NOTICE TO THE PUBLIC OF

NOTICE TO THE PUBLIC OF

COLUMBIA GAS OF VIRGINIA, INC.'S, REQUEST FOR

PERFORMANCE BASED RATE REGULATION AND

GENERAL RATE INVESTIGATION FILING

CASE NOS. PUE-2005-00098 AND PUE-2005-00100

On November 2, 2005. Columbians of Virginia, Inc. ("Columbia' or tbe "Company"), filed with the State Corporation Commission ("Commission") an Application for approval of a performance based ratemaking methodology ("PBR Plan"), pursuant to § 56235.6 of the Code of Virginia ("Code"). The Company explained in the Application that its proposed PBR Plan: (1) freezes non-gas base rates at their current levels for five years beginning January 1.2006, (2) foregoes regulatory treatment of merger savmqs associated with NiSource. Inc.'s ("NiSource"), acquisition of the stock of the Columbia Energy Group ("CEG"), including Columbia Gas of Virginia, Inc., savings that Columbia represents are approximately $3.9 million annually; (3) prohibits the Company from seeking at the expiration of the five-year base rate freeze recovery of these merger savings, and (4) allows Columbia to request an increase in frozen rates in connection with (i) any changes in federal, state, or local taxation of incumbent natural gas distnbution utility revenues, or (n) any financial distress of the Company beyond its control Columbia states that its last rate case was in 1998. and thus, its PBR Plan would freeze base rates at their 1998 level until 2010 The Company concluded that its fuHy adjusted cost of service study demonstrates a cumulative revenue deficiency of approximately $66 5 million during the five-year PBR Ran

On November 9, 2005. the Commission entered its Preliminary Order in this proceeding That Order docketed Columbia's Application for approval of a PBR Ran as Case No. PUE-2005-00098 and initiated an investigation docketed as Case No PUE-200500100 into the justness and reasonableness of Columbia's current rates, fees, charges, and terms and conditions of service Among other things, the Commission directed Columbia lo file the schedules required for a general rate application in full compliance with the Commission's Rules Governing Utility Rate Increase Applications and Annual Informational Filings, 20 VAC 5-200-30

On May 1,2006. the Company filed Schedules 1-30 required by the Commission's Rate Case Rules with the Commission. The schedules addressed the Company's cost of capital, return on equity, and accounting adjustments and purported to show an additional annual revenue requirement of $19,288,735.

°n May 8,2006. the Company filed Schedule 31 (Proposed Rates and Tariffs). Schedule 32 (Present and Proposed Revenues), and Schedule 33 (Sample Billing) required by the Commission's Rate Case Rules The cover letter accompanying these schedules advised that the Company proposed to forego any rate increase pursuant to the terms and conditions of the Company's proposed PBR Plan and, further, did not intend to place its revised tariff schedules in effect on an intenm basis

Columbia s proposed PBR Plan, if approved, will maintain the Company's base rates at their current level and allow the Company to focus on new capacity and infrastructure additions necessary to satisfy increasing customer demand and economic growth The Company advised that it was pursuing (1) the acquisition of 50.000 Dth per day of Firm Transportation Service ("FTS") capacity to serve its Market Areas 33 and 34 (the area around Richmond and extending southeasterly to Portsmouth), at an expected capital investment cost of $1 million to $1.5 million: (2) the acquisition of 40.000 Dth of Firm Storage Service ("FSS") and Storage Service Transportation f SST") to serve its growing customer base in northern Virginia, at an expected capital investment cost of $1 million to $2 million; (3) the acquisition of 40 000 Dth of FTS capacity per day to serve the Gainesville area, at an expected capital investment cost of $4.5 million to $5 million, and (4) the acquisition of 40.000 Dth of capacity per day to serve the Fredericksburg area, at an expected capital investment cost of $10 million to $12 million Columbia projects that it will spend an additional $16.5 million to $20 million over the next three to five years to attach the foregoing capacity to its distribution system.

The Company s general rate investigation filing provides for the revision of its tanffs. rates, fees and charges The schedules included in the general rate investigation filing also reflect an effective date of rates and tariffs of October 5 2006 However pursuant to the terms and conditions of the Company's PBR Plan, the Company proposes to forego any rate increase and the Company does not intend to place the schedules submitted in the general rate investigation filing in effect on an intenm basis durinq the pendency of the Application for approval of the PBR Plan

Columbia's general rate investigation filing .ncorporates changes to the Company's rates, charges, rules and regulations for its sales, transportation and other services including new operational requirements for large volume transportation customers The filing also includes changes to the Company's Rate Schedules, General Terms and Conditions and Form of Service Agreements

Specifically, the general rate mvesligation filing includes revisions to Rate Sc -ules RS -Residential Service RTS -Residential Transportation Service MPS -Metered Propane Service. PDS -Propane Delivery Service SGTS -Small General Transportation 'Service, SGS -Small General Service. ACS -Air Conditioning Service. ACTS -Air Conditioning Transportation Service. UGLS -Unmetered Gas Light Service. UGLTS -Unmetered Gas Light Transportation Service. LGS -Large General Service TS/TS2 - Transportation Service 1 and 2. LVTS -Large Volume Transportation Service LVEDTS -Large Volume Economic Development Transportation Service EDS -Economic Development Service. DES -Distributor Exchange Service. CSPS -Competitive Service Provider Service, and AS -Aggregation Service Columbia's general rate investigation filing also closes the curtailable service option under Rate Schedule LGS to new customers The following new Rale Schedules were also included in the general rate investigation filing Rate Schedules SS -Standby Service, BBS -Banking and Balancing Service. DPS -Demand Polling Service, and DGTS -Daily Gas Transfer Service

