<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

           [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the Quarterly period ended SEPTEMBER 30, 2003

           [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the Transition period from ______ to ______

                          Commission file number 1-1098

                              COLUMBIA ENERGY GROUP
                              ---------------------

             (Exact Name of Registrant as Specified in its Charter)

                Delaware                                         13-1594808
       ---------------------------                            -----------------
     (State or other jurisdiction of                          (I.R.S. Employer
     incorporation or organization)                          Identification No.)

          801 East 86th Avenue
          Merrillville, Indiana                                     46410
       ---------------------------                            -----------------
(Address of principal executive offices)                         (Zip Code)

        Registrant's telephone number, including area code (877) 647-5990

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [ ] or No [X]

As of November 1, 2000, all shares of the registrant's Common Shares, $.01 par
value, were issued and outstanding, all held beneficially and of record by
NiSource Inc.

The registrant meets the conditions set forth in General Instructions H(1)(a)
and (b) of Form 10-Q and is therefore filing this form with the reduced
disclosure format.

<PAGE>

                     COLUMBIA ENERGY GROUP AND SUBSIDIARIES
                           FORM 10-Q QUARTERLY REPORT
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2003

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                        Page
                                                                                                        ----
<S>                                                                                                     <C>
PART I        FINANCIAL INFORMATION

              Item 1.  Financial Statements

                       Statements of Consolidated Income.......................................           3

                       Consolidated Balance Sheets.............................................           4

                       Statements of Consolidated Cash Flows...................................           6

                       Statements of Consolidated Comprehensive Income.........................           7

                       Notes to Consolidated Financial Statements..............................           8

              Item 2.  Management's Narrative Analysis of Results of Operations................          16

              Item 3.  Quantitative and Qualitative Disclosures About Market Risk..............          22

              Item 4.  Controls and Procedures.................................................          22

PART II       OTHER INFORMATION

              Item 1.  Legal Proceedings.......................................................          23

              Item 2.  Changes in Securities and Use of Proceeds...............................          25

              Item 3.  Defaults Upon Senior Securities.........................................          25

              Item 4.  Submission of Matters to a Vote of Security Holders.....................          25

              Item 5.  Other Information.......................................................          25

              Item 6.  Exhibits and Reports on Form 8-K........................................          25

              Signature........................................................................          26
</TABLE>

                                       2
<PAGE>

                                     PART I

ITEM 1. FINANCIAL STATEMENTS

COLUMBIA ENERGY GROUP AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME (unaudited)

<TABLE>
<CAPTION>
                                                                             Three Months             Nine Months
                                                                         Ended September 30,       Ended September 30,
                                                                         ------------------        -------------------
(in millions)                                                              2003       2002          2003          2002
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>        <C>          <C>           <C>
NET REVENUES
   Distribution                                                           $163.0     $191.1       $ 1,511.1     $ 1,030.6
   Transmission and Storage                                                176.8      178.5           688.1         674.2
   Other                                                                     3.4        7.2             9.9          21.8
   Affiliated revenues                                                       2.5        1.5             6.8          14.5
-------------------------------------------------------------------------------------------------------------------------
Gross Revenues                                                             345.7      378.3         2,215.9       1,741.1
   Cost of Sales                                                            40.9       64.1           923.0         512.3
   Cost of Sales - Affiliated                                                  -          -             4.8           3.4
-------------------------------------------------------------------------------------------------------------------------
Total Net Revenues                                                         304.8      314.2         1,288.1       1,225.4
-------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
   Operation and maintenance                                               146.7      142.7           481.3         478.5
   Depreciation and amortization                                            40.1       34.9           122.3         122.0
   Gain on sale of assets                                                  (16.2)      (1.1)          (16.0)         (5.0)
   Other taxes                                                              21.5       25.2           128.2         117.1
-------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses                                                   192.1      201.7           715.8         712.6
-------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME                                                           112.7      112.5           572.3         512.8
-------------------------------------------------------------------------------------------------------------------------
OTHER INCOME (DEDUCTIONS)
   Interest expense                                                        (17.4)     (26.7)          (59.8)        (82.3)
   Interest expense - affiliated                                            (1.1)      (0.9)           (3.8)         (3.6)
   Interest income                                                           1.5        1.8             5.0           5.6
   Interest income - affiliated                                              3.3        2.8            10.2          10.0
   Other, net                                                                1.0        0.5             1.2           0.4
-------------------------------------------------------------------------------------------------------------------------
Total Other Income (Deductions)                                            (12.7)     (22.5)          (47.2)        (69.9)
-------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS
   BEFORE INCOME TAXES                                                     100.0       90.0           525.1         442.9
INCOME TAXES                                                                37.5       32.8           199.2         165.4
-------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS                                           62.5       57.2           325.9         277.5
-------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Discontinued Operations - net of taxes                    1.2        2.7            (0.2)         30.4
Gain (Loss) on Disposition of Discontinued Operations - net of taxes        30.9          -           (50.1)            -
Change in Accounting - net of taxes                                            -          -           (16.8)            -
-------------------------------------------------------------------------------------------------------------------------
NET INCOME                                                                $ 94.6     $ 59.9       $   258.8     $   307.9
=========================================================================================================================
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

                                       3
<PAGE>

ITEM 1. FINANCIAL STATEMENTS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                         SEPTEMBER 30,     December 31,
(in millions)                                                                2003              2002
-------------------------------------------------------------------------------------------------------
                                                                          (unaudited)
<S>                                                                      <C>               <C>
PROPERTY, PLANT AND EQUIPMENT
   Utility Plant                                                         $   8,216.0       $   8,119.2
   Accumulated depreciation and amortization                                (3,953.6)         (3,886.1)
------------------------------------------------------------------------------------------------------
   Net utility plant                                                         4,262.4           4,233.1
------------------------------------------------------------------------------------------------------
   Other property, at cost, less accumulated depreciation                        1.8               1.8
------------------------------------------------------------------------------------------------------
Net Property, Plant and Equipment                                            4,264.2           4,234.9
------------------------------------------------------------------------------------------------------

INVESTMENTS AND OTHER ASSETS
   Assets of discontinued operations and assets held for sale                    6.5             836.3
   Unconsolidated affiliates                                                    33.5              35.0
   Other investments                                                            44.9              21.2
------------------------------------------------------------------------------------------------------
Total Investments                                                               84.9             892.5
------------------------------------------------------------------------------------------------------

CURRENT ASSETS
   Cash and cash equivalents                                                     9.4              14.5
   Restricted cash                                                               2.6              24.2
   Cash invested in the NiSource money pool                                    385.9                 -
   Accounts receivable (less reserves of $10.3 and $13.1, respectively)        251.5             307.7
   Unbilled revenue (less reserves of $0.9 and $2.2, respectively)              52.9             173.4
   Gas inventory                                                               369.9             214.7
   Underrecovered gas and fuel costs                                           113.3             146.2
   Materials and supplies, at average cost                                      16.0              15.3
   Price risk management assets                                                 28.4              25.4
   Exchange gas receivable                                                     174.7             103.9
   Regulatory assets                                                            80.6              76.2
   Prepayments and other                                                        53.0              88.2
------------------------------------------------------------------------------------------------------
Total Current Assets                                                         1,538.2           1,189.7
------------------------------------------------------------------------------------------------------

OTHER ASSETS
   Price risk management assets                                                124.3             111.1
   Regulatory assets                                                           334.7             359.4
   Intangible assets, less accumulated amortization                              0.9               2.9
   Deferred charges and other                                                   82.2              81.0
------------------------------------------------------------------------------------------------------
Total Other Assets                                                             542.1             554.4
------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                             $   6,429.4       $   6,871.5
=======================================================================================================
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

                                       4
<PAGE>

ITEM 1. FINANCIAL STATEMENTS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                          SEPTEMBER 30,   December 31,
(in millions)                                                                2003             2002
------------------------------------------------------------------------------------------------------
                                                                          (unaudited)
<S>                                                                       <C>             <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common Stock Equity                                                       $  2,694.2       $  2,396.2
Long-term debt, excluding amounts due within one year                        1,382.7          1,387.8
-----------------------------------------------------------------------------------------------------
Total Capitalization                                                         4,076.9          3,784.0
-----------------------------------------------------------------------------------------------------

CURRENT LIABILITIES
   Current portion of long-term debt                                             0.2              0.2
   Short-term borrowings                                                           -              0.8
   Accounts payable                                                            179.3            204.2
   Accounts payable-Affiliated                                                  39.4            122.7
   Customer deposits                                                            20.7             21.0
   Taxes accrued                                                               230.2            169.4
   Interest accrued                                                             69.4             18.8
   Overrecovered gas and fuel costs                                              1.9             13.1
   Price risk management liabilities                                             3.4              3.3
   Exchange gas payable                                                        271.4            411.9
   Current deferred revenue                                                     18.9             16.9
   Regulatory liabilities                                                       12.4             11.4
   Accrued liability for postretirement and postemployment benefits             26.3             27.4
   Other accruals                                                              250.0            312.5
-----------------------------------------------------------------------------------------------------
Total Current Liabilities                                                    1,123.5          1,333.6
-----------------------------------------------------------------------------------------------------

