NiSource(NI) - 2020 Q3 - Quarterly Report

PART I FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis of NiSource Inc Item 1. Financial Statements - unaudited This section presents the unaudited condensed consolidated financial statements of NiSource Inc. for the periods ended September 30, 2020, and 2019, including income, comprehensive income, balance sheets, cash flows, and equity statements, along with detailed notes explaining the basis of accounting, recent pronouncements, revenue recognition, and other financial details Condensed Statements of Consolidated Income (Loss) (unaudited) This section presents the unaudited condensed consolidated income and loss statements for specified periods Condensed Statements of Consolidated Income (Loss) (in millions) | Metric (in millions) | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Operating Revenues | $902.5 | $931.5 | $3,470.7 | $3,811.7 | | Operating Income | $92.8 | $91.0 | $332.7 | $928.7 | | Net Income (Loss) | $(172.9) | $6.6 | $(102.0) | $522.4 | | Net Income (Loss) Available to Common Shareholders | $(186.7) | $(7.2) | $(143.4) | $481.0 | | Basic Earnings (Loss) Per Share | $(0.49) | $(0.02) | $(0.37) | $1.29 | | Diluted Earnings (Loss) Per Share | $(0.49) | $(0.02) | $(0.37) | $1.28 | Condensed Statements of Consolidated Comprehensive Income (Loss) (unaudited) This section presents the unaudited condensed consolidated comprehensive income and loss statements for specified periods Condensed Statements of Consolidated Comprehensive Income (Loss) (in millions, net of taxes) | Metric (in millions, net of taxes) | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Income (Loss) | $(172.9) | $6.6 | $(102.0) | $522.4 | | Total other comprehensive income (loss) | $28.3 | $(49.5) | $(101.0) | $(93.1) | | Comprehensive Income (Loss) | $(144.6) | $(42.9) | $(203.0) | $429.3 | Condensed Consolidated Balance Sheets (unaudited) This section presents the unaudited condensed consolidated balance sheets as of September 30, 2020, and December 31, 2019 Condensed Consolidated Balance Sheets (in millions) | Metric (in millions) | Sep 30, 2020 | Dec 31, 2019 | | :------------------- | :----------- | :----------- | | Total Assets | $22,701.5 | $22,659.8 | | Total Stockholders' Equity | $5,424.9 | $5,986.7 | | Long-term debt, excluding amounts due within one year | $9,208.9 | $7,856.2 | | Total Capitalization | $14,633.8 | $13,842.9 | | Total Current Liabilities | $3,446.8 | $3,745.8 | | Total Other Liabilities | $4,620.9 | $5,071.1 | Condensed Statements of Consolidated Cash Flows (unaudited) This section presents the unaudited condensed consolidated cash flow statements for the nine months ended September 30, 2020, and 2019 Condensed Statements of Consolidated Cash Flows (in millions) | Metric (in millions) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :------------------- | :-------------------------- | :-------------------------- | | Net Cash Flows from Operating Activities | $858.6 | $1,231.8 | | Net Cash Flows used for Investing Activities | $(1,399.9) | $(1,393.8) | | Net Cash Flows from Financing Activities | $460.5 | $77.9 | | Cash, Cash Equivalents and Restricted Cash at End of Period | $67.6 | $37.0 | Condensed Statements of Consolidated Equity (unaudited) This section presents the unaudited condensed consolidated equity statements as of September 30, 2020, and December 31, 2019 Condensed Statements of Consolidated Equity (in millions) | Metric (in millions) | Balance as of Sep 30, 2020 | Balance as of Dec 31, 2019 | | :------------------- | :------------------------- | :------------------------- | | Total Stockholders' Equity | $5,424.9 | $5,986.7 | | Common Stock | $3.8 | $3.8 | | Preferred Stock | $880.0 | $880.0 | | Additional Paid-In Capital | $6,684.2 | $6,666.2 | | Retained Deficit | $(1,849.6) | $(1,370.8) | | Accumulated Other Comprehensive Loss | $(193.6) | $(92.6) | - As of September 30, 2020, 383,114,130 common shares and 440,000 preferred shares were outstanding[53] Notes to Condensed Consolidated Financial Statements (unaudited) This section provides detailed notes explaining the basis of accounting, recent pronouncements, revenue recognition, and other financial details for the condensed consolidated financial statements 1. Basis of Accounting Presentation This note outlines the basis for preparing the unaudited condensed consolidated financial statements, including GAAP and SEC rules, and the ongoing monitoring of COVID-19 impacts - The unaudited Condensed Consolidated Financial Statements reflect normal recurring adjustments in accordance with GAAP and SEC rules, and should be read with the 2019 Annual Report on Form 10-K[33][35] - The company continues to monitor the impact of COVID-19 on its workforce, customers, suppliers, operations, financial results, and cash flow, with future impacts depending on the pandemic's duration and severity[36] 2. Recent Accounting Pronouncements This note details recently issued accounting pronouncements and their potential impact on the company's financial statements Recently Issued Accounting Pronouncements | Standard | Description | Effective Date | Effect on the financial statements or other significant matters | | :------- | :---------- | :------------- | :---------------------------------------------------------- | | ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans | Modifies disclosure requirements for defined benefit pension or other postretirement benefit plans, removing non-cost beneficial disclosures, clarifying specific requirements, and adding relevant ones. | Annual periods ending after December 15, 2020. Early adoption permitted. | Will impact Notes to Condensed Consolidated Financial Statements; company will adopt on effective date. | | ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes | Simplifies income tax accounting by eliminating certain exceptions to ASC 740 general principles and improving consistency. | Annual periods beginning after December 15, 2020. Early adoption permitted. | No impact on Condensed Consolidated Financial Statements; company will adopt on effective date. | | ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Statements | Provides temporary optional expedients and exceptions for applying GAAP principles to contract modifications and hedging relationships to ease reporting burdens from LIBOR transition. | Upon issuance on March 12, 2020, and will apply though December 31, 2022. | Company is evaluating impact and identifying affected contracts; no expedients applied as of Sep 30, 2020. | | ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivative and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity | Simplifies accounting for certain financial instruments with liability and equity characteristics, including convertible instruments and contracts on an entity's own equity. | Annual period beginning after December 15, 2021. Early adoption permitted for annual period beginning after December 15, 2020. | Does not impact current securities; company is evaluating effects for future activity and timing of adoption. | - The company adopted ASC 326 (Measurement of Credit Losses on Financial Instruments) effective January 1, 2020, using a modified retrospective method, which did not have a material impact on its financial statements[40] 3. Revenue Recognition This note describes the company's revenue recognition policies, disaggregated by segment and customer class, and details customer accounts receivable and credit loss allowances - Revenue is disaggregated by reportable segment (Gas Distribution Operations and Electric Operations) and customer class, primarily earned over time[41] Total Operating Revenues by Segment and Customer Class (in millions) | Segment/Customer Class | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :--------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Gas Distribution Operations | | | | | | Residential | $306.9 | $288.3 | $1,518.1 | $1,638.6 | | Commercial | $91.8 | $90.9 | $483.9 | $543.2 | | Industrial | $42.8 | $45.3 | $165.6 | $181.1 | | Off-system | $6.0 | $16.9 | $32.7 | $60.4 | | Miscellaneous | $6.8 | $9.8 | $24.6 | $39.4 | | Other Revenues | $15.8 | $12.4 | $79.5 | $43.5 | | Electric Operations | | | | | | Residential | $164.8 | $148.7 | $411.5 | $373.4 | | Commercial | $132.3 | $136.3 | $365.4 | $370.7 | | Industrial | $102.7 | $151.5 | $301.1 | $470.6 | | Other Revenues | $25.2 | $28.1 | $71.1 | $73.5 | | Corporate and Other | | | | | | Miscellaneous | $0.2 | $0.2 | $0.6 | $0.6 | | Total Operating Revenues | $902.5 | $931.5 | $3,470.7 | $3,811.7 | Customer Accounts Receivable (in millions) | Category | Balance as of Dec 31, 2019 | Balance as of Sep 30, 2020 | Decrease | | :------- | :------------------------- | :------------------------- | :------- | | Billed (less reserve) | $466.6 | $291.0 | $(175.6) | | Unbilled (less reserve) | $346.6 | $178.8 | $(167.8) | Allowance for Credit Losses Rollforward (in millions) | Category | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2020 | | :------- | :-------------------------- | :-------------------------- | | Beginning balance | $31.4 | $13.0 | | Current period provisions | $10.5 | $37.3 | | Write-offs charged against allowance | $(4.8) | $(21.1) | | Recoveries of amounts previously written off | $2.2 | $10.1 | | Ending balance of the allowance for credit losses | $39.3 | $39.3 | - The allowance for credit losses as of September 30, 2020, adequately reflects collection risk, considering COVID-19 impacts, payment trends, economic conditions, and government relief programs[50] 4. Earnings Per Share This note explains the calculation of basic and diluted earnings per share, including the impact of potential common shares and net losses - Basic EPS is calculated by dividing net income (loss) available to common shareholders by the weighted-average common shares outstanding. Diluted EPS includes incremental effects of long-term incentive plans and forward agreements when dilutive[52] Diluted Average Common Shares (in thousands) | Denominator | 9 Months Ended Sep 30, 2019 | | :---------- | :-------------------------- | | Basic average common shares outstanding | 373,796 | | Dilutive potential common shares: | | | Shares contingently issuable under employee stock plans | 919 | | Shares restricted under employee stock plans | 141 | | Forward Agreements | 339 | | Diluted Average Common Shares | 375,195 | - Diluted EPS computation was not presented for the three and nine months ended September 30, 2020, and the three months ended September 30, 2019, due to net losses, which would have an anti-dilutive impact[52] 5. Equity This note provides details on authorized and outstanding common and preferred shares, ATM program activities, and preferred dividends declared - As of September 30, 2020, NiSource Inc. had 600,000,000 common shares authorized, with 383,114,130 outstanding, and 20,000,000 preferred shares authorized, with 440,000 outstanding[53][58] - Under its ATM program, NiSource executed forward agreements in August and September 2020, selling 2,809,029 shares and 1,452,102 shares, respectively, with settlement expected by December 15, 2020[55][56] Preferred Dividends Declared (in millions except shares and per share amounts) | Series | Liquidation Preference Per Share | Shares Outstanding (Sep 30, 2020) | Dividends Declared Per Share (3 Months Ended Sep 30, 2020) | Dividends Declared Per Share (3 Months Ended Sep 30, 2019) | Dividends Declared Per Share (9 Months Ended Sep 30, 2020) | Dividends Declared Per Share (9 Months Ended Sep 30, 2019) | | :----- | :----------------------------- | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | 5.650% Series A | $1,000.00 | 400,000 | $28.25 | $28.25 | $56.50 | $56.50 | | 6.500% Series B | $25,000.00 | 20,000 | $406.25 | $406.25 | $1,625.00 | $1,674.65 | - As of September 30, 2020, Series A Preferred Stock had $6.7 million ($16.63 per share) and Series B Preferred Stock had $1.4 million ($72.23 per share) in cumulative preferred dividends in arrears[59] 6. Assets and Liabilities Held For Sale This note details the sale of the Massachusetts Business, including net proceeds, recorded loss on classification, and associated assets and liabilities held for sale - NiSource completed the sale of its Massachusetts Business to Eversource on October 9, 2020, for net proceeds of $1,112.6 million, including a $56.0 million payment in lieu of penalties to create an Energy Relief Fund[62] - A total pre-tax loss on classification as held for sale of $35.6 million for the three months and $400.2 million for the nine months ended September 30, 2020, was recorded for the Massachusetts Business[64] Massachusetts Business Assets and Liabilities Held for Sale (in millions) | Category | Sep 30, 2020 | | :------- | :----------- | | Assets Held for Sale | | | Net Property, Plant and Equipment | $1,705.0 | | Total Current Assets | $161.5 | | Total Other Assets | $91.8 | | Loss on Classification as Held for Sale | $(392.6) | | Total Assets Held for Sale | $1,565.7 | | Liabilities Held for Sale | | | Long-term Debt, Excluding Amounts Due Within One Year | $41.6 | | Total Current Liabilities | $60.1 | | Total Other Liabilities | $350.1 | | Total Liabilities Held for Sale | $451.8 | 7. Property, Plant and Equipment This note describes the reclassification of certain plant and equipment following MISO approval to retire the R.M. Schahfer Generating Station - Following MISO approval to retire the R.M. Schahfer Generating Station in 2023, $903.8 million in net book value of certain plant and equipment was reclassified from 'Net utility plant' to 'Other Property, at cost, less accumulated depreciation' on the balance sheet[67] 8. Asset Retirement Obligations This note details the increase in asset retirement obligation liability due to revised cost estimates for the Coal Combustion Residuals compliance plan - Revisions to estimated costs for refining the Coal Combustion Residuals (CCR) compliance plan resulted in a $70.3 million increase to the asset retirement obligation liability in 2020[68] 9. Regulatory Matters This note discusses regulatory trackers, infrastructure replacement programs, current rate case actions, and COVID-19 related regulatory asset deferrals - Regulatory trackers allow for recovery of significant, recurring costs (e.g., gas costs, tax riders, bad debt) in rates, minimizing impact on operating income[69][70] Infrastructure Replacement and Federally-Mandated Compliance Programs (in millions) | Company | Program | Incremental Revenue | Capital Investment Period | Status | Rates Effective | | :------ | :------ | :------------------ | :------------------------ | :----- | :-------------- | | Columbia of Ohio | IRP - 2020 | $32.9 | 1/19-12/19 | Approved April 22, 2020 | May 2020 | | Columbia of Ohio | CEP - 2020 | $18.0 | 1/19-12/19 | Approved August 12, 2020 | September 2020 | | NIPSCO - Gas | TDSIC 11 | $(1.7) | 5/19-12/19 | Approved June 24, 2020 | July 2020 | | NIPSCO - Gas | TDSIC 1 | $1.3 | 1/20-6/20 | Order Expected December 2020 | January 2021 | | NIPSCO - Gas | FMCA 3 | $0.3 | 4/19-9/19 | Approved March 31, 2020 | April 2020 | | NIPSCO - Gas | FMCA 4 | $1.6 | 10/19-3/20 | Approved September 23, 2020 | October 2020 | | Columbia of Virginia | SAVE - 2020 | $3.8 | 1/20-12/20 | Approved December 6, 2019 | January 2020 | | Columbia of Virginia | SAVE - 2021 | $5.2 | 1/21-12/21 | Order Expected November 2020 | January 2021 | | Columbia of Kentucky | SMRP - 2020 | $4.2 | 1/20-12/20 | Approved December 20, 2019 | January 2020 | | Columbia of Kentucky | SMRP - 2021 | $5.8 | 1/21-12/21 | Order Expected Q1 2021 | Q1 2021 | | Columbia of Maryland | STRIDE - 2020 | $1.3 | 1/20-12/20 | Approved February 19, 2020 | February 2020 | | Columbia of Maryland | STRIDE - 2021 | $1.3 | 1/21-12/21 | Order Expected December 2020 | January 2021 | | NIPSCO - Electric | TDSIC - 6 | $28.1 | 12/18-6/19 | Approved December 18, 2019 | January 2020 | | NIPSCO - Electric | TDSIC - 7 | $13.0 | 7/19-7/20 | Order Expected January 2021 | February 2021 | | NIPSCO - Electric | FMCA - 12 | $1.6 | 3/19-8/19 | Approved January 29, 2020 | February 2020 | | NIPSCO - Electric | FMCA - 13 | $(1.2) | 9/19-2/20 | Approved July 29, 2020 | August 2020 | | Columbia of Pennsylvania | DSIC - Q1 2020 | $0.9 | 12/19-2/20 | Approved May 4, 2020 | May 2020 | | Columbia of Pennsylvania | DSIC - Q2 2020 | $0.8 | 3/20-5/20 | Approved June 29, 2020 | July 2020 | | Columbia of Pennsylvania | DSIC - Q3 2020 | $2.6 | 6/20-8/20 | Approved September 30, 2020 | October 2020 | Current Rate Case Actions (in millions) | Company | Requested Incremental Revenue | Approved or Settled Incremental Revenue | Status | Rates Effective | | :------ | :---------------------------- | :------------------------------------ | :----- | :-------------- | | NIPSCO - Electric | $21.4 | $(53.5) | Approved December 4, 2019 | January 2020 | | Columbia of Pennsylvania | $100.4 | In process | Order Expected Q1 2021 | January 2021 | | Columbia of Maryland | $5.0 | $2.0 | Order Expected November 2020 | December 2020 | - In response to COVID-19, several state regulatory commissions (Ohio, Indiana, Pennsylvania, Virginia, Maryland, Kentucky) have authorized regulatory assets for incremental bad debt and other COVID-19 related costs, and instituted or extended moratoriums on service disconnections and late payment fees[79][80][81][83][84][85] COVID-19 Related Regulatory Asset Deferrals (as of Sep 30, 2020, in millions) | Company | Deferred Amount | | :------ | :-------------- | | Columbia of Ohio | $1.9 | | NIPSCO | $4.8 | | Columbia of Pennsylvania | $1.3 | | Columbia of Maryland | $0.5 | 10. Risk Management Activities This note describes NiSource's use of derivative instruments to manage commodity price and interest rate risks, including forward-starting interest rate swaps - NiSource uses derivatives (futures, options, forwards) to manage commodity price risk (natural gas) and interest rate risk, aiming to lower debt costs and limit price volatility[86][88] Risk Management Assets and Liabilities (in millions) | Category | Sep 30, 2020 | Dec 31, 2019 | | :-------------------------- | :----------- | :----------- | | Risk Management Assets - Current | | | | Interest rate risk programs | $0 | $0 | | Commodity price risk programs | $13.7 | $0.6 | | Risk Management Assets - Noncurrent | | | | Interest rate risk programs | $0 | $0 | | Commodity price risk programs | $6.7 | $3.8 | | Risk Management Liabilities - Current | | | | Interest rate risk programs | $92.1 | $0 | | Commodity price risk programs | $4.8 | $12.6 | | Risk Management Liabilities - Noncurrent | | | | Interest rate risk programs | $123.3 | $76.2 | | Commodity price risk programs | $46.2 | $57.8 | - NiSource has two forward-starting interest rate swaps with a notional value of $500.0 million, designated as cash flow hedges, to manage variability in benchmark interest rates for forecasted debt issuances by 2024[90] 11. Fair Value This note provides fair value measurements for recurring assets and liabilities, including risk management assets, available-for-sale debt securities, and long-term debt Recurring Fair Value Measurements (in millions) | Category | Level 1 (Sep 30, 2020) | Level 2 (Sep 30, 2020) | Level 3 (Sep 30, 2020) | Total (Sep 30, 2020) | | :------- | :--------------------- | :--------------------- | :--------------------- | :------------------- | | Assets | | | | | | Risk management assets | $0 | $20.4 | $0 | $20.4 | | Available-for-sale debt securities | $0 | $161.8 | $0 | $161.8 | | Total Assets | $0 | $182.2 | $0 | $182.2 | | Liabilities | | | | | | Risk management liabilities | $0 | $266.4 | $0 | $266.4 | | Total Liabilities | $0 | $266.4 | $0 | $266.4 | | Category | Level 1 (Dec 31, 2019) | Level 2 (Dec 31, 2019) | Level 3 (Dec 31, 2019) | Total (Dec 31, 2019) | | :------- | :--------------------- | :--------------------- | :--------------------- | :------------------- | | Assets | | | | | | Risk management assets | $0 | $4.4 | $0 | $4.4 | | Available-for-sale debt securities | $0 | $154.2 | $0 | $154.2 | | Total Assets | $0 | $158.6 | $0 | $158.6 | | Liabilities | | | | | | Risk management liabilities | $0 | $146.6 | $0 | $146.6 | | Total Liabilities | $0 | $146.6 | $0 | $146.6 | - Derivative instruments are primarily classified within Level 2, using observable market data for valuation, with credit risk considered for non-exchange-traded derivatives[94][95] - Available-for-sale debt securities, pledged as collateral for insurance trust accounts, are valued using a matrix pricing model and classified within Level 2[96] Available-for-Sale Debt Securities (in millions) | Category | Amortized Cost (Sep 30, 2020) | Gross Unrealized Gains (Sep 30, 2020) | Gross Unrealized Losses (Sep 30, 2020) | Allowance for Credit Losses (Sep 30, 2020) | Fair Value (Sep 30, 2020) | | :------- | :---------------------------- | :------------------------------------ | :------------------------------------- | :--------------------------------------- | :------------------------ | | U.S. Treasury debt securities | $31.5 | $0.4 | $0 | $0 | $31.9 | | Corporate/Other debt securities | $124.6 | $7.0 | $(1.0) | $(0.7) | $129.9 | | Total | $156.1 | $7.4 | $(1.0) | $(0.7) | $161.8 | | Category | Amortized Cost (Dec 31, 2019) | Gross Unrealized Gains (Dec 31, 2019) | Gross Unrealized Losses (Dec 31, 2019) | Allowance for Credit Losses (Dec 31, 2019) | Fair Value (Dec 31, 2019) | | :------- | :---------------------------- | :------------------------------------ | :------------------------------------- | :--------------------------------------- | :------------------------ | | U.S. Treasury debt securities | $31.4 | $0.1 | $(0.1) | $0 | $31.4 | | Corporate/Other debt securities | $118.7 | $4.2 | $(0.1) | $0 | $122.8 | | Total | $150.1 | $4.3 | $(0.2) | $0 | $154.2 | - A $0.7 million allowance for credit losses on available-for-sale debt securities was recorded during the nine months ended September 30, 2020[97] Long-Term Debt Fair Value (in millions) | Category | Carrying Amount as of Sep 30, 2020 | Estimated Fair Value as of Sep 30, 2020 | Carrying Amount as of Dec 31, 2019 | Estimated Fair Value as of Dec 31, 2019 | | :------- | :--------------------------------- | :------------------------------------ | :--------------------------------- | :------------------------------------ | | Long-term debt (including current portion) | $9,230.3 | $10,723.5 | $7,869.6 | $8,764.4 | 12. Transfers of Financial Assets This note details the transfer of customer accounts receivables to third-party financial institutions through securitization transactions, accounted for as secured borrowings - Columbia of Ohio, NIPSCO, and Columbia of Pennsylvania transfer customer accounts receivables to third-party financial institutions through wholly-owned special purpose entities, accounted for as secured borrowings[106][108] Receivables Securitization Transactions (in millions) | Category | Sep 30, 2020 | Dec 31, 2019 | | :-------------------------- | :----------- | :----------- | | Gross receivables | $421.7 | $569.1 | | Less: Receivables not transferred | $190.5 | $215.9 | | Net receivables transferred | $231.2 | $353.2 | | Short-term debt due to asset securitization | $231.2 | $353.2 | - For the nine months ended September 30, 2020 and 2019, $122.0 million and $139.1 million, respectively, was recorded as cash flows used for financing activities related to changes in short-term borrowings from securitization[109] 13. Goodwill This note presents the goodwill balance by segment and discusses the annual impairment analysis, including a prior year impairment charge Goodwill Balance by Segment (as of Sep 30, 2020, in millions) | Segment | Goodwill | | :---------------------- | :------- | | Gas Distribution Operations | $1,485.9 | | Electric Operations | $0 | | Corporate and Other | $0 | | Total | $1,485.9 | - An annual goodwill impairment analysis as of May 1, 2020, indicated that the fair value of each reporting unit with goodwill significantly exceeded its carrying value, resulting in no impairment charge[110] - In 2019, a goodwill impairment charge of $204.8 million was recognized, reducing the Columbia of Massachusetts reporting unit goodwill balance to zero due to its fair value falling below carrying value[112] 14. Income Taxes This note provides effective tax rates and explains the factors influencing changes in income tax expense and benefit, including the impact of the CARES Act Effective Tax Rates | Period | 2020 | 2019 | | :----- | :--- | :--- | | 3 Months Ended Sep 30 | 27.3% | 283.3% | | 9 Months Ended Sep 30 | 42.0% | 18.8% | - The decrease in the three-month effective tax rate in 2020 (256.0% decrease) was primarily due to the relative impact of permanent differences on lower pre-tax loss in 2019, offset by increased amortization of excess deferred federal income tax liabilities in 2020[114] - The increase in the nine-month effective tax rate in 2020 (23.2% increase) was mainly due to increased amortization of excess deferred federal income tax liabilities and lower state income taxes, partially offset by the non-deductible payment in lieu of penalties[115] - Under the CARES Act, NiSource deferred approximately $21.7 million in payroll tax payments through September 30, 2020, with no other material income tax impacts on its financial position, results of operations, and cash flows for the reported periods[116] 15. Pension and Other Postretirement Benefits This note describes the company's defined benefit and postretirement plans, contributions, and net periodic benefit costs, including a Q3 2020 settlement charge - NiSource provides defined contribution and noncontributory defined benefit retirement plans, along with health care and life insurance benefits for certain retired employees[117] - For the nine months ended September 30, 2020, the company contributed $2.1 million to pension plans and $16.7 million to other postretirement benefit plans[118] Net Periodic Benefit Cost (in millions) | Component | Pension Benefits (3 Months Ended Sep 30, 2020) | Pension Benefits (3 Months Ended Sep 30, 2019) | Other Postretirement Benefits (3 Months Ended Sep 30, 2020) | Other Postretirement Benefits (3 Months Ended Sep 30, 