NiSource(NI) - 2025 Q2 - Quarterly Report

Preliminary Information Defined Terms This section provides a comprehensive list of frequently used abbreviations and acronyms within the report for clarity - This section provides a comprehensive list of frequently used abbreviations and acronyms within the report, covering NiSource subsidiaries, affiliates, and various financial and regulatory terms to ensure clarity and understanding[8][9][10][11] Note regarding forward-looking statements This note cautions that forward-looking statements are subject to various factors that could cause actual results to differ materially from projections - The report contains forward-looking statements regarding plans, strategies, objectives, expected performance, and expenditures, which are subject to various factors that could cause actual results to differ materially from projections[12] - Key risk factors include the ability to execute business plans, manage data center growth, operational risks, technology adaptation, infrastructure aging, insurance coverage, electric generation strategy success, construction and supply risks, demand fluctuations, energy commodity price volatility, workforce management, new initiatives, third-party performance, carbon emission reduction goals, cybersecurity, activist stockholders, reputation damage, natural disasters, climate change impacts, debt obligations, credit ratings, adverse economic conditions, regulatory outcomes, and legal proceedings[13][16] PART I FINANCIAL INFORMATION Item 1. Financial Statements This section presents NiSource Inc.'s unaudited condensed consolidated financial statements and detailed notes for the three and six months ended June 30, 2025 and 2024 Condensed Statements of Consolidated Income (unaudited) This table presents the unaudited condensed consolidated income statements for the three and six months ended June 30, 2025 and 2024 Condensed Statements of Consolidated Income (unaudited) | (in millions, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Operating Revenues | $1,283.0 | $1,084.7 | $3,466.2 | $2,791.0 | | Total Operating Expenses | $1,020.1 | $847.7 | $2,443.9 | $1,970.6 | | Operating Income | $262.9 | $237.0 | $1,022.3 | $820.4 | | Income before Income Taxes | $124.3 | $120.7 | $756.7 | $597.0 | | Net Income Attributable to NiSource | $102.2 | $85.8 | $577.0 | $450.8 | | Basic Earnings Per Share | $0.22 | $0.19 | $1.22 | $0.96 | | Diluted Earnings Per Share | $0.22 | $0.19 | $1.22 | $0.95 | Condensed Statements of Consolidated Comprehensive Income (unaudited) This table presents the unaudited condensed consolidated comprehensive income statements for the three and six months ended June 30, 2025 and 2024 Condensed Statements of Consolidated Comprehensive Income (unaudited) | (in millions, net of taxes) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income | $100.5 | $103.1 | $627.2 | $503.4 | | Total other comprehensive income | $1.0 | $0.2 | $2.2 | $— | | Comprehensive Income | $101.5 | $103.3 | $629.4 | $503.4 | Condensed Consolidated Balance Sheets (unaudited) This table presents the unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (unaudited) | (in millions) | June 30, 2025 | December 31, 2024 | | :------------ | :------------ | :---------------- | | Total Assets | $34,028.9 | $31,788.1 | | Total Stockholders' Equity | $10,996.9 | $10,668.3 | | Long-term debt, excluding amounts due within one year | $14,473.8 | $12,074.5 | | Total Capitalization | $25,470.7 | $22,742.8 | | Total Current Liabilities | $3,412.3 | $4,113.4 | | Total Other Liabilities | $5,145.9 | $4,931.9 | | Total Capitalization and Liabilities | $34,028.9 | $31,788.1 | Condensed Statements of Consolidated Cash Flows (unaudited) This table presents the unaudited condensed consolidated cash flow statements for the six months ended June 30, 2025 and 2024 Condensed Statements of Consolidated Cash Flows (unaudited) | Six Months Ended June 30, (in millions) | 2025 | 2024 | | :-------------------------------------- | :-------- | :-------- | | Net Cash Flows from Operating Activities | $1,181.8 | $901.7 | | Net Cash Flows used for Investing Activities | $(2,566.3) | $(1,594.0) | | Net Cash Flows from (used for) Financing Activities | $1,551.5 | $(1,452.9) | | Change in cash, cash equivalents and restricted cash | $167.0 | $(2,145.2) | | Cash, Cash Equivalents and Restricted Cash at End of Period | $365.6 | $135.9 | Condensed Statements of Consolidated Equity (unaudited) This section presents the unaudited condensed consolidated statements of equity for the six months ended June 30, 2025 and 2024 Condensed Statements of Consolidated Equity (unaudited) - June 30, 2025 | (in millions) | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Deficit | Accumulated Other Comprehensive Loss | Noncontrolling Interest in Consolidated Subsidiaries | Total | | :------------ | :----------- | :------------- | :------------------------- | :--------------- | :----------------------------------- | :------------------------------------------------- | :---- | | Balance as of January 1, 2025 | $4.7 | $(99.9) | $9,521.5 | $(711.7) | $(30.4) | $1,984.1 | $10,668.3 | | Net income | — | — | — | 577.0 | — | 50.2 | 627.2 | | Other comprehensive gain, net of tax | — | — | — | — | 2.2 | — | 2.2 | | Dividends: Common stock | — | — | — | (397.4) | — | — | (397.4) | | Contributions from noncontrolling interests | — | — | — | — | — | 134.3 | 134.3 | | Distributions to noncontrolling interests | — | — | — | — | — | (54.2) | (54.2) | | Stock issuances | — | — | 16.5 | — | — | — | 16.5 | | Balance as of June 30, 2025 | $4.7 | $(99.9) | $9,538.0 | $(532.1) | $(28.2) | $2,114.4 | $10,996.9 | Condensed Statements