OTHER LIABILITIES AND DEFERRED CREDITS
   Deferred income taxes                                                       737.2            649.5
   Deferred investment tax credits                                              27.2             28.3
   Deferred credits                                                             45.8             41.6
   Noncurrent deferred revenue                                                 121.2            130.1
   Accrued liability for postretirement and postemployment benefits             73.9            103.2
   Liabilities of discontinued operations and liabilities held for sale            -            539.0
   Regulatory liabilities                                                       88.6             88.1
   Other noncurrent liabilities                                                135.1            174.1
-----------------------------------------------------------------------------------------------------
Total Other                                                                  1,229.0          1,753.9
-----------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES                                                      -                -
-----------------------------------------------------------------------------------------------------
TOTAL CAPITALIZATION AND LIABILITIES                                      $  6,429.4       $  6,871.5
=====================================================================================================
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

                                       5
<PAGE>

ITEM 1. FINANCIAL STATEMENTS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS (unaudited)

<TABLE>
<CAPTION>
Nine Months Ended September 30, (in millions)                   2003       2002
----------------------------------------------------------------------------------
<S>                                                           <C>        <C>
OPERATING ACTIVITIES
   Net Income                                                 $   258.8  $   307.9
   Adjustments to reconcile net income to net cash from
     continuing operations:
     Depreciation and amortization                                122.3      122.0
     Net changes in price risk management activities              (18.2)     (40.3)
     Deferred income taxes and investment tax credits              53.7       55.8
     Deferred revenue                                              (6.8)     (11.5)
     Amortization of unearned compensation                          0.4          -
     Gain on sale of assets                                       (16.0)      (5.0)
     Change in accounting                                          16.8          -
     Loss on sale of discontinued assets                           50.1          -
     Loss (Income) from discontinued operations                     0.2      (30.4)
     Other assets                                                  36.7       15.1
     Other liabilities                                             (6.6)       4.3
   Changes in assets and liabilities:
     Accounts receivable, net                                     191.2      197.9
     Inventories                                                 (155.9)    (125.3)
     Accounts payable                                            (108.2)     (77.2)
     Taxes accrued                                                 (8.2)      16.5
     Under/Overrevovered gas and fuel costs                        21.7      (66.0)
     Exchange gas receivable/payable                             (211.3)     165.7
     Other accruals                                               (97.7)    (133.9)
     Other assets                                                  29.0       71.5
     Other liabilities                                             49.9       50.8
----------------------------------------------------------------------------------
Net Cash from Continuing Activities                               201.9      517.9
Net Cash from Discontinued Activities                             (89.4)     (32.9)
----------------------------------------------------------------------------------
Net Cash from Operating Activities                                112.5      485.0
----------------------------------------------------------------------------------
INVESTMENT ACTIVITIES
   Capital expenditures                                          (163.6)    (109.2)
   Proceeds from disposition of assets                            432.7          -
----------------------------------------------------------------------------------
Net Investment Activities                                         269.1     (109.2)
----------------------------------------------------------------------------------
FINANCING ACTIVITIES
   Changes in short-term debt                                      (0.8)         -
   Dividends paid - common shares                                     -     (202.1)
----------------------------------------------------------------------------------
Net Financing Activities                                           (0.8)    (202.1)
----------------------------------------------------------------------------------
Increase in cash and temporary cash investments                   380.8      173.7
Cash and temporary cash investments at beginning of year           14.5       23.3
----------------------------------------------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD          $   395.3  $   197.0
==================================================================================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
   Cash paid for interest                                          32.7       50.2
   Interest capitalized                                             1.2        1.4
   Cash paid for income taxes (net of refunds)                     93.7        6.9
----------------------------------------------------------------------------------
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

                                       6
<PAGE>

ITEM 1. FINANCIAL STATEMENTS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (unaudited)

<TABLE>
<CAPTION>
                                                                   Three Months                    Nine Months
                                                                 Ended September 30,           Ended September 30,
                                                                ---------------------         ---------------------
(in millions)                                                    2003           2002           2003          2002
-------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>            <C>            <C>           <C>
Net Income                                                      $  94.6        $ 59.9         $ 258.8       $ 307.9
   Other comprehensive income, net of tax
     Foreign currency translation adjustment                       (0.6)         (0.7)            0.9             -
     Net unrealized (losses) gains on cash flow hedges            (11.5)         (7.7)           17.8           3.5
     Net gain on available for sale securities                      0.5             -             0.5             -
     Minimun pension liability adjustment                          19.8         (20.9)           19.8         (20.9)
-------------------------------------------------------------------------------------------------------------------
   Total other comprehensive income (loss), net of tax              8.2         (29.3)           39.0         (17.4)
-------------------------------------------------------------------------------------------------------------------
Total Comprehensive Income                                      $ 102.8        $ 30.6         $ 297.8       $ 290.5
-------------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

                                       7
<PAGE>

ITEM 1.  FINANCIAL STATEMENTS (Continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.       BASIS OF ACCOUNTING PRESENTATION

The accompanying unaudited consolidated financial statements for Columbia Energy
Group (Columbia) reflect all normal recurring adjustments that are necessary, in
the opinion of management, to present fairly the results of operations in
accordance with accounting principles generally accepted in the United States of
America.

The accompanying financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in Columbia's
Annual Report on Form 10-K (Form 10-K) for the fiscal year ended December 31,
2002. Income for interim periods may not be indicative of results for the
calendar year due to weather variations and other factors. Certain
reclassifications have been made to the 2002 financial statements to conform to
the 2003 presentation.

2.       RESTRUCTURING ACTIVITIES

Since 2000, Columbia has implemented restructuring initiatives to streamline its
operations and realize efficiencies from the acquisition of Columbia by NiSource
Inc. (NiSource).

For all of the plans, a total of approximately 950 management, professional,
administrative and technical positions have been identified for elimination. As
of September 30, 2003, approximately 892 employees have been terminated, of whom
approximately 33 employees and 123 employees were terminated during the quarter
and nine months ended September 30, 2003, respectively. At September 30, 2003
and December 31, 2002, the consolidated balance sheets reflected liabilities of
$19.3 million and $35.4 million related to the restructuring plans,
respectively. During the quarter and nine months ended September 30, 2003, $2.8
million and $11.7 million of benefits were paid, respectively, as a result of
the restructuring plans. Additionally, during the quarter and nine months ended
September 30, 2003, the restructuring plan liability was decreased by $4.3
million and $4.4 million, respectively, due to adjustments in estimated costs
related to the reorganization initiatives.

3.       DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

On August 29, 2003, Columbia closed the previously announced sale of its
exploration and production subsidiary, Columbia Energy Resources, Inc. (CER).
Under the CER sales agreement, Triana Energy Holdings (Triana), an exploration
and production company based in Charleston, W.V. and an affiliate of Morgan
Stanley Dean Witter Capital Partners IV, L.P. (MSCP), purchased all of the stock
of CER for $330.0 million, plus the assumption of obligations to deliver
approximately 94.0 billion cubic feet (Bcf) of natural gas pursuant to existing
forward sales contracts. The sale transferred 1.1 trillion cubic feet of natural
gas reserves. The $220.0 million after-tax cash proceeds from the sale were used
to reduce NiSource's debt. In addition, a $213.0 million liability related to
the forward sales contracts was removed from the balance sheet. On January 28,
2003, Columbia's former subsidiary Columbia Natural Resources, Inc. sold its
interest in certain natural gas exploration and production assets in New York
State representing 39.3 Bcf in reserves and approximately 6.0 Bcf of production
for approximately $95.0 million. Columbia recognized an after-tax gain of $44.4
million related to the sale in the first quarter of 2003. An after-tax gain of
$30.9 million was recorded in the third quarter of 2003 for the sale of CER.
Estimated taxes and adjustments related to the sale of $122.9 million were
recorded in the second quarter making the overall effect of the sales an
after-tax loss of $47.6 million. Columbia has accounted for CER as discontinued
operations and has adjusted all periods presented accordingly.

During 2002, Columbia decided to exit the telecommunications business. The
results of operations related to Columbia Transmission Communications
Corporation (Transcom) were displayed as discontinued operations on Columbia's
consolidated income statement and its assets and liabilities were separately
aggregated and reflected as assets and liabilities of discontinued operations on
the consolidated balance sheets for all periods presented. On July 3, 2003,
Columbia executed an agreement for the sale of 100% of its shares in Transcom.
The transaction was completed September 15, 2003. During 2003, Columbia
recognized an additional after-tax loss of $2.5 million loss related to the
sale.

                                        8
<PAGE>

ITEM 1. FINANCIAL STATEMENTS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (unaudited)

On September 30, 2003, Columbia sold Columbia Service Partners, Inc. (Columbia
Service Partners), a subsidiary of Columbia for approximately $22.5 million. In
the third quarter of 2003, Columbia recognized a pre-tax gain of $16.2 million
and an after-tax gain of $10.6 million related to the sale. Columbia Service
Partners was reported as assets held for sale.