2019) | | :-------------------------- | :------------------------------------------- | :------------------------------------------- | :-------------------------------------------------------- | :-------------------------------------------------------- | | Service cost | $8.1 | $7.3 | $1.7 | $1.3 | | Interest cost | $13.1 | $18.1 | $3.8 | $4.8 | | Expected return on assets | $(28.3) | $(27.2) | $(3.6) | $(3.3) | | Amortization of prior service credit | $0.2 | $0 | $(0.4) | $(0.8) | | Recognized actuarial loss | $8.6 | $11.3 | $1.2 | $0.5 | | Settlement loss | $8.0 | $1.9 | $0 | $0 | | Total Net Periodic Benefit Cost | $9.7 | $11.4 | $2.7 | $2.5 | | Component | Pension Benefits (9 Months Ended Sep 30, 2020) | Pension Benefits (9 Months Ended Sep 30, 2019) | Other Postretirement Benefits (9 Months Ended Sep 30, 2020) | Other Postretirement Benefits (9 Months Ended Sep 30, 2019) | | :-------------------------- | :------------------------------------------- | :------------------------------------------- | :-------------------------------------------------------- | :-------------------------------------------------------- | | Service cost | $24.1 | $21.9 | $4.9 | $3.9 | | Interest cost | $40.1 | $54.5 | $11.6 | $14.4 | | Expected return on assets | $(85.1) | $(81.6) | $(10.8) | $(9.9) | | Amortization of prior service credit | $0.6 | $0 | $(1.4) | $(2.4) | | Recognized actuarial loss | $26.0 | $34.1 | $3.8 | $1.5 | | Settlement loss | $8.0 | $1.9 | $0 | $0 | | Total Net Periodic Benefit Cost | $13.7 | $30.8 | $8.1 | $7.5 | - A settlement charge of $8.0 million was recorded in Q3 2020 due to three qualified pension plans meeting settlement accounting requirements, leading to a $6.1 million decrease in net pension assets and a $1.4 million decrease in net periodic pension benefit cost for 2020[119] 16. Long-Term Debt This note details recent long-term debt issuances, tender offers, and redemptions, including the associated losses on early extinguishment of debt - In April 2020, NiSource issued $1.0 billion of 3.60% senior unsecured notes due 2030, yielding $987.8 million in net proceeds[121] - In August 2020, the company issued $1.25 billion of 0.95% senior unsecured notes due 2025 and $750.0 million of 1.70% senior unsecured notes due 2031, generating $1,980.4 million in net proceeds[122] - NiSource executed tender offers and redeemed $969.3 million and $609.3 million, respectively, of outstanding notes in August and September 2020, resulting in a $231.7 million loss on early extinguishment of long-term debt[123] - Columbia of Massachusetts redeemed $25.0 million of its 6.26% notes due 2028 in September 2020, incurring an $11.7 million loss on early extinguishment, with $5.3 million of these costs increasing its net working capital at the sale closing[124] 17. Short-Term Borrowings This note outlines NiSource's short-term borrowing sources, including its revolving credit facility, commercial paper program, accounts receivable transfer programs, and term loan agreement - NiSource's short-term borrowings are sourced from its revolving credit facility ($1.85 billion limit, no outstanding borrowings as of Sep 30, 2020), commercial paper program ($1.5 billion limit, $307.0 million outstanding), accounts receivable transfer programs ($231.2 million outstanding), and a term loan agreement ($850.0 million outstanding)[126][127][128][129] Short-Term Borrowings (in millions) | Category | Sep 30, 2020 | Dec 31, 2019 | | :------------------------------------------------------------------------------------------------ | :----------- | :----------- | | Commercial paper weighted-average interest rate of 0.23% and 2.03% at September 30, 2020 and December 31, 2019, respectively | $307.0 | $570.0 | | Accounts receivable securitization facility | $231.2 | $353.2 | | Term loan interest rate of 0.90% and 2.40% at September 30, 2020 and December 31, 2019, respectively | $850.0 | $850.0 | | Total Short-Term Borrowings | $1,388.2 | $1,773.2 | - The $850.0 million term loan agreement, entered into on April 1, 2020, was terminated and repaid in full on October 14, 2020, using proceeds from the Massachusetts Business sale[129] 18. Other Commitments and Contingencies This note covers guarantees for renewable generation projects, details of the Greater Lawrence Incident, environmental liabilities, and NIPSCO's coal plant retirement plans - NiSource provides guarantees for future performance under Build-Transfer Agreements (BTAs) for renewable generation projects, totaling $195.6 million for Rosewater and Indiana Crossroads BTAs as of September 30, 2020[132] - The Greater Lawrence Incident resulted in one fatality, injuries, property damage, and service interruptions, leading to government inquiries and investigations[133][134] - NiSource and Columbia of Massachusetts settled with the U.S. Attorney's Office and Massachusetts Attorney General's Office regarding the Greater Lawrence Incident, including a $56.0 million payment in lieu of penalties for an Energy Relief Fund[61][148][150] - Columbia of Massachusetts pleaded guilty to violating the Natural Gas Pipeline Safety Act, incurring a $53.0 million criminal fine and a three-year probationary period, with the in-house monitor term ended on October 13, 2020[151] - A class action settlement for the Greater Lawrence Incident was granted final approval on March 12, 2020, with Columbia of Massachusetts agreeing to pay $143 million into a settlement fund[155] - Since the Greater Lawrence Incident, NiSource has recorded approximately $1,036 million in expenses for third-party claims and fines/penalties/settlements, and $441 million for other incident-related costs, with $800 million collected from third-party liability insurance[159][161][191][192] Greater Lawrence Incident Costs and Recoveries (in millions) | Category | Total Costs Incurred through Dec 31, 2019 | Costs Incurred during the 3 Months Ended Sep 30, 2020 | Costs Incurred during the 9 Months Ended Sep 30, 2020 | Incident to Date | | :-------------------------- | :---------------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | :--------------- | | Third-party claims | $1,041 | $(3) | $(5) | $1,036 | | Other incident-related costs | $420 | $5 | $21 | $441 | | Total | $1,461 | $2 | $16 | $1,477 | | Insurance recoveries recorded | $(800) | $0 | $0 | $(800) | | Total costs incurred | $661 | $2 | $16 | $677 | - Environmental liabilities for remediation at various sites totaled $93.4 million as of September 30, 2020, with 54 Manufactured Gas Plant (MGP) sites identified as probable liabilities[166][172] - NIPSCO's 2018 