Executives with NiSource Inc. can start breathing easier now as it appears that their company’s hard-fought and much-delayed merger with Columbia Energy Group last November (see NGI, Nov. 6, 2000) is beginning to show its benefits. CEO Gary L. Neale told shareholders at NiSource’s annual meeting last Wednesday that the merger remains on track to add to the company’s earnings in 2001.
“We’re focused on steadily increasing earnings per share. As we’ve said before, the merger will be accretive in 2001,” Neale said. “We are on track to realize net merger savings of approximately $100 million in 2001 from the elimination of duplicate corporate and administrative functions and from greater efficiencies in operations, business processes and systems.”
With merger-integration costs already taken care of, permanent financing for the merger in place and a strong 2000 performance, NiSource said it is focused on building long-term shareholder value. By bringing together the company’s assets, NiSource can now create total energy solutions with new dimensions of value for its 3.6 million gas and electric customers, Neale said.
“NiSource now has industry-leading scale as the third-largest natural gas distributor in the U.S. and the largest east of the Rocky Mountains…With distribution operations aligned with our exploration and production, gas transmission and storage assets, NiSource is the most vertically integrated gas company in the country,” he said. “Our merger with Columbia has enabled us to achieve our strategic goal of diversifying our earnings and growth profile. Before the merger, NiSource derived one-third of its revenues from natural gas operations and two-thirds from electric. By the end of 2001, two-thirds will be derived from natural gas and one-third from electric.”
The company is focused on taking advantage of the opportunities within its geographic footprint, Neale said. These opportunities include:
Going forward, Neale emphasized that the company must stay flexible in today’s changing energy market in order to handle rising demand, overloaded power transmission networks and customer requirements for greater power reliability and quality. Neale pointed toward distributed generation units, including microturbines and fuel cells, which run on natural gas at or near the point of consumption as part of the answer to future reliability. They offer a non-traditional approach to meeting the demands of a market-driven, customer-oriented economy in which peak power demand has risen 25% since 1990, while capacity has increased only 6%, he said.
“Distributed generation units are to large-scale power plants what personal computers were to large mainframe computers. We view distributed generation as the wave of the future. It will be a significant part of the U.S. energy mix, and gas companies will be winners,” Neale said.
NiSource held its annual meeting in Charleston, WV, where the company’s Columbia Gas Transmission Corp. and Columbia Natural Resources have headquarters and major operations. At the meeting, shareholders also approved the re-election of Steven C. Beering, Dennis E. Foster, James T. Morris and Carolyn Y. Woo as directors of the company, each for a term of three years that will expire in 2004.
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