Results from discontinued operations of CER (including the New York State
properties) and Transcom are provided in the following table:

<TABLE>
<CAPTION>
                                                            Three Months                 Nine Months
                                                        Ended September 30,          Ended September 30,
                                                       ---------------------        ---------------------
(in millions)                                           2003           2002          2003          2002
---------------------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>          <C>           <C>
REVENUES FROM DISCONTINUED OPERATIONS                  $ 26.1          $42.2        $ 104.1       $ 164.7
---------------------------------------------------------------------------------------------------------

Income (Loss) from discontinued operations             $ (3.4)         $ 4.5        $   1.8       $  50.1
Income taxes                                             (4.6)           1.8            2.0          19.7
---------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS         $  1.2          $ 2.7        $  (0.2)      $  30.4
---------------------------------------------------------------------------------------------------------
</TABLE>

The assets and liabilities of discontinued operations and assets and liabilities
held for sale were as follows:

<TABLE>
<CAPTION>
                                                                                 SEPTEMBER 30,    December 31,
(in millions)                                                                        2003            2002
-------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>              <C>
ASSETS HELD FOR SALE AND ASSETS OF DISCONTINUED OPERATIONS
   Accounts receivable, net                                                         $   -           $  44.9
   Property, plant and equipment, net                                                 6.5             682.2
   Other assets                                                                         -             109.2
-----------------------------------------------------------------------------------------------------------
Assets Held for Sale and Assets of Discontinued Operations                          $ 6.5           $ 836.3
-----------------------------------------------------------------------------------------------------------

LIABILITIES HELD FOR SALE AND LIABILITIES OF DISCONTINUED OPERATIONS
   Debt                                                                             $   -           $  (0.1)
   Current liabilities                                                                  -            (191.9)
   Other liabilities                                                                    -            (347.0)
-----------------------------------------------------------------------------------------------------------
Liabilities Held for Sale and Liabilities of Discontinued Operations                    -            (539.0)
-----------------------------------------------------------------------------------------------------------
NET ASSETS AND NET LIABILITIES HELD FOR SALE AND NET ASSETS
   AND NET LIABILITIES OF DISCONTINUED OPERATIONS                                   $ 6.5           $ 297.3
-----------------------------------------------------------------------------------------------------------
</TABLE>

4.       RISK MANAGEMENT ACTIVITIES

Columbia is exposed to market risk due to fluctuations in commodity prices.
Columbia uses commodity-based derivative financial instruments to manage certain
risks in its business and accounts for its derivatives under Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activity" as subsequently amended by SFAS No. 137, SFAS
No. 138 and SFAS No. 149. Financial instruments authorized for use by Columbia
for hedging include futures, swaps and options. Columbia is also exposed to
interest rate risk and has entered into interest rate swaps to hedge a portion
of the interest rate risk associated with its long-term debt.

                                       9
<PAGE>

ITEM 1. FINANCIAL STATEMENTS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (unaudited)

HEDGING ACTIVITIES. The activity for the quarter and nine months ended September
30, 2003 and September 30, 2002 affecting other comprehensive income, with
respect to cash flow hedges included the following:

<TABLE>
<CAPTION>
                                                                               Three Months                Nine Months
                                                                            Ended September 30,        Ended September 30,
                                                                            -------------------        -------------------
(in millions, net of tax)                                                    2003        2002            2003       2002
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>         <C>             <C>        <C>
Net unrealized gains on derivatives qualifying as cash flow
    hedges at the beginning of the period                                   $ 94.3      $ 63.6          $ 65.0     $ 52.4

Unrealized hedging gains (losses) arising during the period on
    derivatives qualifying as cash flow hedges                               (12.1)       (7.8)           22.6       26.0

Reclassification adjustment for net gain (loss) included
    in net income                                                              0.6         0.1            (4.8)     (22.5)
-------------------------------------------------------------------------------------------------------------------------
Net unrealized gains on derivatives qualifying as cash flow
   hedges at the end of the period                                          $ 82.8      $ 55.9          $ 82.8     $ 55.9
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

Unrealized gains and losses on Columbia's hedges were recorded as price risk
management assets and liabilities. The accompanying Consolidated Balance Sheets
reflected price risk management assets related to unrealized gains on hedges of
$152.7 million and $136.5 million at September 30, 2003 and December 31, 2002,
respectively, of which $28.4 million and $25.4 million were included in "Current
Assets" and $124.3 million and $111.1 million were included in "Other Assets."
Price risk management liabilities related to unrealized losses on hedges of $3.4
million and $3.3 million at September 30, 2003 and December 31, 2002,
respectively, were included in "Current Liabilities."

During the third quarter 2003, no amounts were recognized in earnings due to
ineffectiveness and there were no components of the derivatives' fair values
excluded in the assessment of hedge effectiveness. Also, during the third
quarter, Columbia reclassified no amounts from other comprehensive income to
earnings, due to the probability that certain originally forecasted transactions
would not occur. It is anticipated that during the next twelve months the
expiration and settlement of cash flow hedge contracts will result in income
recognition of amounts currently classified in other comprehensive income of
approximately $18.5 million, net of tax.

5.       RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

SFAS NO. 143 - ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS. In July 2001, the
Financial Accounting Standards Board (FASB) issued SFAS No. 143, "Accounting for
Asset Retirement Obligations" (SFAS No. 143). SFAS No. 143 requires entities to
record the fair value of a liability for an asset retirement obligation in the
period in which it is incurred. When the liability is initially recorded, the
entity capitalizes the cost, thereby increasing the carrying amount of the
related long-lived asset. Over time, the liability is accreted, and the
capitalized cost is depreciated over the useful life of the related asset. The
rate-regulated subsidiaries defer the difference between the amount recognized
for depreciation and accretion and the amount collected in rates as required
pursuant to SFAS No. 71, "Accounting for the Effects of Certain Types of
Regulation."

Significant liabilities were calculated for the pipeline operations related to
disposing of offshore platforms, cutting, capping and filling offshore pipelines
and certain storage facilities planned for abandonment. Asset retirement
obligations related to the gas distribution facilities and gas pipeline networks
were identified, however the associated liabilities were not quantifiable due to
the indeterminate lives of the associated assets.

Columbia adopted the provisions of SFAS No. 143 on January 1, 2003, and as a
result Columbia recognized an asset retirement obligations liability of $49.2
million. In addition, Columbia capitalized $19.3 million in additions to plant
assets, net of accumulated amortization. An expense of $1.7 million was
recognized immediately upon adoption related to discontinued operations. The
cumulative after-tax effect of adopting SFAS No. 143 amounted to $16.8 million.
Certain costs of removal, that have been and continue to be included in
depreciation rates and collected in the service rates of the rate-regulated
subsidiaries, did not meet the definition of an asset retirement

                                       10
<PAGE>

ITEM 1. FINANCIAL STATEMENTS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (unaudited)

obligation pursuant to SFAS No. 143. The amount of the other costs of removal
reflected as a component of Columbia's accumulated depreciation and amortization
was approximately $281.2 million at September 30, 2003.

For the quarter and nine months ended September 30, 2003, Columbia recognized
accretion expense of $0.1 million and $0.4 million, respectively. The asset
retirement obligations liability totaled $7.8 million at September 30, 2003. Had
Columbia adopted SFAS No. 143 at the dates the actual liabilities were incurred,
the asset retirement obligations liability would have been $44.7 million and
$40.8 million at December 31, 2001 and 2000, respectively, of which $35.3
million and $31.9 million would have been reported in discontinued operations.

FASB INTERPRETATION NO. 46 - CONSOLIDATION OF VARIABLE INTEREST ENTITIES. In
January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable
Interest Entities" (FIN 46). On October 8, 2003, the FASB deferred the
implementation of FIN 46 to the fourth quarter of 2003. Columbia is currently
evaluating FIN 46 in order to determine the impact.

SFAS NO. 149 - AMENDMENT OF STATEMENT 133 ON DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES. Effective July 1, 2003, Columbia adopted SFAS No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities" (SFAS No. 149).
SFAS No. 149 codifies and clarifies financial accounting and reporting for
derivative instruments and hedging activities under SFAS No. 133 primarily in
connection with decisions made by the Derivatives Implementation Group and for
implementation issues raised in the application of SFAS No. 133. SFAS No. 149 is
effective for contracts entered into or modified after June 30, 2003. SFAS No.
149 did not have a material impact on Columbia's results of operations during
the third quarter of 2003. However, the statement could have a significant
impact on the number of contracts that will be marked to market through
earnings.

EMERGING ISSUES TASK FORCE (EITF) ISSUE NO. 03-11 - REPORTING REALIZED GAINS AND
LOSSES ON DERIVATIVE INSTRUMENTS THAT ARE SUBJECT TO FASB STATEMENT NO. 133 AND
NOT "HELD FOR TRADING PURPOSES" AS DEFINED IN EITF ISSUE NO. 02-03. In August
2003, the EITF released Issue No. 03-11, which provides guidance on whether to
report realized gains or losses on derivative contracts that settle on a net
basis. Currently, Columbia generally reports contracts requiring physical
delivery of a commodity on a gross basis, even when the contract is ultimately
net settled. EITF No. 03-11 will be applied to financial statement periods after
September 30, 2003. Columbia is currently evaluating the effect that EITF 03-11
will have on the financial statements.