Columbia's general rate investigation filing also modifies the following provisions of its General Terms and Conditions Definitions. Measurement. Quality: Possession and Warranty of Title, Discontinuance of Service. Billing and Payment Installation of Distnbution Facilities: Daily Curtailment and Interruption of Service Volumetnc Limitations and Curtailment Provisions: Rate Schedules RS. RTS SGS SGTS MPS. PDS. UGLS. UGLTS. ACS and ACTS -Additional Terms and Conditions Taps On High Pressure Lines for Service to Rural Customers, New Space Heating Service, Transportation Service Rate Schedules -Additional Terms and Conditions; First-Last Gas Through the Meter, PGA Terms and Conditions, Transition Costs Recovery Mechanism. Service Agreement General Terms and Conditions, and Special Services Charges Columbia also adds a provision to the General Terms and Conditions entitled Alternative Price Index

Columbia's general rate investigation filing modifies the Form of Service Agreement for Large General Service the Firm of Service Agreement for Gas Transportation Service, the Competitive Service Provider Service Agreement, and the Aggregation Service Service Agreement Columbia's filing eliminates the generic Form of Service Agreement and adds a new Appointment of Agent and Acknowledgement of Service Form (for Rate Schedules TS1 TS2. LVTS and LVEDTS) a Banking and Balancing Service Agreement (for Rate Schedules LVTS and LVEDTS). and a Standby Service Agreement (for Rate Schedule LVTS and LVEDTS)

The Company's requesl for a PBR Plan is docketed and assigned Case No PUE-2005-00098 The Company's general rate investigation filing is docketed and assigned Case No PUE-2005-00100 In accordance with the Commission's findings made in its orders. Columbia's PBR Plan cannot be implemented unless and until approved by the Commission, and the Company's general rote investigation filing revisions cannot be implemented on a permanent basis unless and until approved by the Commission

Interested persons are encouraged to review the proposed PBR Plan the general rate investigation filing, and the supporting documents for these filings The evidence in these proceedings shall be received concurrently in Case Nos. PUE-2005-00098 ano PUE-2005-00100 if the PBR Ran. for example, is not approved or is modified by the Commission in a manner the Company does not choose to accept, the Commission, without additional notice, may take action in the general rate investigation filing docket and establish just and reasonable rates for Columbia. Interested persons should be advised that, after considenng all of the evidence, the Commission may approve, reject or modify the PBR Plan may approve an annual revenue requirement or implement a decrease in revenues and adjust rates, fees, charges and terms and conditions of service that are the same or different from those appearing m eitner the general rate investigation filing or the PBR Plan Further the Commission may apportion revenues among Customer classes in a manner that is the same or different from those in the general rate investigation filing or PBR Plan.

Interested persons may review a copy of the Applicator! for the PBR Plan and the general rate investigation filing, as well as the Commission's Order for Notice and Hearing, in the Commission's Document Control Center locatec on the First Floor of the Tyler Building, 1300 East Main Street, Richmond Virginia 23219. between the hours of 8 15 am and 5 OO p m. Monday through Fnday A copy of these documents may also be obtained at no cost by interested persons by making a wntten request to the Company's counsel, Edward L Flippen, Esquire, McGuireWoods LLP One James Center. 901 East Cary Street Richmond. Virginia 23219-4030 If acceptable to the requesting party, the Compiany may provide these documents, with or without attachments, by electronic means. In addition to the Commissions Order for Notice and Hearing and other orders entered in these dockets the Commission's Rules of Practice and Procedure, as wefi as other information concerning the Commission and the statutes it administers may be

A pubic hearing will be convened before one of the Commission s Hearing Examiners on November 29. 2006 at 10:00 a m in the Commission's Courtroom, located on the second floor of the Tyler Building 1300 East Mam Street. Richmond. Virginia to receive comments from members of the public and to receive evidence in Case Nos PUE-2005-00098 and PUE-2005-00100 Any person not participating as a respondent as provided for below may present oral testimony concerning these cases as a public witness at the heanng

Public witnesses desinng to make statements at the public hearing need only appear in the Commission's Second Floor Courtroom in the Tyler Building at the address set forth above prior lo 9 45 a m on the day of the hearing and register a request to speak with the Commission s bailiff

Any interested person may participate as a respondent in this proceeding by filing on or before July 28 2006 an original and fifteen (15) copies of a notice of participation with the Clerk State Corporation Commission do Document Control Center. Tyler Building, PO Box 2118. Richmond, Virginia 23218-2118 and snail simultaneously serve a copy of the notice of participation on counsel to Columbia at the address set out abcve

Pursuant to Rule 5 VAC 5-20-80 of the Commission's Rules of Practice and Procedure any notice of participation shall set forth (i) a prec.se statement of the interest of the respondent ju) a statement of the specific acton sought to the extent then known and (hi) the factual and legal basis for the action sought interested parties shall refer in all of their filed papers to Case Nos PUE-2005-00098 and PUE-2005-00100 Interested persons should obtain a copy of the Commission's Order m this proceeding tor additional information abouf participation as a respondent

On or before September 15 2006. any interested person desiring to participate as a pubic witness may file with tne Clerk of the Commission at the address set forth above written comments in this proceeding and shall simultaneously serve a copy of the same on counsel for Columbia at the address set out herein

On or before September 15. 2006. any interested person oesinng to submit comments electronically may do so by following the instructions found m the Commission $ website htto. www see Virginia qov.caseinto htm

COLUMBIA GAS OF VIRGINIA INC