of Consolidated Equity (unaudited) - June 30, 2024 | (in millions) | Common Stock | Preferred Stock | Treasury Stock | Additional Paid-In Capital | Retained Deficit | Accumulated Other Comprehensive Loss | Noncontrolling Interest in Consolidated Subsidiaries | Total | | :------------ | :----------- | :-------------- | :------------- | :------------------------- | :--------------- | :----------------------------------- | :------------------------------------------------- | :---- | | Balance as of January 1, 2024 | $4.5 | $486.1 | $(99.9) | $8,879.5 | $(967.0) | $(33.6) | $1,866.7 | $10,136.3 | | Net income | — | — | — | — | 450.8 | — | 52.6 | 503.4 | | Dividends: Common stock | — | — | — | — | (357.9) | — | — | (357.9) | | Preferred stock | — | — | — | — | (8.1) | — | — | (8.1) | | Contributions from noncontrolling interests | — | — | — | — | — | — | 59.7 | 59.7 | | Distributions to noncontrolling interest | — | — | — | — | — | — | (28.4) | (28.4) | | Series B and B-1 Preferred stock redemption | — | (486.1) | — | — | — | — | — | (486.1) | | Series B and B-1 Preferred stock redemption premium | — | — | — | — | (14.0) | — | — | (14.0) | | Stock issuances | — | — | — | 14.7 | — | — | — | 14.7 | | Balance as of June 30, 2024 | $4.5 | $— | $(99.9) | $8,894.2 | $(896.2) | $(33.6) | $1,950.6 | $9,819.6 | Notes to Condensed Consolidated Financial Statements (unaudited) This section provides detailed explanatory notes to the unaudited condensed consolidated financial statements, covering accounting policies and specific financial items 1. Basis of Accounting Presentation This note outlines the basis for preparing the unaudited condensed consolidated financial statements in accordance with GAAP and SEC rules - The unaudited Condensed Consolidated Financial Statements are prepared in accordance with GAAP and SEC rules, reflecting all normal recurring adjustments. They include NiSource, its majority-owned subsidiaries, and Variable Interest Entities (VIEs) where NiSource is the primary beneficiary[31][33] - Interim period income may not be indicative of full calendar year results due to weather variations and other factors[32] 2. Recent Accounting Pronouncements This note details recently issued and adopted accounting pronouncements, including new FASB ASUs on expense disaggregation and income tax disclosures - The FASB issued ASU 2024-03 (Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures) in November 2024, requiring disaggregated expense disclosures for public business entities, effective for fiscal years beginning after December 15, 2026[34] - ASU 2023-09 (Income Taxes) was issued in December 2023, enhancing income tax disclosures, effective for annual periods beginning after December 15, 2024[35] - NiSource adopted ASU 2023-07 (Segment Reporting) as of December 31, 2024, enhancing disclosures about significant segment expenses and CODM's use of reported measures[36] 3. Revenue Recognition This note describes the company's revenue recognition policies, disaggregating revenue by segment and customer class, and detailing customer accounts receivable - Revenue is disaggregated by reportable segment (Columbia Operations and NIPSCO Operations) and customer class (residential, commercial, industrial, off-system, wholesale, miscellaneous)[37] Total Operating Revenues by Segment and Customer Class (Three Months Ended June 30, 2025) | (in millions) | Columbia Operations | NIPSCO Operations | Corporate and Other | Total | | :------------ | :------------------ | :---------------- | :------------------ | :---- | | Gas Distribution: Residential | $397.0 | $114.2 | $— | $511.2 | | Gas Distribution: Commercial | $126.2 | $45.5 | $— | $171.7 | | Gas Distribution: Industrial | $37.6 | $22.6 | $— | $60.2 | | Electric Generation and Power Delivery: Residential | $— | $163.9 | $— | $163.9 | | Electric Generation and Power Delivery: Commercial | $— | $161.0 | $— | $161.0 | | Electric Generation and Power Delivery: Industrial | $— | $133.5 | $— | $133.5 | | Total Customer Revenues | $592.3 | $654.2 | $— | $1,246.5 | | Other Revenues | $8.9 | $26.4 | $1.2 | $36.5 | | Total Operating Revenues | $601.2 | $680.6 | $1.2 | $1,283.0 | Total Operating Revenues by Segment and Customer Class (Six Months Ended June 30, 2025) | (in millions) | Columbia Operations | NIPSCO Operations | Corporate and Other | Total | | :------------ | :------------------ | :---------------- | :------------------ | :---- | | Gas Distribution: Residential | $1,248.2 | $405.6 | $— | $1,653.8 | | Gas Distribution: Commercial | $432.7 | $148.6 | $— | $581.3 | | Gas Distribution: Industrial | $85.5 | $54.0 | $— | $139.5 | | Electric Generation and Power Delivery: Residential | $— | $331.8 | $— | $331.8 | | Electric Generation and Power Delivery: Commercial | $— | $321.1 | $— | $321.1 | | Electric Generation and Power Delivery: Industrial | $— | $276.1 | $— | $276.1 | | Total Customer Revenues | $1,832.2 | $1,563.8 | $— | $3,396.0 | | Other Revenues | $9.6 | $58.2 | $2.4 | $70.2 | | Total Operating Revenues | $1,841.8 | $1,622.0 | $2.4 | $3,466.2 | - Customer accounts receivable include billed and unbilled amounts, with significant seasonal fluctuations. The allowance for credit losses is determined using a model considering historical collections, current information, and forecasts, and increased from $23.7 million at January 1, 2025, to $27.3 million at June 30, 2025[41][43][44] 4. Noncontrolling Interests This note explains the consolidation of Variable Interest Entities and details contributions from and distributions to noncontrolling interest holders - NiSource consolidates four wind and solar Joint Ventures (Rosewater, Indiana Crossroads Wind, Indiana Crossroads