6.       STOCK OPTIONS AND AWARDS

NiSource currently issues long-term incentive grants to key management
employees, including the management of Columbia. SFAS No. 123, "Accounting for
Stock-Based Compensation" (SFAS No. 123), encourages, but does not require,
entities to adopt the fair value method of accounting for stock-based
compensation plans. The fair value method would require the amortization of the
fair value of stock-based compensation at the date of grant over the related
vesting period. Columbia continues to apply the intrinsic value method of
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," for awards granted under the stock-based compensation plans. The
following table illustrates the effect on net income as if Columbia had applied
the fair value recognition provisions of SFAS No. 123 to stock-based employee
compensation.

                                       11
<PAGE>

ITEM 1. FINANCIAL STATEMENTS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (unaudited)

<TABLE>
<CAPTION>
                                                                    Three Months                  Nine Months
                                                                 Ended September 30,          Ended September 30,
                                                                --------------------         ---------------------
(in millions, except per share data)                             2003          2002           2003          2002
------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>           <C>            <C>           <C>
NET INCOME

   As reported                                                  $ 94.6        $ 59.9         $ 258.8       $ 307.9

   Add:     Stock-based employee compensation expense
            included in reported net inco-e, net of
            related tax effects                                    0.2             -             0.4             -
   Less:    Total stock-based employee compensation
            expense determined under the fair
            value method for all awards, net of tax               (1.0)         (1.3)           (3.6)         (3.1)
------------------------------------------------------------------------------------------------------------------
   Pro forma                                                    $ 93.8        $ 58.6         $ 255.6       $ 304.8
------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       12
<PAGE>

ITEM 1. FINANCIAL STATEMENTS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (unaudited)

7.       LEGAL PROCEEDINGS

In the normal course of its business, Columbia and its subsidiaries have been
named as defendants in various legal proceedings. In the opinion of management,
the ultimate disposition of these currently asserted claims would not have a
material adverse impact on Columbia's consolidated financial position or results
of operations.

8.       ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table displays the components of Accumulated Other Comprehensive
Income, which is included in "Common Stock Equity," on the consolidated balance
sheets.

<TABLE>
<CAPTION>
                                                            SEPTEMBER 30,   December 31,
(in millions, net of tax)                                       2003            2002
---------------------------------------------------------------------------------------
<S>                                                         <C>             <C>
Foreign currency translation adjustment                       $    -           $ (0.9)
Gain on available for sale securities                            0.8              0.3
Net unrealized gains on cash flow hedges                        82.8             65.0
Minimum pension liability adjustment                            (0.3)           (20.1)
-------------------------------------------------------------------------------------
TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME                  $ 83.3           $ 44.3
-------------------------------------------------------------------------------------
</TABLE>

9.       GUARANTEES AND INDEMNITIES

As a part of normal business, Columbia and certain subsidiaries enter into
various agreements providing financial or performance assurance to third parties
on behalf of other subsidiaries. These agreements are entered into primarily to
support or enhance the creditworthiness otherwise attributed to a subsidiary on
a stand-alone basis, thereby facilitating the extension of sufficient credit to
accomplish the subsidiaries' intended commercial purposes. The total commercial
commitments in existence at September 30, 2003 and the years in which they
expire were:

<TABLE>
<CAPTION>
(in millions)                                 2003          2004      2005          2006        2007        After
------------------------------------------------------------------------------------------------------------------
<S>                                          <C>            <C>      <C>          <C>          <C>         <C>
Guarantees supporting commodity
   transactions of subsidiaries              $    -         $ -      $  50.0      $ 798.4      $ 41.7      $ 161.0
Other guarantees                               75.0           -         50.7            -           -        106.7
------------------------------------------------------------------------------------------------------------------
Total commercial commitments                 $ 75.0         $ -      $ 100.7      $ 798.4      $ 41.7      $ 267.7
------------------------------------------------------------------------------------------------------------------
</TABLE>

Columbia has issued guarantees, which support up to approximately $1.0 billion
of commodity-related payments for its subsidiaries involved in satisfying
requirements under forward gas sales agreements. These guarantees were provided
to counterparties in order to facilitate the transactions. To the extent
liabilities exist under the commodity-related contracts subject to these
guarantees, such liabilities are included in the consolidated balance sheets.

Columbia has purchase and sales agreement guarantees totaling $140.0 million,
which guarantee performance of the seller's covenants, obligations, liabilities,
representations and warranties under the agreements. No amounts related to the
purchase and sales agreement guarantees are reflected in the consolidated
balance sheets

Management believes that the likelihood Columbia would be required to perform or
otherwise incur any significant losses associated with any of the aforementioned
guarantees is remote.

Columbia has retained liabilities related to the CER forward gas sales
agreements with Mahonia II Limited (Mahonia) for guarantees of the forward sales
and for indemnity agreements with respect to surety bonds backing the forward
sales. The guarantees, surety bonds and associated indemnity agreements remain
in place subsequent to the closing of the CER sale and decline over time as
volumes (approximately 94.0 Bcf) are delivered in satisfaction of the
contractual obligations, ending in February 2006. Columbia will be indemnified
by Triana, and MSCP will fund up to a maximum of $213.0 million (as of August
31, 2003) of additional equity to Triana to support Triana's indemnity, for
Triana's gas delivery and related obligations to Mahonia. The MSCP commitment
declines over time in concert with the surety bonds and the guaranteed
obligation to deliver gas to Mahonia.

                                       13
<PAGE>

ITEM 1. FINANCIAL STATEMENTS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (unaudited)


Immediately after the close of the sale, Triana owned approximately 1.1 Tcf of
proved reserves, and was capitalized with $330.0 million, approximately $200.0
million of which was provided as initial equity by MSCP and the remainder of
which is provided as part of a $500.0 million revolving credit facility.
Columbia believes that the combination of Triana's proved reserves, sufficient
capitalization, and access to the credit facility, combined with the Triana
indemnity and the $213.0 million of further commitments to Triana from MSCP,
adequately offset any losses that may be incurred by Columbia due to Triana's
non-performance under the Mahonia agreements. Accordingly, Columbia has not
recognized a liability related to the retention of the Mahonia guarantees.

10.      MINIMUM PENSION LIABILITY

Columbia used a measurement date of September 30, 2003 for the calculation of
its obligations under the pension and other postretirement benefit plans. Due to
the upswing in the equity markets, the fair value of Columbia's pension fund
assets has increased since September 30, 2002. However, the discount rate used
to measure the accumulated benefit obligation has decreased, which slightly
offset the increase in the pension assets. In accordance with FASB Statement No.
87, "Employers' Accounting for Pensions," Columbia adjusted its minimum pension
liability adjustment at September 30, 2003. The adjustment resulted in a
decrease to the retirement benefit liabilities of $33.8 million, a decrease in
intangible assets of $2.1 million, a decrease to deferred income tax assets of
$12.0 million and an increase to other comprehensive income of $19.8 million
after-tax.

                                       14
<PAGE>

ITEM 1. FINANCIAL STATEMENTS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (unaudited)

11.      PRESENTATION OF SEGMENT INFORMATION

Columbia manages its operations in three primary segments: Gas Distribution,
Transmission and Storage, and Other. The following table provides information
concerning these major business segments. Revenues include intersegment sales to
affiliated subsidiaries, which are eliminated when consolidated. Affiliated
sales are recognized on the basis of prevailing market or regulated prices.
Operating income is derived from revenues and expenses directly associated with
each segment.

During the second quarter 2003, Columbia re-aligned its reportable segments to
reflect the announced sale of its exploration and production operations. As of
the second quarter 2003, Columbia no longer reported an Exploration and
Production segment. All periods have been adjusted to conform to the
realignment.

<TABLE>
<CAPTION>
                                               Three Months              Nine Months
                                           Ended September 30,       Ended September 30,
                                         -----------------------   -----------------------
(in millions)                               2003         2002         2003         2002
------------------------------------------------------------------------------------------
<S>                                      <C>          <C>          <C>          <C>
REVENUES
DISTRIBUTION
  Unaffiliated                           $    197.5   $    232.0   $  1,746.0   $  1,253.7
  Intersegment and affiliates                     -            -            -          8.4
------------------------------------------------------------------------------------------
Total                                         197.5        232.0      1,746.0      1,262.1
------------------------------------------------------------------------------------------
TRANSMISSION AND STORAGE
  Unaffiliated                                135.8        135.5        438.6        449.6
  Intersegment and affiliates                  48.8         54.1        166.4        180.2
------------------------------------------------------------------------------------------
Total                                         184.6        189.6        605.0        629.8
------------------------------------------------------------------------------------------
OTHER
  Unaffiliated                                  9.8          6.3         23.9         18.5
  Intersegment and affiliates                   0.1          0.1          0.2          0.2
------------------------------------------------------------------------------------------
Total                                           9.9          6.4         24.1         18.7
------------------------------------------------------------------------------------------
Adjustments and eliminations                  (46.3)       (49.7)      (159.2)      (169.5)
------------------------------------------------------------------------------------------
CONSOLIDATED REVENUES                    $    345.7   $    378.3   $  2,215.9   $  1,741.1
------------------------------------------------------------------------------------------

OPERATING INCOME
  Distribution                           $      8.9   $     17.9   $    262.8   $    208.0
  Transmission and Storage                     91.1         85.2        289.4        286.6
  Other                                         0.7          8.5            -         19.4
  Corporate                                    12.0          0.9         20.1         (1.2)
------------------------------------------------------------------------------------------
CONSOLIDATED                             $    112.7   $    112.5   $    572.3   $    512.8
------------------------------------------------------------------------------------------
</TABLE>

                                       15

<PAGE>

ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

COLUMBIA ENERGY GROUP AND SUBSIDIARIES

Columbia Energy Group (Columbia) meets the conditions specified in General
Instruction H(1)(a) and (b) to Form 10-Q and is permitted to use the reduced
disclosure format for wholly-owned subsidiaries of companies, such as NiSource
Inc. (NiSource), that are reporting companies under the Securities Exchange Act
of 1934. Accordingly, this Columbia Management's Narrative Analysis of Results
of Operations is included in this report, and Columbia has omitted from this
report the information called for by Part I. Item 2 (Management's Discussion and
Analysis of Financial Condition and Results of Operations).

