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What changed in NiSource's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NiSource's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+398 added−408 removedSource: 10-K (2025-02-12) vs 10-K (2024-02-21)

Top changes in NiSource's 2024 10-K

398 paragraphs added · 408 removed · 250 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

28 edited+13 added−92 removed14 unchanged
Biggest changeYates 63 President and Chief Executive Officer of NiSource since February 2022 and Director since March 2020 Executive Vice President, Customer and Delivery Operations, and President, Carolinas Region, of Duke Energy Corporation from 2014 to 2019.
Biggest changeYates 64 President and Chief Executive Officer of NiSource since February 2022 and Director since March 2020 Executive Vice President, Customer and Delivery Operations, and President, Carolinas Region, of Duke Energy Corporation from 2014 to 2019 Shawn Anderson 43 Executive Vice President and Chief Financial Officer of NiSource since March 2023 Senior Vice President and Chief Strategy and Risk Officer from June 2020 to March 2023 Vice President, Strategy and Chief Risk Officer from January 2019 to May 2020 Melody Birmingham 53 Executive Vice President, and President, NiSource Utilities of NiSource since March 2023 Executive Vice President, Chief Innovation Officer of NiSource from July 2022 to March 2023 Senior Vice President and Chief Administrator Officer of Duke Energy Corporation from May 2021 to June 2022 Senior Vice President, Supply Chain and Chief Procurement Officer of Duke Energy Indiana from 2018 to April 2021 William Jefferson, Jr 63 Executive Vice President, Chief Operating and Safety Officer of NiSource since May 2024 Executive Vice President, Operations and Chief Safety Officer of NiSource from July 2022 to May 2024 Station Director at STPNOC, Wadsworth, Texas, from 2020 to May 2022 and Vice President in 2022 Michael S.
We perform succession planning annually for officer level positions to ensure that we develop and sustain a strong bench of talent capable of performing at the highest levels. Talent is identified, and potential paths of development are discussed to ensure that employees have an opportunity to build their skills to be well-prepared for future roles.
Succession Planning . We perform succession planning annually for officer level positions to ensure that we develop and sustain a strong bench of talent capable of performing at the highest levels. Talent is identified, and potential paths of development are discussed, to ensure that employees have an opportunity to build their skills to be well-prepared for future roles.
Even if our business plan and/or growth strategy are executed, there is still risk of, among other things, human error in maintenance, installation or operations, shortages or delays in obtaining equipment, including as a result of transportation delays and availability, labor availability and performance below expected levels (in addition to the other risks discussed in this section).
Even if our business plan, growth strategy, and/or business opportunities are executed, there is still risk of, among other things, human error in maintenance, installation or operations, shortages or delays in obtaining equipment, including as a result of transportation delays and availability, labor availability and performance below expected levels (in addition to the other risks discussed in this section).
All employees receive training on our Code of Business Conduct annually or more frequently if there is a material change in content. Because of this training and other programs, we have learned from our most recent employee survey that 92% of our employees know what ethical violations look like and how to report them.
All employees receive training on our Code of Business Conduct annually or more frequently if there is a material change in content. Because of this training and other programs, we have learned from our most recent employee survey that our employees know what ethical violations look like and how to report them.
These communications emphasize the importance of our values and culture in the workplace. 16 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS N I S OURCE I NC . The following is a list of our Executive Officers, including their names, ages, offices held and other recent business experience. Name Age Office(s) Held in Past 5 Years Lloyd M.
These communications emphasize the importance of our values and culture in the workplace. 15 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS N I S OURCE I NC . The following is a list of our Executive Officers, including their names, ages, offices held and other recent business experience. Name Age Office(s) Held in Past 5 Years Lloyd M.
Our gas distribution and transmission, electric generation, transmission and distribution activities, involve a variety of inherent hazards and operating risks, including, but not limited to, gas leaks and over-pressurization, downed power lines, stray electrical voltage, excavation or vehicular damage to our infrastructure, outages, environmental spills, mechanical problems and other incidents, which could cause substantial financial losses.
Our gas distribution and transmission, electric generation, transmission and distribution activities, involve a variety of inherent hazards and operating risks, including, but not limited to, gas leaks and over-pressurization, downed power lines, stray electrical voltage, excavation or vehicular damage to our infrastructure, outages, environmental spills, mechanical problems, damage from weather events, and other incidents, which could cause substantial financial losses.
Luhrs 51 Executive Vice President, Strategy and Risk Chief Commercial Officer of NiSource since March 2023 Senior Vice President at Alliant Energy from 2022 to March 2023. Vice President at Duke Energy Corporation from 2013 to 2022. Kimberly S.
Luhrs 52 Executive Vice President, Strategy and Risk and Chief Commercial Officer of NiSource since March 2023 Senior Vice President at Alliant Energy from 2022 to March 2023 Vice President at Duke Energy Corporation from 2013 to 2022 Kimberly S.
Our Board reviews results and action plans related to our enterprise-wide comprehensive employee engagement survey. Our executive leadership team, including our Chief Executive Officer, communicates directly and regularly with all employees on timely ethics topics through electronic messages, coffee chats, and all-employee town hall meetings.
Our Board reviews results and action plans related to our enterprise-wide comprehensive employee engagement survey. Our executive leadership team, including our CEO, communicates directly and regularly with all employees on timely ethics topics through electronic messages, coffee chats, and all-employee town hall meetings.
Our business ethics program, including the employee training program, is reviewed annually by our executive leadership team and the Audit Committee of our Board of Directors. Our Compensation and Human Capital Committee reviews reports from our Chief Human Resources Officer and Chief Diversity, Equity and Inclusion Officer on employee engagement and corporate culture.
Our business ethics program, including the employee training program, is reviewed annually by our executive leadership team and the Audit Committee of our Board of Directors. Our Compensation and Human Capital Committee reviews reports from our Chief Human Resources Officer on employee engagement and corporate culture.
We maintain formal succession plans for our Chief Executive Officer ("CEO") and key officers. The succession plan for our CEO is reviewed by the Nominating and Governance Committee and the succession plans for key officers (other than the CEO) and critical roles are reviewed by the Compensation and Human Capital Committee annually or more frequently as needed.
We maintain formal succession plans for our CEO and key officers. The succession plan for our CEO is reviewed by the Environmental, Social, Nominating and Governance Committee and the succession plans for key officers (other than the CEO) and critical roles are reviewed by the Compensation and Human Capital Committee annually or more frequently as needed.
In addition to our DE&I, recruiting, development and retention programs described above, we also invest in internal communications programs, including in-person and virtual learning and networking opportunities, as well as regular town hall communications to employees. We measure and monitor culture and employee engagement through various channels including employee lifecycle, pulse, and census surveys.
In addition to recruiting, development and retention programs described above, we also invest in internal communications programs, including in-person and virtual learning and networking opportunities, as well as regular town hall communications to employees. We measure and monitor organizational health and employee engagement through various channels including employee lifecycle, pulse, and census surveys.
These programs include competitive medical, dental, vision, life and long-term disability programs, including employee HSA company contributions, telemedicine services, Employee Assistance Program, Integrated Health Management navigation services, and paid time off including a wellness day, sick/disability, parental leave, and illness in family day.
These programs include competitive medical, dental, vision, life and long-term disability programs, including employee health savings account company contributions, telemedicine services, Employee Assistance Program, Integrated Health Management navigation services, and paid time off including wellness, sick/disability, parental leave, and illness in family days.
Our enterprise-wide transformation roadmap initiatives are designed to identify long-term sustainable capability enhancements, cost optimization improvements, technology investments and work process optimization, has increased the volume and pace of change and may not be effective as it continues. Our customer and regulatory initiatives may not achieve planned results.
Our enterprise-wide transformation roadmap initiatives identify and enable long-term sustainable capability enhancements, cost optimization improvements, technology investments and work process optimization, and these initiatives have increased the volume and pace of change and may not be effective as it continues. Our customer and regulatory initiatives may not achieve planned results.
Employee and Workplace Health and Safety . We have several programs to support employees, and their families’ physical, mental, and financial well-being.
Employee and Workplace Health and Safety . We have several programs to support employees, and their families’ well-being.
Gode 49 Vice President, Chief Accounting Officer and Controller of NiSource since July 2020 Vice President and Controller of Washington Gas from March 2019 to 2020. Assistant Controller of Washington Gas from 2016 to March 2019. 17 Table of Contents ITEM 1A. RISK FACTORS N I S OURCE I NC .
Gode 50 Vice President, Chief Accounting Officer and Controller of NiSource since July 2020 Vice President and Controller of Washington Gas from March 2019 to 2020 16 Table of Contents ITEM 1A. RISK FACTORS N I S OURCE I NC .
Cuccia 40 Senior Vice President, General Counsel and Corporate Secretary of NiSource since April 2022 Vice President, Interim General Counsel and Corporate Secretary of NiSource from December 2021 to April 2022. Vice President and Deputy General Counsel, Regulatory, of NiSource Corporate Services Company, from January 2021 to December 2021.
Cuccia 41 Senior Vice President, General Counsel and Corporate Secretary of NiSource since April 2022 Vice President, Interim General Counsel and Corporate Secretary of NiSource from December 2021 to April 2022 Vice President and Deputy General Counsel, Regulatory, of NiSource Corporate Services Company, from January 2021 to December 2021 Vice President and General Counsel of Columbia Gas of Massachusetts and of NiSource Corporate Services Company, from 2019 to 2020 Melanie B.
Although the Company has, when possible, developed alternative sources of technology and built redundancy into its computer networks and tools, there can be no assurance that these efforts would protect against all potential issues related to the loss of any such technologies. Aging infrastructure may lead to disruptions in operations and increased capital expenditures and maintenance costs .
Although the Company has, when possible, developed alternative sources of technology and built redundancy into its computer networks and tools, there can be no assurance that these efforts would protect against all potential issues related to the loss of any such technologies. 18 Table of Contents
Failure to adapt to advances in technology, including alternative energy sources, and changes in laws or regulations to support such advances in technology or alternative energy sources, and our ability to manage such related costs could make us less competitive. 18 Table of Contents ITEM 1A. RISK FACTORS N I S OURCE I NC .
Failure to adapt to advances in technology, including alternative energy sources, and changes in laws or regulations to support such advances in technology or alternative energy sources, and our ability to manage such related costs could make us less competitive.
Our operations and financial results are subject to various risks and uncertainties, including those described below, that could adversely affect our business, financial condition, results of operations, cash flows, and the market price of our common stock. OPERATIONAL RISKS We may not be able to execute our business plan or growth strategy, including utility infrastructure investments.
Our operations and financial results are subject to various risks and uncertainties, including those described below, that could adversely affect our business, financial condition, results of operations, cash flows, and the market price of our common stock.
Utility infrastructure investments may not materialize, may cease to be achievable or economically viable and may not be successfully completed. Natural gas may cease to be viewed as an economically and environmentally attractive fuel.
Utility infrastructure investments may not materialize, may cease to be achievable or economically viable and may not be successfully completed.
We are currently experiencing, and expect to continue to experience, supply chain challenges, including labor availability issues, impacting our ability to obtain materials for our gas and electric projects, as well as our ability to ensure timely completion. Our distribution, transmission and generation activities involve a variety of inherent hazards and operating risks, including potential public safety risks.
We are currently experiencing, and expect to continue to experience, supply chain challenges, including labor availability issues, impacting our ability to obtain materials for our gas and electric projects, as well as our ability to ensure timely completion.
Advances in technology and potential competition supported by changes in laws or regulations could reduce the cost of electric generation and provide retail alternatives causing power sales to decline and the value of our generating facilities to decline. Our natural gas business model depends on widespread utilization of natural gas for space heating as a core driver of revenues.
Advances in technology and potential competition supported by changes in laws or regulations could reduce the cost of electric generation and provide retail alternatives causing power sales to decline and the value of our generating, transmission and distribution facilities to decline.
Operational, financial or regulatory conditions may result in our inability to execute our business plan or growth strategy, including investments related to natural gas pipeline modernization and our renewable energy projects, and the build-transfer execution goals within our business plan.
Operational, financial or regulatory conditions may result in our inability to execute our business plan or growth strategy, including investments related to natural gas and electric distribution and transmission infrastructure investments and our electric generation projects.
Vice President and General Counsel of Columbia Gas of Massachusetts and of NiSource Corporate Services Company, from 2019 to 2020. Melanie B. Berman 53 Senior Vice President and Chief Human Resources Officer since June 2021 Executive Vice President and Chief Human Resources Officer of The Michaels Companies, Inc. from 2020 to 2021.
Berman 54 Chief Human Resources Officer and Senior Vice President, Administration of NiSource since May 2024 Senior Vice President and Chief Human Resources Officer of NiSource from June 2021 to May 2024 Executive Vice President and Chief Human Resources Officer of The Michaels Companies, Inc. from 2020 to 2021 Gunnar J.
These hazards and risks have resulted and may result in serious injury or loss of life to employees and/or the general public, significant damage to property, environmental pollution, impairment of our operations, adverse regulatory rulings and reputational harm, which in turn could lead to substantial business and financial losses.
These hazards and risks have resulted and may result in serious injury or loss of life to employees and/or the general public, significant damage to property, 17 Table of Contents ITEM 1A.
A key element of our electric business model includes generating power at central station power plants to achieve economies of scale and produce power at a competitive cost. We continue to transition our generation portfolio in order to implement new and diverse technologies including renewable energy, distributed generation, energy storage, and energy efficiency designed to reduce regulated emissions.
A key element of our electric business model includes generating power at central station power plants and transmitting that power to customers to achieve economies of scale and produce power at a competitive cost.
In addition, we consider acquisitions or dispositions of assets or businesses, JVs, and mergers from time to time as we execute on our business plan and growth strategy. Any of these circumstances could adversely affect our business, results of operations and growth prospects.
Energy conservation, energy efficiency, distributed generation, energy storage, policies favoring electric heat over gas heat and other factors may reduce demand for natural gas and electricity. In addition, we consider acquisitions or dispositions of assets or businesses, JVs, and mergers from time to time as we execute on our business plan and growth strategy.
Certain environmental activist groups, investors and governmental entities continue to oppose natural gas delivery and infrastructure investments because of perceived environmental impacts associated with the natural gas supply chain and end use. Energy conservation, energy efficiency, distributed generation, energy storage, policies favoring electric heat over gas heat and other factors may reduce demand for natural gas and electricity.
We expect that management of load growth would require new generation and transmission capabilities. Natural gas may cease to be viewed as an economically and environmentally attractive fuel. Certain environmental activist groups, investors and governmental entities continue to oppose natural gas delivery and infrastructure investments because of perceived environmental impacts associated with the natural gas supply chain and end use.
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ITEM 1. BUSINESS N I S OURCE I NC . separations break down into involuntary separations (2%), resignations (4%), and retirements (2%). Retention has improved 2% year over year since 2021. Succession Planning .
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ITEM 1. BUSINESS N I S OURCE I NC . We strive to provide promotion and advancement opportunities for employees. In 2024, for all leadership positions at the supervisor and above level posted externally, we filled 64% with internal employees. We also develop and implement targeted development action plans to increase succession candidate readiness for leadership roles.
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These surveys continue to show above benchmark performance in safety, employee/manager relationships, and employee empowerment.
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Additionally, we monitor the risk and potential impact of talent loss and take action to increase retention of top talent. Retention in 2024 was 93%. We calculate retention as 100 minus the total number of separations divided by the average headcount for the annual period. These separations break down into involuntary separations (2%), resignations (3%), and retirements (2%).
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Shawn Anderson 42 Executive Vice President and Chief Financial Officer of NiSource since March 2023 Senior Vice President and Chief Strategy and Risk Officer from June 2020 to March 2023. Vice President, Strategy and Chief Risk Officer from January 2019 to May 2020.
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Our Code of Business Conduct is designed to ensure that our employees adhere to legal and regulatory requirements, mitigate risks, and promote ethical behavior. Our ethics program is led by leadership tone at the top, policies and procedures, regular training and communication, monitoring and auditing, and a system for reporting and addressing violations.
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Melody Birmingham 52 Executive Vice President, and President, NiSource Utilities of NiSource since March 2023 Executive Vice President, Chief Innovation Officer of NiSource from July 2022 to March 2023. Senior Vice President and Chief Administrator Officer of Duke Energy Corporation from May 2021 to June 2022.
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OPERATIONAL RISKS We may not be able to execute our business plan or growth strategy, including utility infrastructure investments, or business opportunities, such as data center development and related generation sources and transmission capabilities to meet potential load growth.
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Senior Vice President, Supply Chain and Chief Procurement Officer of Duke Energy Indiana from 2018 to April 2021. Donald E. Brown 52 Executive Vice President and Chief Innovation Officer of NiSource since March 2023 Executive Vice President and Chief Financial Officer of NiSource from July 2015 to March 2023. President, NiSource Corporate Services from 2020 to 2022.
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Additionally, operational, financial or regulatory conditions may result in our inability to manage the development and implementation connected to the complex business opportunity associated with growing interest in data centers from existing and potential customers.
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William Jefferson, Jr 62 Executive Vice President, Operations and Chief Safety Officer of NiSource since July 2022 Station Director and Plant General Manager at STPNOC, Wadsworth, Texas, from 2016 to May 2022. Michael S.
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Furthermore, we are evaluating the potential for data center development in our service territories, including ways to effectively manage the potential power demand, generation sources, and transmission capabilities to meet potential load growth from any data center customer, while at the same time focusing on our environmental goals.
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Vice President, Human Resources of Anthem, Inc. from January 2018 to 2019. Michael W. Hooper 50 Senior Vice President and President, NIPSCO of NiSource since May 2020 Senior Vice President, Regulatory, Legislative Affairs and Strategy, of NIPSCO from 2018 to 2020. Gunnar J.
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As data center opportunities evolve and develop, we may also enter into arrangements and agreements with customers and potential customers that require us to invest capital related to the data center development and related generation sources and transmission capabilities before we receive any potential return. Any of these circumstances could adversely affect our business, results of operations and growth prospects.
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We have risks associated with aging electric and gas infrastructure. These risks can be driven by threats such as, but not limited to, electrical faults, mechanical failure, internal corrosion, external corrosion, ground movement and stress corrosion and/or cracking.
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Data center growth in our service territories, including a focus on northern Indiana, while providing growth opportunities that enhance our business strategy, provide significant financial, operational, and regulatory risks that must be effectively managed.
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The age of these assets may result in a need for replacement, a higher level of maintenance costs or unscheduled outages, despite efforts by us to properly maintain or upgrade these assets through inspection, scheduled maintenance and capital investment.
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As we evaluate business opportunities presented by the data center development in our territories, including a focus on northern Indiana, we face a variety of challenges including accurately predicting future power needs of data centers due to rapidly changing technology and market dynamics, managing the potential power demand, generation sources, and transmission capabilities to meet potential load growth from any data center customer, financing the capital investment needed to build and maintain the necessary infrastructure to support data center development, managing the possible environmental impact of the potential increased power demand while remaining focused on our Net Zero Goal, and evaluating and complying with evolving regulations related to data center development.
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In addition, the nature of the information available on aging infrastructure assets, which in some cases is incomplete, may make the operation of the infrastructure, inspections, maintenance, upgrading and replacement of the assets particularly challenging.
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As we evaluate the potential for data center development in our service territories, we must effectively manage these financial, operational and regulatory risks. Our distribution, transmission and generation activities involve a variety of inherent hazards and operating risks, including potential public safety risks.
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Missing or incorrect infrastructure data may lead to (1) difficulty properly locating facilities, which can result in excavator damage and operational or emergency response issues, and (2) configuration and control risks associated with the modification of system operating pressures in connection with turning off or turning on service to customers, which can result in unintended outages or operating pressures.
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RISK FACTORS N I S OURCE I NC . environmental pollution, impairment of our operations, adverse regulatory rulings and reputational harm, which in turn could lead to substantial business and financial losses.
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Also, additional maintenance and inspections are required in some instances to improve infrastructure information and records and address emerging regulatory or risk management requirements, resulting in increased costs.
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We continue to transition our generation portfolio in order to implement new and diverse technologies including renewable energy, distributed generation, energy storage, and implement energy efficiency programs for customers.
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Supply chain issues related to shortages of materials, labor and transportation logistics may lead to delays in the maintenance and replacement of aging or damaged infrastructure, which could increase the probability and/or impact of a public safety incident. We lack diversity in suppliers of some gas materials.
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Our natural gas business model depends on widespread utilization of natural gas for space heating as a core driver of revenues.