Solar, and Dunns Bridge I) as Variable Interest Entities (VIEs) because NIPSCO is the managing member and controls significant decisions[45] - Assets of consolidated VIEs totaled $1,356.6 million at June 30, 2025, and liabilities totaled $148.5 million, which can only be used to settle obligations of the respective VIEs[50] Contributions from and Distributions to NIPSCO Minority Interest Holders | (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Contributions from NIPSCO minority interest holders | $99.5 | $59.7 | $134.3 | $59.7 | | Distributions to NIPSCO minority interest holders | $26.9 | $20.2 | $44.4 | $20.2 | 5. Earnings Per Share This note details the calculation of basic and diluted earnings per share using the two-class method due to participating securities - Basic and diluted EPS are calculated using the two-class method due to participating securities (non-vested restricted stock units with dividend rights)[52][53] Basic and Diluted EPS Calculation | (in millions, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income Available to Common Shareholders - Basic | $101.9 | $85.4 | $575.9 | $429.4 | | Average common shares outstanding - Basic | 471.0 | 448.5 | 470.6 | 448.2 | | Basic Earnings Per Share | $0.22 | $0.19 | $1.22 | $0.96 | | Average Common Shares - Diluted | 472.1 | 450.2 | 472.3 | 449.8 | | Diluted Earnings Per Share | $0.22 | $0.19 | $1.22 | $0.95 | 6. Equity This note describes the At-the-Market program for common stock issuance and the redemption of preferred stock - NiSource has an At-the-Market (ATM) program allowing the sale of up to $900.0 million of common stock, with approximately $47.5 million available as of June 30, 2025. The company executed three forward sale agreements in February, March, and June 2025, totaling 6,225,713 shares, with settlement expected by December 31, 2025[55][56][57][58][59] - On March 15, 2024, NiSource redeemed all outstanding Series B and B-1 Preferred Stock for a total of $500.0 million[59] 7. Short-Term Borrowings This note details the company's short-term borrowing arrangements, including its revolving credit facility and commercial paper program - NiSource utilizes a $1.85 billion revolving credit facility and a $1.85 billion commercial paper program for short-term borrowings. As of June 30, 2025, there were no outstanding borrowings under the revolving credit facility or commercial paper program (compared to $604.6 million outstanding commercial paper at December 31, 2024)[62][63] - Columbia of Ohio, NIPSCO, and Columbia of Pennsylvania maintain accounts receivable transfer programs, treated as secured borrowings, with a maximum borrowing capacity of $245.0 million as of June 30, 2025. No short-term borrowings related to these securitization transactions were outstanding at June 30, 2025[64][66] 8. Long-Term Debt This note outlines recent long-term debt issuances, including senior unsecured notes, and their net proceeds - On March 27, 2025, NiSource issued $750.0 million of 5.850% senior unsecured notes maturing in 2055, yielding $739.6 million in net proceeds[69] - On June 27, 2025, the company issued an additional $750.0 million of the same 5.850% senior unsecured notes due 2055, bringing the total to $1.5 billion. Concurrently, $900.0 million of 5.350% senior unsecured notes maturing in 2035 were issued, with these June issuances generating approximately $1.616 billion in total net proceeds[70] 9. Regulatory Matters This note discusses regulatory accounting practices and recent regulatory filings and approvals impacting NIPSCO's operations and rates - NiSource follows ASC Topic 980 for regulatory accounting, deferring certain expenses and credits as regulatory assets and liabilities, which are recognized in the income statement as they are recovered or refunded through customer rates[71] - NIPSCO filed a petition in February 2025 to modify a prior IURC order to allow full ownership of the Templeton power purchase agreement, with a final order expected in October 2025[72] - NIPSCO GenCo filed a declination of jurisdiction petition in January 2025 to establish a framework for accommodating megaload customers, including data centers, with an order expected in Q3 2025[73] - The IURC approved NIPSCO's Electric rate case settlement agreement on June 26, 2025, with new rates to be implemented in multiple steps from July 2025 through early 2026[74] 10. Risk Management Activities This note details the company's use of derivatives to manage commodity price and interest rate risks, avoiding speculative energy trading - NiSource uses derivatives to manage commodity price risk (natural gas purchases) and interest rate risk, aiming to limit volatility and is not involved in speculative energy trading[75][77][80] Risk Management Assets and Liabilities (in millions) | (in millions) | June 30, 2025 Assets | June 30, 2025 Liabilities | December 31, 2024 Assets | December 31, 2024 Liabilities | | :------------ | :------------------- | :---------------------- | :----------------------- | :------------------------ | | Current Derivatives not designated as hedging instruments | $16.6 | $1.7 | $9.1 | $2.3 | | Noncurrent Derivatives not designated as hedging instruments | $20.3 | $3.8 | $17.9 | $1.2 | | Total | $36.9 | $5.5 | $27.0 | $3.5 | - As of June 30, 2025, NiSource had 90.8 MMDth of net energy derivative volumes outstanding for natural gas hedges (up from 77.8 MMDth at December 31, 2024). Gains and losses on these derivatives are deferred as regulatory assets or liabilities and passed through to customers[77][79] 11. Fair Value This note provides fair value measurements for various assets and liabilities, including derivatives and debt securities, categorized