Good day, ladies and gentlemen and welcome to the third quarter 2009 NiSource earnings conference call. My name is Kershaw and I will be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator instructions). I would now like to turn the call over to Glen Kettering, Senior Vice President of Corporate Affairs, please proceed sir.

Thank you, Kershaw, and good morning to everyone. On behalf of NiSource I would like to welcome you to our quarterly analyst call. We appreciate the opportunity to be with you today and thank you for taking the time to join us. Joining us this morning are Bob Skaggs, President and Chief Executive Officer; Steve Smith, Executive Vice President and Chief Financial Officer; and Randy Hullen, Director of Investor Relations. As you know, the focus of today’s call is to review our third quarter 2009 earnings results and provide a general business update. During the course of the call we will be referring to certain supplemental materials, which are available to those accessing our call via webcast, which have been posted on www.nisource.com. Following Bob’s prepared remarks we will open the call to your questions. I'd remind you that some of the statements made on this conference call will be forward-looking statements within the meaning of the Safe Harbor provisions of the U.S. Federal Securities Laws. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Information concerning factors that could cause actual results to differ materially is included in the management's discussion and analysis and risk factors section of our periodic SEC filings. And now I’d like to turn the call over to Bob Skaggs.

Thanks, Glen. Good morning and thanks for joining us. As you know we have several important matters to address this morning. First, we’ll report on NiSource’s third quarter’s earnings results. Next we’ll update you on the impacts of the continuing economic downturn on our business and the steps we’re taking to mitigate them. I’ll also briefly update you on our liquidity position, which I’ll preview now by telling you it has again improved. And finally we’ll discuss our business segment results and what I think you will agree is continued tangible progress on our balance plan to grow the company and enhance shareholder value. Let’s begin with a look at our third quarter results. As we noted in our news release this morning, our team’s execution of our business and liquidity plans has been nothing short of exceptional. Despite continued economic challenges particularly in Northwest Indiana our underlying business performance has been strong, our liquidity position is solid, and we're producing concrete results from our long-term growth strategy. For the third quarter, NiSource delivered net operating earnings on a non-GAAP basis of $18.8 million or $0.07 per share that was an increase from $7.7 million or $0.03 per share for the third quarter of 2008. Operating earnings again on a non-GAAP basis were $134.3 million compared to $111.8 million for the same period in 2008. As noted in our release NiSource is delivering solid financial performance in spite of some tough economic conditions. This is particularly true in our Northern Indiana markets where third quarter electrical industrial demand continue to lag prior levels by almost 20%. In that regard, our ability to continue delivering on our financial commitments in this challenging environment underscores the resilience of our core regulated businesses and the ability of our team's to execute on their…

(Operator instructions) Your first question comes from the line of Jonathan Arnold with Deutsche Bank. Please proceed.

Good morning, Jonathan. Jonathan Arnold – Deutsche Bank: Good morning, guys.

Hi, how are you? Jonathan Arnold – Deutsche Bank: Good. Thank you. Thanks for taking my question. I noticed on your schedule that you showed for the regulatory timeline that the first or the current NiSource NIPSCO rate case is you're now thinking for the late second quarter resolution that used to be, sort of a middle of first quarter. Is that just having a better sense of the schedule or what exactly changed?

That’s correct. The creeping process finishes or was completed mid-January 2010 and Jonathan, we really begin counting 90 days from that date. And that would probably be the minimum time that commission would need to complete its deliberations. So I count 90 days out from that date and then you could begin adding from that point. Jonathan Arnold – Deutsche Bank: And now that you're into briefing, is it reasonable to assume that settlement is will be tougher at this point of the schedule or is it still something that (inaudible)?

That's the correct assumption. Challenging we'll never say never. We have ongoing conversations not emphasized conversations supposed to negotiations with our stakeholders, but I do believe that it’s more likely in north we'll go through litigated commission decision on this case. Jonathan Arnold – Deutsche Bank: Okay. And then if I could just ask a some more strategy question. You obviously laid out this plan in the beginning of the year to address some of the upcoming mature season and had great success with that. As you look forward now and some of the things you had looked out in the past like the MOP, for example, and I think what should we be looking at this kind of the next significant strategic move on the part of the company as you can now begin to you go visibility on addressing this liquidity issues that were pressing?