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While we have implemented contractual protections with suppliers and stockpile some materials in inventory for such supply risks, we may not be effective in ensuring that we can obtain adequate emergency supply on a timely basis in each state, that no compromises are being made on quality and that we have alternate suppliers available.
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The failure to operate our assets as desired could result in interruption of electric service, major component failure at generating facilities and electric substations, gas leaks and other incidents, and an inability to meet firm service and compliance obligations, which could adversely impact revenues, and could also result in increased capital expenditures and maintenance costs, which, if not fully recovered from customers, could negatively impact our financial results. 19 Table of Contents ITEM 1A.
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RISK FACTORS N I S OURCE I NC . We may be unable to obtain insurance on acceptable terms or at all, and the insurance coverage we do obtain may not provide protection against all significant losses.
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Our ability to obtain insurance, as well as the cost and coverage of such insurance, is impacted by various events and developments affecting our industry and the financial condition and underwriting considerations of insurers.
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For example, some insurers have discontinued underwriting certain carbon-intensive energy-related businesses such as those in the coal industry or excluded coverage for specific perils such as wildfires or punitive damage risks.
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Certain perils, such as cyber liability, are now being excluded from some master policies for property and casualty insurance, requiring, where we have the ability, procurement of additional policies to maintain consistent coverage at an additional cost.
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Specific natural catastrophe events, such as hail and tornado, may not be covered with the same limits as other perils in certain property policies, as full coverage for these events is unavailable in the marketplace without costly specialty policies. Insurance coverage may not continue to be available at limits, rates or terms acceptable to us.
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In addition, our insurance is not sufficient or effective under all circumstances and against all hazards or liabilities to which we are subject. Certain types of damages, expenses or claimed costs, such as fines and penalties, have been and in the future may be excluded under the policies.
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In addition, insurers providing insurance to us may raise defenses to coverage under the terms and conditions of the respective insurance policies that could result in a denial of coverage or limit the amount of insurance proceeds available to us.
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Any losses for which we are not fully insured or that are not covered by insurance at all could materially adversely affect our results of operations, cash flows and financial position.
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Aspects of the implementation of our electric generation strategy, including the timing of the retirement of our coal generation units or the addition of new generation resources, may be delayed and may not achieve intended results. We intend to retire the remaining two coal units at R.M.
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Schahfer Generating Station by the end of 2025 and the remaining coal-fired generation by the end of 2028, to be replaced by lower-cost, reliable and cleaner options.
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Our 2021 Integrated Resource Plan (“2021 Plan”) validated the activities underway pursuant to our prior Integrated Resource Plans and calls for the retirement of the Michigan City Generating Station, replacement of existing vintage gas peaking facilities at the R.M. Schahfer Generating Station and upgrades to the electric transmission system.
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Macro supply chain issues and U.S. federal policy actions could create uncertainty around the availability of key input materials necessary to develop and place our renewable energy projects in service. In the U.S., solar industry supply chain issues include the U.S.
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Department of Commerce regulations related to antidumping and countervailing duties circumvention, the Uyghur Forced Labor Protection Act, Section 201 Tariffs and persistent general global supply chain and labor availability issues. The most prominent effect of these issues is the curtailment of imported solar panels and other key components required to complete utility scale solar projects in the U.S.
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Any available solar panels may not meet the cost and efficiency standards of our currently approved projects and the incremental cost may not be recoverable through customer rates. As a result of the challenges in obtaining solar panels, many solar projects in the U.S. have been delayed or canceled.
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As we are in the midst of a transition to an electric generation portfolio with more renewable resources, including solar, our projects are vulnerable to the effects of these issues.
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Our expectation has been that renewable or alternative energy sources would be some of the primary ways in which we will meet our electric generation capacity and reliability obligations to the MISO market and reliably serve our customers when we retire our coal generation capacity.
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The uncertainty surrounding the completion of generation resource projects could create significant risks for us to reliably meet our capacity and energy obligations to MISO and to provide reliable and affordable energy to our customers.
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Any additional delays to the completion dates of our planned and approved solar projects or other electric generation projects, including our proposed gas peaking facility could impact our capacity position and our ability to meet our resource adequacy obligations to MISO.
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Delays to the completion dates of our projects could also include delays in the financial return of certain investments and impact the overall timing of our electric generation transition.
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Our electric generation strategy may require additional investment to meet our MISO obligations and may require significant future capital expenditures, operating costs and charges to earnings that may negatively impact our financial position, financial results and cash flows.
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An inability to secure and deliver on renewable projects has negatively impacted, and could in the future negatively impact, our generation transition timeline and could negatively impact our achievement of decarbonization goals and reputation.
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Our capital projects and programs subject us to construction and supply risks, and are subject to regulatory oversight, including requirements for permits, approvals and certificates from various governmental agencies. 20 Table of Contents ITEM 1A. RISK FACTORS N I S OURCE I NC .
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Our business requires substantial capital expenditures for investments in, among other things, capital improvements to our electric generating facilities, electric and natural gas distribution infrastructure, natural gas storage and other projects, including projects for environmental compliance. As we undertake these projects and programs, we may be unable to complete them on schedule or at the anticipated costs.
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Additionally, we may construct or purchase some of these projects and programs to capture anticipated future growth, which may not materialize, and may cause the construction to occur over an extended period of time.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

64 edited+92 added−10 removed66 unchanged
Biggest changeCertain of the assumptions that could impact our ability to meet our emissions goal include, but are not limited to: the accuracy of current emission measurements, service territory size and capacity needs remaining in line with expectations; regulatory approval; impacts of future environmental regulations or legislation; impact of future GHG pricing regulations or legislation, including a future carbon tax or methane fee; price, availability and regulation of carbon offsets; price of fuel, such as natural gas; cost of energy generation technologies, such as wind and solar, natural gas and storage solutions; adoption of alternative energy, including adoption of electric vehicles; rate of technology innovation with regards to alternative energy resources; our ability to implement our modernization plans for our pipelines and facilities; the ability to complete and implement generation alternatives to NIPSCO’s coal generation and retirement dates of NIPSCO’s coal facilities by 2028; the ability to construct and/or permit new natural gas pipelines; the ability to procure resources needed to build at a reasonable cost, the lack of scarcity of resources and labor, project cancellations, construction delays or overruns and the ability to appropriately estimate costs of new generation; impact of any supply chain disruptions; and advancement of energy efficiencies.
Biggest changeCertain of the assumptions that could impact our ability to meet our emissions goal include, but are not limited to: the accuracy of current emission measurements, the ability to complete and implement generation alternatives to NIPSCO’s coal generation and retire NIPSCO’s coal facilities; the ability to implement our modernization plans for our natural gas pipelines and facilities, including construction of new pipelines and facilities; customer demand and capacity needs remaining in line with current expectations, including impacts from energy efficiency and technological innovation and adoption of alternative energy sources; the ability to effectively manage business opportunities from data center development; the ability to manage costs and supply chain risks associated with construction of electric and natural gas assets; technological innovation and costs of energy generation technologies such as wind, solar, thermal and energy storage, and of carbon abatement technologies such carbon capture solutions; regulatory approval; impacts of potential future environmental regulations or legislation, including potential GHG pricing regimes such as a carbon tax or methane fee; price, availability and regulation of carbon offsets; and price of natural gas and alternative fuels such as hydrogen.
Our extension of credit is governed by a Corporate Credit Risk Policy, involves judgment by our employees and is based on an evaluation of customer, supplier, or counterparty’s financial condition, credit history and other factors.
Our extension of credit is governed by a Corporate Credit Risk Management Policy, involves judgment by our employees and is based on an evaluation of customer, supplier, or counterparty’s financial condition, credit history and other factors.
We are, or may be, involved in legal and regulatory proceedings, investigations, inquiries, claims and litigation in connection with our business operations, the most significant of which are summarized in, Note 19, "Other Commitments and Contingencies," in the Notes to Consolidated Financial Statements. While we have insurance, it may not cover all costs or expenses incurred relating to litigation.
We are, or may be, involved in legal and regulatory proceedings, investigations, inquiries, claims and litigation in connection with our business operations, the most significant of which are summarized in, Note 19, "Other Commitments and Contingencies," in the Notes to Consolidated Financial Statements. While we maintain insurance, it may not cover all costs or expenses incurred relating to litigation.
As these technologies become a more cost-competitive option over time, whether through cost effectiveness or government incentives and subsidies, certain customers may choose to meet their own energy needs and subsequently decrease usage of our systems and services, which may result in, among other things, our facilities becoming less competitive and economical.
As these technologies become a more cost-competitive option, whether through cost effectiveness or government incentives and subsidies, certain customers may choose to meet their own energy needs and subsequently decrease usage of our systems and services, which may result in, among other things, our facilities becoming less competitive and economical.
As described in more detail in the risk factor below, the outcomes of these proceedings are uncertain, potentially lengthy and could be influenced by many factors, some of which may be outside of our control, including the cost of providing service, the necessity of expenditures, the quality of service, regulatory interpretations, customer intervention, economic conditions and the political environment.
As described in more detail in the risk factor below, the outcomes of these proceedings are uncertain, potentially lengthy and could be influenced by many factors, some of which may be outside of our control, including the cost of providing service, the necessity of expenditures, regulatory interpretations, customer intervention, economic conditions, the political environment and customer affordability.
As a utility company, we are subject to adverse publicity focused on the reliability of our services, the speed with which we are able to respond effectively to electric outages, natural gas leaks or events and related accidents and similar interruptions caused by storm damage, physical or cybersecurity incidents, or other unanticipated events, as well as our own or third parties’ actions or failure to act.
As a utility company, we are subject to adverse publicity focused on the actual or perceived reliability or affordability of our services, the speed with which we are able to respond effectively to electric outages, natural gas leaks or events and related accidents and similar interruptions caused by storm damage, physical or cybersecurity incidents, or other unanticipated events, as well as our own or third parties’ actions or failure to act.
Any negative views with respect to our environmental practices or our ability to meet the challenges posed by climate change from regulators, customers, investors or legislators could harm our reputation and adversely affect the perceived value of our products and services.
Any negative views with respect to our environmental practices or our ability to meet the challenges posed by climate change from regulators, customers, investors or legislators could not only harm our reputation, but could adversely affect the perceived value of our products and services.
Separately, a challenge by a taxing authority, changes in taxing authorities’ administrative interpretations, decisions, policies and positions, our ability to utilize tax benefits such as carryforwards or tax credits, or a deviation from other tax-related assumptions may cause actual financial results to deviate from previous estimates. 31 Table of Contents ITEM 1B.
Statutory changes, a challenge by a taxing authority, changes in taxing authorities’ administrative interpretations, decisions, policies and positions, our ability to utilize tax benefits such as carryforwards or tax credits, or a deviation from other tax-related assumptions may cause actual financial results to deviate from previous estimates. 30 Table of Contents ITEM 1B.
Existing environmental laws and regulations may be revised and new laws and regulations may be adopted or become applicable to us, with an increasing focus on the impact of coal and natural gas facilities that may result in significant additional expense and operating restrictions on our facilities, which may not be fully recoverable from customers and could materially affect the continued economic viability of our facilities. 30 Table of Contents ITEM 1A.
Existing environmental laws and regulations may be revised and new laws and regulations may be adopted or become applicable to us, with an increasing focus on the impact of coal and natural gas facilities that may result in significant additional expense and operating restrictions on our facilities, which may not be fully recoverable from customers and could materially affect the continued economic viability of our facilities.
To the extent that we are unable to recover those costs, or if higher rates arising from recovery of such costs result in reduced demand for services, our future financial results may be adversely impacted.
Some of these costs may not be recovered. To the extent that we are unable to recover those costs, or if higher rates arising from recovery of such costs result in reduced demand for services, our future financial results may be adversely impacted.
Reduced access to capital markets, increased borrowing costs, and/or lower equity valuation levels could reduce future earnings per share and cash flows. In addition, any rise in interest rates may lead to higher borrowing costs, which may adversely impact reported earnings, cost of capital and capital holdings. 27 Table of Contents ITEM 1A.
Reduced access to capital markets, increased borrowing costs, and/or lower equity valuation levels could reduce future earnings per share and cash flows. In addition, any rise in interest rates may lead to higher borrowing costs, which may adversely impact reported earnings, cost of capital and capital holdings.
These agreements are primarily for insurance purposes and for the physical purchase or sale of gas or power. As of December 31, 2023, the collateral requirement that would be required in the event of a downgrade below the ratings trigger levels would amount to approximately $90.1 million.
These agreements are primarily for insurance purposes and for the physical purchase or sale of gas or power. As of December 31, 2024, the collateral requirement that would be required in the event of a downgrade below the ratings trigger levels would amount to approximately $115.5 million.
As a result of increased awareness regarding climate change, coupled with adverse economic conditions, availability of alternative energy sources, including private solar, microturbines, fuel cells, energy-efficient buildings and energy storage devices, and new regulations restricting emissions, including potential regulations of methane emissions, some consumers and companies may use less energy, meet their own energy needs through alternative energy sources or avoid expansions of their facilities, including natural gas facilities, which may result in less demand for our services.
As a result of increased awareness regarding climate change, coupled with economic considerations, availability of alternative energy sources, including private solar, microturbines, fuel cells, energy-efficient buildings and energy storage devices, and regulations restricting, or imposing fees on, emissions, some consumers and companies may use less energy, meet their own energy needs through alternative energy sources or avoid expansions of their facilities, including natural gas facilities, which may result in less demand for our services.
If, in the future, we face limits to the credit and capital markets or experience significant increases in the cost of capital or are unable to access the capital markets, it could limit our ability to implement, or increase the costs of implementing, our business plan, which, in turn, could materially and adversely affect our results of operations, cash flows, financial condition and liquidity.
We may face limits, or the inability, to access credit and capital markets or may experience significant increases in the cost of capital, which could limit our ability to implement or increase the costs of implementing, our business plan, which, in turn, could materially and adversely affect our results of operations, cash flows, financial condition and liquidity.
Adverse economic conditions could result in an increase in defaults by customers, suppliers and counterparties We are also exposed to the risk that due to adverse economic conditions one or more suppliers or counterparties may fail or delay the performance of their contractual obligations. such risks could negatively impact our business, financial condition and cash flow.
We are also exposed to the risk that due to adverse economic conditions one or more suppliers or counterparties may fail or delay the performance of their contractual obligations, such risks could negatively impact our business, financial condition and cash flow.
We are subject to a financial covenant under our revolving credit facility, which requires us to maintain a debt to capitalization ratio that does not exceed 70%. As of December 31, 2023, the ratio was 58.2%.
We are subject to a financial covenant under our revolving credit facility, which requires us to maintain a debt to capitalization ratio that does not exceed 70%. As of December 31, 2024, the ratio was 52.6%.
An economic downturn or uncertainty, market turmoil, changes in interest rates, changes in tax policy, challenges faced by financial institutions, changes in our credit ratings, or a change in investor sentiment toward us or the utilities industry generally could adversely affect our ability to raise additional capital or refinance debt.
An economic downturn or uncertainty, market turmoil, changes in interest rates, changes in tax policy, challenges faced by financial institutions, changes in our credit ratings, or a change in investor sentiment toward us or the utilities industry generally could adversely affect our ability to raise additional capital or refinance debt. For example, because 26 Table of Contents ITEM 1A.
There can be no assurance that regulators will approve the recovery of all costs incurred by our electric and natural gas companies, including costs for construction, operation and maintenance, and compliance with current and future changes in environmental, federal pipeline safety, critical infrastructure and cyber-security laws and regulations.
There can be no assurance that regulators will approve the recovery of all operating and capital costs incurred by our electric and natural gas companies, including, but not limited to, costs for construction, operation and maintenance, and compliance with current and future changes in environmental, federal pipeline safety, critical infrastructure and cybersecurity laws and regulations.
Climate change is exacerbating risks to our physical infrastructure by increasing the frequency of extreme weather, including heat stresses to power lines, cold temperature stress to our electric and gas systems, and storms and floods that damage infrastructure.
Climate change is exacerbating risks to our physical infrastructure by increasing the frequency of extreme weather, including temperature stresses to our electric and gas systems and equipment and storms and floods that damage infrastructure.
While we continue to execute our plan to reduce our Scope 1 GHG emissions through the retirement of coal-fired electric generation, increased sourcing of renewable energy, priority pipeline replacement, leak detection and repair, and other methods, and while we have set a Net Zero Goal, GHG emissions are anticipated to be associated with energy delivery for many years.
While we have set a Net Zero Goal and continue to execute our plan to reduce our GHG emissions by the increased sourcing of renewable energy, priority pipeline replacement, leak detection and repair, and other methods, GHG emissions are anticipated to be associated with energy delivery for many years.
The EPA has issued regulations and plans to promulgate additional regulations concerning the management, transformation, transportation and storage of CCRs. NIPSCO is also incurring or will incur costs associated with closing, corrective action, and ongoing monitoring of certain CCR impoundments.
The EPA has issued regulations and may promulgate additional regulations concerning the management, storage, use and disposal of CCRs. NIPSCO is also incurring or will incur costs associated with closing, corrective action, and ongoing monitoring of certain CCR impoundments.
Our businesses are subject to extensive federal, state and local environmental laws and rules that regulate, among other things, air emissions, water usage and discharges, leak detection and repair, GHG and waste products such as CCR.
Our businesses are subject to extensive federal, state and local environmental laws and rules that regulate, among other things, air emissions, water usage and discharges, leak detection and repair, GHG and waste products such as CCR. Compliance with 29 Table of Contents ITEM 1A.
Although we attempt to maintain adequate defenses to these cyber-attacks or security breaches and work through industry groups and trade associations to identify common threats and assess our countermeasures, a security breach of our information systems or operational technology, or a security breach of the information systems of our customers, suppliers or others with whom we do business, could (i) adversely impact our ability to safely and reliably deliver electricity and natural gas to our customers through our generation, transmission and distribution systems and potentially negatively impact our compliance with certain mandatory reliability and gas flow standards, (ii) subject us to reputational and other harm or liabilities associated with theft or inappropriate release of certain types of information such as system operating information or information, personal or otherwise, relating to our customers or employees, (iii) impact our ability to manage our businesses, and/or (iv) subject us to legal and regulatory proceedings and claims from third parties, in addition to remediation costs, any of which, in turn, could have a material adverse effect on our businesses, cash flows, financial condition, results of operations and/or prospects.
A cybersecurity breach of our information systems or operational technology, or a cybersecurity breach of the information systems of our customers, suppliers or others with whom we do business, could, among other things, (i) adversely impact our ability to safely and reliably deliver electricity and natural gas to our customers through our generation, transmission and distribution systems and potentially negatively impact our compliance with certain mandatory reliability and gas flow standards, (ii) subject us to reputational and other harm or liabilities associated with theft or inappropriate release of certain types of information such as system operating information or information, personal or otherwise, relating to our customers or employees, (iii) impact our ability to manage our businesses, and/or (iv) subject us to legal and regulatory proceedings and claims from third parties, in addition to remediation costs, any of which, in turn, could have a material adverse effect on our businesses, cash flows, financial condition and/or results of operations.
Our electric business is subject to mandatory reliability and critical infrastructure protection standards established by NERC and enforced by the FERC. The critical infrastructure protection standards focus on controlling access to critical physical and cybersecurity assets. Compliance with the mandatory reliability standards could subject our electric utilities to higher operating costs.
The critical infrastructure protection standards focus on controlling access to critical physical and cybersecurity assets. Compliance with the mandatory reliability standards could subject our electric utilities to higher operating costs.
We have significant obligations in these areas and hold significant assets in these trusts. These assets are subject to market fluctuations and may yield uncertain returns, which could fall below our projected rates of return. A decline in the market value of assets may increase the funding requirements of the obligations under the defined benefit pension plans.
We have significant obligations in these areas and hold significant assets in these trusts. These assets are subject to market fluctuations and may yield uncertain returns, which could fall below our projected rates of return. A decline in the market value of assets may increase the funding requirements of the 28 Table of Contents ITEM 1A.
A negative rating action could also adversely impact our business relationships with suppliers and operating partners, who may be less willing to extend credit or offer us similarly favorable terms as secured in the past under such circumstances.
Any negative rating action could adversely affect our ability to access capital at rates and on terms that are attractive. A negative rating action could also adversely impact our business relationships with suppliers and operating partners, who may be less willing to extend credit or offer us similarly favorable terms as secured in the past under such circumstances.