by valuation levels Recurring Fair Value Measurements (June 30, 2025) | (in millions) | Level 1 | Level 2 | Level 3 | Balance as of June 30, 2025 | | :------------ | :------ | :------ | :------ | :-------------------------- | | Assets: U.S. Treasury debt securities | $1.5 | $— | $— | $1.5 | | Assets: Risk management assets | $— | $36.9 | $— | $36.9 | | Assets: Available-for-sale debt securities | $— | $144.9 | $— | $144.9 | | Assets: Equity securities | $6.1 | $— | $— | $6.1 | | Total Assets | $7.6 | $181.8 | $— | $189.4 | | Liabilities: Risk management liabilities | $— | $5.5 | $— | $5.5 | | Total Liabilities | $— | $5.5 | $— | $5.5 | - Risk management assets and liabilities include exchange-traded derivatives (Level 1) and non-exchange-traded derivatives (Level 2), with valuations incorporating market-based information. Available-for-sale debt securities are valued using a matrix pricing model (Level 2)[82][83][86] Available-for-Sale Debt Securities (June 30, 2025) | (in millions) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Allowance for Credit Losses | Fair Value | | :------------ | :------------- | :--------------------- | :---------------------- | :-------------------------- | :--------- | | U.S. Treasury debt securities | $4.3 | $— | $— | $— | $4.3 | | Corporate/Other debt securities | $143.6 | $1.4 | $(4.3) | $(0.1) | $140.6 | | Total | $147.9 | $1.4 | $(4.3) | $(0.1) | $144.9 | Long-Term Debt Fair Value (in millions) | (in millions) | Carrying Amount as of June 30, 2025 | Estimated Fair Value as of June 30, 2025 | Carrying Amount as of Dec. 31, 2024 | Estimated Fair Value as of Dec. 31, 2024 | | :------------ | :---------------------------------- | :------------------------------------- | :---------------------------------- | :------------------------------------- | | Long-term debt (including current portion) | $15,756.0 | $15,106.3 | $13,355.7 | $12,505.2 | 12. Goodwill This note presents the goodwill balance by segment and confirms no impairment was recorded after the annual qualitative assessment Goodwill Balance by Segment (June 30, 2025) | (in millions) | Columbia Operations | NIPSCO Operations | Corporate and Other | Total | | :------------ | :------------------ | :---------------- | :------------------ | :---- | | Goodwill | $1,468.1 | $17.8 | $— | $1,485.9 | - An annual qualitative 'step 0' assessment for goodwill impairment as of May 1, 2025, determined that the estimated fair value of reporting units substantially exceeded their carrying value, with no impairments recorded during the periods presented[94] 13. Income Taxes This note analyzes the effective tax rates, explaining their deviation from the federal statutory rate and period-over-period changes Effective Tax Rates | Period | Effective Tax Rate 2025 | Effective Tax Rate 2024 | | :----- | :---------------------- | :---------------------- | | Three Months Ended June 30 | 19.1% | 14.6% | | Six Months Ended June 30 | 17.1% | 15.7% | - The effective tax rates differ from the federal statutory rate of 21% primarily due to noncontrolling interest, amortization of excess deferred income taxes, federal tax credits, state income taxes, and other permanent book-to-tax differences[95] - The increase in the three-month effective tax rate (4.5%) and six-month effective tax rate (1.4%) in 2025 compared to 2024 was primarily driven by higher state income taxes and lower AFUDC equity, partially offset by increased federal tax credits for the three-month period[96] 14. Pension and Other Postemployment Benefits This note details the company's defined contribution and benefit retirement plans, including contributions and net periodic benefit costs - NiSource provides defined contribution and noncontributory defined benefit retirement plans, along with health care and life insurance benefits for certain retired employees. Regulatory assets and liabilities are recorded for postretirement benefit costs where future recovery is probable[98] Contributions to Pension and OPEB Plans (Six Months Ended June 30) | (in millions) | 2025 | 2024 | | :------------ | :---- | :---- | | Pension plans | $1.0 | $1.3 | | OPEB plans | $10.5 | $10.7 | Net Periodic Benefit Cost (Six Months Ended June 30, in millions) | Components of Net Periodic Benefit Cost | Pension Benefits 2025 | Pension Benefits 2024 | OPEB 2025 | OPEB 2024 | | :-------------------------------------- | :-------------------- | :-------------------- | :-------- | :-------- | | Service cost | $9.8 | $10.9 | $2.0 | $2.6 | | Interest cost | $32.0 | $32.6 | $11.2 | $10.9 | | Expected return on assets | $(46.2) | $(47.6) | $(8.4) | $(8.0) | | Recognized actuarial loss | $12.8 | $14.4 | $0.8 | $1.6 | | Total Net Periodic Benefit Cost | $8.4 | $10.3 | $4.8 | $6.3 | 15. Other Commitments and Contingencies This note outlines various commitments and contingencies, including guarantees, legal proceedings, environmental matters, and generation transition activities A. Guarantees and Indemnities This section details outstanding stand-by letters of credit and guarantees for renewable generation projects and service agreements - NiSource had $9.4 million in stand-by letters of credit outstanding as of June 30, 2025, for third parties[101] - Guarantees for renewable generation projects under Build-Transfer Agreements (BTAs) totaled $86.5 million at June 30, 2025, significantly down from $1,127.5 million at December 31, 2024, with amounts decreasing upon substantial completion of facilities[102] - Guarantees for rail and pipeline service agreements could require payments up to $52.0 million at June 30, 2025, if contractual obligations are not met[103] B. Legal Proceedings This section addresses various