Integrated Resource Plan aims to retire the R.M. Schahfer Generating Station by end of 2023 and Michigan City Generating Station by end of 2028, replacing 2,080 MW of coal-fired capacity with lower-cost, cleaner energy resources[178] - NIPSCO has executed several Power Purchase Agreements (PPAs) and Build-Transfer Agreements (BTAs) for renewable generation facilities, including wind and solar, totaling approximately 400 MW (wind BTA), 1,300 MW (wind/solar PPAs), and 900 MW (solar BTAs) with 135 MW storage capacity[182][183][186][187][188] - A voluntary separation program commenced in August 2020 resulted in approximately $38 million in total severance expense, with $23.4 million recognized for the three and nine months ended September 30, 2020[198] 19. Accumulated Other Comprehensive Loss This note presents the components of accumulated other comprehensive loss, including changes from gains/losses on securities, cash flow hedges, and pension/OPEB items Components of Accumulated Other Comprehensive Loss (in millions, net of tax) | Component | Balance as of July 1, 2020 | Net current-period other comprehensive income (loss) (3 Months Ended Sep 30, 2020) | Balance as of Sep 30, 2020 | | :-------------------------- | :------------------------- | :----------------------------------------------------------------- | :------------------------- | | Gains and Losses on Securities | $3.6 | $1.4 | $5.0 | | Gains and Losses on Cash Flow Hedges | $(207.8) | $26.0 | $(181.8) | | Pension and OPEB Items | $(17.7) | $0.9 | $(16.8) | | Accumulated Other Comprehensive Loss | $(221.9) | $28.3 | $(193.6) | | Component | Balance as of January 1, 2020 | Net current-period other comprehensive income (loss) (9 Months Ended Sep 30, 2020) | Balance as of Sep 30, 2020 | | :-------------------------- | :-------------------------- | :----------------------------------------------------------------- | :------------------------- | | Gains and Losses on Securities | $3.3 | $1.7 | $5.0 | | Gains and Losses on Cash Flow Hedges | $(77.2) | $(104.6) | $(181.8) | | Pension and OPEB Items | $(18.7) | $1.9 | $(16.8) | | Accumulated Other Comprehensive Loss | $(92.6) | $(101.0) | $(193.6) | - Accumulated Other Comprehensive Loss increased from $(92.6) million at January 1, 2020, to $(193.6) million at September 30, 2020, primarily due to net current-period other comprehensive loss of $(101.0) million[200] 20. Other, Net This note details the components of other, net income and expenses, including interest income, AFUDC equity, charitable contributions, and pension/postretirement non-service costs Components of Other, Net (in millions) | Component | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Interest income | $1.3 | $2.1 | $4.4 | $5.4 | | AFUDC equity | $1.8 | $2.9 | $4.9 | $7.1 | | Charitable contributions | $(0.3) | $(1.1) | $(0.9) | $(4.0) | | Pension and other postretirement non-service cost | $0.6 | $(2.8) | $6.4 | $(8.7) | | Sale of emission reduction credits | $4.6 | $0 | $4.6 | $0 | | Miscellaneous | $0 | $0.2 | $0.5 | $0.5 | | Total Other, net | $8.0 | $1.3 | $19.9 | $0.3 | 21. Business Segment Information This note provides operating revenues and income by NiSource's primary reportable segments: Gas Distribution Operations and Electric Operations - NiSource operates two primary reportable segments: Gas Distribution Operations (natural gas service in multiple states) and Electric Operations (electric service in northern Indiana). The Massachusetts Business was sold on October 9, 2020[204] Operating Revenues and Income by Segment (in millions) | Segment | Operating Revenues (3 Months Ended Sep 30, 2020) | Operating Revenues (3 Months Ended Sep 30, 2019) | Operating Revenues (9 Months Ended Sep 30, 2020) | Operating Revenues (9 Months Ended Sep 30, 2019) | | :-------------------------- | :----------------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Gas Distribution Operations | $473.1 | $466.9 | $2,313.4 | $2,516.1 | | Electric Operations | $432.3 | $467.9 | $1,166.2 | $1,305.5 | | Corporate and Other | $120.7 | $117.1 | $328.5 | $342.8 | | Eliminations | $(123.6) | $(120.4) | $(337.4) | $(352.7) | | Consolidated Operating Revenues | $902.5 | $931.5 | $3,470.7 | $3,811.7 | | Segment | Operating Income (Loss) (3 Months Ended Sep 30, 2020) | Operating Income (Loss) (3 Months Ended Sep 30, 2019) | Operating Income (Loss) (9 Months Ended Sep 30, 2020) | Operating Income (Loss) (9 Months Ended Sep 30, 2019) | | :-------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | | Gas Distribution Operations | $(42.2) | $(48.6) | $38.0 | $605.8 | | Electric Operations | $130.0 | $140.7 | $295.4 | $321.4 | | Corporate and Other | $5.0 | $(1.1) | $(0.7) | $1.5 | | Consolidated Operating Income | $92.8 | $91.0 | $332.7 | $928.7 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of NiSource's financial condition, results of operations, and cash flows, including an executive summary of key strategic initiatives, a summary of consolidated financial results, detailed discussions of segment operations (Gas Distribution and Electric), liquidity and capital resources, off-balance sheet arrangements, market risk disclosures, and other relevant information Executive Summary This summary highlights NiSource's business model, the sale of its Massachusetts Business, renewable energy transition plans, the 'NiSource Next' program, and the impacts of COVID-19 - NiSource is an energy holding company with fully regulated natural gas and electric utility subsidiaries in six states, generating substantially all operating income from these businesses[213] - The Massachusetts Business was sold to Eversource on October 9, 2020, for $1,112.6 million in cash, with a Transition Services Agreement (TSA) now in effect[216] - NiSource's 'Your Energy, Your Future' plan aims to replace 80% of coal generation capacity by end of 2023 and all by end of 2028 with renewables, including recent BTAs for 900 MW solar and 135 MW storage capacity[217] - The 'NiSource Next' program, launched in August 2020, targets long-term safety, capability enhancements, and cost optimization, including a voluntary separation program with $38.0 million in severance expense, aiming for an 8% reduction in ongoing O&M costs in 2021[218] - COVID-19 has led to lower revenue, higher PPE/supplies costs, and increased bad debt, but has not materially impacted results as of September 30, 2020; however, future impacts are uncertain, including potential revenue decline and continued cash flow delays[223][224] Summary of Consolidated Financial Results This section