For example, it could: • limit our ability to borrow additional funds or increase the cost of borrowing additional funds; • reduce the availability of cash flow from operations to fund working capital, capital expenditures and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in the business and the industries in which we operate; • lead parties with whom we do business to require additional credit support, such as letters of credit, in order for us to transact such business; • place us at a competitive disadvantage compared to competitors that are less leveraged; • increase vulnerability to general adverse economic and industry conditions; and • limit our ability to execute on our growth strategy, which is dependent upon access to capital to fund our substantial infrastructure investment program.
For example, it could: • limit our ability to borrow additional funds or increase the cost of borrowing additional funds; • reduce the availability of cash flow from operations to fund working capital, capital expenditures and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in the business and the industries in which we operate; • lead parties with whom we do business to require additional credit support, such as letters of credit, in order for us to transact such business; • place us at a competitive disadvantage compared to competitors that are less leveraged; 25 Table of Contents ITEM 1A.
Some of our debt obligations contain financial covenants related to debt-to-capital ratios and cross-default provisions. Our failure to comply with any of these covenants could result in an event of default, which, if not cured or waived, could result in the acceleration of outstanding debt obligations.
Our failure to comply with any of these covenants could result in an event of default, which, if not cured or waived, could result in the acceleration of outstanding debt obligations.
Compliance with these legal obligations require us to make significant expenditures for installation of pollution control equipment, remediation, environmental monitoring, emissions fees, and permits at many of our facilities.
RISK FACTORS N I S OURCE I NC . these legal obligations require us to make significant expenditures for installation of pollution control equipment, remediation, environmental monitoring, emissions fees, and permits at many of our facilities.
RISK FACTORS N I S OURCE I NC . An area of significant uncertainty and risk are potential changes to the laws concerning emission of GHG.
An area of significant uncertainty and risk are potential changes to the laws concerning emission of GHG.
Conversely, demand for our services may increase as a result of customer changes in response to climate change. For example, as the utilization of electric vehicles increases, demand for electricity may increase, resulting in increased usage of our systems and services. 25 Table of Contents ITEM 1A. RISK FACTORS N I S OURCE I NC .
Conversely, demand for our services may increase as a result of customer changes in response to climate change. For example, as the utilization of electric vehicles increases, demand for electricity may increase, resulting in increased usage of our systems and services.
The inability to recover a significant amount of operating costs could have an adverse effect on a company’s financial position, results of operations and cash flows. Changes to rates may occur at times different from when costs are incurred.
The inability to recover a significant amount of operating or capital costs could have an adverse effect on a company’s financial position, results of operations and cash flows. 27 Table of Contents ITEM 1A. RISK FACTORS N I S OURCE I NC . Changes to rates may occur at times different from when costs are incurred.
The foregoing may have adverse effects on our business, results of operations, cash flow and financial condition. The physical impacts of climate change and the transition to a lower carbon future are impacting our business and could materially adversely affect our results of operations.
The physical impacts of climate change and the transition to a lower carbon future are impacting our business and could materially adversely affect our results of operations.
UASs are also being used for malicious activities and the cybersecurity risk in connection with operating UASs is increasing. In addition, we collect and retain personally identifiable information of our customers and employees. Customers and employees expect that we will adequately protect their personal information. The legal and regulatory environment surrounding information security and privacy is increasingly demanding.
In addition, we use unmanned aircraft systems (UAS) or drones in our business operations. UASs are also being used for malicious activities and the cybersecurity risk in connection with operating UASs is increasing. In addition, we collect and retain personally identifiable information of our customers and employees. Customers and employees expect that we will adequately protect their personal information.
Our analysis and plan for execution, which is outlined in the NIPSCO 2021 Integrated Resource Plan, requires us to make a number of assumptions. These goals and underlying assumptions involve risks and uncertainties and are not guarantees.
NIPSCO’s electric generation transition, which is outlined in the 2024 Plan, is a key element of the Net Zero Goal. Our analysis and plan for execution requires us to make a number of assumptions. These goals and underlying assumptions involve risks and uncertainties and are not guarantees.
Additionally, changes in interest rates affect the liabilities under these benefit plans; as interest rates decrease, the liabilities increase, which could potentially increase funding requirements.
RISK FACTORS N I S OURCE I NC . obligations under the defined benefit pension plans. Additionally, changes in interest rates affect the liabilities under these benefit plans; as interest rates decrease, the liabilities increase, which could potentially increase funding requirements.
Achieving the Net Zero Goal will require supportive regulatory and legislative policies, favorable stakeholder environments and advancement of technologies that are not currently economical to deploy, the impacts and costs of which are not fully understood at this time. NIPSCO’s electric generation transition is a key element of the Net Zero Goal.
Achieving the Net Zero Goal will require supportive regulatory and legislative policies, favorable stakeholder environments and advancement of technologies that are not currently economically or technologically feasible to deploy at scale, of which, the impacts and costs are not currently fully understood.
For example, because NIPSCO’s current generating facilities substantially rely on coal for its operations, certain financial institutions may choose not to participate in our financing arrangements. In addition, large institutional investors may choose to sell or choose not to purchase our stock due to environmental, social and governance (“ESG”) concerns or concerns regarding renewable energy supply chain challenges.
RISK FACTORS N I S OURCE I NC . NIPSCO’s current generating facilities substantially rely on coal for its operations, certain financial institutions may choose not to participate in our financing arrangements. In addition, investors may choose to sell or choose not to purchase our stock due to environmental, social and governance or sustainability concerns.
Any negative opinions with respect to these goals or our environmental practices, including any inability to achieve, or a scaling back of these goals, formed by regulators, customers, investors or legislators could harm our reputation and have an adverse effect on our financial condition. FINANCIAL, ECONOMIC AND MARKET RISKS We have substantial indebtedness which could adversely affect our financial condition.
Any negative opinions with respect to these goals or our environmental practices, including our ability to meet the challenges posed by climate change and our ability to achieve our carbon emission reduction goals, or a scaling back of these goals, formed by regulators, customers, investors or legislators could harm our reputation and have an adverse effect on our financial condition.
Further, evolving investor sentiment related to the use of fossil fuels and initiatives to restrict continued production of fossil fuels could result in a significant impact on our electric generation and natural gas businesses in the future. We are unable to forecast the future of commodity markets.
Further, evolving investor sentiment related to the use of fossil fuels and initiatives to restrict continued production of fossil fuels could result in a significant impact on our electric generation and natural gas businesses in the future. 24 Table of Contents ITEM 1A. RISK FACTORS N I S OURCE I NC .
A disruption or failure of natural gas distribution systems, or within electric generation, transmission or distribution systems, in the event of a major hurricane, tornado, wildfire, or other major weather event, or terrorist attack, acts of war, international military invasions, including the political and economic disruption and uncertainty related to such terrorist attack, acts of war, or international military invasions (e.g.
A disruption or failure of natural gas distribution systems, or within electric generation, transmission or distribution systems, in the event of a hurricane, tornado, wildfire, flood, or other major weather event, or terrorist attack, acts of war, international 23 Table of Contents ITEM 1A.
Ultimately, significant funding requirements and increased pension or other postretirement benefit plan expenses could negatively impact our results of operations and financial position. We have significant goodwill.
Ultimately, significant funding requirements and increased pension or other postretirement benefit plan expenses could negatively impact our results of operations and financial position. We have significant goodwill. Any future impairments of goodwill could result in a significant charge to earnings in a future period and negatively impact our compliance with certain covenants under financing agreements.
The occurrence of such events could materially adversely affect our business, financial position and results of operations. In accordance with customary industry practice, we maintain insurance against some, but not all, of these risks and losses. As a result, the amount and scope 24 Table of Contents ITEM 1A.
In addition, the supply chain constraints that we are experiencing could impact our ability to timely restore services. The occurrence of such events could materially adversely affect our business, financial position and results of operations. In accordance with customary industry practice, we maintain insurance against some, but not all, of these risks and losses.
With higher frequency of these and other possible extreme weather events it may become more costly for us to safely and reliably deliver certain products and services to our customers.
With higher frequency of these and other possible extreme weather events it may become more costly for us to safely and reliably deliver certain products and services to our customers. Further, as our generation profile increases geographically, it is potentially more vulnerable to certain weather hazards than centralized generation, thereby increasing the frequency of weather impacts to overall electric reliability.
Our business is capital intensive and we rely significantly on long-term debt to fund a portion of our capital expenditures and repay outstanding debt, and on short-term borrowings to fund a portion of day-to-day business operations. We had total consolidated indebtedness of $14,127.9 million outstanding as of December 31, 2023. Our substantial indebtedness could have important consequences.
FINANCIAL, ECONOMIC AND MARKET RISKS We have substantial indebtedness which could adversely affect our financial condition. Our business is capital intensive and we rely significantly on long-term debt to fund a portion of our capital expenditures and repay outstanding debt, and on short-term borrowings to fund a portion of day-to-day business operations.
Cyber-attacks or security breaches can occur at any point in the supply chain or with any suppliers, and future supplier non-compliance with cybersecurity controls could result in material cybersecurity incidents. In addition, we use unmanned aircraft systems (UAS) or drones in our business operations.
We are aware of vendor cybersecurity incidents that have impacted our business, although no such events have had a material impact. Cyber-attacks or security breaches can occur at any point in the supply chain or with any suppliers, and future supplier non-compliance with cybersecurity controls could result in material cybersecurity incidents.
Additionally, non-compliance with debt covenants could adversely affect our 26 Table of Contents ITEM 1A. RISK FACTORS N I S OURCE I NC . ability to obtain future borrowings and as a result materially adversely affect our business, financial condition, results of operations, and liquidity.
Additionally, non-compliance with debt covenants could adversely affect our ability to obtain future borrowings and as a result materially adversely affect our business, financial condition, results of operations, and liquidity. A drop in our credit ratings could adversely impact our cash flows, results of operation, financial condition and liquidity.
Diminished investor interest in funding fossil fuel development could reduce the amount of exploration and production of natural gas or coal, or investment in gas transmission pipelines. Reduced production and transportation of natural gas could, in the long-term, lead to supply shortages leading to baseload generation outages.
Reduced production and transportation of natural gas could, in the long-term, lead to supply shortages leading to baseload generation outages.
Some of our baseload generation is dependent on natural gas and coal, and we pass through the costs for these energy sources to our customers. In addition, in our gas distribution business, we procure natural gas on behalf of certain customers, and we pass through the actual cost of the gas consumed.
We are unable to forecast the future of commodity markets. Some of our generation is dependent on natural gas and coal, and we pass through the costs for these energy sources to our customers.
We have increased security given the current environment and may be required by regulators or by the future threat environment to make investments in security that we cannot currently predict. In addition, the supply chain constraints that we are experiencing could impact our ability to timely restore services.
Our electric and gas physical infrastructure may be targets of physical security threats or terrorist activities that could disrupt our operations. We have increased security given the current environment and may be required by regulators or by the future threat environment to make investments in security that we cannot currently predict.
The U.S. manufacturing industry continues to adjust to changing market conditions including international competition, inflation and increasing costs, government and societal pressure to decarbonization, and fluctuating demand for its products.
The U.S. manufacturing industry continues to adjust to changing market conditions including international competition, inflation and increasing costs, government and societal pressure to decarbonization, and fluctuating demand for its products. We are exposed to risk that customers will not remit payment for delivered energy or services, and that suppliers or counterparties will not perform under various financial or operating agreements.
In 2021, the TSA announced two new security directives in response to a ransomware attack on the Colonial Pipeline that occurred earlier in the year. These directives, including updates or amendments to such TSA directives, require critical pipeline owners to comply with mandatory reporting measures, designate a cybersecurity coordinator, provide vulnerability assessments, and ensure compliance with certain cybersecurity requirements.
These directives, including updates or amendments to such TSA directives, require critical pipeline owners to comply with mandatory reporting measures, designate a cybersecurity coordinator, provide vulnerability assessments, and ensure compliance with certain cybersecurity requirements. In November 2024, the TSA issued a Notice of Proposed Rulemaking (NPRM) that would mandate cyber risk management and reporting requirements for the pipeline industry.
We are also subject to adverse publicity related to actual or perceived environmental impacts. If customers, legislators or regulators have or develop a negative opinion of us, this could result in less favorable legislative and regulatory outcomes or increased regulatory oversight, increased litigation and negative public perception.
If customers, legislators or regulators have or develop a negative opinion of us, this could result in less favorable legislative and regulatory outcomes or increased regulatory oversight, increased litigation and negative public perception. The foregoing may have adverse effects on our business, results of operations, cash flow and financial condition.
We are subject to operational and financial risks and liabilities associated with the implementation and efforts to achieve our carbon emission reduction goals. On November 7, 2022, we announced our goal of reaching net zero Scope 1 and 2 greenhouse gas emissions by 2040 (the “Net Zero Goal”).
In November 2022, we announced our goal of reaching net zero Scope 1 and 2 greenhouse gas emissions by 2040 (the “Net Zero Goal”).
Compliance with and changes in cybersecurity requirements have a cost and operational impact on our business, and failure to comply with such laws and regulations could adversely impact our reputation, results of operations, financial condition and/or cash flows. As cyber-attacks or security breaches are becoming more sophisticated, critical infrastructure assets, including pipelines and electric infrastructure, may be specifically targeted.
Compliance with and changes in cybersecurity requirements have a cost and operational impact on our business, and failure to comply with such laws and regulations could adversely impact our reputation, results of operations, financial condition and/or cash flows. The legal and regulatory environment surrounding cybersecurity and privacy is increasingly demanding.
Regulators may reduce ROE to mitigate potential customer bill increases due to items unrelated to capital investments. These actions would have an adverse effect on our financial position, results of operations and cash flows. 28 Table of Contents ITEM 1A. RISK FACTORS N I S OURCE I NC .
Regulators may reduce ROE to mitigate potential customer bill increases due to items unrelated to capital investments. These actions would have an adverse effect on our financial position, results of operations and cash flows. Our electric business is subject to mandatory reliability and critical infrastructure protection standards established by NERC and enforced by the FERC.
The credit rating agencies periodically review our ratings, taking into account factors such as our capital structure, earnings profile, and overall shifts in the economy or business environment. We are committed to maintaining investment grade credit ratings; however, there is no assurance we will be able to do so in the future.
The availability and cost of credit for our businesses may be greatly affected by credit ratings. The credit rating agencies periodically review our ratings, taking into account factors such as our capital structure, earnings profile, liabilities, and overall shifts in the economy or business environment.
Actions to reduce inflation, including raising interest rates, increase our cost of borrowing, which in turn could make it more difficult to obtain financing for our operations or investments on favorable terms.
There may be external factors such as inflation, monetary policy or other market conditions which could impact our cost of borrowing and could make it more difficult to obtain financing for our operations or investments on favorable terms.
RISK FACTORS N I S OURCE I NC . of insurance coverage maintained against losses resulting from any such event may not be sufficient to cover such losses or otherwise adequately compensate for any business disruptions that could result.
As a result, the amount and scope of insurance coverage maintained against losses resulting from any such event may not be sufficient to cover such losses or otherwise adequately compensate for any business disruptions that could result. We are exposed to significant reputational risks, which make us vulnerable to a loss of cost recovery, increased litigation and negative public perception.
Russia’s military invasion of Ukraine, Israel/Hamas conflict), civil unrest, accident, public health emergency (e.g. pandemic), or other catastrophic event could cause delays in completing sales, providing services, or performing other critical functions. We have experienced disruptions in the past from hurricanes and tornadoes and other events of this nature.
RISK FACTORS N I S OURCE I NC . military invasions, including the political and economic disruption and uncertainty related to such terrorist attack, acts of war, or international military invasions, civil unrest, accident, public health emergency (e.g. pandemic), or other catastrophic event could cause delays in completing sales, providing services, or performing other critical functions.
Our credit ratings could be lowered or withdrawn entirely by a rating agency if, in its judgment, the circumstances warrant. Any negative rating action could adversely affect our ability to access capital at rates and on terms that are attractive.
We are committed to maintaining investment grade credit ratings; however, there is no assurance we will be able to do so in the future. Our credit ratings could be lowered or withdrawn entirely by a rating agency if, in its judgment, the circumstances warrant.
Challenges arise with state regulators on inflationary pricing for electric and gas materials and potential price increases, ensuring that updated pricing for electric and gas materials is included in plans and regulatory assumptions, and ensuring there is a regulatory recovery model.
Further, we face regulatory challenges when our electric and gas companies seek regulatory recovery of increases to materials and other costs as a result of inflationary pressures, including accounting for inflationary pricing in plans and assumptions and ensuring there is a regulatory recovery model.
Also, companies in our industry face a heightened risk of exposure to and have experienced acts of terrorism and vandalism. Our electric and gas physical infrastructure may be targets of physical security threats or terrorist activities that could disrupt our operations.
We have experienced disruptions in the past from tornadoes, hurricanes and remnants of hurricanes and other events of this nature. Also, companies in our industry face a heightened risk of exposure to and have experienced acts of terrorism and vandalism.
Supply chain constraints may challenge our ability to remain in compliance if we cannot obtain the materials that we need to operate our business in a compliant manner.
Supply chain constraints, both direct and indirect, including but not limited to material or labor shortages, may challenge our ability to remain in compliance with these laws, regulations, tariffs and policies and operate our business in a compliant manner.
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ITEM 1A. RISK FACTORS N I S OURCE I NC . cybersecurity controls can also result in a cybersecurity incident. We are aware of vendor cyber incidents that have impacted our business, although no such events have had a material impact.
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ITEM 1A. RISK FACTORS N I S OURCE I NC . Aging infrastructure may lead to disruptions in operations and increased capital expenditures and maintenance costs . We have risks associated with aging electric and gas infrastructure.
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NiSource continues to work with the TSA to ensure that compliance with the security directives are being met. Additionally, on November 30, 2022, the TSA issued an advance notice of proposed rulemaking (ANPRM) seeking public comment on more comprehensive, formal cybersecurity regulations for the pipeline industry.
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These risks can be driven by threats such as, but not limited to, electrical faults, mechanical failure, internal corrosion, external corrosion, ground movement and stress corrosion and/or cracking.
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We are exposed to significant reputational risks, which make us vulnerable to a loss of cost recovery, increased litigation and negative public perception.
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The age of these assets may result in a need for replacement, a higher level of maintenance costs or unscheduled outages, despite efforts by us to properly maintain or upgrade these assets through inspection, scheduled maintenance and capital investment.
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Further, as our generation profile increases geographically, it is potentially more vulnerable to certain weather hazards than centralized fossil generation, thereby increasing the frequency of weather impacts to overall electric reliability and such distributed renewables. Some of these costs may not be recovered.
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In addition, the nature of the information available on aging infrastructure assets, which in some cases is incomplete, may make the operation of the infrastructure, inspections, maintenance, upgrading and replacement of the assets particularly challenging.
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For example, in February 2023, the Maryland Office of People's Counsel filed a petition with the Maryland PSC seeking an investigation regarding planning, practices, and future operations of natural gas suppliers in the state and this initiated a proceeding related to Near-Term, Priority Actions and Comprehensive, Long-Term Planning for Maryland's Gas Companies, and in December 2023 the Maryland Department of Environment proposed a Building Efficiency Performance Standard regulation that could require buildings of a certain size and type eliminate Scope 1 GHG emissions by 2040.
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Missing or incorrect infrastructure data may lead to (1) difficulty properly locating facilities, which can result in excavator damage and operational or emergency response issues, (2) configuration and control risks associated with the modification of system operating pressures in connection with turning off or turning on service to customers, which can result in unintended outages or operating pressures and (3) other potential risks related to missing or incorrect infrastructure data.
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A drop in our credit ratings could adversely impact our cash flows, results of operation, financial condition and liquidity. The availability and cost of credit for our businesses may be greatly affected by credit ratings.
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Also, additional maintenance and inspections are required in some instances to improve infrastructure information and records and address emerging regulatory or risk management requirements, resulting in increased costs.
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RISK FACTORS N I S OURCE I NC .
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Supply chain issues related to shortages of materials, labor and transportation logistics may lead to delays in the maintenance and replacement of aging or damaged infrastructure, which could increase the probability and/or impact of a public safety incident. We lack diversity in suppliers of some gas materials.
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In addition, our results of operations are negatively impacted by lower revenues resulting from higher bankruptcies, predominately focused on commercial and industrial customers not able to sustain operations through the economic disruptions related to the pandemic.