legal and regulatory claims, noting the uncertainty of outcomes and the establishment of reserves - NiSource is subject to various legal and regulatory claims, with outcomes uncertain but potentially material to financial results or cash flows. Reserves are established, but actual results may exceed these amounts[104][105] - Other claims and proceedings arising in the ordinary course of business are not considered individually or in aggregate material at this time[106] C. Environmental Matters This section discusses environmental compliance, remediation liabilities for various sites, and costs related to the EPA's Legacy CCR Rule - NiSource's operations comply with environmental regulations, and management expects most remediation and asset retirement costs to be recoverable through rates[107][108] - A liability of $85.8 million was recorded at June 30, 2025, for environmental remediation at various sites, with estimates subject to change based on evolving factors[109] - For Manufactured Gas Plant (MGP) sites, the estimated liability was $79.1 million at June 30, 2025, with a reasonably possible variance of up to $16.7 million[112] - An additional $38.8 million was accrued in Q2 2025 for probable compliance activities related to the EPA's Legacy Coal Combustion Residuals (CCR) Rule, with NIPSCO expecting cost recovery through depreciation rates[115] D. Other Matters (Generation Transition) This section outlines NIPSCO's generation portfolio transition, including PPA conversions and milestone payments for renewable asset development - NIPSCO is transitioning its generation portfolio, converting the Templeton PPA to a BTA and seeking IURC approval for full ownership. Purchase obligations for Templeton and Gibson are contingent on timely construction completion[116] - Milestone payments to renewable generation asset developers included $336.6 million for Fairbanks (mechanical completion in Jan 2025), $141.4 million for Fairbanks (substantial completion in May 2025), $217.6 million for Dunns Bridge II (substantial completion in Jan 2025), and $262.4 million for Gibson (mechanical completion in June 2025)[117][118] 16. Accumulated Other Comprehensive Loss This note details the components of accumulated other comprehensive loss, including gains and losses on securities, cash flow hedges, and pension/OPEB items Components of Accumulated Other Comprehensive Loss (June 30, 2025) | (in millions) | Gains and Losses on Securities | Gains and Losses on Cash Flow Hedges | Pension and OPEB Items | Accumulated Other Comprehensive Loss | | :------------ | :----------------------------- | :----------------------------------- | :--------------------- | :----------------------------------- | | Balance as of January 1, 2025 | $(4.0) | $(13.2) | $(13.2) | $(30.4) | | Net current-period other comprehensive income (loss) | $1.8 | $(0.2) | $0.6 | $2.2 | | Balance as of June 30, 2025 | $(2.2) | $(13.4) | $(12.6) | $(28.2) | 17. Business Segment Information This note provides financial information for NiSource's reportable segments, Columbia Operations and NIPSCO Operations, detailing revenues, income, and assets - NiSource operates through two primary reportable segments: Columbia Operations (regulated natural gas in five states) and NIPSCO Operations (regulated gas and electric in northern Indiana). Corporate and Other includes holding company interest expense and unallocated corporate costs[121][122] Operating Income by Segment (Three Months Ended June 30) | (in millions) | Columbia Operations 2025 | NIPSCO Operations 2025 | Total Reportable Segments 2025 | Columbia Operations 2024 | NIPSCO Operations 2024 | Total Reportable Segments 2024 | | :------------ | :----------------------- | :----------------------- | :----------------------------- | :----------------------- | :----------------------- | :----------------------------- | | Operating Revenues | $604.7 | $680.8 | $1,285.5 | $490.5 | $597.4 | $1,087.9 | | Operating Income | $122.2 | $134.0 | $256.2 | $96.6 | $142.3 | $238.9 | Operating Income by Segment (Six Months Ended June 30) | (in millions) | Columbia Operations 2025 | NIPSCO Operations 2025 | Total Reportable Segments 2025 | Columbia Operations 2024 | NIPSCO Operations 2024 | Total Reportable Segments 2024 | | :------------ | :----------------------- | :----------------------- | :----------------------------- | :----------------------- | :----------------------- | :----------------------------- | | Operating Revenues | $1,848.5 | $1,622.5 | $3,471.0 | $1,447.4 | $1,350.1 | $2,797.5 | | Operating Income | $568.0 | $445.9 | $1,013.9 | $458.6 | $358.7 | $817.3 | Assets by Segment (in millions) | (in millions) | June 30, 2025 | December 31, 2024 | | :------------ | :------------ | :---------------- | | Columbia Operations | $14,982.7 | $14,769.5 | | NIPSCO Operations | $17,511.3 | $15,823.5 | | Corporate and Other | $1,534.9 | $1,195.1 | | Consolidated Assets | $34,028.9 | $31,788.1 | 18. Other, Net This note itemizes the components of "Other, Net," including interest income, AFUDC equity, and pension/postretirement non-service costs Components of Other, Net (in millions) | (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income | $1.5 | $1.9 | $3.5 | $4.4 | | AFUDC equity | $8.6 | $13.3 | $17.8 | $24.6 | | Pension and other postretirement non-service cost | $(1.6) | $(2.1) | $(5.4) | $(4.3) | | Tax penalties | $(8.1) | $— | $(9.2) | $— | | Miscellaneous | $0.1 | $(0.1) | $(0.4) | $(2.5) | | Total Other, net | $0.5 | $13.0 | $6.3 | $22.2 | 19. Supplemental Disclosures of Cash Flow Information This note provides supplemental disclosures on cash flow information, detailing changes in working capital and significant non-cash