Forward Looking Statements

The Management's Narrative Analysis of Results of Operations, including
statements regarding market risk sensitive instruments, contains
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Investors and prospective investors should understand that many
factors govern whether any forward-looking statement contained herein will be or
can be realized. Any one of those factors could cause actual results to differ
materially from those projected. These forward-looking statements include, but
are not limited to, statements concerning Columbia's plans, proposed
dispositions, objectives, expected performance, expenditures and recovery of
expenditures through rates, stated on either a consolidated or segment basis,
and any and all underlying assumptions and other statements that are other than
statements of historical fact. From time to time, Columbia may publish or
otherwise make available forward-looking statements of this nature. All such
subsequent forward-looking statements, whether written or oral and whether made
by or on behalf of Columbia, are also expressly qualified by these cautionary
statements. All forward-looking statements are based on assumptions that
management believes to be reasonable; however, there can be no assurance that
actual results will not differ materially. Realization of Columbia's objectives
and expected performance is subject to a wide range of risks and can be
adversely affected by, among other things, increased competition in deregulated
energy markets, weather, fluctuations in supply and demand for energy
commodities, growth opportunities for Columbia's businesses, dealings with third
parties over whom Columbia has no control, actual operating experience of
acquired assets, Columbia's ability to integrate acquired operations into its
operations, the regulatory process, regulatory and legislative changes, changes
in general economic, capital and commodity market conditions and counter-party
credit risk, many of which are beyond the control of Columbia.

The following Management's Narrative Analysis should be read in conjunction with
the Columbia Annual Report on Form 10-K for the fiscal year ended December 31,
2002.

                     THIRD QUARTER 2003 CONSOLIDATED RESULTS

Net Income

Columbia reported net income of $94.6 million for the three months ended
September 30, 2003, compared to net income of $59.9 million for the third
quarter in 2002. Operating income was $112.7 million, an increase of $0.2
million over the same period in 2002.

Net Revenues

Total consolidated net revenues (gross revenues less cost of sales) for the
three months ended September 30, 2003, were $304.8 million, a $9.4 million
decrease from the same period last year. The decrease in net revenues was due to
lower non-weather related gas sales of $5.0 million and lower interruptible
service revenues resulting from high gas commodity costs and early storage
refills by firm customers, which reduce available capacity for interruptible
customers.

Expenses

Operating expenses for the third quarter 2003 were $192.1 million, a decrease of
$9.6 million from the 2002 period. The decrease was primarily due a gain of
$16.2 million from the sale of Columbia Service Partners Inc. (Columbia Service
Partners), a reduction in employee-related and administrative expenses of $14.0
million, an improvement to income based on a decrease in estimated environmental
expenditures of $8.4 million and $2.7 million in environmental insurance
recoveries. The 2002 period was favorably impacted by a reduction in estimated
sales taxes related to sales of natural gas customers of a subsidiary previously
engaged in the retail and wholesale gas marketing business of $12.5 million,
environmental insurance recoveries of $12.0 million and $10.0 million based on a
reduction in estimated environmental expenditures

                                       16

<PAGE>

ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES

Other Income (Deductions)

Interest expense was $18.5 million for the quarter, a decrease of $9.1 million
compared to the third quarter of 2002. The decrease was primarily due to a
reduction of long-term debt and lower interest rates on long-term debt.

Income Taxes

Income tax expense for the third quarter 2003 was $37.5 million, an increase of
$4.7 million compared to the 2002 period, due to higher pre-tax income.

Discontinued Operations

Income from discontinued operations was $32.1 million for the third quarter of
2003 versus income form discontinued operations of $2.7 million in the third
quarter of 2002. On August 29, 2003, Columbia completed the sale of Columbia
Energy Resources, Inc. (CER). During the third quarter of 2003, Columbia record
a $30.9 million gain on the sale. The sale of CER's interest in natural gas
production properties in New York State was recorded in the first quarter and
estimated taxes and adjustments related to the sale were recorded in the second
quarter making the overall effect of the sales of CER an after-tax loss of $47.6
million.

                        NINE MONTHS CONSOLIDATED RESULTS

Net Income

Columbia reported net income of $258.8 million for the nine months ended
September 30, 2003, compared to net income of $307.9 million for the same period
in 2002, a decrease of $49.1 million. Operating income was $572.3 million, an
increase of $59.5 million from the same period in 2002.

Net Revenues

Total consolidated net revenues (gross revenues less cost of sales) for the nine
months ended September 30, 2003, were $1,288.1 million, a $62.7 million increase
over the same period last year. The increase in net revenues was a result of
increased natural gas sales and deliveries due to colder weather primarily
during the first quarter amounting to $51.5 million, increased non-weather
related gas sales of $10.6 million, an adjustment for gas costs associated with
certain customers and higher gross receipt taxes which were offset in operating
expenses, partly offset by $9.3 million of lower interruptible service revenues
and $10.4 million of lower firm service revenues due to measures undertaken
during a first quarter period of sustained, colder-than-normal weather.

Expenses

Operating expenses for the first nine months of 2003 were $715.8 million, an
increase of $3.2 million over the 2002 period. The increase was primarily due to
increased uncollectible receivables of $15.3 million from a modification in the
method of calculation and the effects of weather-driven higher gas costs on the
residential customer base and increased other taxes primarily due to the effects
of higher commodity prices on gross receipts taxes that are generally offset in
revenues. The increase was mostly offset by a reduction in employee-related and
administrative expenses of $31.0 million, a gain of $16.2 million from the sale
of Columbia Service Partners, an improvement to income based on a decrease in
estimated environmental expenditures of $8.4 million, a reversal of a litigation
reserve of $6.6 million relating to a lawsuit that was settled in the second
quarter of 2003 and $2.7 million in environmental insurance recoveries. The 2002
period was favorably impacted by $24.5 million in environmental insurance
recoveries, $10.0 million based on a reduction in estimated environmental
expenditures and unfavorably impacted by $6.5 million from the recognition of a
reserve related to a long-term note receivable.

Other Income (Deductions)

Interest expense was $63.6 million for the first nine months 2003, a decrease of
$22.3 million compared to the same period in 2002. The decrease was primarily
due to a reduction of long-term debt and lower interest rates.

Income Taxes

Income tax expense for the first nine months of 2003 was $199.2 million, an
increase of $33.8 million compared to the 2002 period, due to higher pre-tax
income.

                                       17

<PAGE>

ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES

Discontinued Operations

Loss from discontinued operations was $50.3 million for the first nine months of
2003 versus income from discontinued operations of $30.4 in the prior-year
period. Columbia recorded an after-tax loss of $50.1 million, related to the
sales of CER and Columbia Transmission Communications Corporation (Transcom)
which were completed in the third quarter 2003, slightly offset by a first
quarter 2003 gain on the sale of CER's interest in natural gas production
properties in New York State. An after-tax gain of $30.9 million was recorded in
the third quarter of 2003 for the sale of CER. Estimated taxes and adjustments
related to the sale of $122.9 million were recorded in the second quarter making
the overall effect of the sales of CER an after-tax loss of $47.6 million.

Change in Accounting

The change in accounting of $16.8 million, net-of-tax, resulted from the
cumulative effect of adopting the Financial Accounting Standards Board statement
on asset retirement obligations.

                         LIQUIDITY AND CAPITAL RESOURCES

A significant portion of Columbia's operations is subject to seasonal
fluctuations in cash flows. During the heating season, which is primarily from
November through March, cash receipts from natural gas sales and transportation
services typically exceed cash requirements. Conversely, during the remainder of
the year, cash on hand together with external short-term financing, as needed,
is used to purchase gas to place in storage for heating season deliveries,
perform necessary maintenance of facilities, make capital improvements in plant
and expand service.

Net cash from continuing operations for the quarter ended September 30, 2003 was
$201.9 million. Cash used for working capital was $289.5 million, principally
driven by a decrease in exchange gas payables, accounts payable other accruals
and increased inventories, partly offset by decreased accounts receivable and
underrecovered gas and fuel costs.

