The board of directors of Columbia Energy Group yesterday rejected for the third time an unsolicited $5.7 billion bid for the Herndon-based gas and electric utility company -- saying that NiSource Inc.'s proposal was "the wrong price, at the wrong time, and with the wrong company."

The reaction to the $68-a-share offer from Columbia's board wasn't unexpected. The board has consistently rejected NiSource's attempt to take over the substantially larger Columbia as not a good deal.

But the letter from Columbia Chairman Oliver G. Richard III to NiSource Chairman Gary L. Neale underscored the ill will between the two companies that the hostile bid has generated.

NiSource said it will continue to pursue the takeover despite this most recent rejection. "In his letter, Mr. Richard doesn't promise Columbia shareholders a $68 price now or in the future," Neale noted.

Columbia's shares closed yesterday at $63.87 1/2, down 31 1/4 cents, while NiSource shares closed at $26.25, also down 31 1/4 cents.

Prudential Securities industry analyst M. Carol Coale said that the main issue is price, and that Columbia believes the bid is too low. But she added, "I don't know if NiSource would be willing to raise the bid, and I don't know if, after all the mudslinging, Columbia would be willing to accept a higher bid."

The increasingly bitter takeover battle comes at a time when the $300 billion-plus utility industry is rapidly consolidating as markets begin to allow companies to compete for customers who once had no choice other than a local monopoly gas or electric company. Companies are seeking to merge to acquire the size and strength to continue to play in a competitive arena.

Columbia tried and failed earlier to merge with Consolidated Natural Gas Co., which merged instead with Dominion Resources Inc. of Richmond. And some analysts have suggested that the NiSource bid for Columbia may also be a defensive maneuver. NiSource launched a hostile bid for Columbia at $68 a share June 7 and has since offered to buy stock from Columbia's shareholders at that price.

"This is three times," Richard said yesterday in a telephone interview about the board's rejection of the offer. "And we'd like to say `You're out!' but they obviously want to stay in."

A spokesman for NiSource said yesterday that some shares have been tendered to the company, but he couldn't say yet how many. The deadline for the tender offer is Aug. 6, but it may be extended.

NiSource Inc. was formerly known as Nipsco, for Northern Indiana Public Service Co. It has a market capitalization of approximately $3.6 billion and is about 60 percent natural gas and 40 percent electric power. The company says the merger would link gas in the Chicago area, which is oversupplied, to high-volume markets in the Northeast.

Columbia has a market capitalization of about $4.7 billion and is an integrated gas company that explores for, produces and transports gas and sells it to retail customers.

Columbia has told analysts and investors that NiSource is a high-cost producer in low-growth markets and has asserted that it expects to achieve per-share earnings growth of 10 percent to 12 percent on a stand-alone basis by 2001. The company met with major investors and analysts June 24 and 25. After the meeting, some analysts changed their target price for the stock, saying they expect it to reach $72 a share within the next 12 months.

William D. Hyler of CIBC World Markets was one of those. Yesterday he noted that it would take NiSource about 12 months to complete a merger if it persuaded Columbia's investors to take its $68-a-share offer.

Columbia has also indicated that it may expand a program to buy back its own stock, which could help push up the stock price.

Richard said in his letter to NiSource's Neale and in an interview yesterday what he has said before: that Columbia's management would "seriously consider a strategic combination that would provide superior value for our shareholders." But he added, "A merger of our two companies is not compelling."