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While we have implemented contractual protections with suppliers and stockpile some materials in inventory for such supply risks, we may not be effective in ensuring that we can obtain adequate emergency supply on a timely basis in each state, that no compromises are being made on quality and that we have alternate suppliers available.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAs of the date of filing this Annual Report on Form 10-K, NiSource is not aware of any material cybersecurity incidents during the past year. NiSource monitors the increasing sophistication of cybersecurity threats and continues to contribute resources to improve its cybersecurity program to protect its information systems and assets.
Biggest changeNiSource monitors the increasing sophistication of cybersecurity threats and continues to allocate resources to enhance its cybersecurity program to protect its information systems and assets. No cybersecurity program is effective to identify and mitigate all threats and NiSource cannot guarantee that it will be able to prevent all cybersecurity incidents.
NiSource’s Supply Chain function works with legal counsel and the Cyber function to periodically update cybersecurity contractual provisions in its vendor agreements, with deviations from such provisions requiring approval from the Legal Department and Cyber function.
NiSource’s Supply Chain function works with the Legal and Cyber functions to periodically update cybersecurity contractual provisions in its vendor agreements, with deviations from such provisions requiring approval from the Legal and Cyber functions.
The NiSource cybersecurity program includes the following key components: Risk assessment NiSource regularly assesses its cybersecurity risks to identify and prioritize the most significant threats. The risk assessment process considers a variety of factors, including those specific to the utility/energy industry, the types of data NiSource collects and stores, and the threats posed by known vulnerabilities.
NiSource regularly assesses its cybersecurity risks to identify and prioritize the most significant threats. The risk assessment process considers a variety of factors, including those specific to the utility/energy industry, the types of data NiSource collects and stores, and the threats posed by known vulnerabilities.
The Risk Management Committee reviews any mitigation gaps identified by risk owners and approves or rejects the pace of mitigation activities as a statement of risk tolerance and then directs that mitigation activities be included in budgets and the business plan as appropriate.
The Risk Management Committee reviews any mitigation gaps identified by risk owners and approves or rejects the pace of mitigation activities as a statement of risk tolerance and then directs that mitigation activities be included in budgets and the business plan as appropriate. The NiSource cybersecurity program includes the following key components: Risk assessment.
Incident response: NiSource has a comprehensive incident response plan in place to respond to cybersecurity incidents. The plan includes steps for detection, analysis, containment, eradication, and recovery from incidents, as well as steps for notifying affected individuals and regulators. The NiSource Board of Directors' Audit Committee has responsibility for oversight of the cybersecurity program and risks from cybersecurity threats.
The plan includes steps for detection, analysis, containment, eradication, and recovery from incidents, as well as steps for notifying affected individuals and regulators. The NiSource Board of Directors' Audit Committee has responsibility for oversight of the cybersecurity program and risks from cybersecurity threats. The Audit Committee regularly reviews NiSource’s cybersecurity posture.
At the management level, the CISO leads the cybersecurity program and is responsible for assessing and managing cybersecurity risks. Our CISO has expertise and experience in cybersecurity derived from over 15 years of cyber related work experience and possess several certifications including Certified Information Systems Security Professional (CISSP), Certified 32 Table of Contents ITEM 2.
At the management level, the CISO leads the cybersecurity program and is responsible for assessing and managing cybersecurity risks. Our CISO has expertise and experience in cybersecurity derived from over 15 years of cyber related work experience and possesses several certifications including CISSP, CRISC, and CISA. The CISO is supported by the NiSource 31 Table of Contents ITEM 2.
To ensure cybersecurity controls, NiSource Operational Technology (OT) within the electric business adheres to the North American Electric Reliability Corporation Critical Infrastructure Protection (NERC CIP). Within the natural gas business, cybersecurity controls are managed and monitored based on the Transportation Security Administration (TSA) Security Directives.
To ensure cybersecurity controls, NiSource OT within the electric business adheres to the NERC CIP. Within the natural gas business, cybersecurity controls are managed and monitored based on the TSA Security Directives. Incident response. NiSource has a comprehensive incident response plan in place to respond to cybersecurity incidents.
PROPERTIES N I S OURCE I NC . in Risk and Information Systems Control (CRISC), and Certified Information Systems Auditor (CISA). The CISO is supported by the NiSource Enterprise Security team which performs the cybersecurity function and engages directly on the prevention, detection, mitigation, and remediation of cybersecurity incidents.
PROPERTIES N I S OURCE I NC . Enterprise Security team which performs the cybersecurity function and engages directly on the prevention, detection, mitigation, and remediation of cybersecurity incidents. As of the date of filing this Annual Report on Form 10-K, NiSource is not aware of any material cybersecurity incidents during the past year.
No cybersecurity program is effective to identify and mitigate all threats, and NiSource cannot guarantee that it will be able to prevent all cybersecurity incidents. Such an incident could interrupt our normal operations and require us to incur significant costs to remediate any such incident and could have a material impact on our businesses, operations and financial condition.
Such an incident could interrupt our normal operations and require us to incur significant costs to remediate any such incident and could have a material impact on our businesses, operations and financial condition. For more information regarding the risks associated with cybersecurity, refer to “Item 1A. Risk Factors” of this Annual Report on Form 10-K.
The Audit Committee meets quarterly to review NiSource’s cybersecurity posture and make recommendations for improvement. The Chief Information Security Officer (CISO) regularly briefs the Audit Committee on cybersecurity risks and the efforts to address them. In addition, the Board of Directors is briefed regularly, through written reports and updates by the Audit Committee, about key and emerging cybersecurity risks.
The CISO briefs the Audit Committee on cybersecurity risks and risk mitigation initiatives and actions. In addition, the Board of Directors remains informed of key and emerging cybersecurity risks and receives updates by the Audit Committee after each of its regularly scheduled meetings.
Removed
For more information regarding the risks associated with cybersecurity, see “A cyber-attack or security breach on any of our or certain third-party technology systems, including information systems, upon which we rely may adversely affect our ability to operate, could lead to a loss or misuse of confidential and proprietary information, or potential liability.” included in Part I, “Item 1A.
Removed
Risk Factors” of this Annual Report on Form 10-K.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeCharacter of Ownership Our principal properties and our subsidiaries' principal properties are owned free from encumbrances, subject to minor exceptions, none of which are of such a nature as to impair substantially the usefulness of such properties. Many of our subsidiary offices in various communities served are occupied under leases.
Biggest changeCorporate and Other Operations We own the Southlake Complex, our 325,000 square foot headquarters building located in Merrillville, Indiana. Character of Ownership Our principal properties and our subsidiaries' principal properties are owned free from encumbrances, subject to minor exceptions, none of which are of such a nature as to impair substantially the usefulness of such properties.
ITEM 2. PROPERTIES Discussed below are the principal properties held by us and our subsidiaries as of December 31, 2023. Gas Distribution Operations Refer to Item 1, "Business - Gas Distribution Operations," of this report for further information on Gas Distribution Operations properties.
ITEM 2. PROPERTIES Discussed below are the principal properties held by us and our subsidiaries as of December 31, 2024. Columbia Operations Refer to Item 1, "Business - Columbia Operations," of this report for further information on Columbia Operations properties. NIPSCO Operations Refer to Item 1, "Business - NIPSCO Operations," of this report for further information on NIPSCO Operations properties.
All properties are subject to routine liens for taxes, assessments and undetermined charges (if any) incidental to construction. It is our practice to regularly pay such amounts, as and when due, unless contested in good faith.
Many of our subsidiary offices in various communities served are occupied under leases. All properties are subject to routine liens for taxes, assessments and undetermined charges (if any) incidental to construction. It is our practice to regularly pay such amounts, as and when due, unless contested in good faith.
Removed
Electric Operations Refer to Item 1, "Business - Electric Operations," of this report for further information on Electric Operations properties. Corporate and Other Operations We own the Southlake Complex, our 325,000 square foot headquarters building located in Merrillville, Indiana.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings 33 Item 4 Mine Safety Disclosures 33 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 34 Item 6. Reserved 35 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 36 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 55 Item 8.
Biggest changeItem 3. Legal Proceedings 32 Item 4 Mine Safety Disclosures 32 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 33 Item 6. Reserved 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 35 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 56 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeNiSource’s common stock is listed and traded on the New York Stock Exchange under the symbol "NI." Holders of shares of NiSource’s common stock are entitled to receive dividends if and when declared by the Board out of funds legally available, subject to the prior dividend rights of holders of our preferred stock or the depositary shares representing such preferred stock outstanding, and if full dividends have not been declared and paid on all outstanding shares of preferred stock in any dividend period, no dividend may be declared or paid or set aside for payment on our common stock.
Biggest changeNiSource’s common stock is listed and traded on the New York Stock Exchange under the symbol "NI." Holders of shares of NiSource’s common stock are entitled to receive dividends if and when declared by the Board out of funds legally available. There is no preferred stock outstanding as of December 31, 2024.
For the three months ended December 31, 2023, no equity securities that are registered by NiSource Inc. pursuant to Section 12 of the Securities Exchange Act of 1934 were purchased by or on behalf of us or any of our affiliated purchasers. 34 Table of Contents
For the three months ended December 31, 2024, no equity securities that are registered by NiSource Inc. pursuant to Section 12 of the Securities Exchange Act of 1934 were purchased by or on behalf of us or any of our affiliated purchasers. 33 Table of Contents
The graph below compares the cumulative total shareholder return of NiSource’s common stock for the period commencing December 31, 2018 and ending December 31, 2023 with the cumulative total return for the same period of the S&P 500 and the Dow Jones Utility indices.
The graph below compares the cumulative total shareholder return of NiSource’s common stock for the period commencing December 31, 2019 and ending December 31, 2024 with the cumulative total return for the same period of the S&P 500 and the Dow Jones Utility indices.
The policy of the Board has been to declare cash dividends on a quarterly basis payable on or about the 20th day of February, May, August, and November. At its January 25, 2024 meeting, the Board declared a quarterly common dividend of $0.265 per share, payable on February 20, 2024 to holders of record on February 5, 2024.
The policy of the Board has been to declare cash dividends on a quarterly basis payable on or about the 20th day of February, May, August, and November. At its January 23, 2025 meeting, the Board declared a quarterly common dividend of $0.280 per share, payable on February 20, 2025 to holders of record on February 3, 2025.
There can be no assurance that NiSource will continue to pay such dividends or the amount of such dividends. As of February 14, 2024, NiSource had 15,832 common stockholders of record and 447,524,529 shares outstanding.
There can be no assurance that NiSource will continue to pay such dividends or the amount of such dividends. As of February 5, 2025 NiSource had 14,161 common stockholders of record and 469,939,639 shares outstanding.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeGas Distribution Operations Financial and operational data for the Gas Distribution Operations segment for the years ended December 31, 2023, 2022 and 2021, are presented below: Favorable (Unfavorable) Year Ended December 31, (in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Operating Revenues $ 3,732.7 $ 4,019.8 $ 3,183.5 $ (287.1) $ 836.3 Operating Expenses Cost of energy 1,087.0 1,534.8 962.7 447.8 (572.1) Operation and maintenance 1,061.3 1,045.3 993.8 (16.0) (51.5) Depreciation and amortization 464.6 415.9 383.0 (48.7) (32.9) (Gain) loss on sale of fixed assets and impairments, net — (103.9) 8.7 (103.9) 112.6 Other taxes 217.9 211.9 217.8 (6.0) 5.9 Total Operating Expenses 2,830.8 3,104.0 2,566.0 273.2 (538.0) Operating Income $ 901.9 $ 915.8 $ 617.5 $ (13.9) $ 298.3 Revenues Residential $ 2,517.7 $ 2,609.6 $ 2,143.4 $ (91.9) $ 466.2 Commercial 855.3 942.4 731.0 (87.1) 211.4 Industrial 226.4 221.5 197.2 4.9 24.3 Off-System 60.7 192.9 71.3 (132.2) 121.6 Other 72.6 53.4 40.6 19.2 12.8 Total $ 3,732.7 $ 4,019.8 $ 3,183.5 $ (287.1) $ 836.3 Sales and Transportation (MMDth) Residential 215.4 249.0 231.2 (33.6) 17.8 Commercial 164.3 181.3 167.0 (17.0) 14.3 Industrial 517.1 490.7 507.1 26.4 (16.4) Off-System 31.8 32.3 21.6 (0.5) 10.7 Other 0.3 0.3 0.3 — — Total 928.9 953.6 927.2 (24.7) 26.4 Heating Degree Days 4,583 5,436 5,002 (853) 434 Normal Heating Degree Days 5,347 5,347 5,427 — (80) % (Warmer) Colder than Normal (14) % 2 % (8) % % (Warmer) Colder than Prior Year (16) % 9 % (2) % Gas Distribution Customers Residential 3,010,949 2,991,913 2,970,157 19,036 21,756 Commercial 254,866 254,436 253,987 430 449 Industrial 4,794 4,870 4,921 (76) (51) Other 4 3 4 1 (1) Total 3,270,613 3,251,222 3,229,069 19,391 22,153 40 Table of Contents ITEM 7.
Biggest changeColumbia Operations Financial and operational data for the Columbia Operations segment for the years ended December 31, 2024, 2023 and 2022, are presented below: Favorable (Unfavorable) Year Ended December 31, (in millions) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Operating Revenues $ 2,716.0 $ 2,746.1 $ 2,964.4 $ (30.1) $ (218.3) Operating Expenses Cost of energy 514.7 645.0 978.4 130.3 333.4 Operation and maintenance 837.5 792.3 791.3 (45.2) (1.0) Depreciation and amortization 409.1 371.7 329.4 (37.4) (42.3) Loss on impairment of assets 2.7 — — (2.7) — Loss (gain) on sale of assets, net 4.7 — (103.9) (4.7) (103.9) Other taxes 218.6 198.8 184.2 (19.8) (14.6) Total Operating Expenses 1,987.3 2,007.8 2,179.4 20.5 171.6 Operating Income $ 728.7 $ 738.3 $ 785.0 $ (9.6) $ (46.7) Revenues Residential $ 1,891.5 $ 1,882.8 $ 1,918.1 $ 8.7 $ (35.3) Commercial 588.4 606.2 674.8 (17.8) (68.6) Industrial 145.2 139.5 136.4 5.7 3.1 Off-System 42.6 60.7 192.8 (18.1) (132.1) Other 48.3 56.9 42.3 (8.6) 14.6 Total $ 2,716.0 $ 2,746.1 $ 2,964.4 $ (30.1) $ (218.3) Sales and Transportation (MMDth) Residential 153.2 155.2 180.2 (2.0) (25.0) Commercial 121.8 120.4 134.3 1.4 (13.9) Industrial 277.9 255.3 243.2 22.6 12.1 Off-System 23.8 31.8 32.3 (8.0) (0.5) Other 0.2 0.3 0.3 (0.1) — Total 576.9 563.0 590.3 13.9 (27.3) Heating Degree Days 4,262 4,373 5,195 (111) (822) Normal Heating Degree Days 5,134 5,137 5,137 (3) — % (Warmer) Colder than Normal (17) % (15) % 1 % % (Warmer) Colder than Prior Year (3) % (16) % 8 % Gas Distribution Customers Residential 2,225,564 2,215,293 2,201,999 10,271 13,294 Commercial 188,699 188,561 188,374 138 187 Industrial 1,991 1,986 1,995 5 (9) Other 5 4 3 1 1 Total 2,416,259 2,405,844 2,392,371 10,415 13,473 40 Table of Contents ITEM 7.
Additionally, the 2021 Plan calls for a new natural gas peaking facility to replace existing vintage gas peaking facilities at the R.M. Schahfer Generating Station to support system reliability and resiliency, and upgrades to to the electric transmission system.
Additionally, the 2021 Plan calls for a new natural gas peaking facility to replace existing vintage gas peaking facilities at the R.M. Schahfer Generating Station to support system reliability and resiliency, and upgrades to the electric transmission system.
The remainder of our operations, which are not significant enough on a stand-alone basis to warrant treatment as an operating segment, are presented as "Corporate and Other" within the Notes to the Consolidated Financial Statements and primarily are comprised of interest expense on holding company debt, and unallocated corporate costs and activities. 39 Table of Contents ITEM 7.
The remainder of our operations, which are not significant enough on a stand-alone basis to warrant treatment as a reportable segment, are presented as "Corporate and Other" within the Notes to the Consolidated Financial Statements and primarily are comprised of interest expense on holding company debt, and unallocated corporate costs and activities. 39 Table of Contents ITEM 7.
Our electric generation transition, initiated through our 2018 Integrated Resource Plan ("2018 Plan") is well underway, and we are continually adjusting to the dynamic energy landscape. As of 36 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC .
Our electric generation transition, initiated through our 2018 Integrated Resource Plan 35 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC . ("2018 Plan") is well underway, and we are continually adjusting to the dynamic energy landscape .
Our composite heating degree days reported do not directly correlate to the weather-related dollar impact on the results of Gas Distribution Operations. Heating degree days experienced during different times of the year or in different operating locations may have more or less impact on volume and dollars depending on when and where they occur.
Our composite heating degree days reported do not directly correlate to the weather-related dollar impact on the results of Columbia Operations. Heating degree days experienced during different times of the year or in different operating locations may have more or less impact on volume and dollars depending on when and where they occur.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC . Gas Distribution Operations (continued) Comparability of operation and maintenance expenses, depreciation and amortization, and other taxes may be impacted by regulatory, depreciation and tax trackers that allow for the recovery in rates of certain costs.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC . Columbia Operations (continued) Comparability of operation and maintenance expenses, depreciation and amortization, and other taxes may be impacted by regulatory, depreciation and tax trackers that allow for the recovery in rates of certain costs.
ITEM 6. RESERVED N I S OURCE I NC . Not applicable. 35 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS N I S OURCE I NC .
ITEM 6. RESERVED N I S OURCE I NC . Not applicable. 34 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS N I S OURCE I NC .
The underlying reasons for changes in our operating revenues and expenses from 2023 to 2022 are presented in the respective tables below.
The underlying reasons for changes in our operating revenues and expenses from 2024 to 2023 are presented in the respective tables below.
Gas Distribution Operations (continued) Commodity Price Impact Cost of energy for the Gas Distribution Operations segment is principally comprised of the cost of natural gas used while providing transportation and distribution services to customers. All of our Gas Distribution Operations companies have state-approved recovery mechanisms that provide a means for full recovery of prudently incurred gas costs.
Columbia Operations (continued) Commodity Price Impact Cost of energy for the Columbia Operations segment is principally comprised of the cost of natural gas procured on behalf of and sold to customers while providing transportation and distribution services. All of our Columbia Operations companies have state-approved recovery mechanisms that provide a means for full recovery of prudently incurred gas costs.
Index Page Executive Summary 36 Summary of Consolidated Financial Results 38 Results and Discussion of Operations 39 Gas Distribution Operations 40 Electric Operations 43 Liquidity and Capital Resources 47 Market Risk Disclosures 51 Other Information 52 EXECUTIVE SUMMARY This Management's Discussion and Analysis of Financial Condition and Results of Operations ("Management's Discussion") includes management’s analysis of past financial results and certain potential factors that may affect future results, potential future risks and approaches that may be used to manage those risks.
Index Page Executive Summary 35 Summary of Consolidated Financial Results 38 Results and Discussion of Operations 39 Columbia Operations 40 NIPSCO Operations 43 Liquidity and Capital Resources 48 Market Risk Disclosures 52 Other Information 53 EXECUTIVE SUMMARY This Management's Discussion and Analysis of Financial Condition and Results of Operations ("Management's Discussion") includes management’s analysis of past financial results and certain potential factors that may affect future results, potential future risks and approaches that may be used to manage those risks.
Your Energy, Your Future: We continue to advance Your Energy, Your Future primarily through the continuation and enhancement of existing programs, such as retiring and replacing remaining coal-fired electric generation by 2028 with a balanced mix of low or zero-emission electric generation, ongoing pipe replacement and modernization programs, and deployment of advanced leak detection and repair.
Energy Transition: We are advancing our energy transition strategy primarily through the continuation and enhancement of existing programs, such as retiring and replacing remaining coal-fired electric generation by 2028 with a balanced mix of low or zero-emission electric generation and battery storage, ongoing pipe replacement and modernization programs, and deployment of advanced leak detection and repair.
Throughput The decrease in total volumes sold and transported in 2023 compared to 2022 of 24.7 MMDth is primarily attributable to the effects of warmer weather offset by increased industrial usage. 41 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC .
Throughput The increase in total volumes sold and transported in 2024 compared to 2023 of 13.9 MMDth is primarily attributable to the increased industrial usage offset by off-system sales. 41 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC .
Summary of Consolidated Financial Results A summary of our consolidated financial results for the years ended December 31, 2023, 2022 and 2021, are presented below: Favorable (Unfavorable) Year Ended December 31 , (in millions, except per share amounts) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Operating Revenues $ 5,505.4 $ 5,850.6 $ 4,899.6 $ (345.2) $ 951.0 Operating Expenses Cost of energy 1,533.3 2,110.5 1,392.3 577.2 (718.2) Other Operating Expenses 2,676.6 2,474.3 2,500.4 (202.3) 26.1 Total Operating Expenses 4,209.9 4,584.8 3,892.7 374.9 (692.1) Operating Income 1,295.5 1,265.8 1,006.9 29.7 258.9 Total Other Deductions, Net (481.6) (309.4) (300.3) (172.2) (9.1) Income Taxes 139.5 164.6 117.8 25.1 (46.8) Net Income 674.4 791.8 588.8 (117.4) 203.0 Net (loss) income attributable to noncontrolling interest (39.9) (12.3) 3.9 27.6 16.2 Net Income attributable to NiSource 714.3 804.1 584.9 (89.8) 219.2 Preferred dividends and redemption premium (52.6) (55.1) (55.1) 2.5 — Net Income Available to Common Shareholders 661.7 749.0 529.8 (87.3) 219.2 Basic Earnings Per Share $ 1.59 $ 1.84 $ 1.35 $ (0.25) $ 0.49 Diluted Earnings Per Share $ 1.48 $ 1.70 $ 1.27 $ (0.22) $ 0.43 The majority of the costs of energy in both segments are tracked costs that are passed through directly to the customer, resulting in an equal and offsetting amount reflected in operating revenues.
Summary of Consolidated Financial Results A summary of our consolidated financial results for the years ended December 31, 2024, 2023 and 2022, are presented below: Favorable (Unfavorable) Year Ended December 31 , (in millions, except per share amounts) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Operating Revenues $ 5,455.1 $ 5,505.4 $ 5,850.6 $ (50.3) $ (345.2) Operating Expenses Cost of energy 1,132.2 1,533.3 2,110.5 401.1 577.2 Other Operating Expenses 2,867.4 2,676.6 2,474.3 (190.8) (202.3) Total Operating Expenses 3,999.6 4,209.9 4,584.8 210.3 374.9 Operating Income 1,455.5 1,295.5 1,265.8 160.0 29.7 Total Other Deductions, Net (452.7) (481.6) (309.4) 28.9 (172.2) Income Taxes 158.1 139.5 164.6 (18.6) 25.1 Net Income 844.7 674.4 791.8 170.3 (117.4) Net (loss) income attributable to noncontrolling interest 84.3 (39.9) (12.3) (124.2) 27.6 Net Income attributable to NiSource 760.4 714.3 804.1 46.1 (89.8) Preferred dividends and redemption premium (20.7) (52.6) (55.1) 31.9 2.5 Net Income Available to Common Shareholders 739.7 661.7 749.0 78.0 (87.3) Basic Earnings Per Share $ 1.63 $ 1.59 $ 1.84 $ 0.04 $ (0.25) Diluted Earnings Per Share $ 1.62 $ 1.48 $ 1.70 $ 0.14 $ (0.22) The majority of the costs of energy in both segments are tracked costs that are passed through directly to the customer, resulting in an equal and offsetting amount reflected in operating revenues.
With a focus on workforce planning, we are evaluating our future talent footprint by creating flexible work arrangements where possible to ensure we have the right people, in the right role, and at the right time. Refer to Item 1A. Risk Factors, "Operational Risks" of this Annual Report on Form 10-K for further detail.
With a focus on workforce planning, we are evaluating our future talent footprint by creating flexible work arrangements where possible to support a broader talent footprint for sourcing needed talent. Refer to Item 1A. Risk Factors, "Operational Risks" of this Annual Report on Form 10-K for further detail.
Favorable (Unfavorable) Changes in Operating Revenues (in millions) 2023 vs 2022 New rates from base rate proceedings and regulatory capital programs $ 241.1 The effects of customer growth 7.5 Higher revenue related to off system sales 2.7 Increased customer usage 1.5 The effects of weather in 2023 compared to 2022 (59.9) Other 7.4 Change in operating revenues (before cost of energy and other tracked items) $ 200.3 Operating revenues offset in operating expense Lower cost of energy billed to customers (447.8) Lower tracker deferrals within operation and maintenance, depreciation, and tax (31.2) Reduction in gross receipts tax, offset in operating expenses (8.4) Total change in operating revenues $ (287.1) Weather In general, we calculate the weather-related revenue variance based on changing customer demand driven by weather variance from normal heating degree days, net of weather normalization mechanisms.
Favorable (Unfavorable) Changes in Operating Revenues (in millions) 2024 vs 2023 New rates from base rate proceedings and regulatory capital programs $ 112.5 The effects of customer growth 6.2 The effects of customer usage 5.9 The effects of weather in 2024 compared to 2023 (5.2) Other (4.2) Change in operating revenues (before cost of energy and other tracked items) $ 115.2 Operating revenues offset in operating expense Lower cost of energy billed to customers (130.3) Lower tracker recoveries within operation and maintenance, depreciation, and tax (15.0) Total change in operating revenues $ (30.1) Weather In general, we calculate the weather-related revenue variance based on changing customer demand driven by weather variance from normal heating degree days, net of weather normalization mechanisms.
In September of 2023, we filed a request for issuance of a certificate of public convenience and necessity for an approximately 400 MW natural gas peaking generation facility with the IURC. The planned retirement of the two vintage gas peaking facilities at the R.M. Schahfer Generating Station is also expected to occur by the end of 2028.
In October 2024, we received approval for the issuance of a CPCN for an approximately 400 MW natural gas peaking generation facility from the IURC. The planned retirement of the two vintage gas peaking facilities at the R.M. Schahfer Generating Station is also expected to occur by the end of 2028.
We continue to evaluate our financing plan to manage interest expense and exposure to rates. For more information on interest rate risk, see "Market Risk Disclosures" and Item 1A. Risk Factors, "Financial, Economic and Market Risks" of this Annual Report on Form 10-K.
For more information on interest rate risk, see "Market Risk Disclosures" and Item 1A. Risk Factors, "Financial, Economic and Market Risks" of this Annual Report on Form 10-K.
Refer to Note 4, "Noncontrolling Interest," in the Notes to the Consolidated Financial Statements for more information on this transaction. Transformation: Our enterprise-wide transformation roadmap focuses on operational excellence, safety, operation and maintenance management, and unlocking efficiencies. We are committed to identifying and implementing initiatives that will enable us to streamline work and improve logistics company-wide.
Transformation: Our enterprise-wide transformation roadmap focuses on operational excellence, safety, operation and maintenance management, and unlocking efficiencies. We are committed to identifying and implementing initiatives that will enable us to streamline work and improve processes company-wide.
These are tracked costs that are passed through directly to the customer, and the gas costs included in revenues are matched with the gas cost expense recorded in the period. The difference is recorded on the Consolidated Balance Sheets as under-recovered or over-recovered gas cost to be included in future customer billings.
These are tracked costs that are passed through directly to the customer, and the gas costs included in revenues are matched with the gas cost expense recorded in the period.
Our goal is to develop strategies that benefit all stakeholders as we (i) focus on long-term infrastructure investment and safety programs to better serve our customers, (ii) align our tariff structures with our cost structure, and (iii) address changing customer energy demand.
In order to achieve this goal, we seek to develop strategies that benefit all stakeholders as we (i) support long-term infrastructure investment and safety programs to better serve our customers, (ii) align our tariff structures with our cost structure, and (iii) drive value and enable growth in an evolving energy ecosystem.
See Note 7, "Short-Term Borrowings," Note 8, "Long-Term Debt," and Note 16, "Pension and Other Postemployment Benefits," in the Notes to Consolidated Financial Statements for additional information. Income Taxes The decrease in income tax expense in 2023 compared to the same period in 2022 is primarily attributable to lower pre-tax income.
See Note 7, "Short-Term Borrowings,"and Note 8, "Long-Term Debt," in the Notes to Consolidated Financial Statements for additional information. Income Taxes The increase in income tax expense in 2024 compared to the same period in 2023 is primarily due to higher pre-tax income, partially offset by the tax effect of non-controlling interest.
Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and have essentially no impact on net income. Certain Gas Distribution Operations companies continue to offer choice opportunities, where customers can choose to purchase gas from a third-party supplier, through regulatory initiatives in their respective jurisdictions.
Certain Columbia Operations companies continue to offer choice opportunities, where customers can choose to purchase gas from a third-party supplier, through regulatory initiatives in their respective jurisdictions.
We generate substantially all of our operating income through these rate-regulated businesses, which are summarized for financial reporting purposes into two primary reportable segments: Gas Distribution Operations and Electric Operations.
We are an energy holding company under the Public Utility Holding Company Act of 2005 whose subsidiaries are fully regulated natural gas and electric utility companies serving customers in six states. We generate substantially all of our operating income through these rate-regulated businesses, which are summarized for financial reporting purposes into two primary reportable segments: Columbia Operations and NIPSCO Operations.
The market price of natural gas has been stable during the last half of 2023 at lower levels than 2022 and with little volatility. Similar to natural gas pricing, electric commodity costs have stayed subdued due to plentiful supplies of natural gas and coal and the growing influence of renewable generation on power market pricing.
The market price of natural gas was stable during 2024 and was very close to levels seen in 2023. Similar to natural gas pricing, electric commodity costs have remained stable due to available supplies of natural gas and coal and the growing influence of renewable generation on power market pricing.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC . leadership enablement programs, succession, performance management) to promote retention of our current employees along with having a competitive and attractive appeal for potential recruits.
We are ensuring that we use all internal human capital programs (development, leadership enablement programs, succession, performance management) to promote retention of our current employees along with having a competitive and attractive appeal for potential recruits.
To the extent that work plan delays occur or our costs increase, our business operations, results of operations, cash flows, and financial condition could be materially adversely affected. Refer to Item 1A. Risk Factors, "Financial, Economic and Market Risks" of this Annual Report on Form 10-K for further detail.
To the extent that work plan delays occur or our costs increase, our business operations, results 36 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC . of operations, cash flows, and financial condition could be materially adversely affected. Refer to Item 1A.
The 2021 Plan lays out a timeline to retire the Michigan City Generating Station by the end of 2028. The 2021 Plan calls for the replacement of the retiring units with a diverse portfolio of resources including demand side management resources, incremental solar, stand-alone energy storage and upgrades to existing facilities at the Sugar Creek Generating Station, among other steps.
The 2021 Plan calls replacing the retiring coal units with a diverse portfolio of resources including demand side management resources, renewables, stand-alone energy storage and upgrades to existing facilities at the Sugar Creek Generating Station, among other steps. In 2024, Sugar Creek completed an Advanced Gas Path Tech upgrade that will enhance its overall production capabilities.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC . Other Deductions, Net The change in Other deductions, net in 2023 compared to 2022 is primarily driven by higher long-term and short-term debt interest in 2023 and higher non-service pension costs offset by increases in AFUDC.
For additional information on operating income variance drivers see "Results and Discussion of Operations" for Columbia Operations and NIPSCO Operations in this Management's Discussion. Other Deductions, Net The change in Other deductions, net in 2024 compared to 2023 is primarily driven by higher long-term debt interest in 2024 offset by increases in AFUDC.
Risk Factors, "Operational Risks" of this Annual Report on Form 10-K, "Results and Discussion of Segment Operations - Gas Distribution Operations," "Results and Discussion of Segment Operations - Electric Operations," and "Market Risk Disclosures." Due to rising interest rates, we experienced higher interest expense during 2023 compared to 2022 associated with short-term borrowings.
Risk Factors, "Operational Risks" of this Annual Report on Form 10-K, "Results and Discussion of Segment Operations - Columbia Operations," "Results and Discussion of Segment Operations - NIPSCO Operations," and "Market Risk Disclosures." We continue to evaluate our financing plan to manage interest expense and exposure to rates.
Refer to Note 15, "Income Taxes," in the Notes to Consolidated Financial Statements for additional information on income taxes and the change in the effective tax rate. RESULTS AND DISCUSSION OF OPERATIONS Presentation of Segment Information Our operations are divided into two primary reportable segments: Gas Distribution Operations and Electric Operations.
Refer to Note 15, "Income Taxes," in the Notes to Consolidated Financial Statements for additional information on income taxes and the change in the effective tax rate. 38 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC .
We are faced with increased competition for employee and contractor talent in the current labor market which has resulted in increased costs to attract and retain talent. We are ensuring that we use all internal human capital programs (development, 37 Table of Contents ITEM 7.
Risk Factors, "Financial, Economic and Market Risks" of this Annual Report on Form 10-K for further detail. We are faced with increased competition for employee and contractor talent in the current labor market which has resulted in increased costs to attract and retain talent.
These cases represent balanced outcomes supporting all stakeholders. Between our Gas Distribution and Electric Operating Segments, we added 22,000 customers. We also invested $1.5 billion in infrastructure modernization to enhance safe, reliable service, including replacement of 339 miles of distribution main and service lines, 34 miles of underground cable and 1,942 electric poles.
We also invested $1.5 billion in infrastructure modernization to enhance safe, reliable service, including replacement of 288 miles of distribution main and service lines, 24 miles of underground cable and 1,240 electric poles. We achieved the first major milestone in our Transformation road map and continue to increase the efficiency of our operating companies.
Serving as a guiding practice for our SMS, NiSource is certified in conformance to the American Petroleum Institute Recommended Practice 1173, which is the foundation to our journey towards operational excellence. 2023 Overview: In 2023, we continued to make significant progress towards our strategic and financial goals and objectives by achieving in-service status in June 2023 and substantial completion in August 2023 for our first two solar BTA projects, Indiana Crossroads Solar and Dunns Bridge I.
Serving as a guiding practice for our SMS, NiSource is certified in conformance to the American Petroleum Institute Recommended Practice 1173, which is the foundation to our journey towards operational excellence. 2024 Overview: In 2024, we continued to make significant progress on the remaining portfolio of projects that will enable our electric generation transition, including placing one solar and battery project into service and receiving approval of a new gas peaking facility.
We continue to progress on the remaining portfolio of projects that will enable our electric generation transition. During the year, we received orders for four cases: Columbia of Virginia, Columbia of Ohio, Columbia of Maryland, and NIPSCO Electric. In addition, the NIPSCO Gas rate case filed in 2023 is anticipated to be resolved in the third quarter of 2024.
During the year, we received orders for three rate cases: Columbia of Pennsylvania, Columbia of Kentucky, and NIPSCO Gas. In addition, the Columbia of Virginia, Columbia of Maryland and NIPSCO Electric rate cases filed in 2024 are anticipated to be resolved during 2025 with balanced outcomes supporting all stakeholders.
Favorable (Unfavorable) Changes in Operating Expenses (in millions) 2023 vs 2022 Property insurance settlement related to the Greater Lawrence Incident in 2022 $ (105.0) Higher depreciation and amortization expense (50.6) Higher employee and administrative related expenses (38.3) Higher property tax (14.9) Impact from Columbia of Ohio's rate case settlement (9.1) Higher expenses related to uncollectible customer accounts (3.8) Lower environmental remediation costs 12.4 Other (4.9) Change in operating expenses (before cost of energy and other tracked items) $ (214.2) Operating expenses offset in operating revenue Lower cost of energy billed to customers 447.8 Lower tracker deferrals within operation and maintenance, depreciation, and tax 31.2 Increase in gross receipts tax 8.4 Total change in operating expense $ 273.2 42 Table of Contents
Favorable (Unfavorable) Changes in Operating Expenses (in millions) 2024 vs 2023 Higher employee related expenses $ (47.5) Higher depreciation and amortization expense (37.4) Higher property tax (17.2) Loss on sale of assets and impairments (7.4) Higher materials and supplies expense (7.0) Other (8.3) Change in operating expenses (before cost of energy and other tracked items) $ (124.8) Operating expenses offset in operating revenue Lower cost of energy billed to customers 130.3 Higher tracker recoveries within operation and maintenance, depreciation, and tax 15.0 Total change in operating expense $ 20.5 42 Table of Contents
We also made advancements in key strategic initiatives, described in further detail below.
The following describes in more detail the advancements we have made in our key strategic initiatives.
In addition, we plan to advance other low- or zero-emission energy resources and technologies, such as hydrogen and renewable natural gas. In 2023, we launched a multi-phase pilot project at the Columbia Gas of Pennsylvania Training Center’s Safety Town to better understand the impact of blending hydrogen into the natural gas system.
We continue to enhance safety and reduce methane emissions on our gas systems through modernization programs and utilization of advanced leak detection and repair. In addition, we plan to advance other low- or zero-emission energy resources and technologies, such as hydrogen and renewable natural gas.
December 31, 2023, we have executed and received IURC approval for BTAs and PPAs with a combined nameplate capacity of 1,950 MW and 1,400 MW, respectively, under the 2018 Plan.
In addition, renewable and storage BTA projects with combined nameplate capacities of 1,085 MW and 56 MW, respectively, and renewable PPA projects with a combined nameplate capacity of 600 MW were under development as of December 31, all of which have received IURC approval. The capacity figure for BTA projects in development includes the Templeton Wind project.
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We are an energy holding company under the Public Utility Holding Company Act of 2005 whose subsidiaries are fully regulated natural gas and electric utility companies serving customers in six states.
Added
Our vision is to be a premier, innovative and trusted energy partner. We exist to deliver safe, reliable energy that drives value to our customers.
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We have also taken contractual actions on a number of our other renewable projects to address the timing of these projects as well as consider the broad market issues facing the industry. We remain on track to retire R.M Schahfer's remaining two coal units by the end of 2025. On January 1, 2023, the provisions of the IRA became effective.
Added
We continued to build and advance our SMS by successfully maintaining our certification of conformance for API 1173 and achieving LRQA’s ISO 50001 certification. Between our Columbia and NIPSCO Operating Segments, we added 21,000 customers.
Removed
On January 17, 2024, the IURC approved full ownership of the Cavalry and Dunns Bridge II projects, allowing NIPSCO to leverage provisions of the IRA to monetize tax credits for the benefit of customers in lieu of utilizing tax equity partnerships.
Added
As of December 31, we have placed in service owned renewable and storage projects, developed under BTAs, with combined nameplate capacities of 1,065 MW and 45 MW respectively. Renewable PPA projects with a combined nameplate capacity of 600 MW have also been placed in service.
Removed
We are evaluating the impact of this legislation on our remaining projects, with potential to drive increased value to customers. For additional information, see "Results and Discussion of Operations - Electric Operations," in this Management's Discussion. In 2021, we announced and filed with the IURC the Preferred Energy Resource Plan associated with our 2021 Integrated Resource Plan ("2021 Plan").
Added
In October 2024, NIPSCO contracted with a developer to convert the previously approved Templeton Wind PPA to a BTA and has provided a notice of intent to file a CPCN with the IURC.
Removed
Final retirement dates for these units, as well as Michigan City, will be subject to MISO approval. We continue to enhance safety and reduce methane emissions on our gas systems through modernization programs and utilization of advanced leak detection and repair. Advanced mobile methane-detection vehicles are being deployed across our service territory.
Added
In 2024, the IURC approved full ownership of the Cavalry, Dunns Bridge II, Fairbanks and Gibson and the cost of the Fairbanks project as contemplated in contractual actions.
Removed
These vehicles are designed to identify potential natural gas leaks using proven technology that is more sensitive than traditional leak-detection equipment. Resources like these vehicles are advancing the company’s commitment to safety and reaching our goal of net zero greenhouse gas emissions by 2040.
Added
Full ownership of these projects allows NIPSCO to leverage provisions of the IRA, monetize renewable tax credits more effectively, and provide enhanced benefits to customers as compared to the previous tax equity partnership structure approved by the IURC. We remain on track to retire R.M Schahfer's remaining two coal units by the end of 2025.
Removed
We have partnered with outside experts to conduct a series of field trials blending hydrogen with the natural gas system at various percentages. The blending system allows blending from 0% to 20% hydrogen, by volume. The field trials have initially focused on the customer experience and are now moving toward system operations and other procedures.
Added
For additional information, see "Results and Discussion of Operations - NIPSCO Operations," in this Management's Discussion. NIPSCO's 2021 Integrated Resource Plan ("2021 Plan") lays out a timeline to retire the Michigan City Generating Station by the end of 2028.