provides a consolidated overview of NiSource's operating revenues, expenses, income, and earnings per share for the reported periods Consolidated Financial Results (in millions, except per share amounts) | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | Change (2020 vs 2019) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | Change (2020 vs 2019) | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Operating Revenues | $902.5 | $931.5 | $(29.0) | $3,470.7 | $3,811.7 | $(341.0) | | Total Operating Expenses | $809.7 | $840.5 | $(30.8) | $3,138.0 | $2,883.0 | $255.0 | | Operating Income | $92.8 | $91.0 | $1.8 | $332.7 | $928.7 | $(596.0) | | Total Other Deductions, net | $(330.6) | $(94.6) | $(236.0) | $(508.6) | $(285.3) | $(223.3) | | Income Taxes | $(64.9) | $(10.2) | $(54.7) | $(73.9) | $121.0 | $(194.9) | | Net Income (Loss) | $(172.9) | $6.6 | $(179.5) | $(102.0) | $522.4 | $(624.4) | | Net Income (Loss) Available to Common Shareholders | $(186.7) | $(7.2) | $(179.5) | $(143.4) | $481.0 | $(624.4) | | Basic Earnings (Loss) Per Share | $(0.49) | $(0.02) | $(0.47) | $(0.37) | $1.29 | $(1.66) | - The net loss available to common shareholders increased to $186.7 million (or $0.49 per basic share) for the three months ended September 30, 2020, primarily due to a loss on early extinguishment of debt[230] - For the nine months ended September 30, 2020, a net loss of $143.4 million (or $0.37 per basic share) was reported, driven by the loss on early debt extinguishment, higher operating expenses (due to 2019 insurance recoveries), and the loss from classifying the Massachusetts Business as held for sale[231] - Operating income for the nine months ended September 30, 2020, decreased by $596.0 million to $332.7 million, mainly due to the loss on classification of the Massachusetts Business as held for sale, higher operating expenses (net of 2019 insurance recoveries for the Greater Lawrence Incident), and COVID-19 impacts[233] - Total Other Deductions, net, increased by $236.0 million for the three months and $223.3 million for the nine months ended September 30, 2020, primarily due to a loss on early extinguishment of debt[234][235] - Income tax benefit increased for the three months ended September 30, 2020, due to a larger pre-tax loss and a lower effective tax rate, while the nine-month period saw a shift from income tax expense to benefit due to a pre-tax loss, partially offset by a higher effective tax rate[236][237] - Capital expenditures for the nine months ended September 30, 2020, were $1,292.2 million, with a projected total of $1.7 to $1.8 billion for 2020, focused on growth, safety, and modernization[239][240] Results and Discussion of Segment Operations This section analyzes the financial and operational performance of NiSource's Gas Distribution Operations and Electric Operations segments Gas Distribution Operations This section discusses the operating revenues, expenses, income, and key operational metrics for the Gas Distribution Operations segment Gas Distribution Operations Financial and Operational Data (in millions, except MMDth and Heating Degree Days) | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | Change (2020 vs 2019) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | Change (2020 vs 2019) | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Operating Revenues | $473.1 | $466.9 | $6.2 | $2,313.3 | $2,516.1 | $(202.8) | | Total Operating Expenses | $515.3 | $515.5 | $(0.2) | $2,275.3 | $1,910.3 | $365.0 | | Operating Income (Loss) | $(42.2) | $(48.6) | $6.4 | $38.0 | $605.8 | $(567.8) | | Total Sales and Transportation (MMDth) | 168.9 | 172.5 | $(3.6) | 715.8 | 749.7 | $(33.9) | | Heating Degree Days | 91 | 13 | 78 | 3,259 | 3,409 | $(150) | | Total Gas Distribution Customers | N/A | N/A | N/A | 3,520,071 | 3,451,420 | 68,651 | - Gas Distribution Operations reported an operating loss of $42.2 million for the three months ended September 30, 2020 (a $6.4 million decrease in loss YoY), driven by new rates and customer growth, partially offset by lower cost of sales and decreased commercial/industrial usage due to COVID-19[247][248] - For the nine months ended September 30, 2020, operating income decreased by $567.8 million to $38.0 million, primarily due to the $400.2 million loss on classification of the Massachusetts Business as held for sale and $190.8 million in 2019 insurance recoveries related to the Greater Lawrence Incident[249][250] - Weather in Q3 2020 was 28% colder than normal, increasing operating revenues by $2.3 million YoY; for the nine months, it was 8% warmer than normal, decreasing revenues by $29.4 million YoY[252][253] - Total volumes sold and transported decreased by 3.6 MMDth in Q3 2020 and 33.9 MMDth for the nine months, mainly due to decreased industrial/commercial usage from COVID-19 and warmer weather[254][255] Electric Operations This section discusses the operating revenues, expenses, income, and key operational metrics for the Electric Operations segment Electric Operations Financial and Operational Data (in millions, except GWh and Cooling Degree Days) | Metric | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | Change (2020 vs 2019) | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | Change (2020 vs 2019) | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Operating Revenues | $432.3 | $467.9 | $(35.6) | $1,166.2 | $1,305.5 | $(139.3) | | Total Operating Expenses | $302.3 | $327.2 | $(24.9) | $870.8 | $984.1 | $(113.3) | | Operating Income | $130.0 | $140.7 | $(10.7) | $295.4 | $321.4 | $(26.0) | | Total Sales (Gigawatt Hours) | 4,080.1 | 4,355.9 | $(275.8) | 11,044.7 | 12,111.4 | $(1,066.7) | | Cooling Degree Days | 599 | 720 | $(121) | 891 | 940 | $(49) | | Total Electric Customers | N/A | N/A | N/A | 477,829 | 473,264 | 4,565 | - Electric Operations' operating income decreased by $10.7 million to $130.0 million for the three months and by $26.0 million to $295.4 million for the nine months ended September 30, 2020[262][263] - Revenue changes were driven by lower cost of sales, decreased commercial/industrial usage due to COVID-19, partially offset by new rates and increased residential usage[263][264] - Electric sales decreased by 275.8 GWh in Q3 2020 and 1,066.7 GWh for the nine months, primarily due to reduced industrial and commercial usage from COVID-19 and higher self-generation, partially offset by increased residential usage[270][271] - NIPSCO's 2018 Integrated Resource Plan aims to retire all coal generation by 2028, replacing 2,080 MW with lower-cost, cleaner energy resources, with