I appreciate your comments and your forward look at this point but we are at the moment still focused on the relative near-term. We believe that we have to continue our work on fixing NIPSCO, improving clarity in and around NIPSCO. So our near-term priority is fix NIPSCO, continue to address our pension expense challenge and advance our key business initiatives. So that’s really the process and that’s probably where our thinking is. Let’s continue to strengthen the business, continue to reduce the business risk and position ourselves to address the longer-term considerations, but we still have near-term work in front of us. Jonathan Arnold – Deutsche Bank: Should we see that the MOP transaction is, on how though off the table?

I'd say at the moment it’s off the table, but certainly we're taking note that the MOP market has improved rather dramatically over the past six months or so. So, we're very mindful of what’s going on in the market, we try to take a broad view, but at the same time we have some near-term priorities, we just need to address. Jonathan Arnold – Deutsche Bank: Thank you very much, Bob.

Your next question comes from the line of Carrie Saint Louis with Fidelity. Please proceed. Carrie Saint Louis – Fidelity: Hi, good morning.

Hey, good morning, Carrie. How are you?

Good morning, Carrie. Carrie Saint Louis – Fidelity: I am good. I have a number of questions. First I wanted to start with (inaudible) about the sources and uses. And I just wanted to maybe go over some of the improvements that you have seen from the February call to October, because like the working capital is now up, say, 100. So I know a lot of that was related to lower gas prices, but is that number also includes the recent tax settlement or what else is in there?

Let’s ask Steve to address that.

Okay, thanks, Bob. Carrie, the tax benefit, the $295 million tax benefit that we received is reflected in FFO. So that would be in the $1.2 billion green box. That’s where the tax benefit comes from. The financing, the blue box, the 1.105 billion we’ve effectively taken a liberty of assuming that we would issue the $120 million of additional financing related to Sugar Creek in the fourth quarter, so that ups the amount of financing by $120 million. Carrie Saint Louis – Fidelity: Okay, that got regulatory approval?

That has not gotten regulatory approval yet. We’re anticipating that we will receive that and we've asked for the flexibility to issue both external debt or internal debt or secured debt or non-secured debt. So we hope that will have a fairly broad-based regulatory financing order when that is approved. Carrie Saint Louis – Fidelity: Okay, great.

And then the $800 million of working capital benefit, you're correct; it's largely driven by the lower gas prices. That we've experienced through the balance of 2009. So that continues to help us going forward. And then the last little bucks there the drip we've talked about the drop quite a bit at our last earnings calls we anticipated somewhere between $15 million to $20 million of that. Now based on sharp of pencil we think we're going to be closer to the $28 million for the year. So those items basically have provided us with pretty good, strong liquidity position for 2009. Carrie Saint Louis – Fidelity: Right. Can I just ask on that tax refund? Is there any amount that’s kind of leg up all over into 2010 or is that 295 a comprehensive amount?

That 295, Carrie, is a comprehensive amount and it represents historic look back on expenditures that were capitalized for tax purposes that were expense for tax purposes on a 20008 return. So that 295 represents cash refund from the IRS and we received $260 million plus already and anticipates the balance of $30 million or so to flow largely in the fourth quarter of this year. Carrie Saint Louis – Fidelity: Okay, great. I'm just kind of thinking up to 2010. Obviously, I dare the FFO will not have the tax benefit item in there?

That’s correct. Carrie Saint Louis – Fidelity: So if I were to take the 1.2 and take out that roughly $300 million that get like a $900 million, is that a fair maybe with some growth but is that a fair and reasonable assumption for next year?

Well, we've said before that the FFO for us is in the billion dollar range. Give or take $50 million to there. It’s a very hard number (inaudible) going to appreciate or predicting exactly. Yes, it’s in the billion dollar range. Carrie Saint Louis – Fidelity: Okay, and then the CapEx this year, 800 kind of looking out next year?

It will be in that neighborhood, it may frankly be a bit north of that. But I would characterize it as a bid as opposed to a lot. Carrie Saint Louis – Fidelity: Yes, bit being like what, 10%?