Removed
This pilot is designed to help us understand hydrogen blending into the natural gas system, identify best practices, and analyze the operational and safety impact on company infrastructure and customer appliances. Carbon offsets and renewable energy credits may also be used to assist with achieving GHG reductions and our Net Zero Goal.
Added
Final retirement dates for these units, as well as Michigan City, will be subject to MISO approval. NIPSCO’s 2024 Plan was submitted to the IURC on December 9, 2024.
Removed
NIPSCO Minority Interest Transaction: On December 31, 2023, we consummated the closing of the NIPSCO Minority Interest Transaction and issued the 19.9% equity interest in NIPSCO Holdings II to BIP in exchange for a capital contribution of $2.16 billion in cash.
Added
The 2024 Plan informs future generation investments required to ensure reliability for NIPSCO’s customers and incorporates factors such as anticipated load growth from data centers and other economic development opportunities, new EPA emissions rules, and evolving MISO resource accreditation rules.
Removed
The decrease in net income available to common shareholders during 2023 was primarily due to lower revenue resulting from the effects of weather, the receipt of the insurance settlement related to the Greater Lawrence Incident in 2022, higher other deductions due to higher interest expense in 2023, partially offset by lower tax expense and favorable impact from net loss attributable to noncontrolling interest.
Added
We have seen an acceleration of customer interest in our northern Indiana service territory in the form of data center development. We believe data center development can enhance our local tax base, diversify the employment base across the state of Indiana, and provide greater value to existing customers and shareholders.
Removed
The decrease in preferred dividends during 2023 was due primarily to the redemption of Series A Preferred Stock in the second quarter 2023. See Note 6, "Equity," for additional information. For additional information on operating income variance drivers see "Results and Discussion of Operations" for Gas and Electric Operations in this Management's Discussion. 38 Table of Contents ITEM 7.
Added
We are evaluating the potential for data center development in our service territory, including ways to effectively manage the potential power demand, generation sources, and transmission capabilities to meet potential load growth from any data center customer, while at the same time focusing on our environmental goals.
Removed
Please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Results and Discussion of Operations - Gas Distribution Operations," of the Company's 2022 Annual Report on Form 10-K for discussion of underlying reasons for changes in our operating revenues and expenses for 2022 versus 2021.
Added
We expect the management of large load growth would require new generation resources, including gas-fired resource, and transmission capabilities.We plan to move as efficiently as possible while maintaining the integrity of our commercial, planning, regulatory, procurement and operational execution processes.
Added
We are making progress towards our transformation goals with a successful completion of the first phase of our WAM program, an enterprise resource planning system that will optimize the scheduling, dispatch, and execution of our field operations.
Added
This phase of the program implemented the solution within our electric distribution and transmission operations, while the remaining phases associated with gas distribution and generation operations are anticipated to be completed by the end of 2025.
Added
NIPSCO Minority Interest Transaction: On December 31, 2023, contemporaneously with the closing of the NIPSCO Minority Interest Transaction, Blackstone, NIPSCO Holdings I, NIPSCO Holdings II, and NiSource entered into an Amended and Restated Limited Liability Company Agreement (the "LLC Agreement") of NIPSCO Holdings II.
Added
On January 31, 2024, BIP transferred a 4.5% equity interest in NIPSCO Holdings II to BIP Blue Buyer VCOC L.L.C., a Delaware limited liability company and also an affiliate of Blackstone.
Added
Effective upon the closing of this transfer, the members of NIPSCO Holdings II entered into a Second Amended and Restated Limited Liability Company Operating Agreement of NIPSCO Holdings II (the "Amended LLC Agreement"). The two affiliates of Blackstone must vote their equity holdings under the Amended LLC Agreement as one investor.
Added
Refer to Note 4, "Noncontrolling Interests," in the Notes to the Consolidated Financial Statements for more information on this transaction. 37 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC .
Added
The increase in net income available to common shareholders during 2024 was primarily due to higher revenues, net of cost of energy, driven by our continued investment in safety, reliability and low- or zero-emission generation as well as increased AFUDC, reported in Other Deductions, Net, primarily related to NIPSCO's wholly owned Cavalry and Dunns Bridge II projects.
Added
The increase in net income available to common shareholders is partially offset by higher depreciation expense attributed to our planned capital expenditures, higher interest expense and higher net income attributable to noncontrolling interest following the consummation of the NIPSCO Minority Interest Transaction. See Note 6, "Equity," for additional information.
Added
RESULTS AND DISCUSSION OF OPERATIONS Presentation of Segment Information In response to the NIPSCO Minority Interest Transaction, our operations are now evaluated through two primary reportable segments, Columbia Operations and NIPSCO Operations. Our historical segment disclosures have been recast to be consistent with the current presentation.
Added
Columbia Operations aggregates the results of the fully regulated and wholly owned subsidiaries of NiSource Gas Distribution Group, Inc. Each Columbia distribution company is an operating segment which we aggregate to form the Columbia Operations reportable segment.
Added
NIPSCO Operations aggregates the results of NIPSCO Holdings I, and its majority-owned subsidiaries, including NIPSCO, which has both fully regulated gas and electric operations in northern Indiana.
Added
Any difference in actual costs incurred and amounts billed to customers is recorded on the Consolidated Balance Sheets as under-recovered or over-recovered gas cost to be included in future customer billings. Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and have essentially no impact on net income.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

75 edited+19 added−32 removed45 unchanged
Biggest changeElectric Operations Financial and operational data for the Electric Operations segment for the years ended December 31, 2023, 2022 and 2021, are presented below: Favorable (Unfavorable) Year Ended December 31, (in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Operating Revenues $ 1,785.0 $ 1,831.7 $ 1,697.1 $ (46.7) $ 134.6 Operating Expenses Cost of energy 446.4 575.8 429.7 129.4 (146.1) Operation and maintenance 518.0 486.2 493.6 (31.8) 7.4 Depreciation and amortization 400.9 362.9 329.4 (38.0) (33.5) Loss (gain) on sale of fixed assets and impairments, net 2.2 — (0.9) (2.2) (0.9) Other taxes 38.8 44.4 57.5 5.6 13.1 Total Operating Expenses 1,406.3 1,469.3 1,309.3 63.0 (160.0) Operating Income $ 378.7 $ 362.4 $ 387.8 $ 16.3 $ (25.4) Revenues Residential $ 583.9 $ 592.4 $ 568.0 $ (8.5) $ 24.4 Commercial 578.1 571.0 534.9 7.1 36.1 Industrial 475.0 561.4 494.1 (86.4) 67.3 Wholesale 32.0 13.5 15.7 18.5 (2.2) Other 116.0 93.4 84.4 22.6 9.0 Total $ 1,785.0 $ 1,831.7 $ 1,697.1 $ (46.7) $ 134.6 Sales (Gigawatt Hours) Residential 3,262.9 3,482.9 3,546.8 (220.0) (63.9) Commercial 3,614.2 3,682.4 3,698.0 (68.2) (15.6) Industrial 7,820.3 7,915.3 8,253.7 (95.0) (338.4) Wholesale 556.4 50.0 124.7 506.4 (74.7) Other 78.9 89.5 108.5 (10.6) (19.0) Total 15,332.7 15,220.1 15,731.7 112.6 (511.6) Cooling Degree Days 710 942 1,020 (232) (78) Normal Cooling Degree Days 831 831 803 — 28 % (Colder) Warmer than Normal (15) % 13 % 27 % % (Colder) Warmer than prior year (25) % (8) % 13 % Electric Customers Residential 427,217 424,735 422,436 2,482 2,299 Commercial 58,779 58,374 58,010 405 364 Industrial 2,126 2,130 2,137 (4) (7) Wholesale 708 710 714 (2) (4) Other 3 3 2 — 1 Total 488,833 485,952 483,299 2,881 2,653 43 Table of Contents ITEM 7.
Biggest changeNIPSCO Operations Financial and operational data for the NIPSCO Operations segment, which services both gas and electric customers, for the years ended December 31, 2024, 2023 and 2022, are presented below: Favorable (Unfavorable) Year Ended December 31, (in millions) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 NIPSCO Operations Operating Revenues $ 2,752.0 $ 2,771.6 $ 2,887.1 $ (19.6) $ (115.5) Operating Expenses Cost of energy 617.5 888.3 1,132.1 270.8 243.8 Operation and maintenance 761.4 787.7 740.4 26.3 (47.3) Depreciation and amortization 590.3 493.8 449.4 (96.5) (44.4) Loss on impairment of assets 0.4 — — (0.4) — Loss (gain) on sale of assets, net (1.7) 2.2 — 3.9 (2.2) Other taxes 64.3 57.9 72.1 (6.4) 14.2 Total Operating Expenses 2,032.2 2,229.9 2,394.0 197.7 164.1 Operating Income $ 719.8 $ 541.7 $ 493.1 $ 178.1 $ 48.6 Favorable (Unfavorable) Year Ended December 31, (in millions) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 NIPSCO Electric Revenues Residential $ 649.9 $ 583.9 $ 592.4 $ 66.0 $ (8.5) Commercial 620.4 578.1 571.0 42.3 7.1 Industrial 500.0 475.0 561.4 25.0 (86.4) Wholesale 38.3 32.0 13.5 6.3 18.5 Other 105.0 116.0 93.4 (11.0) 22.6 Total $ 1,913.6 $ 1,785.0 $ 1,831.7 $ 128.6 $ (46.7) Sales (GWh) Residential 3,404.9 3,262.9 3,482.9 142.0 (220.0) Commercial 3,697.9 3,614.2 3,682.4 83.7 (68.2) Industrial 7,984.8 7,820.3 7,915.3 164.5 (95.0) Wholesale 889.7 556.4 50.0 333.3 506.4 Other 85.2 78.9 89.5 6.3 (10.6) Total 16,062.5 15,332.7 15,220.1 729.8 112.6 Cooling Degree Days 903 710 942 193 (232) Normal Cooling Degree Days 852 831 831 21 — % Warmer (Colder) than Normal 6 % (15) % 13 % % Warmer (Colder) than prior year 27 % (25) % (8) % NIPSCO Electric Customers Residential 430,648 427,217 424,735 3,431 2,482 Commercial 59,214 58,779 58,374 435 405 Industrial 2,121 2,126 2,130 (5) (4) Wholesale 705 708 710 (3) (2) Other 2 3 3 (1) — Total 492,690 488,833 485,952 3,857 2,881 43 Table of Contents ITEM 7.
We are also exposed to interest rate risk as a result of changes in benchmark rates that can influence the interest rates of future debt issuances. From time to time, we may enter into forward interest rate instruments to lock in long term interest costs and/ or rates.
We are also exposed to interest rate risk as a result of changes in benchmark rates that can influence the interest rates of future long-term debt issuances. From time to time, we may enter into forward interest rate instruments to lock in long term interest costs and/ or rates.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC .
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC .
Certain of our subsidiaries are required to make cash margin deposits with their brokers to cover actual and potential losses in the value of outstanding exchange traded derivative contracts. The amount of these deposits, some of which are reflected in our restricted cash balance, may fluctuate significantly during periods of high volatility in the energy commodity markets.
Our subsidiaries are required to make cash margin deposits with their brokers to cover actual and potential losses in the value of outstanding exchange traded derivative contracts. The amount of these deposits, some of which are reflected in our restricted cash balance, may fluctuate significantly during periods of high volatility in the energy commodity markets.
Interest Rate Risk We are exposed to interest rate risk as a result of changes in interest rates on borrowings under our revolving credit agreement, commercial paper program, term credit agreements and accounts receivable programs, which have interest rates that are indexed to short-term market interest rates.
Interest Rate Risk We are exposed to interest rate risk as a result of changes in interest rates on borrowings under our revolving credit agreement, commercial paper program, and accounts receivable programs, which have interest rates that are indexed to short-term market interest rates.
NIPSCO has also executed several BTAs with developers to construct renewable generation facilities. See Note 19, "Other Commitments and Contingencies - A. Contractual Obligations," and Note 19, "Other Commitments and Contingencies," - E. "Other Matters - Generation Transition," in the Notes to Consolidated Financial Statements for additional information.
NIPSCO has also executed several BTAs with developers to construct renewable generation facilities. See Note 19, "Other Commitments and Contingencies - A. Contractual Obligations," and Note 19, "Other Commitments and Contingencies - E. Other Matters," in the Notes to Consolidated Financial Statements for additional information.
The credit rating agencies periodically review our ratings, taking into account factors such as our capital structure and earnings profile. The following table includes our and NIPSCO's credit ratings and ratings outlook as of December 31, 2023. There have been no changes to our credit ratings or outlooks since February 2020.
The credit rating agencies periodically review our ratings, taking into account factors such as our capital structure and earnings profile. The following table includes our and NIPSCO's credit ratings and ratings outlook as of December 31, 2024. There have been no changes to our credit ratings or outlooks since February 2020.
As required by GAAP, we test for impairment of goodwill on an annual basis and on an interim basis when events or circumstances indicate that a potential impairment may exist. Our annual goodwill test takes place in the second quarter of each year and was performed on May 1, 2023.
As required by GAAP, we test for impairment of goodwill on an annual basis and on an interim basis when events or circumstances indicate that a potential impairment may exist. Our annual goodwill test takes place in the second quarter of each year and was performed on May 1, 2024.
Significant judgment is required to determine whether the recognition threshold has been met and, if so, the appropriate amount of tax benefits to be recorded in the consolidated financial statements. At December 31, 2023 and 2022, we had $21.7 million of unrecognized tax benefits.
Significant judgment is required to determine whether the recognition threshold has been met and, if so, the appropriate amount of tax benefits to be recorded in the consolidated financial statements. At December 31, 2024 and 2023, we had $21.7 million of unrecognized tax benefits.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC . Electric Operations (continued) Comparability of operation and maintenance expenses and depreciation and amortization may be impacted by regulatory and depreciation trackers that allow for the recovery in rates of certain costs.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC . NIPSCO Operations (continued) Comparability of operation and maintenance expenses and depreciation and amortization may be impacted by regulatory and depreciation trackers that allow for the recovery in rates of certain costs.
In recognition of the increasingly varied and complex nature of the energy business, our risk management process, policies and procedures continue to evolve and are subject to ongoing review and modification. Commodity Price Risk Our Gas and Electric Operations have commodity price risk primarily related to the purchases of natural gas and power.
In recognition of the increasingly varied and complex nature of the energy business, our risk management process, policies and procedures continue to evolve and are subject to ongoing review and modification. Commodity Price Risk Our gas and electric subsidiaries have commodity price risk primarily related to the purchases of natural gas and power.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC . Capital Expenditures. The table below reflects actual capital expenditures and certain other investing activities by segment for 2023.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC . Capital Expenditures. The table below reflects actual capital expenditures and certain other investing activities by segment for 2024.
Based upon average borrowings and debt obligations subject to fluctuations in short-term market interest rates, an increase (or decrease) in short-term interest rates of 100 basis points (1%) would have increased (or decreased) interest expense by $18.9 million and $8.7 million for 2023 and 2022, respectively.
Based upon average borrowings and debt obligations subject to fluctuations in short-term market interest rates, an increase (or decrease) in short-term interest rates of 100 basis points (1%) would have increased (or decreased) interest expense by $7.9 million and $18.9 million for 2024 and 2023, respectively.
At December 31, 2023 and 2022, we had established $6.4 million and $7.8 million, respectively, of valuation allowances (net of federal benefit) related to certain state net operating loss carryforwards. Refer to Note 15, "Income Taxes," in the Notes to Consolidated Financial Statements for additional information.
At December 31, 2024 and 2023, we had established $6.4 million and $6.4 million, respectively, of valuation allowances (net of federal benefit) related to certain state net operating loss carryforwards. Refer to Note 15, "Income Taxes," in the Notes to Consolidated Financial Statements for additional information.
The underlying reasons for changes in our operating revenues and expenses from 2023 to 2022 are presented in the respective tables below.
The underlying reasons for changes in our operating revenues and expenses from 2024 to 2023 are presented in the respective tables below.
Although we believe that current estimates for deferred tax assets and liabilities are reasonable, actual results could differ from these estimates for a variety of reasons, including reasonable projections of taxable income, the ability and intent to implement tax planning strategies if necessary, and interpretations of applicable tax laws and regulations across multiple taxing jurisdictions.
Although we believe that current estimates for deferred tax assets and liabilities are reasonable, actual results could differ from these estimates for a variety of reasons, including reasonable projections of taxable income, the ability and intent to implement tax planning strategies if necessary, and interpretations of applicable tax laws and regulations across multiple taxing jurisdictions. 55 Table of Contents ITEM 7.
We estimate the assumed health care cost trend rate, which is used in determining our other postretirement benefit net expense, based upon our actual health care cost experience, the effects of recently enacted legislation, third-party actuarial surveys and general economic conditions. 53 Table of Contents ITEM 7.
We estimate the assumed health care cost trend rate, which is used in determining our other postretirement benefit net expense, based upon our actual health care cost experience, the effects of recently enacted legislation, third-party actuarial surveys and general economic conditions.
See Note 10, "Goodwill," in the Notes to Consolidated Financial Statements for further information. Unbilled Revenue. We record utility operating revenues when energy is delivered to our customers. However, the determination of energy sales to individual customers is based upon the reading of their meters, which occurs on a systematic basis throughout the month.
See Note 10, "Goodwill," in the Notes to Consolidated Financial Statements for information regarding our 2024 analyses and assumptions. Unbilled Revenue. We record utility operating revenues when energy is delivered to our customers. However, the determination of energy sales to individual customers is based upon the reading of their meters, which occurs on a systematic basis throughout the month.
Refer to Note 6, "Equity," in the Notes to Consolidated Financial Statements for information on common stock, preferred stock and equity units activity. Short-term Debt. Refer to Note 7, "Short-Term Borrowings," in the Notes to Consolidated Financial Statements for information on short-term debt. Long-term Debt.
Financing Activities Common Stock, Preferred Stock and Equity Unit Sale. Refer to Note 6, "Equity," in the Notes to Consolidated Financial Statements for information on common stock, preferred stock and equity units activity. Short-term Debt. Refer to Note 7, "Short-Term Borrowings," in the Notes to Consolidated Financial Statements for information on short-term debt. Long-term Debt.
We also consider the guidance from our investment advisors in making a final determination of our expected rate of return on assets. For measurement of 2023 net periodic benefit cost, we selected a weighted-average assumption of the expected pre-tax long-term rate of return of 7.00% and 6.96% for our pension and other postretirement benefit plan assets, respectively.
We also consider the guidance from our investment advisors in making a final determination of our expected rate of return on assets. For measurement of 2024 net periodic benefit cost, we selected a weighted-average assumption of the expected pre-tax long-term rate of return of 7.02% and 7.06% for our pension and other postretirement benefit plan assets, respectively.
The following tables illustrate the effects of changes in these actuarial assumptions while holding all other assumptions constant: Impact on December 31, 2023 Projected Benefit Obligation Increase/(Decrease) Change in Assumptions (in millions) Pension Benefits Other Postretirement Benefits +50 basis points change in discount rate $ (51.8) $ (20.5) -50 basis points change in discount rate 55.9 22.3 Impact on 2023 Expense Increase/(Decrease) (1) Change in Assumptions (in millions) Pension Benefits Other Postretirement Benefits +50 basis points change in discount rate $ (1.6) $ 0.3 -50 basis points change in discount rate 1.4 (0.3) +50 basis points change in expected long-term rate of return on plan assets (6.8) (1.1) -50 basis points change in expected long-term rate of return on plan assets 6.8 1.1 (1) Before labor capitalization and regulatory deferrals.
The following tables illustrate the effects of changes in these actuarial assumptions while holding all other assumptions constant: Impact on December 31, 2024 Projected Benefit Obligation Increase/(Decrease) Change in Assumptions (in millions) Pension Benefits Other Postretirement Benefits +50 basis points change in discount rate $ (44.9) $ (18.8) -50 basis points change in discount rate 48.2 20.4 Impact on 2024 Expense Increase/(Decrease) (1) Change in Assumptions (in millions) Pension Benefits Other Postretirement Benefits +50 basis points change in discount rate $ (1.6) $ 0.3 -50 basis points change in discount rate 1.6 0.4 +50 basis points change in expected long-term rate of return on plan assets (6.8) (1.2) -50 basis points change in expected long-term rate of return on plan assets 6.8 1.2 (1) Before labor capitalization and regulatory deferrals.
Debt Covenants . We are subject to a financial covenant under our revolving credit facility which requires us to maintain a debt to capitalization ratio that does not exceed 70%. As of December 31, 2023, the ratio was 58.2%. Credit Ratings .