MISO approving the R.M. Schahfer Generating Station retirement by 2023[275] Liquidity and Capital Resources This section assesses NiSource's liquidity position, cash flow activities, capital expenditures, debt to capitalization ratio, and credit ratings - NiSource maintains adequate liquidity through operating activities, a $1.85 billion revolving credit facility, commercial paper program, accounts receivable securitization facilities, long-term debt, and proceeds from the Massachusetts Business sale[241][242] - Net cash from operating activities decreased by $373.2 million to $858.6 million for the nine months ended September 30, 2020, primarily due to increased net payments related to the Greater Lawrence Incident and slower accounts receivable collections from COVID-19[279] - Net cash used for investing activities increased by $6.1 million to $1,399.9 million, driven by increased net available-for-sale debt security purchases[280] - Capital expenditures decreased to $1,292.2 million for the nine months, mainly due to 2019 Greater Lawrence Pipeline Replacement spend and reduced Electric TDSIC investments, partially offset by customer growth and IT modernization[281] Liquidity Position (in millions) | Category | Sep 30, 2020 | Dec 31, 2019 | | :------------------------------------ | :----------- | :----------- | | Revolving Credit Facility | $1,850.0 | $1,850.0 | | Accounts Receivable Program | $231.2 | $353.2 | | Less: Commercial Paper | $(307.0) | $(570.0) | | Less: Accounts Receivable Program Utilized | $(231.2) | $(353.2) | | Less: Letters of Credit Outstanding Under Credit Facility | $(10.2) | $(10.2) | | Add: Cash and Cash Equivalents | $58.6 | $139.3 | | Net Available Liquidity | $1,591.4 | $1,409.1 | - NiSource's debt to capitalization ratio was 66.2% as of September 30, 2020, below the 70% covenant limit[285] Credit Ratings (as of Sep 30, 2020) | Entity | S&P Rating | S&P Outlook | Moody's Rating | Moody's Outlook | Fitch Rating | Fitch Outlook | | :--------------- | :--------- | :---------- | :------------- | :-------------- | :----------- | :---------- | | NiSource | BBB+ | Stable | Baa2 | Stable | BBB | Stable | | NIPSCO | BBB+ | Stable | Baa1 | Stable | BBB | Stable | | Columbia of Massachusetts | BBB+ | Stable | Baa2 | Stable | Not rated | Not rated | | Commercial Paper | A-2 | Stable | P-2 | Stable | F2 | Stable | Off Balance Sheet Arrangements This section describes NiSource's off-balance sheet arrangements, including guarantees and stand-by letters of credit - NiSource and its subsidiaries engage in various off-balance sheet arrangements, including guarantees and stand-by letters of credit, to provide financial or performance assurance to third parties[294] Market Risk Disclosures This section details NiSource's exposure to commodity price and interest rate risks, and the strategies employed for their management and mitigation - NiSource is exposed to commodity price risk (natural gas and power) and interest rate risk, which are managed through derivatives and a comprehensive risk management process with oversight by the Risk Management Committee[295][296] - An increase or decrease of 100 basis points in short-term interest rates would have impacted interest expense by $3.2 million (3 months) and $10.9 million (9 months) for 2020, and $4.7 million (3 months) and $14.7 million (9 months) for 2019[300] - Credit risk is monitored through a Corporate Credit Risk Policy and Risk Management Committee guidelines, with temporary regulatory moratoriums impacting mitigation practices for customer accounts receivable due to COVID-19[302][304] Other Information This section highlights critical accounting estimates and refers to disclosures on recently issued and adopted accounting pronouncements - Critical accounting estimates involve management judgment in determining allowance for credit losses (Note 3), annual goodwill impairment analysis (Note 13), and estimates related to the Greater Lawrence Incident (Note 18)[305][306] - Information on recently issued and adopted accounting pronouncements is provided in Note 2[307] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section refers to the 'Management's Discussion and Analysis of Financial Condition and Results of Operations - Market Risk Disclosures' for detailed information on quantitative and qualitative disclosures about market risk Item 4. Controls and Procedures This section details the evaluation of NiSource's disclosure controls and procedures, confirming their effectiveness as of September 30, 2020, and states that there have been no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that NiSource's disclosure controls and procedures were effective as of September 30, 2020, providing reasonable assurance that financial information is accurately processed, recorded, and reported[309] - No material changes in internal control over financial reporting occurred during the fiscal quarter covered by the report[310] PART II OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, defaults, mine safety, and a list of exhibits Item 1. Legal Proceedings This section directs readers to Note 18-B, 'Legal Proceedings,' in the Notes to Condensed Consolidated Financial Statements for a comprehensive description of NiSource's legal proceedings Item 1A. Risk Factors This section refers to the risk factors detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, for a complete understanding of potential risks Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period Item 3. Defaults Upon Senior Securities This section indicates that there were no defaults upon senior securities during the reporting period Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to NiSource's operations Item 5. Other Information This section reports that there is no other information to disclose for the period Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including forms of notes, settlement agreements, amendments, executive retirement plans, severance policies, certifications, and XBRL documents - Key exhibits include forms of 0.950% Notes due 2025 and 1.700% Notes due 2031, the Settlement Agreement for the Massachusetts Business sale, and various executive compensation and separation program documents[318] - Certifications from the Chief Executive Officer and Chief Financial Officer, pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, are included[318] - Inline XBRL documents (Instance, Schema, Calculation Linkbase, Labels Linkbase, Presentation Linkbase, Definition Linkbase) are provided for interactive data filing[318]