We don’t get out of ahead of me, but yes reasonable bump, but not huge, and we're literally just deliberating on the 2010 number, Carrie, so, hopefully going to appreciate that we're deciding that real time. Carrie Saint Louis – Fidelity: Did you mention so the whole update for moving forward to 2010 as that can be expected on your four quarter call?

That's correct, Carrie. Carrie Saint Louis – Fidelity: Okay, and then I am not turning yet, Hawney [ph] is also lower so I was wondering why that is, is that expected to now carry over to '10 or is it just a change in how much you had to pay for Hawney?

It is more the latter that some of this will continue into 2010, we've already paid a significant chunk in, but we're not looking at a big number in 2010, but we may have additional cash to go in 2010, but not big. Carrie Saint Louis – Fidelity: Okay. And then any comment on the economy at NIPSCO and just any kind of thoughts about what now you're looking at for 2010 and any more color you could add there?

Yes, as I mentioned in the prepared remarks, we believe it has bottomed in Northwest Indiana, we are seeing some modest indication of recovery but I'd emphasize modest and as we look at 2010, our plan will be built on modest as opposed to a robust jump in industrial activity in Northwest Indiana. I'm sure you've been reading, as we’ve been reading press releases by metal and US Steel, they have been very cautious about the outlook and we would echo that caution at the moment. Carrie Saint Louis – Fidelity: Great.

Thank you, Carrie, see you. Carrie Saint Louis – Fidelity: Okay.

Your next question comes from the line of Carl Kirst - BMO Capital. Please proceed.

Hey, good morning, everybody. How are you doing?

Good and you?

Good. Just actually a couple of clarifications at least one from Carrie's question, with respect to the tax infusion the 295, Steve mentioned 260 was already received, I'm just trying to clarifying was that received in October or is that actually part of the Q3 cash flow statement?

That was received in October, but we had accounts receivable for the 295 on the balance sheet so you will see that, it reflected in the third quarter balance sheet.

Okay, I appreciate the clarification there. Bob, maybe looking at the second NIPSCO rate case and understanding that the timing hasn’t been necessarily settled on when you would file, but 2010 obviously you can kind of pick and choose your points there. Since this first rate case is so complex and has to settle so many issues, is there actually any benefit to filing before that is settled, would you actually legitimately have a chance of at least for instance file that in January of getting a decision sooner than if you would be filing it in June?

Great question, and that’s the sort of calculus that we're working through as we speak. That is exactly the read that we're trying to make and we'll continue to make as case one is closer to decision. So, we're making those sort of political regulatory reads real time in the first part of 2010. It’s just not a black and white consideration.

No, that’s fine, I just didn’t know if you had any additional color, but I mean I can understand you can appreciate the situation. This may also be a difficult one to answer to, but is there any more color with respect to sense of magnitude you could share yet with respect to the pension in the demand side issue, we've seen that the second rate case could be as big if not bigger than the first and I didn’t know if my calculus was different than yours?

No, I think directionally you're correct, it's going to be a significant case, and we do have to look at the size of the increase in pension expense. The predominant share of the increase for NiSource occurred at NIPSCO. And you have seen what the volume reduction deterioration has been on the industrial side of the house, down 20% give or take. So these are big issues. Now having said that and I think you understand and appreciate it, case two is likely to have many fewer moving parts, again, assuming a resolution, full resolution of case one and pretty clear direction coming out of case one, case two does look like its more about pension expense and volume levels for rate design.

Fair enough. And then last question if I could, switching to the pipes here, on the chance that as we look out over the next three years and just under a hypothetical we don’t have any perhaps recovery in the geographic basis market. Your pipes from the Gulf to Northeast, one are the cheapest routes to get up there, but nonetheless with respect to whatever contracts that might be rolling, did you see any risk there, Bob, under that kind of scenario?

We currently do not see material risk on Columbia Gulf, you make great point, number one it is the cheapest route from the Southwest, number two, the hydraulics, the operation of Columbia gas transmission is heavily dependent on Columbia Gulf, storage refill is heavily dependent on Columbia Gulf. And I'd also add that we now have so much gas heading Columbia Gulf and Northeast Louisiana and we now have much stronger businesses on Columbia Gulf from west east in the Gulf region, but we feel all of that as the Columbia Gulf remains strategic and quite economically viable. Now, we're watching the bases, what note the bases has shown some recovery as we're turning a bit more to normal on Columbia Gulf so again long-term we feel good about the asset, the utilization, and the contractual status of that pipe.

