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                                                                   EXHIBIT 10.28


                       2002 NISOURCE ANNUAL INCENTIVE PLAN

OBJECTIVES

The NiSource Annual Incentive plan is a variable compensation plan for eligible
employees which is driven by designated financial results and designed to reward
the achievement of company and individual goals. The Plan is a blend of profit
sharing and incentive, and is designed to support the following objectives:

1.       Encourage employees to act like owners of Nisource.

2.       Encourage short and long-term cost discipline and revenue growth.
         (Employees will be asked to participate in every opportunity to improve
         revenue, manage costs and utilize assets effectively).

3.       Provide a significant opportunity to motivate outstanding company and
         individual performance.


PLAN DESIGN

NiSource Earnings Per Share (EPS) Trigger is required to make any payout under
this plan.

EPS PROFIT SHARING COMPONENT

Achievement of the EPS Trigger creates a profit sharing pool. This pool is
distributed to all employees regardless of segment/company/department
performance.

There is a straight formula for the profit sharing payout to participants:
Employee incentive % x eligible earnings x %

BUSINESS UNIT PERFORMANCE COMPONENT

         OPERATING COMPANIES - OPERATING INCOME OR PLANNED LOSS GOALS COMPONENT

         x % of operating company pool is determined by actual operating
         income/loss as measured against Threshold-Target-Stretch (Assuming EPS
         and Company Performance at Threshold Triggers)

         Pool Amount is determined by actual performance on the following
         formula: Employee incentive % x eligible earnings x %

         Pool is distributed by management to participants based upon individual
         participant's performance.

         Operating Income or Planned Loss Goals

         Company establishes goals for OI Threshold, Target, and Stretch that
         tie to EPS goal ranges of                         (OI does not include
         Corporate/Business Services allocations).

         O& M BUDGET - CORPORATE/BUSINESS SERVICES

         % of pool is determined by performance against budget (assuming EPS
         and O& M Budget at Threshold Triggers)

         Pool Amount is determined by actual performance on the following
         formula: Employee incentive % x eligible earnings x %

         Pool is distributed at management discretion to participants based upon
         individual participant's

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         performance.

         O & M Budget Goals by Department
         -        x % Over budget - Threshold
         -        Budget - Target
         -        x % Under budget - Stretch

PLAN GUIDELINES

Any 2002 adjustments to EPS, OI or O&M budget or any other incentive plan goals
must be approved by CEO, COO and CFO at the time of occurrence.

EPS, OI and O & M goals are set annually when the companies develop their annual
budgets and action plans. Individual performance goals will be set at the
beginning of each year. These goals will be communicated to all employees with
regular updates detailing progress towards achievement.

After the Board of Directors has reviewed and approved Plan year financial
results, the incentive pool(s) for each Plan participant or group of
participants will be determined by NiSource Business Services Finance based upon
the performance measures and targets.

In calculating the incentive pool(s), if actual financial performance for the
Plan year falls between the different levels of financial performance
established as targets, the incentive pool(s) will be determined by
interpolation. There is a maximum pool established for each participant or group
of participants.

2002 employee incentive levels will be the same as 2001 unless otherwise
adjusted for a change in job duties.

CONFIRMATION OF PLAN YEAR RESULTS

As soon as possible after the end of the Plan year, financial results will be
reviewed and approved by the Board of Directors of NiSource Inc.

INCENTIVE POOL CALCULATION

The incentive pool is calculated using EPS and OI/O&M Budget as separate
components. Incentives under both components are paid only when performance
thresholds for EPS are attained. No awards will be payable for a component if
threshold levels of performance are not met, nor will payments reflect
performance in excess of stretch goals.

PLAN PERIOD

The Plan Period begins January 1, 2002 and ends December 31, 2002 unless
otherwise amended or extended.


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PLAN ADMINISTRATION


ALLOCATION OF BONUS DOLLARS TO EMPLOYEES

For the 2002 plan year, employees' bonus payments will be calculated using total
earnings. "Total Earnings" for purposes of this plan will be defined as follows:

Total Earnings = Actual Base Earnings in the plan year plus all shift premiums
and overtime.

Total Earnings will not include reimbursement for educational assistance,
relocation, meals, mileage, lump sum bonus payments, and long-term Disability
payments.

ELIGIBILITY PROVISIONS

All full and part-time employees are eligible with the following conditions:

-        Employees must be on the payroll on December 31 of the plan year to be
         eligible for a payment.

-        Incentive pool awards for individuals whose active employment was
         terminated due to death, retirement, or disability during the Plan year
         or prior to incentive award payments for such Plan year will have their
         incentive pool award pro-rated based on earnings during the Plan year.