transactions Components of Working Capital (Six Months Ended June 30, in millions) | (in millions) | 2025 | 2024 | | :------------ | :------ | :------- | | Accounts receivable | $185.6 | $238.0 | | Inventories | $20.9 | $118.6 | | Accounts payable | $(146.9) | $(160.6) | | Customer deposits and credits | $(108.9) | $(106.7) | | Total change in working capital | $(64.8) | $(116.2) | Non-Cash Transactions (Six Months Ended June 30, in millions) | (in millions) | 2025 | 2024 | | :------------ | :----- | :----- | | Capital expenditures included in current liabilities | $426.6 | $283.6 | | Dividends declared but not paid | $135.1 | $120.0 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on NiSource's financial condition, operational results, key strategies, and future outlook, covering energy transition and economic environment Executive Summary This summary outlines NiSource's business as a regulated energy holding company, its strategic vision, energy transition efforts, and operational transformation roadmap - NiSource is an energy holding company with fully regulated natural gas and electric utility subsidiaries in six states, generating substantially all operating income through Columbia Operations and NIPSCO Operations segments[139] - The company's vision is to be a premier, innovative, and trusted energy partner, focusing on safe, reliable energy delivery, long-term infrastructure investment, tariff alignment, and value creation in an evolving energy ecosystem[140] - NiSource is advancing its energy transition strategy by retiring coal-fired generation by 2028, replacing it with low- or zero-emission sources. As of June 30, 2025, 1,750 MW of owned renewable and 800 MW of PPA renewable projects are in service, with an additional 400 MW BTA and 400 MW PPA projects under development[141] - NIPSCO's 2024 Integrated Resource Plan (IRP) maintains prior retirement decisions and capacity additions, calling for additional generation resources through 2029 to support anticipated load growth from data centers and other economic development opportunities[143] - The company's enterprise-wide transformation roadmap focuses on operational excellence, safety, and efficiency, including the implementation of a three-phased Work and Asset Management (WAM) ERP program, with the final phase expected by end of 2025[145] - NiSource is monitoring economic risks such as supply chain constraints, material shortages, increased material prices, and competition for talent, which could impact operations and costs[146][147] Summary of Consolidated Financial Results This section summarizes NiSource's consolidated financial performance, highlighting changes in net income, operating expenses, and effective tax rates Consolidated Financial Results (Three and Six Months Ended June 30) | (in millions, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Favorable (Unfavorable) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Favorable (Unfavorable) | | :-------------------------------------- | :------------------------------- | :------------------------------- | :---------------------- | :----------------------------- | :----------------------------- | :---------------------- | | Operating Revenues | $1,283.0 | $1,084.7 | $198.3 | $3,466.2 | $2,791.0 | $675.2 | | Total Operating Expenses | $1,020.1 | $847.7 | $(172.4) | $2,443.9 | $1,970.6 | $(473.3) | | Operating Income | $262.9 | $237.0 | $25.9 | $1,022.3 | $820.4 | $201.9 | | Net Income Attributable to NiSource | $102.2 | $85.8 | $16.4 | $577.0 | $450.8 | $126.2 | | Diluted Earnings Per Share | $0.22 | $0.19 | $0.03 | $1.22 | $0.95 | $0.27 | - The increase in net income available to common shareholders for both periods was primarily due to higher revenues from capital investments, partially offset by increased operating expenses (including depreciation) and interest expense[150] - The effective tax rates for the three and six months ended June 30, 2025, were 19.1% and 17.1%, respectively, compared to 14.6% and 15.7% in 2024, primarily due to higher state income taxes and lower AFUDC equity[95][96][152] - Management does not believe the recently signed One Big Beautiful Bill Act (OBBBA) will have a material impact on the Company's financial position or results of operations[153] Results and Discussion of Segment Operations This section analyzes the financial and operational performance of Columbia and NIPSCO Operations, detailing revenue and expense changes, sales volumes, and NIPSCO's generation transition Columbia Operations This section provides a financial summary for Columbia Operations, detailing changes in operating revenues, expenses, and sales volumes driven by rates and weather Columbia Operations Financial Summary (Three and Six Months Ended June 30) | (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Favorable (Unfavorable) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Favorable (Unfavorable) | | :------------ | :------------------------------- | :------------------------------- | :---------------------- | :----------------------------- | :----------------------------- | :---------------------- | | Operating Revenues | $604.7 | $490.5 | $114.2 | $1,848.5 | $1,447.4 | $401.1 | | Total Operating Expenses | $482.5 | $393.9 | $(88.6) | $1,280.5 | $988.8 | $(291.7) | | Operating Income | $122.2 | $96.6 | $25.6 | $568.0 | $458.6 | $109.4 | - Operating revenues increased by $114.2 million (three months) and $401.1 million (six months) primarily due to new rates from base rate proceedings and regulatory capital programs, favorable weather effects, and higher cost of energy billed to customers[160] - Total sales and transportation volumes increased by 3.4 MMDth (three