NiSource Inc. announced last week that effective July 1, current president Robert C. Skaggs Jr. will take over as CEO. Skaggs will succeed Gary L. Neale, who will retire in June but who will continue to serve as chairman.

Neale, 65, made the announcement following the annual shareholder meeting. He said he and Skaggs had worked closely over the past year “to put in place the NiSource platform for sustainable growth, and I look forward to continuing to work with him during the transition and on strategic issues in the future.” He called Skaggs “an experienced executive” with a proven track record. Neale joined NiSource in August 1989 as president and COO and was promoted to chairman, president and CEO in March 1993.

Skaggs, who also was elected to the board of directors on Tuesday, said he planned to continue the efforts to build NiSource’s position. He credited Neale with transforming “a relatively small local electric and gas utility into a super regional energy company that is today one of the nation’s most vital companies.”

Skaggs, 50, joined Columbia Gas Transmission in 1981 and served in various management positions both before and after the November 2000 merger of NiSource and Columbia Energy Group. Since October 2004 he has served as president. He also serves on the boards of a variety of industry, charitable and community organizations.

Neale told shareholders Tuesday that NiSource’s transformation is continuing, and said its future growth drivers will include utility market organic growth along with regulatory and commercial initiatives. He also promised a strengthened balance sheet and expense management as it focuses on the 2005 business plan and its platform for sustainable growth in 2006 and beyond.

“We have made significant progress in each of these areas so far this year,” Neale said. He noted that 100% of NiSource’s operating income now is derived from regulated natural gas and electric distribution and natural gas transmission and storage businesses. NiSource’s operations also serve a market area covering 30% of the U.S. population and 40% of the nation’s energy consumption.

NiSource is the parent company for the Columbia pipelines and multiple gas and electric utilities, which serve 3.7 million customers from the Gulf Coast to the Midwest and Northeast. It has been in a long restructuring process that began when the company purchased Columbia Energy Group in 2000. Since then, it has reduced the size of its management structure and sold some of its energy assets (see NGI, Oct. 14, 2002). Earnings strengthened last year, and it has begun expansion of its storage capabilities and transmission services since then (see NGI, May 2; Feb. 7).

Besides Skaggs, stockholders also voted to elect Steven R. McCracken, Ian M. Rolland and John W. Thompson as directors of the company, each to serve three-year terms. McCracken, CEO of Owens-Illinois Inc., in Toledo, OH and Skaggs were both nominated as candidates for director for the first time. Rolland, prior to his retirement in 1998, served as CEO of Lincoln National Corp. in Fort Wayne, IN and has been a NiSource director since 1978. Thompson, CEO of Symantec Corp. in Cupertino, CA, has been a NiSource director since 1993.

Stockholders also voted to ratify the appointment of Deloitte & Touche LLP as the company’s independent public accountants for 2005, and they voted in favor of proposed amendments to NiSource’s long-term incentive plan and the employee stock purchase plan.

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