-        Temporary employees are not eligible to participate.

-        Some business units may have other incentive programs that preclude
         participation in the NiSource Incentive plan. Employees participating
         in other incentive plans should check with their Human Resources
         representative to determine their eligibility.

-        Employees may be denied a payment for performance reasons if
         recommended by their supervisor and approved at the next higher level
         of management.

-        Employees represented by a bargaining unit that is not covered by this
         plan are not eligible. Employees who bid into a non-participating
         bargaining unit during the plan year will not be eligible for an
         incentive plan payment. Employees who bid from a non-participating
         group to a participating group will be eligible for an incentive plan
         payment provided they meet the general eligibility requirements as
         specified in this document.

EMPLOYEES TRANSFERRING BETWEEN BUSINESS UNITS OR COMPANIES

Employees who transfer between companies or subsidiaries of NiSource will be
eligible for incentive payments from each company/subsidiary based on the total
earnings earned at each company/subsidiary, the results of each
company/subsidiary and the incentive plan payout level applicable to each
position held during the plan year

ADMINISTRATION RESPONSIBILITIES

The HR Business leader, with the support of line management, will be responsible
for assuring the plan and its goals are communicated throughout their respective
business unit.

Nisource Corporate Management will be responsible for setting the annual goals,
and at the end of the plan year, determining the company's final goal
achievement level.

The HR Business Leader for will provide lists of eligible employees based upon
plan document eligibility to Corporate HR.


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Corporate HR will be responsible for creation of budgeting worksheets once the
plan achievement levels have been determined.

Incentive plan budget sponsors (normally functional leaders and various levels
of management) will be responsible for their incentive plan budgets and assuring
individual performance is appropriately considered in incentive award
determination. Approval of incentive budgets will be based upon direction from
the appropriate Business Leader.

Business Services payroll will then assure final payments are made to employees.

NON-DISCRIMINATION

The NiSource Incentive Plan provides payment on a basis that does not
discriminate because of race, color, religion, national origin, sex, disability
or veteran status.

FREQUENCY AND TIMING OF PAYOUTS

Payouts will normally be made in the first quarter following the plan year.

PAYOUT MECHANISM

Incentive Plan payouts will be made in the same manner as the employee receives
their paycheck, either by direct deposit or check. All payments are subject to
all appropriate federal, state and local taxes based on the employee's
established tax withholding status at the time of payment.

SUNSET PROVISION

The Board of Directors of NiSource Inc. may at any time terminate, suspend or
modify the Plan to the extent allowed by law. This Plan does not constitute a
contract of employment.

Management retains the discretionary authority to determine eligibility for
payment of benefits under the NiSource Incentive Plan, and is the final arbiter
of any disputes concerning the interpretation or operation of this plan.

ATTACHMENTS

Attachment A lists the EPS goals for the 2002 plan year.

Attachment B is an example of an award calculation.


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ATTACHMENT A

NISOURCE INC.  2002 CORPORATE SERVICES FINANCIAL PLAN TARGETS

<TABLE>
<CAPTION>
EPS               THRESHOLD               TARGET                 STRETCH
<S>               <C>                     <C>                    <C>
                    $X.XX                  $X.XX                  $X.XX
</TABLE>


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ATTACHMENT B

                                 PAYOUT EXAMPLE

<TABLE>
<CAPTION>
Weighting of Goals         Threshold            Target              Stretch
------------------         ---------            ------              -------
<S>                        <C>                  <C>                 <C>
EPS   XX%                  $X.XX                $X.XX               $X.XX
Operating Income           $XXX                 $XXX                $XXX
</TABLE>

Employee's total earnings for the purpose of incentive plan calculation are
$XXX Employee's bonus opportunity is X% at threshold, X% at target and X% at
stretch

EPS reaches stretch goal       X% X XX%   =   XX%
EPS Payout                     X.X% X XXX = $X profit sharing - amount
                               can not be modified

OI reaches target goal         X% X XX%   =   X.X%
OI Payout budget               X% X $XXX = $XXX - amount can be modified by
                               dept. head based upon individual performance

EMPLOYEES FINAL PAYOUT PERCENTAGE      X.X% (ASSUMES OI PAYOUT IS NOT MODIFIED)
EMPLOYEE'S FINAL PAYOUT                $XXX

NOTE: IF THE EPS MEASURES FAILS TO MEET THE THRESHOLD LEVEL, THE PLAN DOES NOT
PAYOUT UNDER ANY MEASURE.


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