months) and 27.0 MMDth (six months) due to colder weather, particularly impacting residential and commercial customers[158][162] - Operating expenses increased by $88.6 million (three months) and $291.7 million (six months), driven by higher cost of energy billed to customers, increased depreciation and amortization, and higher employee and administrative expenses[165] - All Columbia Operations companies have state-approved recovery mechanisms for prudently incurred gas costs, ensuring that increases in tracked operating expenses are offset by increases in operating revenues with essentially no impact on net income[163] NIPSCO Operations This section presents NIPSCO Operations' financial summary, discussing revenue and expense drivers, sales volumes, and the ongoing electric generation transition strategy NIPSCO Operations Financial Summary (Three and Six Months Ended June 30) | (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Favorable (Unfavorable) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Favorable (Unfavorable) | | :------------ | :------------------------------- | :------------------------------- | :---------------------- | :----------------------------- | :----------------------------- | :---------------------- | | Operating Revenues | $680.8 | $597.4 | $83.4 | $1,622.5 | $1,350.1 | $272.4 | | Total Operating Expenses | $546.8 | $455.1 | $(91.7) | $1,176.6 | $991.4 | $(185.2) | | Operating Income | $134.0 | $142.3 | $(8.3) | $445.9 | $358.7 | $87.2 | - Operating revenues increased by $83.3 million (three months) and $272.3 million (six months), driven by new rates, weather effects, customer growth, and higher cost of energy billed to customers[171] - Electric sales volumes increased by 2.6 GWh (three months) and 365.4 GWh (six months), primarily due to increased industrial usage. Gas sales volumes increased by 5.2 MMDth (three months) and 15.5 MMDth (six months), mainly from industrial and residential customers due to colder weather[167][168][173] - Operating expenses increased by $91.7 million (three months) and $185.2 million (six months), largely due to higher cost of energy billed to customers, increased depreciation and amortization, and higher outside services expenses[176] - NIPSCO is executing its electric generation transition, aiming to retire remaining coal units by 2028 and replace them with renewable sources (wind, solar, battery storage) and flexible natural gas resources. As of June 30, 2025, Dunns Bridge II and Fairbanks projects were placed into service[177][178] Remaining Renewables Projects Under Development | Remaining Renewables Projects | Transaction Type | Technology | Nameplate Capacity (MW) | Storage Capacity (MW) | | :---------------------------- | :--------------- | :--------- | :---------------------- | :-------------------- | | Gibson | BTA | Solar | 200 | — | | Templeton | BTA | Wind | 200 | — | | Appleseed | 20 year PPA | Solar | 200 | — | | Carpenter | 20 year PPA | Wind | 200 | — | Liquidity and Capital Resources This section details NiSource's funding strategies, including cash flow, debt, and equity, along with capital investment plans, liquidity, debt covenants, and credit ratings ATM program This section details the At-the-Market program's remaining capacity and recent forward sale agreements for common stock issuance - As of June 30, 2025, the ATM program had approximately $47.5 million of common stock available for issuance, expiring on December 31, 2025[185] - NiSource executed three forward sale agreements in February, March, and June 2025, allowing the issuance of fixed numbers of shares at future settlement prices, with total potential proceeds of approximately $248.9 million based on June 30, 2025, net prices[185] Long-Term Debt This section outlines recent issuances of senior unsecured notes, including their maturities and net proceeds - In March 2025, NiSource issued $750.0 million of 5.850% senior unsecured notes due 2055, generating $739.6 million in net proceeds[185] - In June 2025, an additional $750.0 million of 5.850% senior unsecured notes due 2055 and $900.0 million of 5.350% senior unsecured notes due 2035 were issued, resulting in approximately $1.616 billion in total net proceeds[185] Cash Flow Activities This section analyzes cash flow changes from operating, investing, and financing activities, alongside planned capital investments for 2025-2029 Cash Flow Activities (Six Months Ended June 30, in millions) | (in millions) | 2025 | 2024 | Change in 2025 vs 2024 | | :------------ | :-------- | :-------- | :--------------------- | | Operating Activities | $1,181.8 | $901.7 | $280.1 | | Investing Activities | $(2,566.3) | $(1,594.0) | $(972.3) | | Financing Activities | $1,551.5 | $(1,452.9) | $3,004.4 | - Cash from operating activities increased by $280.1 million, driven by changes in exchange gas receivables, higher net income, deferred income taxes, and investments, partially offset by higher inventory and accounts receivables[187] - Cash used for investing activities increased by $972.3 million, primarily due to milestone payments to renewable generation asset developers and advanced deposits[188] - NiSource plans capital investments of $4.0 billion to $4.3 billion in 2025 and approximately $19.4 billion during 2025-2029, including generation transition strategy support[189] Regulatory Capital Programs This section describes ongoing system upgrades and details approved regulatory capital programs aimed at enhancing safety and reliability - NiSource is upgrading and modernizing its electric and gas systems to enhance safety, reliability, and reduce GHG emissions, supported by regulatory capital programs across its six states[190] Approved