Columbia subsidiaries satisfy their liquidity requirements primarily through
internally generated funds and through intercompany borrowings from the NiSource
Money Pool. These subsidiaries may borrow, on an intercompany basis, a
cumulative maximum of $1.13 billion through the NiSource Money Pool as approved
by the Securities and Exchange Commission under the Public Utility Holding
Company Act of 1935. NiSource Finance Corp. provides funding to the NiSource
Money Pool from external borrowing sources and maintains an aggregate $1.25
billion revolving credit facility with a syndicate of banks. The credit facility
is guaranteed by NiSource. As of September 30, 2003, Columbia was a net investor
in the NiSource Money Pool.

On August 29, 2003, Columbia closed the previously announced sale of its
exploration and production subsidiary, CER. Under the CER sales agreement,
Triana Energy Holdings, an exploration and production company based in
Charleston, W.V. and an affiliate of Morgan Stanley Dean Witter Capital Partners
IV, L.P., purchased all of the stock of CER for $330.0 million, plus the
assumption of obligations to deliver approximately 94.0 billion cubic feet (Bcf)
of natural gas pursuant to existing forward sales contracts. The sale
transferred 1.1 trillion cubic feet of natural gas reserves. The $220.0 million
after-tax cash proceeds from the sale were used to reduce NiSource's debt. In
addition, a $213.0 million liability related to the forward sales contracts was
removed from the balance sheet. On January 28, 2003, Columbia's former
subsidiary Columbia Natural Resources, Inc. sold its interest in certain natural
gas exploration and production assets in New York State representing 39.3 Bcf in
reserves and approximately 6.0 Bcf of production for approximately $95.0
million. Columbia recognized an after-tax gain of $44.4 million related to the
sale in the first quarter of 2003. An after-tax gain of $30.9 million was
recorded in the third quarter of 2003 for the sale of CER. Estimated taxes and
adjustments related to the sale of $122.9 million were recorded in the second
quarter making the overall effect of the sales an after-tax loss of $47.6
million. Columbia has accounted for CER as discontinued operations and has
adjusted all periods presented accordingly.

Columbia has entered into interest rate swap agreements to modify the interest
characteristics of its outstanding long-term debt. Under the terms of the swap
agreements, Columbia pays interest based on a floating rate index and receives
interest based on a fixed rate. The effect of these agreements is to modify the
interest rate characteristics of a portion of Columbia's long-term debt from
fixed to variable and hedge the fair value of the underlying debt.

                                       18

<PAGE>

ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES

On April 11, 2003, Columbia entered into fixed-to-variable interest rate swap
agreements in a notional amount of $100.0 million with two counterparties.
Columbia will receive payments based upon a fixed 7.42% interest rate and pay a
floating interest amount based on U.S. 6-month LIBOR-BBA plus an average of 2.39
% per annum. There was no exchange of premium at the initial date of the swaps.
The swaps contain mirror-image call provisions that allow the counterparties to
cancel the agreements beginning November 28, 2005 through the stated maturity
date. In addition, each party has the right to cancel the swaps on either April
15, 2008 or April 15, 2013 at mid-market. Effectiveness of the swaps was
determined using the short-cut method pursuant to Statement of Financial
Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and
Hedging Activity" as subsequently amended by SFAS No. 137, SFAS No. 138 and SFAS
No. 149 (collectively referred to as SFAS No. 133).

On April 4, 2003, Columbia terminated a fixed-to-variable interest rate swap
agreement containing a notional amount of $100.0 million. Columbia received a
settlement payment from the counterparty amounting to $8.2 million, which will
be amortized as a reduction to interest expense over the remaining term of the
underlying debt.

Columbia Gas of Ohio, Inc. (Columbia Gas of Ohio) is a party to an agreement to
sell, without recourse, all of its trade receivables to Columbia Accounts
Receivable Corporation (CARC), a wholly-owned subsidiary of Columbia. CARC, in
turn, is party to an agreement in which it sells a percentage ownership interest
in a defined pool of the accounts receivable to a commercial paper conduit. As
of September 30, 2003, CARC had $31.5 million outstanding accounts receivable
under the conduit.

Management believes that its sources of funding are sufficient to meet the
short- and long-term liquidity needs of Columbia.

Credit Ratings

On July 8, 2003, Moody's Investors Service affirmed the senior unsecured ratings
of NiSource at Baa3, and the existing ratings of all other subsidiaries
including Columbia, concluding a review for possible downgrade that began on May
13, 2003. Moody's ratings outlook for NiSource and all of its subsidiaries is
now "stable". On June 30, 2003, Fitch Ratings affirmed their BBB senior
unsecured rating for NiSource and the BBB+ rating for the Columbia subsidiary.
Fitch's rating outlook for all entities is stable. On June 16, 2003, Standard
and Poor's affirmed its senior unsecured ratings of NiSource at BBB, and the
existing ratings of all other subsidiaries including Columbia. Standard and
Poor's outlook for NiSource and all of its subsidiaries were revised from
negative to stable.

                                OTHER INFORMATION

Critical Accounting Policies

Columbia applies certain accounting policies based on the accounting
requirements discussed below that have had, and may continue to have,
significant impacts on Columbia's results of operations and consolidated balance
sheets.

FINANCIAL ACCOUNTING STANDARDS BOARD'S (FASB)- ACCOUNTING FOR THE EFFECTS OF
CERTAIN TYPES OF REGULATION. SFAS No. 71, "Accounting for the Effects of Certain
Types of Regulation" (SFAS No. 71), provides that rate-regulated subsidiaries
account for and report assets and liabilities consistent with the economic
effect of the way in which regulators establish rates, if the rates established
are designed to recover the costs of providing the regulated service and if the
competitive environment makes it probable that such rates can be charged and
collected. Columbia's rate-regulated subsidiaries follow the accounting and
reporting requirements of SFAS No. 71. Certain expenses and credits subject to
utility regulation or rate determination normally reflected in income are
deferred on the balance sheet and are recognized in income as the related
amounts are included in service rates and recovered from or refunded to
customers.

In the event that regulation significantly changes the opportunity for Columbia
to recover its costs in the future, all or a portion of Columbia's regulated
operations may no longer meet the criteria for the application of SFAS No. 71.
In such event, a write-down of all or a portion of Columbia's existing
regulatory assets and liabilities could result. If transition cost recovery is
approved by the appropriate regulatory bodies that would meet the requirements
under generally accepted accounting principles for continued accounting as
regulatory assets and liabilities during such recovery period, the regulatory
assets and liabilities would be reported at the recoverable amounts. If unable
to continue to apply the provisions of SFAS No. 71, Columbia would be required
to apply the provisions of SFAS No.

                                       19

<PAGE>

ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES

101, "Regulated Enterprises - Accounting for the Discontinuation of Application
of SFAS No. 71." In management's opinion, Columbia's regulated subsidiaries will
be subject to SFAS No. 71 for the foreseeable future.

Certain of the regulatory assets reflected on Columbia's Consolidated Balance
Sheets require specific regulatory action in order to be included in future
service rates. Although recovery of these amounts is not guaranteed, Columbia
believes that these costs meet the requirements for deferral as regulatory
assets under SFAS No. 71.

HEDGING ACTIVITIES. Under SFAS No. 133, as amended, the accounting for changes
in the fair value of a derivative depends on the intended use of the derivative
and resulting designation. Unrealized and realized gains and losses are
recognized each period as components of other comprehensive income, earnings, or
regulatory assets and liabilities depending on the nature of such derivatives.
For subsidiaries that utilize derivatives for cash flow hedges, the effective
portions of the gains and losses are recorded to other comprehensive income and
are recognized in earnings concurrent with the disposition of the hedged risks.
For fair value hedges, the gains and losses are recorded in earnings each period
along with the change in the fair value of the hedged item. As a result of the
rate-making process, the rate-regulated subsidiaries generally record gains and
losses as regulatory liabilities or assets and recognize such gains or losses in
earnings when recovered in revenues.

In order for a derivative contract to be designated as a hedge, the relationship
between the hedging instrument and the hedged item or transaction must be highly
effective. The effectiveness test is performed at the inception of the hedge and
each reporting period thereafter, throughout the period that the hedge is
designated. Any amounts determined to be ineffective are recorded currently in
earnings.

Although Columbia applies some judgment in the assessment of hedge effectiveness
to designate certain derivatives as hedges, the nature of the contracts used to
hedge the underlying risks is such that the correlation of the changes in fair
values of the derivatives and underlying risks is high. Columbia generally uses
NYMEX exchange-traded natural gas futures and options contracts and
over-the-counter swaps based on published indices to hedge the risks underlying
its natural-gas-related businesses.

PENSIONS AND POSTRETIREMENT BENEFITS. Columbia has defined benefit plans for
both pensions and other postretirement benefits. The plans are accounted for
under SFAS No. 87, "Employers' Accounting for Pensions," and SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other than Pensions." The
calculation of the net obligations and annual expense related to the plans
requires a significant degree of judgment regarding the discount rates to be
used in bringing the liabilities to present value, long-term returns on plan
assets and employee longevity, amongst other assumptions. Due to the size of the
plans and the long-term nature of the associated liabilities, changes in the
assumptions used in the actuarial estimates could have material impacts on the
measurement of the net obligations and annual expense recognition.

Refer to "Recently Issued Accounting Pronouncements" in Note 5 of the Notes to
Consolidated Financial Statements for information regarding recently issued
accounting standards.

