Southern Union Along with AIG Highstar to Acquire the Panhandle Companies from CMS Energy

Conference Call Scheduled for Monday at 2 p.m. ET

WILKES-BARRE, Pa. (December 22, 2002) - Southern Union Company ("Southern Union" or the "Company") (NYSE: SUG) along with AIG Highstar Capital, L.P. ("AIG Highstar"), a private equity fund sponsored by American International Group, Inc. ("AIG") (NYSE: AIG), have reached a definitive agreement with CMS Energy Corporation (NYSE: CMS) to acquire the CMS Panhandle Companies ("CMS Panhandle"). The agreement calls for a newly formed entity, Southern Union Panhandle Corporation, owned by Southern Union and AIG Highstar to pay approximately $1.8 billion, which includes $1.166 billion in gross debt. The transaction has been approved by the boards of directors of all companies and will close following clearance by the Federal Trade Commission under the Hart-Scott-Rodino Act and certain state regulatory approvals.

"We are extremely pleased to be acquiring CMS Panhandle," said George L. Lindemann, Southern Union's Chairman and CEO. "This acquisition further delivers on our stated strategy to re-deploy our assets and capitalize on opportunities in the energy market."

Thomas Karam, President and COO of Southern Union, added, "CMS Panhandle is a well run and stable business, which will be accretive to our earnings in the first year. We expect to execute a smooth and seamless transition. We welcome the chance to work with the Panhandle's dedicated and experienced management team."

AIG Highstar's Managing Partner Christopher H. Lee stated, "Investment in Southern Union Panhandle will be an excellent addition to AIG Highstar's portfolio of energy infrastructure assets, which include power transmission and generation and natural gas storage and transportation."

The CMS Panhandle Companies include CMS Panhandle Eastern Pipe Line Company, CMS Trunkline Gas Company, CMS Trunkline LNG Company, which operates an LNG terminal complex at Lake Charles, La., and CMS Sea Robin Pipeline Company. The CMS Panhandle Companies operate almost 11,000 miles of mainline natural gas pipeline extending from the Gulf of Mexico to the Midwest and Canada. These pipelines access the major natural gas supply regions of the Louisiana and Texas Gulf Coasts as well as the Midcontinent and Rocky Mountains. The pipelines have a combined peak daydelivery capacity of 5.4 billion cubic feet per day, 88 billion cubic feet of underground storage capacity and 6.3 billion cubic feet of above ground LNG storage facilities.

Southern Union recently announced plans to sell its Southern Union Gas division and related Texas assets to ONEOK, Inc. for $420 million in cash. The transaction is expected to close in early January. Proceeds from the Texas assets sale and other funds, including the AIG Highstar investment, will fund the equity purchase price of the CMS Panhandle Companies.

Southern Union will host a conference call and live webcast on Monday, December 23, 2002 at 2:00 p.m. ET (1:00 p.m CT) to discuss the acquisition. To participate, visit www.southernunionco.com or call 1-800-218-0530 approximately fifteen minutes prior to the start and refer to the Southern Union conference call. A replay of the call will be available through Monday, December 30, 2002 by dialing 1-800-405-2236 and entering conference ID 517909#.

Berenson Minella and Lehman Brothers acted as financial advisors to the buyer in this transaction.

CMS Energy Corporation is an integrated energy company, which has as its primary business operations in electric and natural gas utilities, natural gas pipeline systems and independent power generation.

AIG Highstar Capital, L.P. is a private equity fund sponsored by American International Group, Inc. to make structured equity investments in infrastructure-related projects and operating companies.

Southern Union Company is an international energy distribution company serving approximately 1.5 million customers through its natural gas operating divisions in Texas, Missouri, Pennsylvania, Rhode Island, Massachusetts and Mexico. In addition to controlling several intrastate natural gas pipelines in Texas, Southern Union also owns and operates electric generating facilities in Pennsylvania. For further information, visit www.southernunionco.com

This release and other Company reports and statements issued or made from time to time contain certain "forward-looking statements" concerning projected future financial performance, expected plans or future operations. Southern Union Company cautions that actual results and developments may differ materially from such projections or expectations.

Investors should be aware of important factors that could cause actual results to differ materially from the forward-looking projections or expectations. These factors include, but are not limited to: weather conditions in the Company's service territories; cost of gas; regulatory and court decisions; the receipt of timely and adequate rate relief; the achievement of operating efficiencies and the purchase and implementation of any new technologies for attaining such efficiencies; impact of relations with labor unions of bargaining-unit employees; the effect of any stock repurchases; and the effect of strategic initiatives (including: any recent, pending or potential acquisitions or merger, recent corporate restructuring activities, any sales of non-core assets, and any related financing arrangements including refinancings and debt repurchases) on earnings and cash flow.

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For further information:

Richard N. Marshall
Treasurer & Director of Investor Relations
570/829-8662