Great, appreciate the color, thanks guys.

Your next question comes from the line of Paul Ridzon with Keybanc. Please proceed. Paul Ridzon – Keybanc: Hey, good morning

Hey, Paul.

Hey, Paul

You're up early this morning. Paul Ridzon – Keybanc: Would you check my gas meter?

We saw you reported at the lawn, yes we were reading meters really to. Paul Ridzon – Keybanc: I have a question on the tax refund and what is the impact on rate base or is that the regulatory book difference and the tax book?

No, typically, Paul, as you're probably aware deferred tax is an element of most rate proceedings. So you have deferred tax balances associated with a whole host of items, like bonus depreciation and the like, so it will be a component of rate making going forward for our company, but we feel we'll be able to manage that in those processes. Paul Ridzon – Keybanc: Is rate base just been effectively reduced by 300 million, is that too simple of you?

Yes, I would say if you look at the tax benefits of 295 or so, it's about a third and third and third in terms of where the benefits accrue, so third is that NIE, NIPSCO a third is the pipeline and the third of the Gas Distribution businesses. Paul Ridzon – Keybanc: Okay, and it sounds like you are going to have the pan cake in the next NIPSCO electric case, is that fair?

Well, not necessarily, that, Carl asked question earlier about that and clearly we're considering the calculus of filing case two and we think it is regulatory, political, strategic so we're going to take a very close look of when and how we file case two. So I don’t think it's correct to assume pan caking, on the other hand I wouldn’t say that we would rule that out at this point, but we recognize we have to make a careful, thoughtful decision around that. Paul Ridzon – Keybanc: Okay, thank you, and now just to echo Jonathan’s remarks, congratulations on getting the ship back on an even keel.

We appreciate that, thanks very much, team's worked hard.

Thanks, Paul.

Sure. Your next question comes from the line of Ashar Khan with Incremental Capital. Please proceed. Ashar Khan – Incremental Capital: Hi, good morning, how are you doing?

Good morning. We’re doing well.

How are you? Ashar Khan – Incremental Capital: I just wanted to clarify, I was a bit confused, you said in your remarks about that no need for large equity financing. Does that imply? And then you were mentioning financings in the fourth quarter. Does that imply? That some kind of equity financing is required in this current quarter. I was a little bit confused in the terminology used. I just wanted to clarify if you could?

Yes, the answer is no, I just appreciate that if there is any confusion we certainly want to be clear. Obviously, I want to be straight up for using the drip, and the drip purchased $28 million so that’s an ongoing equity issuance, if you will. And that’s the only thing we have on the table right now. Now, let me be absolutely clear on the fourth quarter contemplate activity and that is debt financing of about a $120 million or so. And in the remarks we talked about in Indiana Regulatory Commission approval pending for financing related to our Sugar Creek facility so we could use that if the commission approves that we could use that as a financing vehicle. But we also retain the right to use debt financing at the corporate level during the fourth quarter of the 2010 is to take off the table or 2010 financing requirements and they would be met with the debt issuance of some sort presumably yet this quarter again depending on market conditions and the like. Ashar Khan – Incremental Capital: Okay.

Does that help?. Ashar Khan – Incremental Capital: That helps, that clarifies, I really appreciate it.

Good. Ashar Khan – Incremental Capital: And then can I just go as we look for pensions next year what is the discount rate you are using this year? And how should we look at the discount rates if you were to do something today, is that going to be a further hurt in 2010 or with some end of these rate case decisions and all that. It’s like its not going to hurt 2010 going from '09?

I will take that, Bob. I mean in terms of the discount rate we used for 2008 calculations to determine what our expenses would be in 2009 we were using a 6.92% rate. And if you looked at our assets value as a 12/31/08, we were about $1.44 billion in asset value. If you take the actual uptick in the market through September 30th of 2009, our asset value is closer to $1.66 billion, $1.7 billion. So we have received some benefit as a result of the uptick in the market, which we're very pleased about. But as you know the calculation for the 2010 expense are effectively done at the end of the year and there are a lot of moving parts in terms of how your assets perform through the balance of the year, how discount rates apply to your liability, how demographic changes, impact, all of those assumptions so I had to take to speculate on what the discount rate would be in December when we take measure of the pension, but I think it’s a positive, all things being considered that our asset values have improved by about 20% from year-end 2008 so far this year. Ashar Khan – Incremental Capital: Could you give us some rough stab, how much would the disc, you don’t know right now right, how much would the discount rate would have to fall to offset that gain. Is there any kind of a way to kind of like judge?