Regulatory Matters

Changes in gas industry regulation, which began in the mid-1980s at the federal
level, have broadened to retail customers at the state level. For many years,
large industrial and commercial customers have had the ability to purchase
natural gas directly from marketers and to use Gas Distribution's facilities for
transportation services. Additionally, as of September 30, 2003, approximately
0.8 million of Gas Distribution's residential and small commercial customers had
selected an alternate supplier.

Gas Distribution continues to offer customer choice opportunities through
regulatory initiatives in all of its jurisdictions. Columbia Gas of Kentucky,
Inc. has received approval to continue its choice program for residential and
commercial customers through May 31, 2005. While customer choice programs are
intended to provide all customer classes with the opportunity to obtain gas
supplies from alternative merchants, Gas Distribution expects to play a
substantial role in supplying gas commodity services to its customers in the
foreseeable future. As customers enroll in these programs and purchase their gas
from other suppliers, the Gas Distribution subsidiaries are sometimes

                                       20

<PAGE>

ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES

left with pipeline capacity they have contracted for, but no longer need. The
state commissions in jurisdictions served by Gas Distribution are at various
stages in addressing these issues and other transition considerations. Gas
Distribution is currently recovering, or has the opportunity to recover, the
costs resulting from the unbundling of its services and believes that most of
such future costs will be mitigated or recovered. Methodologies for mitigating
or recovering transition costs include incentive sharing mechanisms, reducing
levels of reserved pipeline capacity and mandatory assignment of pipeline
capacity to alternative suppliers.

Through October 2004, Columbia Gas of Ohio is operating under a regulatory
stipulation approved by the Public Utilities Commission of Ohio (PUCO). On
October 9, 2003, Columbia Gas of Ohio and other parties filed with the PUCO an
amended stipulation that would govern Columbia Gas of Ohio's regulatory
framework from October 2004 through October 2010. The majority of Columbia Gas
of Ohio's contracts with interstate pipelines expire in October 2004, and the
amended stipulation would permit Columbia to renew those contracts for firm
capacity sufficient to meet up to 100% of the design peak day requirements
through October 31, 2005 and up to 95% of the design peak day requirements
through October 31, 2010. Among other things, the amended stipulation would
also: (1) extend Columbia Gas of Ohio's Choice program through October 2010; (2)
provide Columbia Gas of Ohio with an opportunity to generate revenues sufficient
to cover the stranded costs associated with the Choice program; and, (3) allow
Columbia Gas of Ohio to record post-in-service-carrying charges on plant placed
into service after October 2004, and to defer the property taxes and
depreciation associated with such plant. The PUCO is currently reviewing the
amended stipulation. Management cannot predict what action the PUCO will take on
the amended stipulation.

On February 28, 2003, Columbia Transmission Corporation (Columbia Transmission)
filed with the Federal Energy Regulatory Commission (FERC) its annual
Transportation Costs Rate Adjustment (TCRA), Retainage Adjustment Mechanism, and
Electric Power Cost Adjustment. On March 31, 2003, the FERC requested that
Columbia Transmission provide further documentation for the rate adjustments
included in the filings. Responses were filed with the FERC on April 21, 2003.
On October 7, 2003, FERC issued a Letter Order accepting Columbia Transmission's
supplemental informational compliance filing to support its annual TCRA filing.
The Order finds that the April 21st filing complies with the March 31, 2003
order and supports Columbia Transmission's proposed TCRA rates.

Environmental Matters

Proposals for voluntary initiatives and mandatory controls are being discussed
both in the United States and worldwide to reduce so-called "greenhouse gases"
such as carbon dioxide, a by-product of burning fossil fuels. Certain Columbia
affiliates engage in efforts to voluntarily report and reduce their greenhouse
gas emissions. Columbia will monitor and participate in developments related to
efforts to register and potentially regulate greenhouse gas emissions.

Certain Columbia affiliates use various combustion equipment in the generation,
distribution and transmission of energy, including turbines, boilers and various
reciprocating engines. Within the period December 2002 to January 2003, the U.S.
Environmental Protection Agency (EPA) proposed maximum achievable control
technology (MACT) standards to meet national emission standards for hazardous
air pollutants for stationary combustion turbines, industrial boilers and
reciprocating internal combustion engines. Columbia will continue to monitor the
proposed MACT standards for potential applicability and cost impact to its
operations. Pending finalization of the proposed standards, Columbia is unable
to predict what, if any, additional compliance costs may result.

In connection with the sale of CER, Columbia has agreed to retain responsibility
for remediation of approximately 140 metering stations where mercury was
utilized, and certain other environmental issues. An estimated liability has
been recorded for the remediation.

The EPA issued final rules revising the National Ambient Air Quality Standards
for ozone and particulate matter in July 1997. These rules were widely
challenged. On March 26, 2002, the United States Court of Appeals for the D.C.
Circuit largely upheld the ambient air standards as challenged. Consequently,
designation of areas not attaining the standards, promulgation of rules
specifying a compliance level, compliance deadline, and controls necessary for
compliance will be completed over the next few years, which will likely change
air emissions compliance requirements. In the interim, existing ozone ambient
air quality standards will remain in place and may

                                       21

<PAGE>

ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES

require imposition of additional controls in areas of non-attainment. Resulting
rules could require additional reductions in NOx emissions from reciprocating
engines and turbines at pipeline compressor stations (including compressor
stations owned by Columbia Transmission and Columbia Gulf Transmission Company).
The EPA and state regulatory authorities will set final implementation
requirements. Certain states have already begun to propose new NOx emission
requirements that may be applicable to pipeline engines and turbines. Columbia
believes that the costs relating to compliance with any new limits may be
significant but are dependent upon the ultimate control program agreed to by the
targeted states and the EPA, and are currently not reasonably estimable.
Columbia will continue to closely monitor developments in this area.

Columbia Transmission continues to conduct characterization and remediation
activities at specific sites under a 1995 EPA Administrative Order by Consent
(AOC). The program pursuant to the AOC covers approximately 240 facilities,
approximately 13,000 liquid removal points, approximately 2,200 mercury
measurement stations and about 3,700 storage well locations. Field
characterization has been performed at all sites. Site characterization reports
and remediation plans, which must be submitted to the EPA for approval, are in
various stages of development and completion. Remediation has been completed at
the mercury measurement stations, liquid removal point sites and storage well
locations and at a number of the 240 facilities.

Only those site investigation, characterization and remediation costs currently
known and determinable can be considered "probable and reasonably estimable"
under SFAS No. 5. As costs become probable and reasonably estimable, the
associated reserves will be adjusted as appropriate. During the nine months
ended September 30, 2003, Columbia Transmission completed a sufficient number of
the characterization reports and remediation plans to adjust its estimate for
the entire program. As a result, the liability was reduced by $44.2 million, the
related regulatory asset was decreased by $33.2 million, and there was an
improvement to income of $11.0 million. The estimate may be adjusted as
additional work is completed consistent with the Securities and Exchange
Commission's Staff Accounting Bulletin No. 92, FASB's SFAS No. 5, and American
Institute of Certified Public Accountants Statement of Position No. 96-1.

At September 30, 2003, the remaining environmental liability recorded on the
balance sheet of Columbia Transmission was $7.6 million. Future expenditures
will be charged against the previously recorded liability. Management does not
believe that Columbia Transmission's environmental expenditures will have a
material adverse effect on Columbia's operations, liquidity or financial
position, based on known facts, existing laws, regulations, Columbia
Transmission's cost recovery settlement with customers and the time period over
which expenditures will be made.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Omitted pursuant to General Instruction H(2)(c).


ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Columbia's president and chief executive officer and its principal financial
officer, after evaluating the effectiveness of Columbia's disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), have
concluded based on the evaluation required by paragraph (b) of Exchange Act
Rules 13a-15 and 15d-15 that, as of the end of the period covered by this
report, Columbia's disclosure controls and procedures were adequate and
effective to ensure that material information relating to Columbia and its
consolidated subsidiaries would be made known to them by others within those
entities.

Changes in Internal Controls

There was no change in Columbia's internal control over financial reporting
during the fiscal quarter covered by this report that has materially affected,
or is reasonably likely to materially affect, Columbia's internal control over
financial reporting.

                                       22

<PAGE>

                                     PART II

ITEM 1. LEGAL PROCEEDINGS

COLUMBIA ENERGY GROUP AND SUBSIDIARIES

1.       CANADA SOUTHERN PETROLEUM LTD. V. COLUMBIA GAS DEVELOPMENT OF CANADA
         LTD.

         This action was originally filed March 7, 1990. The plaintiffs
         asserted, among other things, that the defendant working interest
         owners, including Columbia Gas Development of Canada Ltd. (Columbia
         Canada) and various Amoco affiliates, breached an alleged fiduciary
         duty to ensure the earliest feasible marketing of gas from the
         Kotaneelee field (Yukon Territory, Canada). The plaintiffs sought,
         among other remedies, the return of the defendants' interests in the
         Kotaneelee field to the plaintiffs, a declaration that such interests
         are held in trust for the plaintiffs and an order requiring the
         defendants to promptly market Kotaneelee gas or assessing damages.