Debt Covenants . We are subject to a financial covenant under our revolving credit facility which requires us to maintain a debt to capitalization ratio that does not exceed 70%. As of December 31, 2024, the ratio was 52.6%. Credit Ratings .
These agreements are primarily for insurance purposes and for the physical purchase or sale of power. As of December 31, 2023, a collateral requirement of approximately $90.1 million would be required in the event of a downgrade below investment grade.
These agreements are primarily for insurance purposes and for the physical purchase or sale of power. As of December 31, 2024, a collateral requirement of approximately $115.5 million would be required in the event of a downgrade below investment grade.
For measurement of 2024 net periodic benefit cost, we selected a weighted-average assumption of the expected pre-tax long-term rate of return o f 7.02% and 7.06 % respectively, for our pension and other postretirement benefit plan assets.
For measurement of 2025 net periodic benefit cost, we selected a weighted-average assumption of the expected pre-tax long-term rate of return o f 7.30% and 7.09 % respectively, for our pension and other postretirement benefit plan assets.
Sources of Liquidity The following table displays our liquidity position as of December 31, 2023 and 2022: Year Ended December 31, (in millions) 2023 2022 Current Liquidity Revolving Credit Facility $ 1,850.0 $ 1,850.0 Accounts Receivable Programs (1) 383.9 447.2 Less: Commercial Paper 1,061.0 415.0 Accounts Receivable Programs Utilized 337.6 347.2 Letters of Credit Outstanding Under Credit Facility 9.9 10.2 Add: Cash and Cash Equivalents 2,245.4 40.8 Net Available Liquidity $ 3,070.8 $ 1,565.6 (1) Represents the lesser of the seasonal limit or maximum borrowings supportable by the underlying receivables.
Sources of Liquidity The following table displays our liquidity position as of December 31, 2024 and 2023: Year Ended December 31, (in millions) 2024 2023 Current Liquidity Revolving Credit Facility $ 1,850.0 $ 1,850.0 Accounts Receivable Programs (1) 175.0 383.9 Less: Commercial Paper 604.6 1,061.0 Accounts Receivable Programs Utilized — 337.6 Letters of Credit Outstanding Under Credit Facility 9.4 9.9 Add: Cash and Cash Equivalents 156.6 2,245.4 Net Available Liquidity $ 1,567.6 $ 3,070.8 (1) Represents the lesser of the seasonal limit or maximum borrowings supportable by the underlying receivables.
In the event that regulation significantly changes the opportunity for us to recover our costs in the future, all or a portion of our regulated operations may no longer meet the criteria for the application of ASC Topic 980, Regulated Operations . In such 52 Table of Contents ITEM 7.
In the event that regulation significantly changes the opportunity for us to recover our costs in the future, all or a portion of our regulated operations may no longer meet the criteria for the application of ASC Topic 980, Regulated Operations .
Plan contributions beyond 2024 are dependent upon a number of factors, including actual returns on plan assets, which cannot be reliably estimated at this time. In 2024, we expect to make contributions of approximately $2.2 million to our pension plans and approximately $23.1 million to our postretirement medical and life plans.
Plan contributions beyond 2025 are dependent upon a number of factors, including actual returns on plan assets, which cannot be reliably estimated at this time. In 2025, we expect to make contributions of approximatel y $2.3 million to our pension plans and approximately $21.3 million to our postretirement medical and life plans.
For more information regarding our common and preferred stock, see Note 6, "Equity," in the Notes to Consolidated Financial Statements. Contractual Obligations, Cash Requirements and Off-Balance Sheet Arrangements We have certain contractual obligations requiring payments at specified periods. Our material cash requirements are detailed below.
As of December 31, 2024, 469,822,472 shares of common stock were outstanding. For more information regarding our common and preferred stock, see Note 6, "Equity," in the Notes to Consolidated Financial Statements. Contractual Obligations, Cash Requirements and Off-Balance Sheet Arrangements We have certain contractual obligations requiring payments at specified periods. Our material cash requirements are detailed below.
Credit Risk Due to the nature of the industry, credit risk is embedded in many of our business activities. Our extension of credit is governed by a Corporate Credit Risk Policy. In addition, Risk Management Committee guidelines are in place which document management approval levels for credit limits, evaluation of creditworthiness, and credit risk mitigation efforts.
Credit Risk Due to the nature of the industry, credit risk is embedded in many of our business activities. Our extension of credit is governed by a Corporate Credit Risk Management Policy which establishes guidelines for documenting management approval levels for credit limits, evaluating creditworthiness, and credit risk mitigation efforts.
Accordingly, certain expenses and credits subject to utility regulation or rate determination normally reflected in income may be deferred on the Consolidated Balance Sheets and recognized in income as the related amounts are included in service rates and recovered from or refunded to customers.
Accordingly, certain expenses and credits subject to utility regulation or rate determination normally reflected in income may be deferred on the Consolidated Balance Sheets and recognized in income as the related amounts are included in service rates and recovered from or refunded to customers. For additional information, refer to Note 12, "Regulatory Matters," in the Notes to Consolidated Financial Statements.
Goodwill and Other Intangible Assets. We have six goodwill reporting units, comprised of the six state operating companies within the Gas Distribution Operations reportable segment. Our goodwill assets at December 31, 2023 were $1,486 million, most of which resulted from the acquisition of Columbia on November 1, 2000.
Goodwill and Other Intangible Assets. We have six goodwill reporting units, comprised of the six state operating companies within both the Columbia Operations and NIPSCO Operations reportable segments. Our goodwill assets at December 31, 2024 were $1,485.9 million, most of which resulted from the acquisition of Columbia on November 1, 2000.
At the end of each month, amounts of energy delivered to customers since the date of their last meter reading are estimated and corresponding unbilled revenues are calculated. This unbilled revenue is estimated each month based upon historical usage, customer rates and weather. As of December 31, 2023, we recorded $337.6 million of customer 54 Table of Contents ITEM 7.
At the end of each month, amounts of energy delivered to customers since the date of their last meter reading are estimated and corresponding unbilled revenues are calculated. This unbilled revenue is estimated each month based upon historical usage, customer rates and weather. As of December 31, 2024, we recorded $408.1 million of customer accounts receivable for unbilled revenue.
Electric Operations (continued) Favorable (Unfavorable) Changes in Operating Expenses (in millions) 2023 vs 2022 Renewable Joint Venture operating expense, partially offset by Joint Venture operating revenues $ (44.7) Higher depreciation and amortization expense driven by new base rates (25.0) Higher outside services expenses (6.9) Lower materials and supplies 9.4 Other (6.2) Change in operating expenses (before cost of energy and other tracked items) $ (73.4) Operating expenses offset in operating revenue Lower cost of energy billed to customers 129.4 Reduction in gross receipts tax, offset in operating revenues 12.0 Higher tracker deferrals within operation and maintenance, depreciation and tax (5.0) Total change in operating expense $ 63.0 Electric Supply and Generation Transition NIPSCO continues to execute on an electric generation transition consistent with the 2018 Plan and 2021 Plan, which outline the path to retire the remaining two coal units at R.M.
Favorable (Unfavorable) Changes in Operating Expenses (in millions) 2024 vs 2023 Higher depreciation and amortization expense driven by new base rates $ (91.1) Higher employee and administrative expenses (21.8) Higher outside services expenses (8.6) Higher environmental remediation costs (4.7) Lower materials and supplies 8.9 Renewable Joint Venture operating expense, partially offset by Joint Venture operating revenues 7.6 Other 5.3 Change in operating expenses (before cost of energy and other tracked items) $ (104.4) Operating expenses offset in operating revenue Lower cost of energy billed to customers 270.8 Higher tracker deferrals within operation and maintenance, depreciation and tax 32.4 Reduction in gross receipts tax, offset in operating revenues (1.1) Total change in operating expense $ 197.7 Electric Supply and Generation Transition NIPSCO continues to execute on an electric generation transition consistent with the 2018 Plan and 2021 Plan and maintained in the 2024 Plan, which outlines the path to retire the remaining two coal units at R.M.
When the detailed results are combined for reporting, there may be weather-related dollar impacts on operations when there is not an apparent or significant change in our aggregated composite cooling degree day comparison. Sales NIPSCO's Electric Segment results remains closely linked to the performance of the steel industry.
When the detailed results are combined for reporting, there may be weather-related dollar impacts on operations when there is not an apparent or significant change in our aggregated composite cooling and heating degree day comparison.
We expect to make capital investments totaling approximately $16.0 billion during the 2024-2028 period related to infrastructure modernization, generation transition and customer growth over the next five years. This forecast incorporates an estimated $1.7 billion of additional investment in renewable generation projects.
We expect to make capital investments totaling approximately $19.4 billion during the 2025-2029 period related to infrastructure modernization, generation transition and customer growth. This forecast incorporates an estimated $1.6 billion of additional investment in renewable generation projects.
The application of HLBV to consolidated VIEs generally results in the recognition of profit from the related JVs over a time frame that is different from when the regulatory return is earned.
One of the more significant items recorded through the application of this accounting guidance is the regulatory overlay for JV accounting. The application of HLBV to consolidated VIEs generally results in the recognition of profit from the related JVs over a time frame that is different from when the regulatory return is earned.
(2) Amounts differ from those presented on the Statements of Consolidated Cash Flows primarily due to the capitalized portion of the Corporate Incentive Plan payout, inclusion of capital expenditures included in current liabilities and AFUDC Equity.
(2) Amounts differ from those presented on the Statements of Consolidated Cash Flows primarily due to the capitalized portion of the Corporate Incentive Plan payout, inclusion of capital expenditures included in current liabilities and AFUDC Equity. In addition to these capital expenditures, we made $29.0 million of advanced deposits for project costs related to the construction of the R.M.
Ultimate resolution or clarification of income tax matters may result in favorable or unfavorable impacts to net income and cash flows, and adjustments to tax-related assets and liabilities could be material.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC . Ultimate resolution or clarification of income tax matters may result in favorable or unfavorable impacts to net income and cash flows, and adjustments to tax-related assets and liabilities could be material.
Columbia of Ohio CEP - 2023 $ 482.1 4/21-12/22 2/24/2023 Assets not included in the IRP. NIPSCO - Gas TDSIC - 6 $ 237.8 1/23-2/23 4/28/2023 New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development. NIPSCO - Gas FMCA - 1 $ 22.1 1/23-3/23 5/30/2023 Project costs to comply with federal mandates.
NIPSCO - Gas TDSIC - 8 $ 8.3 1/23-2/24 4/30/2024 New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development. NIPSCO - Gas FMCA - 3 $ 27.0 1/23-6/24 8/27/2024 Project costs to comply with federal mandates.
Exposure to credit risk is measured in terms of both current obligations and the market value of forward positions net of any posted collateral such as cash and letters of credit.
Exposure to credit risk is measured in terms of both current obligations and the market value of forward positions net of any posted collateral such as cash and letters of credit. The financial status of our banking partners is periodically assessed through traditional credit ratings provided by major credit rating agencies.
We intend to use funds from the liquidity sources referenced above to meet these cash requirements. At December 31, 2023, we had $11,079.3 million in long-term debt and $3,048.6 million in short-term borrowings outstanding.
We intend to use funds from the liquidity sources referenced above to meet these cash requirements. At December 31, 2024, we had $13,355.7 million in long-term debt, of which $1,281.2 million is current and $604.6 million in short-term borrowings outstanding.
Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and have essentially no impact on net income. 44 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC .
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC . NIPSCO Operations (continued) as under-recovered or over-recovered fuel and gas cost to be included in future customer billings. Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and have essentially no impact on net income.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC . eliminated, these subsidiaries may begin providing services without the benefit of the traditional rate-making process and may be more exposed to commodity price risk. For additional information, see "Results and Discussion of Operations" in this Management's Discussion.
These changes are included in the GCA and FAC regulatory rate-recovery mechanisms. If these mechanisms were to be adjusted or eliminated, these subsidiaries may begin providing services without the benefit of the traditional rate-making process and may be more exposed to commodity price risk. For additional information, see "Results and Discussion of Operations" in this Management's Discussion.
Schahfer by the end of 2025 and the remaining coal-fired generation at Michigan City by the end of 2028, to be replaced by lower-cost, reliable and cleaner options.
Schahfer by the end of 2025 and the remaining coal-fired generation at Michigan City by the end of 2028, to be replaced by lower-cost, reliable and cleaner options. See "Liquidity and Capital Resources" in this Management's Discussion for additional information on our capital investment spend.
Refer to Note 13, "Risk Management Activities," in the Notes to Consolidated Financial Statements for further information on our commodity price risk assets and liabilities as of December 31, 2023 and 2022.
Refer to Note 13, "Risk Management Activities," in the Notes to Consolidated Financial Statements for further information on our commodity price risk assets and liabilities as of December 31, 2024 and 2023. 52 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC .
The majority of these costs of energy are passed through directly to the customer, and the costs of energy included in operating revenues are matched with the cost of energy expense recorded in the period. The difference is recorded on the Consolidated Balance Sheets as under-recovered or over-recovered fuel cost to be included in future customer billings.
The majority of these costs of energy are passed through directly to the customer, and the costs of energy included in operating revenues are matched with the cost of energy expense recorded in the period. Any difference in actual costs incurred and amounts billed to customers is recorded on the Consolidated Balance Sheets 45 Table of Contents ITEM 7.
In addition to agreements with ratings triggers, there are other agreements that contain “adequate assurance” or “material adverse change” provisions that could necessitate additional credit support such as letters of credit and cash collateral to transact business. 50 Table of Contents ITEM 7.
In addition to agreements with ratings triggers, there are other agreements that contain “adequate assurance” or “material adverse change” provisions that could necessitate additional credit support such as letters of credit and cash collateral to transact business. Equity. Our authorized capital stock consists of 770,000,000 shares, $0.01 par value, of which 750,000,000 are common stock and 20,000,000 are preferred stock.
This increase in cash from operating activities was primarily driven by year over year change in accounts receivable collections driven by the implementation of new rates and the impact of lower gas prices as compared to 2022, partially offset by lower accounts payables also driven by lower gas prices.
This decrease in cash from operating activities was primarily driven by year over year change in accounts receivable collections and exchange gas receivables due to the impact of lower gas prices, offset by a year over year increase in revenue, net of cost of energy and higher accounts payables due to increased gas purchases.
Our composite cooling degree days reported do not directly correlate to the weather-related dollar impact on the results of Electric Operations. Cooling degree days experienced during different times of the year may have more or less impact on volume and dollars depending on when they occur.
Cooling and heating degree days experienced during different times of the year or in different operating locations may have more or less impact on volume and dollars depending on when they occur.
Favorable (Unfavorable) Changes in Operating Revenues (in millions) 2023 vs 2022 New rates from base rate proceedings, regulatory capital, and DSM programs $ 103.5 Renewable Joint Venture revenue, fully offset by Joint Venture operating expense and noncontrolling interest net income (loss) 10.2 2022 FAC refund to customers 8.0 FAC over earnings reserve 5.8 The effects of weather in 2023 compared to 2022 (25.6) Decreased customer usage (12.8) Other 0.6 Change in operating revenues (before cost of energy and other tracked items) $ 89.7 Operating revenues offset in operating expense Lower cost of energy billed to customers (129.4) Reduction in gross receipts tax, offset in operating expenses (12.0) Higher tracker deferrals within operation and maintenance, depreciation and tax 5.0 Total change in operating revenues $ (46.7) Weather In general, we calculate the weather-related revenue variance based on changing customer demand driven by weather variance from normal cooling degree days.
Favorable (Unfavorable) Changes in Operating Revenues (in millions) 2024 vs 2023 New rates from base rate proceedings, regulatory capital, and DSM programs $ 238.4 Renewable Joint Venture revenue, fully offset by Joint Venture operating expense and noncontrolling interest net income (loss) 17.5 The effects of customer usage 11.9 The effects of customer growth 11.2 Decreased fuel handling costs 9.7 Other (6.2) Change in operating revenues (before cost of energy and other tracked items) $ 282.5 Operating revenues offset in operating expense Lower cost of energy billed to customers (270.8) Lower tracker deferrals within operation and maintenance, depreciation and tax (32.4) Reduction in gross receipts tax, offset in operating expenses 1.1 Total change in operating revenues $ (19.6) Weather The results of operations for the NIPSCO Operations segment include income from both electric and gas service lines.
An ancillary benefit of these programs is the reduction of GHG emissions. In 2023, we continued to move forward on core infrastructure and environmental investment programs supported by complementary regulatory and customer initiatives across all six states of our operating area. 48 Table of Contents ITEM 7.
In 2024, we continued to move forward on core infrastructure and environmental investment programs supported by complementary regulatory and customer initiatives across all six states of our operating area. 49 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC .
We adopted Aon's U.S. Endemic Mortality Improvement scale MP-2021, accounting for both the near-term and long-term COVID-19 impacts.
We adopted Aon's U.S. Endemic Mortality Improvement scale MP-2021, accounting for both the near-term and long-term COVID-19 impacts. 54 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC .
Refer to Note 3, "Revenue Recognition," in the Notes to Consolidated Financial Statements for additional information regarding our significant judgments and estimates related to unbilled revenue recognition. Income Taxes. The consolidated income tax provision and deferred income tax assets and liabilities, as well as any unrecognized tax benefits and valuation allowances, require use of estimates and significant management judgement.
The consolidated income tax provision and deferred income tax assets and liabilities, as well as any unrecognized tax benefits and valuation allowances, require use of estimates and significant management judgement.
Since 2020, two wind PPA projects, two wind BTA projects and two solar BTA projects have been placed into service, totaling 1,465 MW of nameplate capacity. NIPSCO has executed commercial agreements for each of the eight remaining identified projects. Dunns Bridge II, Cavalry, Fairbanks, Gibson, GreenRiver, Appleseed, Carpenter and Templeton have received IURC approval.
Since 2020, two wind PPA projects and six owned projects (two wind, two solar and two solar plus storage) have been placed into service totaling 2,201 MW of nameplate capacity, including Dunns Bridge II which was placed into service in January 2025. NIPSCO has executed commercial agreements for each of the six remaining identified projects.
The current replacement plan is aligned with the Preferred Energy Resource Plan outlined in the 2021 Plan and primarily includes renewable sources of energy, including wind, solar, battery storage, and flexible natural gas resources to be obtained through a combination of NIPSCO ownership and PPAs.
Refer to Item 1A. Risk Factors, "Operational Risks," of this Annual Report on Form 10-K for further detail. The current replacement plan primarily includes renewable sources of energy, including wind, solar, battery storage, and flexible natural gas resources to be obtained through a combination of NIPSCO ownership and PPAs.
Commodity Price Impact Cost of energy for the Electric Operations segment is principally comprised of the cost of coal, natural gas purchased for internal generation of electricity at NIPSCO, and the cost of power purchased from generators of electricity. NIPSCO has a state-approved recovery mechanism that provides a means for full recovery of prudently incurred costs of energy.
Commodity Price Impact Cost of energy for the NIPSCO Operations segment's electric activities is principally comprised of the cost of coal, natural gas purchased for internal generation of electricity, transportation of coal and natural gas, and the cost of power purchased from generators of electricity for its generation an d transmission activities.
Columbia of Virginia SAVE - 2024 $ 166.5 10/22-12/24 8/15/2023 Replacement projects that (1) enhance system safety or reliability, or (2) reduce, or potentially reduce, greenhouse gas emissions. Includes costs associated with Advanced Leak Detection and Repair. Columbia of Kentucky SMRP - 2023 $ 41.6 1/23-12/23 10/14/2022 Replacement of mains and inclusion of system safety investments.
Columbia of Ohio CEP - 2024 $ 763.3 4/21-12/23 2/26/2024 Assets not included in the IRP or PHMSA IRP. Columbia of Virginia SAVE - 2025 $ 89.0 10/24-12/25 8/15/2024 Replacement projects that (1) enhance system safety or reliability, or (2) reduce, or potentially reduce, greenhouse gas emissions. Includes costs associated with Advanced Leak Detection and Repair.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC . event, a write-down of all or a portion of our existing regulatory assets and liabilities could result.
In such event, a write-down of all or a portion of our existing regulatory assets and liabilities could result.
MWh sales to steel-related industries accounted for approximately 49.3% and 47.4% of the total industrial MWh sales for the years ended December 31, 2023 and 2022, respectively.
MWh sales to steel-related industries accounted for approximately 49.4% and 49.6% of the total industrial MWh sales for the years ended December 31, 2024 and 2023, respectively. The decrease in total volumes sold to gas customers for the twelve months ended December 31, 2024 compared to the same period in 2023 was primarily attributable to decreased usage by industrial customers.