Regulatory Capital Programs (Selected) | Company | Program | Capital Investment Approved (in millions) | Investment Period | | :------ | :------ | :-------------------------------------- | :---------------- | | Columbia of Ohio | IRP - 2025 | $978.7 | 4/21-12/24 | | Columbia of Ohio | CEP - 2024 | $763.3 | 4/21-12/23 | | NIPSCO - Electric | TDSIC - 6 | $555.0 | 7/22-9/24 | | NIPSCO - Electric | GCT - 1 | $149.4 | 9/23-10/25 | - NIPSCO Gas filed an FMCA CPCN in April 2025, seeking recovery of $244.1 million in estimated capital for federally mandated Pipeline Safety IV Compliance Plan costs[191] Financing Activities This section summarizes financing activities, including common stock, long-term debt, short-term debt, and noncontrolling interest transactions - Financing activities include common stock issuances (refer to Note 6), long-term debt issuances (refer to Note 8), short-term debt activities (refer to Note 7), and contributions/distributions from noncontrolling interests (refer to Note 4)[192][193][194] Sources of Liquidity This section presents the company's current liquidity position, including available revolving credit, accounts receivable programs, and cash Current Liquidity Position (in millions) | (in millions) | June 30, 2025 | December 31, 2024 | | :------------ | :------------ | :---------------- | | Revolving Credit Facility | $1,850.0 | $1,850.0 | | Accounts Receivable Programs | $245.0 | $175.0 | | Less: Commercial Paper | $— | $604.6 | | Less: Letters of Credit Outstanding Under Credit Facility | $— | $9.4 | | Add: Cash and Cash Equivalents | $335.4 | $156.6 | | Net Available Liquidity | $2,430.4 | $1,567.6 | Debt Covenants This section outlines the debt to capitalization ratio covenant under the revolving credit facility and the company's compliance - NiSource must maintain a debt to capitalization ratio not exceeding 70.0% under its revolving credit facility. As of June 30, 2025, the ratio was 55.2%[195] Credit Ratings This section provides current credit ratings and outlooks for NiSource and NIPSCO, noting potential collateral requirements upon downgrade Credit Ratings as of June 30, 2025 | 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 | | Commercial Paper | A-2 | Stable | P-2 | Stable | F2 | Stable | - There have been no changes to NiSource's or NIPSCO's credit ratings or outlooks since February 2020[196] - A downgrade below investment grade could trigger collateral requirements of approximately $145.0 million as of June 30, 2025[197] Equity This section states the number of common and preferred shares outstanding as of June 30, 2025 - As of June 30, 2025, NiSource had 470,784,423 shares of common stock outstanding and no shares of preferred stock outstanding[198] Contractual Obligations This section confirms no material changes to contractual obligations occurred during the period, aside from recent debt issuances - No material changes to contractual obligations occurred during the six months ended June 30, 2025, other than the March and June 2025 debt issuances[199] Guarantees, Indemnities and Other Of Balance Sheet Arrangements This section describes various agreements, including guarantees and stand-by letters of credit, providing financial or performance assurance to third parties - NiSource and its subsidiaries enter into various agreements, including guarantees and stand-by letters of credit, to provide financial or performance assurance to third parties[200] Regulatory, Environmental and Safety Matters This section details NiSource's engagement with regulatory, environmental, and safety frameworks, covering cost recovery, rate cases, PHMSA compliance, and climate change initiatives Cost Recovery and Trackers This section explains regulatory trackers for cost recovery and rate design changes aimed at mitigating revenue volatility and ensuring fixed cost recovery - Regulatory trackers allow for the recovery of certain costs, such as gas and fuel costs, through rates, generally resulting in offsetting increases in operating revenues and expenses with no significant impact on operating income[201][202][204] - Gas distribution companies offer energy efficiency programs and have pursued rate design changes, such as straight fixed variable rates and weather normalization adjustments, to better match cost recoveries with fixed charges and mitigate weather-related revenue volatility[203] - NIPSCO expects future growth in per customer electric usage due to increasing electric applications like electric vehicles, which will likely lead to innovative rate designs to ensure fixed cost recovery[205] Rate Case Actions This section provides an overview of approved and pending rate case actions across various operating companies, including requested and approved incremental revenues Approved Rate Cases (Selected) | Company | Approved ROE | Requested Incremental Revenue (in millions) | Approved Incremental Revenue (in millions) | Filing Date | Rates Effective | | :------ | :----------- | :---------------------------------------- | :----------------------------------------- | :---------- | :-------------- | | Columbia of Pennsylvania | None specified | $124.1 | $74.0 | March 15, 2024 | December 2024 | | Columbia of Maryland | 9.80 % | $10.7 | $7.8 | September 24, 2024 | April 2025 | | NIPSCO - Electric | 9.75 % | $368.7 | $257.0 | September 12, 2024 | July 2025 | Pending Rate Cases (Selected) | Company | Requested Incremental Revenue (in millions) | Filing Date | Rates Effective | | :------ | :---------------------------------------- | :---------- | :-------------- | | Columbia of Pennsylvania | $110.5 | March 20, 2025 | December 2025 | | NIPSCO - Electric | $315.6 | May 27, 2