         In November 1993, the plaintiffs amended their Amended Statement of
         Claim to include allegations that the balance in the Carried Interest
         Account (an account for operating costs, which are recoverable, by
         working interest owners), which is in excess of the balance as of
         November 1988, should be reduced to zero. Columbia Canada consented to
         the amendment in consideration of the plaintiffs' acknowledgment that
         approximately $63 million was properly charged to the account.

         Pursuant to an Indemnification Agreement regarding the Kotaneelee
         Litigation entered into when Columbia Canada was sold to Anderson
         Exploration Ltd. (Anderson), Columbia agreed to indemnify and hold
         Anderson harmless for losses due to this litigation arising out of
         actions occurring prior to December 31, 1991. An escrow account
         provides security for the indemnification obligation and is funded by a
         letter of credit with a face amount of approximately $35,835,000 (Cdn).

         A trial commenced in the third quarter of 1996 in the Court of Queen's
         Bench for the Province of Alberta and judgment was issued in September
         2001. The court dismissed most of the plaintiffs' claims, including the
         fiduciary duty claim, but did order a reduction of the Carried Interest
         Account in the amount of $5.3 million (Cdn.) and ordered that the
         defendants were not entitled to charge the plaintiffs processing fees.
         On October 3, 2003, this matter was settled and the case was dismissed.
         The Company also believes that it will shortly be able to negotiate an
         early release of the escrow account that secures its indemnification
         obligation to Anderson.

2.       UNITED STATES OF AMERICA EX REL. JACK J. GRYNBERG V. COLUMBIA GAS
         TRANSMISSION CORP., ET AL.

         Plaintiff originally filed a complaint under the False Claims Act, on
         behalf of the United States of America, against approximately seventy
         pipelines. Plaintiff claimed that the defendants had submitted false
         royalty reports to the government (or caused others to do so) by
         mismeasuring the volume and heating content of natural gas produced on
         Federal land and Indian lands. Plaintiff's original complaint was
         dismissed without prejudice for misjoinder of parties and for failing
         to plead fraud with specificity. In 1997, plaintiff then filed over
         sixty-five new False Claims Act complaints against over 330 defendants
         in numerous Federal courts. One of those complaints was filed in the
         Federal District Court for the Eastern District of Louisiana against
         Columbia and thirteen affiliated entities. Plaintiff's second complaint
         repeats the mismeasurement claims previously made and adds valuation
         claims alleging that the defendants have undervalued natural gas for
         royalty purposes in various ways, including by making sales to
         affiliated entities at artificially low prices. Most of the Grynberg
         cases were transferred to Federal court in Wyoming in 1999. In December
         1999, the Columbia defendants filed a motion to dismiss plaintiff's
         second complaint primarily based on a failure to plead fraud with
         specificity. In May 2001, the Court denied the Columbia defendants'
         motion to dismiss. The Columbia defendants joined together with
         numerous other defendants and filed a motion requesting the district
         court to amend its order to include a certification so that the
         defendants could request permission from the United States Court of
         Appeals for the Tenth Circuit to appeal a controlling question of law.
         That motion was denied on July 2, 2001. Pretrial proceedings continue.

                                       23

<PAGE>

ITEM 1. LEGAL PROCEEDINGS (continued)

COLUMBIA ENERGY GROUP AND SUBSIDIARIES

3.       PRICE ET AL V. GAS PIPELINES, ET AL.

         Plaintiff filed an amended complaint in Stevens County, Kansas state
         court on September 23, 1999, against over 200 natural gas measurers,
         mostly natural gas pipelines, including Columbia and thirteen
         affiliated entities. The allegations in Price (formerly known as
         Quinque) are similar to those made in Grynberg; however, Price broadens
         the claims to cover all oil and gas leases (other than the Federal and
         Indian leases that are the subject of Grynberg). Price asserts a breach
         of contract claim, negligent or intentional misrepresentation, civil
         conspiracy, common carrier liability, conversion, violation of a
         variety of Kansas statutes and other common law causes of action. Price
         sought certification as a nationwide class action on behalf of all
         similarly situated gas producers, royalty owners, overriding royalty
         owners, working interest owners and certain state taxing authorities.
         However, on April 10, 2003, the judge denied Plaintiffs motion for
         class certification of the nationwide class. On July 28, 2003, the
         court granted Plaintiffs' Motion for Leave to File a Fourth Amended
         Complaint, which narrows the number of defendants and scope of the
         allegations to volume mismeasurement in Kansas, Wyoming, and Colorado.
         This complaint only names one Columbia entity, Columbia Energy Services
         Corporation ("CES"), as a defendant. On October 9, 2003, the court also
         allowed the Plaintiffs to file a related case alleging BTU
         mis-measurement, in which CES again is the only Columbia entity named
         as a defendant.

4.       VIVIAN K. KERSHAW ET AL. V. COLUMBIA NATURAL RESOURCES, INC., ET AL.

         In February 2000, plaintiff filed a complaint in New York state court
         against Columbia, Columbia Natural Resources, Inc. (CNR) and Columbia
         Gas Transmission Corporation (Columbia Transmission). The complaint
         alleges that Kershaw owns an interest in an oil and gas lease in New
         York and that the defendants have underpaid royalties on the lease by,
         among other things, failing to base royalties on the price at which
         natural gas is sold to the end user and by improperly deducting
         post-production costs. The complaint also seeks class action status on
         behalf of all royalty owners in oil and gas leases operated by CNR.
         Plaintiff seeks the alleged royalty underpayments and punitive damages.
         CNR and Columbia Transmission removed the case to Federal court in
         March 2000. The Federal court has remanded Kershaw back to New York
         state court. The Columbia defendants' motion to dismiss was partially
         granted and partially denied by the New York state court judge on
         September 24, 2001. On December 3, 2001, the defendants filed an answer
         to the plaintiffs' complaint. Discovery regarding class certification
         is ongoing.

5.       ATLANTIGAS CORPORATION V. NISOURCE, INC., ET AL, U.S. DISTRICT COURT,
         DISTRICT OF COLUMBIA AND TRIAD ENERGY RESOURCES, ET AL. V. NISOURCE
         INC., ET AL. U.S. DISTRICT COURT, DISTRICT OF COLUMBIA

         In June 2002, Atlantigas Corporation filed a complaint alleging that
         NiSource, certain of its subsidiaries and other defendants illegally
         discounted services to select shippers and sought damages under
         anti-trust, RICO, and state law totaling $18 million ($54 million if
         trebled). The activities about which the plaintiff is complaining were
         the subject of a FERC enforcement staff investigation and subsequent
         settlement approved in October 2000. On September 29, 2003, the court
         granted the NiSource defendants' motion to dismiss for lack of personal
         jurisdiction. On October 8, 2003, plaintiff moved to modify the court's
         order to provide for transfer of the case to the U.S. District Court
         for Delaware, rather than outright dismissal. The NiSource defendants
         filed their opposition to plaintiff's motion on October 15, 2003. In
         addition, on October 27, 2003 the plaintiff also filed its complaint in
         U.S. District Court for the Northern District of Maryland.

         On March 18, 2003, a related suit was filed by Triad Energy Resources.
         This new case purports to be a class action covering customers of
         Columbia Gas Transmission who were allegedly damaged by the same
         activities complained of in the Atlantigas litigation. The named
         defendants include NiSource Inc., certain of its subsidiaries and other
         unrelated parties, including shippers who allegedly benefited from the
         complained of activities. The plaintiffs claim that all defendants
         engaged in vertical restraint of trade by conspiring to provide scarce
         transportation/storage capacity to a select group of shippers who in
         turn agreed to fix the price of gas. The plaintiffs also claim that the
         defendant shippers engaged in horizontal restraint of trade by
         conspiring with each other to gain preferential treatment from the
         pipeline defendants. There is also a separate count alleging tortious
         interference against all defendants. The Company intends to vigorously
         defend this matter. Based on the court's decision in Atlantigas, the
         Triad plaintiffs have moved to dismiss this case from the District of
         Columbia in order to refile it in another jurisdiction.

                                       24

<PAGE>

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

COLUMBIA ENERGY GROUP AND SUBSIDIARIES

Omitted pursuant to General Instruction H(2)(b)

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Omitted pursuant to General Instruction H(2)(b)

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Omitted pursuant to General Instruction H(2)(b)

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         (12)     Statements of Ratio of Earnings to Fixed Charges (filed
                  herewith).

         (31.1)   Certification of Michael W. O'Donnell, Chief Executive
                  Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of
                  2002 (filed herewith).

         (31.2)   Certification of David J. Vajda, Principal Financial Officer,
                  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
                  (filed herewith).

         (32.1)   Certification of Michael W. O'Donnell, Chief Executive
                  Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002 (furnished herewith).

         (32.2)   Certification of David J. Vajda, Principal Financial Officer,
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
                  (furnished herewith).

(b)      Reports on Form 8-K

         There were no reports on Form 8-K filed during the third quarter 2003.

                                       25

<PAGE>

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                      Columbia Energy Group
                                               ---------------------------------
                                                           (Registrant)

Date:  November 12, 2003                   By: /s/ Jeffrey W. Grossman
                                               ---------------------------------
                                                   Jeffrey W. Grossman
                                                      Vice President
                                               (Principal Accounting Officer
                                               and Duly Authorized Officer)

                                       26