I hesitate to come up with a methodology or formula that would provide there, I mean I think in a big picture the asset return is probably 80% of the issue and the discount rate was a much smaller percentage of the issue, so I think asset returns are really what drive ultimately your pension expense, discount rates do have an effect, but not nearly as dramatic as the asset returns. Ashar Khan – Incremental Capital: Okay, so we should be then I guess a little bit comfortable with things. Okay, I appreciate it. Thank you very much.

Thank you.

We have a follow-up question from the line of Jonathan Arnold with Deutsche Bank. Please proceed. Jonathan Arnold – Deutsche Bank: Thank you. I wanted to just clarify one thing and I had to jump off for a bit and I apologize if this was already addressed. Bob, you had talked about your guidance still being at a $1 to a $1.10 and I think in the release and also in your prepared remarks you mentioned that, that had assumed a moderate second half '09 recovery. Are you effectively saying that despite not really having seen such a recovery in the way you might have envisaged you're still planning to make the numbers or you're reminding us that absent that you may not make that number?

Its more the former, we feel comfortable that its going to be well within the range, the team has worked hard to mitigate the lack of a robust recovery, so feel good about the guidance. I would just continue to add that we've sensed that to economic conditions in our marketplace and you will just continue to hear me issues that caveat as we go forward that it does play key role and where we have. Jonathan Arnold – Deutsche Bank: You're effectively no longer requiring a meaningful recovery in the second half to –

That's correct. Jonathan Arnold – Deutsche Bank: To make your range, that –

That’s correct, Jonathan. Jonathan Arnold – Deutsche Bank: Thanks

We have a follow up question from the line of Carl Kirst with BMO Capital. Please proceed

Hey, Carl. Carl Kirst – BMO Capital: Hi.

You got a double dipper. Carl Kirst – BMO Capital: I know, I know. Just very, very quickly because the amount of influx of working capital this year seen some benefit of low gas prices as obviously might that. I don’t know if there is a way to kind of give a sensitivity, Steve, or just as you look at right now, and we have got kind of cal 2010 strip and roughly the $6 range maybe a little bit under that and this year we're probably going to be ending with gas prices for the year somewhere just north of four bucks. If the hurt strip were to hold is there any sense of what the working capital outlay might be next year?

Yes, that’s a great question, I mean largely the way we look at this is the fact that the gas prices have dropped so dramatically in 2009 and helped us tremendously in terms of our working capital situation, but going forward in 2010, working capital will turn around, because we filled up our storage caverns with a lot lower price gas, so the accounts receivable balances that we have in the fourth quarter are a lot lower than they were in the fourth quarter of 2008. So the working capital benefits that we derived primarily as a result of lower gas prices will effectively go away next year in 2010 and normalize the more regular levels that we've seen historically. Carl Kirst – BMO Capital: Okay, but no sensitivity or shot at this point of what the cash flow exit could be as gas prices go higher?

Not at this time. Carl Kirst – BMO Capital: Okay, all right, thank you.

Let me just mention the team is sensitive to managing that pretty aggressively so all eyes are on that sort of thing, I mention, Carl.

We feel very good about our liquidity position in 2010.

That’s the bottom line.

With no further questions in the queue I would now like to turn the call over to Bob Skaggs for closing remarks. You may proceed.

Yes, thank you very much, Kershaw. I just want to say a couple of things, number one, we certainly have the view that the business has improved dramatically if you reflect back a year ago, 18 months ago, this business has made significant strides forward, be it liquidity, business initiatives, core operations, reducing the risk profile, and hopefully you agree the progress is remarkable, the resilience of the business is remarkable, and we feel like we are much stronger, better business with improved clarity on our path forward. So with that thanks again for your interest, your support and we will see you soon. Thank you

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect and have a great day.