Investing Activities Net cash used for investing activities for the year ended December 31, 2023 was $3,571.6 million, an increase of $1,001.4 million from 2022.
Operating Activities Net cash from operating activities for the year ended December 31, 2024 was $1,781.5 million, a decrease of $153.6 million from 2023.
Columbia of Maryland (2) STRIDE - 2023 $ 18.0 1/23-12/23 10/31/2022 Pipeline upgrades designed to improve public safety or infrastructure reliability. NIPSCO - Electric (3) TDSIC - 3 $ 144.8 7/22-1/23 3/28//2023 New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.
Columbia of Kentucky SMRP - 2024 $ 81.9 1/23-12/24 10/13/2023 Replacement of mains and inclusion of system safety investments. NIPSCO - Electric TDSIC - 5 $ 346.9 7/22-3/24 5/28/2024 New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.
See "Executive Summary - Your Energy, Your Future" in this Management's Discussion for additional information. 45 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC .
In October 2024, the IURC approved the CPCN for NIPSCO's planned gas peaking facility to be located at the R.M. Schahfer Generating Station. See "Executive Summary - Energy Transition" in this Management's 46 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC .
On January 17, 2024 the IURC approved increases to the project costs as well as the full ownership of Cavalry and Dunns Bridge II, allowing NIPSCO to leverage provisions of the IRA to monetize tax credits for the benefit of customers in lieu of utilizing tax equity partnerships.
In January 2024, the IURC approved increases to the project costs as well as the full ownership of Cavalry and Dunns Bridge II. In August 2024, the IURC approved full ownership of Gibson and Fairbanks as well as increases to the cost of the Fairbanks project.
The following table describes the most recent vintage of our regulatory programs to recover infrastructure replacement and other federally mandated compliance investments: (in millions) Company Program Capital Investment Investment Period Filing Date Costs Covered (1) Approved Columbia of Ohio IRP - 2023 $ 522.1 4/21-12/22 2/24/2023 Replacement of hazardous service lines, cast iron, wrought iron, uncoated steel, and bare steel pipe.
The following table describes the most recent vintage of our regulatory programs to recover infrastructure replacement and other federally mandated compliance investments: (in millions) Company Program Capital Investment Investment Period Filing Date Costs Covered (1) Approved Columbia of Pennsylvania (2) DSIC - Q4 2024 $ 180.1 2/24-8/24 9/20/2024 Eligible project costs including piping, couplings, gas service lines, excess flow valves, risers, meter bars, meters, and other related capitalized investments to improve the distribution system.
On December 31, 2023, we consummated the NIPSCO Minority Interest Transaction in exchange for a capital contribution of $2.16 billion in cash. See Note 4, "Noncontrolling Interest,", Note 6, "Equity," Note 7, "Short-Term Borrowings," and Note 8, "Long-Term Debt," in the Notes to the Consolidated Financial Statements for more information.
See Note 4, "Noncontrolling Interests,", Note 6, "Equity," Note 7, "Short-Term Borrowings," and Note 8, "Long-Term Debt," in the Notes to the Consolidated Financial Statements for more information. We believe these sources provide adequate capital to fund our operating activities and capital expenditures in 2025 and beyond.
If we determine that the amounts included as regulatory assets are no longer probable of recovery, a charge to income would immediately be required to the extent of the unrecoverable amounts. One of the more significant items recorded through the application of this accounting guidance is the regulatory overlay for JV accounting.
If we determine that the amounts included as regulatory assets are no longer probable of recovery, a charge to income would immediately be required to the extent of the unrecoverable amounts. 53 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC .
Pending Commission Approval NIPSCO - Gas TDSIC - 7 $ 444.9 1/23-8/23 10/31/2023 New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development. NIPSCO - Gas (4) FMCA - 2 $ 49.0 1/23-9/23 11/29/2023 Project costs to comply with federal mandates.
Pending Commission Approval (3) Columbia of Kentucky (4) SMRP - 2025 $ 128.5 1/23-12/25 10/15/2024 Replacement of mains and inclusion of system safety investments. NIPSCO - Electric TDSIC - 6 $ 555.0 7/22-9/24 11/26/2024 New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) N I S OURCE I NC . accounts receivable for unbilled revenue. Significant fluctuations in energy demand for the unbilled period or changes in the composition of customer classes could impact the accuracy of the unbilled revenue estimate.
Significant fluctuations in energy demand for the unbilled period or changes in the composition of customer classes could impact the accuracy of the unbilled revenue estimate. Refer to Note 3, "Revenue Recognition," in the Notes to Consolidated Financial Statements for additional information regarding our significant judgments and estimates related to unbilled revenue recognition. Income Taxes.
(in billions) 2023 Actual 2024 Estimated 2025 Estimated 2026 Estimated 2027 Estimated 2028 Estimated Capital Investments $3.6 $3.3 - 3.5 $3.2 - 3.5 $2.9 - 3.2 $2.9 - 3.2 $2.9 - 3.2 Regulatory Capital Programs. We replace pipe and modernize our gas infrastructure to enhance safety and reliability and reduce leaks.
(in billions) 2024 Actual 2025 Estimated 2026 Estimated 2027 Estimated 2028 Estimated 2029 Estimated Capital Investments $3.3 $4.0 - 4.3 $3.4 - 3.7 $3.6 - 3.9 $3.7 - 4.0 $3.8 - 4.1 Regulatory Capital Programs.
Refer to Note 8, "Long-Term Debt," in the Notes to Consolidated Financial Statements for information on long-term debt. Non-controlling Interest . We received $2.16 billion upon closing the NIPSCO Minority Interest Transaction. Proceeds from the closing of the NIPSCO Minority Interest Transaction were used to repay short-term debt, including our credit agreements.
Refer to Note 8, "Long-Term Debt," in the Notes to Consolidated Financial Statements for information on long-term debt. Non-controlling Interest . Refer to Note 4, "Noncontrolling Interests," in the Notes to Consolidated Financial Statements for more information. 50 Table of Contents ITEM 7.
During 2024 and 2025, we expect to make cash payments of $652.0 million and $485.7 million, respectively, related to pipeline service obligations including demand for gas transportation, gas storage and gas purchases. Our expected payments include employer contributions to pension and other postretirement benefits plans expected to be made in 2024.
During 2025 and 2026, we expect to make cash payments of $685.5 million and $631.2 million, respectively, related to pipeline service obligations including demand for gas transportation, gas storage and gas purchases, and $140.5 million and $24.9 million , respectively, for long lead time items related to plant equipment purchases. 51 Table of Contents ITEM 7.
Electric Operations (continued) Remaining Renewables Projects Transaction Type Technology Nameplate Capacity (MW) Storage Capacity (MW) Cavalry BTA Solar & Storage 200 60 Dunns Bridge II BTA Solar & Storage 435 75 Fairbanks (1) BTA Solar 250 — Gibson (1) BTA Solar 200 — Green River 20 year PPA Solar 200 — Templeton 20 year PPA Wind 200 — Carpenter 20 year PPA Wind 200 — Appleseed 20 year PPA Solar 200 — (1) Under the structure approved by the IURC ownership of Fairbanks and Gibson will be transferred to JVs whose members are expected to include NIPSCO and an unrelated tax equity partner.
Remaining Renewables Projects Transaction Type Technology Nameplate Capacity (MW) Storage Capacity (MW) Fairbanks BTA Solar 250 — Gibson BTA Solar 200 — Templeton BTA (1) Wind 200 — Green River 20 year PPA Solar 200 — Appleseed 20 year PPA Solar 200 — Carpenter 20 year PPA Wind 200 — (1) Pending regulatory approval. 47 Table of Contents ITEM 7.
In the event that the approval is not obtained, future operations could be impacted. We cannot estimate the financial impact on us if this approval is not obtained. Refer to Item 1A. Risk Factors, "Operational Risks," of this Annual Report on Form 10-K for further detail.
NIPSCO continues to await EPA decision on an administrative approval associated with the operation of R.M. Schahfer’s remaining two coal units, which are expected to be retired by the end of 2025. In the event that the approval is not obtained, future operations could be impacted. We cannot estimate the financial impact on us if this approval is not obtained.
Our current year investing activities were comprised of increased capital expenditures related to system growth and reliability as well as payments to renewable generation asset developers related to milestone payments for certain of our BTA projects in 2023, as well as the property insurance settlement related to the Greater Lawrence Incident received in the prior year. 47 Table of Contents ITEM 7.
Investing Activities Net cash used for investing activities for the year ended December 31, 2024 was $3,213.0 million, a decrease of $358.6 million from 2023. Lower current year investing activities were primarily driven by lower milestone payments to renewable generation asset developers for certain of our BTA projects in 2024 compared to 2023. 48 Table of Contents ITEM 7.
In addition to these capital expenditures, we made $871.2 million of capital investments in the form of milestone and final payments to the renewable generation asset developers. Through December 2023, NiSource has added approximately $1 billion in renewable generation projects to its rate base.
Schahfer gas peaker as part of our generation transition and invested $65.7 million in deferred cloud computing costs in 2024. We also made $454.2 million of capital investments in the form of milestone payments to the renewable generation asset developers in 2023 that were recognized in capital expenditures in 2024.
Removed
Please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Results and Discussion of Operations - Electric Operations," of the Company's 2022 Annual Report on Form 10-K for discussion of underlying reasons for changes in our operating revenues and expenses for 2022 versus 2021.
Added
NIPSCO Operations Favorable (Unfavorable) Year Ended December 31, (in millions) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 NIPSCO Gas Revenues Residential $ 540.9 $ 634.9 $ 691.5 $ (94.0) $ (56.6) Commercial 202.4 249.1 267.6 (46.7) (18.5) Industrial 79.0 86.9 85.1 (7.9) 1.8 Other 16.1 15.7 11.2 0.4 4.5 Total $ 838.4 $ 986.6 $ 1,055.4 $ (148.2) $ (68.8) Sales and Transportation Volumes (MMDth) Residential 58.2 60.3 68.8 (2.1) (8.5) Commercial 42.5 43.9 47.0 (1.4) (3.1) Industrial 256.8 261.8 247.5 (5.0) 14.3 Total 357.5 366.0 363.3 (8.5) 2.7 Heating Degree Days 4,975 5,198 6,133 (223) (935) Normal Heating Degree Days 6,001 5,954 5,985 47 (31) % (Warmer) Colder than Normal (17) % (13) % 2 % % (Warmer) Colder than prior year (4) % (15) % 10 % NIPSCO Gas Customers Residential 801,740 795,656 789,914 6,084 5,742 Commercial 66,633 66,305 66,062 328 243 Industrial 2,734 2,808 2,875 (74) (67) Total 871,107 864,769 858,851 6,338 5,918 44 Table of Contents ITEM 7.
Removed
See "Project Status" discussion, below, and "Liquidity and Capital Resources" in this Management's Discussion for information on anticipated in-service dates related to our electric generation transition and additional information on our capital investment spend. NIPSCO continues to work with the EPA to obtain an administrative approval associated with the operation of R.M. Schahfer’s remaining two coal units until 2025.
Added
In general, we calculate the weather-related revenue variance based on changing customer demand driven by weather variance from normal cooling degree days and normal heating degree days, net of weather normalization mechanisms. Our composite cooling and heating degree days reported do not directly correlate to the weather-related dollar impact on the results of NIPSCO Operations.
Removed
Additional approvals by the IURC may be required to obtain recovery for increases in projects costs. NIPSCO has filed for a new gas peaking facility to be located at R.M. Schahfer Generating Station. On November 22, 2023 the IURC approved NIPSCO's request to convert the Gibson project from a PPA to a BTA.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeSTATEMENTS OF CONSOLIDATED CASH FLOWS Year Ended December 31, (in millions) 2023 2022 2021 Operating Activities Net Income $ 674.4 $ 791.8 $ 588.8 Adjustments to Reconcile Net Income to Net Cash from Operating Activities: Depreciation and amortization 908.2 820.8 748.4 Deferred income taxes and investment tax credits 134.1 156.9 111.9 Stock compensation expense and 401(k) profit sharing contribution 33.5 24.9 24.3 Loss (gain) on sale of assets 2.9 (105.3) 5.6 Other adjustments (17.9) 5.7 (0.7) Changes in Assets and Liabilities: Accounts receivable 184.1 (216.3) (40.3) Gas storage and other inventories 233.9 (258.9) (112.9) Accounts payable (171.8) 165.0 54.9 Exchange gas receivable/payable 126.5 57.8 (114.2) Other accruals (102.9) 73.4 43.0 Prepayments and other current assets 36.7 (9.8) (36.6) Regulatory assets/liabilities (26.2) (129.4) 76.8 Postretirement and postemployment benefits (22.0) 84.7 (96.4) Deferred charges and other noncurrent assets (10.1) (4.1) (4.7) Other noncurrent liabilities and deferred credits (48.3) (47.8) (30.0) Net Cash Flows from Operating Activities 1,935.1 1,409.4 1,217.9 Investing Activities Capital expenditures (2,645.8) (2,203.1) (1,838.0) Insurance Recoveries 3.0 105.0 — Cost of removal (160.8) (151.7) (121.1) Purchases of available-for-sale securities (42.8) (73.5) (102.9) Sales of available-for-sale securities 39.9 75.7 97.8 Milestone and final payments to renewable generation asset developer (761.4) (323.9) (240.4) Other investing activities (3.7) 1.3 (1.0) Net Cash Flows used for Investing Activities (3,571.6) (2,570.2) (2,204.9) Financing Activities Proceeds from issuance of long-term debt 1,488.7 345.6 — Repayments of long-term debt and finance lease obligations (33.1) (60.3) (25.7) Issuance of short term credit agreements 650.0 1,000.0 — Net change in commercial paper and other short-term borrowings 636.4 202.2 57.0 Issuance of common stock, net of issuance costs 12.9 154.3 299.6 Payment of obligation to renewable generation asset developer (347.2) — — Equity costs, premiums and other debt related costs (30.2) (13.0) (18.2) Contributions from noncontrolling interests 2,402.8 21.2 245.1 Distributions to noncontrolling interest (14.1) (6.0) (0.6) Issuance of equity units, net of underwriting costs — — 839.9 Redemption of preferred stock (393.9) — — Dividends paid - common stock (413.5) (381.5) (345.2) Preferred stock redemption premium (6.2) — — Dividends paid - preferred stock (43.8) (55.1) (55.1) Contract liability payment (66.6) (66.1) (40.5) Net Cash Flows from Financing Activities 3,842.2 1,141.3 956.3 Change in cash, cash equivalents and restricted cash 2,205.7 (19.5) (30.7) Cash, cash equivalents and restricted cash at beginning of period 75.4 94.9 125.6 Cash, Cash Equivalents and Restricted Cash at End of Period $ 2,281.1 $ 75.4 $ 94.9 Reconciliation to Balance Sheet 2023 2022 2021 Cash and cash equivalents 2,245.4 40.8 84.2 Restricted Cash 35.7 34.6 10.7 Total Cash, Cash Equivalents and Restricted Cash 2,281.1 75.4 94.9 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 64 Table of Contents
Biggest changeSTATEMENTS OF CONSOLIDATED CASH FLOWS Year Ended December 31, (in millions) 2024 2023 2022 Operating Activities Net Income $ 844.7 $ 674.4 $ 791.8 Adjustments to Reconcile Net Income to Net Cash from Operating Activities: Depreciation and amortization 1,043.2 908.2 820.8 Deferred income taxes 168.0 134.1 156.9 Stock compensation expense and 401(k) profit sharing contribution 43.6 33.5 24.9 Loss (gain) on sale of assets 2.9 2.9 (105.3) Payments for assets retirement obligations (72.5) (41.6) (22.3) Other adjustments (52.8) (17.9) 5.7 Changes in Assets and Liabilities: Accounts receivable (101.5) 184.1 (216.3) Gas storage and other inventories 102.0 233.9 (258.9) Accounts payable 71.5 (171.8) 165.0 Exchange gas receivable/payable (133.5) 126.5 57.8 Other accruals 9.5 (102.9) 73.4 Prepayments and other current assets (75.9) 36.7 (9.8) Regulatory assets/liabilities (8.7) (26.2) (129.4) Postretirement and postemployment benefits (64.3) (22.0) 84.7 Deferred charges and other noncurrent assets (20.8) (10.1) (4.1) Other noncurrent liabilities and deferred credits 26.1 (6.7) (25.5) Net Cash Flows from Operating Activities 1,781.5 1,935.1 1,409.4 Investing Activities Capital expenditures (2,614.0) (2,645.8) (2,203.1) Insurance recoveries 0.8 3.0 105.0 Cost of removal (166.8) (160.8) (151.7) Purchases of available-for-sale securities (17.8) (42.8) (73.5) Sales of available-for-sale securities 93.2 39.9 75.7 Milestone and final payments to renewable generation asset developer (482.0) (761.4) (323.9) Advanced deposits for project costs (29.0) — — Other investing activities 2.6 (3.7) 1.3 Net Cash Flows used for Investing Activities (3,213.0) (3,571.6) (2,570.2) Financing Activities Proceeds from issuance of long-term debt 2,229.5 1,488.7 345.6 Repayments of long-term debt and finance lease obligations (25.6) (33.1) (60.3) Repayment of short term credit agreements (1,650.0) — — Issuance of short term credit agreements — 650.0 1,000.0 Net change in commercial paper and other short-term borrowings (794.0) 636.4 202.2 Issuance of common stock, net of issuance costs 612.6 12.9 154.3 Redemption of preferred stock (486.1) (393.9) — Preferred stock redemption premium (14.0) (6.2) — Payment of obligation to renewable generation asset developer — (347.2) — Equity costs, premiums and other debt related costs (67.3) (30.2) (13.0) Contributions from NIPSCO minority interest holders 99.5 2,161.9 — Distributions to NIPSCO minority interest holders (50.3) — — Contributions from tax equity partners — 240.9 21.2 Distributions to tax equity partners (16.1) (14.1) (6.0) Dividends paid - common stock (481.0) (413.5) (381.5) Dividends paid - preferred stock (8.2) (43.8) (55.1) Contract liability payment — (66.6) (66.1) Net Cash Flows (used for) from Financing Activities (651.0) 3,842.2 1,141.3 Change in cash, cash equivalents and restricted cash (2,082.5) 2,205.7 (19.5) Cash, cash equivalents and restricted cash at beginning of period 2,281.1 75.4 94.9 Cash, Cash Equivalents and Restricted Cash at End of Period $ 198.6 $ 2,281.1 $ 75.4 Reconciliation to Balance Sheet 2024 2023 2022 Cash and cash equivalents 156.6 2,245.4 40.8 Restricted Cash 42.0 35.7 34.6 Total Cash, Cash Equivalents and Restricted Cash 198.6 2,281.1 75.4 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 65 Table of Contents
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued) N I S OURCE I NC .
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued) N I S OURCE I NC .
Regulatory Matters - Impact of Rate Regulation on the Financial Statements - Refer to Notes 1, 9, and 12 to the financial statements Critical Audit Matter Description The Company’s subsidiaries are fully regulated natural gas and electric utility companies serving customers in six states.
Regulatory Matters - Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 9, and 12 to the financial statements Critical Audit Matter Description The Company’s primary subsidiaries are fully regulated natural gas and electric utility companies serving customers in six states.
Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of NiSource Inc. and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related statements of consolidated income, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").
Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of NiSource Inc. and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Refer to Note 4, "Noncontrolling Interest," for additional information. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 63 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued) N I S OURCE I NC .
Refer to Note 4, "Noncontrolling Interests," for additional information. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 63 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued) N I S OURCE I NC .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Quantitative and Qualitative Disclosures about Market Risk are reported in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk Disclosures.” 55 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA N I S OURCE I NC .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Quantitative and Qualitative Disclosures about Market Risk are reported in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk Disclosures.” 56 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA N I S OURCE I NC .
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 21, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 12, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.
(3) Unrecognized pension and OPEB benefit (costs), net of $0.1 million tax benefit, $2.3 million tax benefit and $3.8 million tax expense in 2023, 2022 and 2021, respectively. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 61 Table of Contents ITEM 8.
(3) Unrecognized pension and OPEB benefit (costs), net of $0.3 million tax expense, $0.1 million tax benefit and $2.3 million tax benefit in 2024, 2023 and 2022, respectively. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 62 Table of Contents ITEM 8.
(2) Net unrealized (loss) gain on derivatives qualifying as cash flow hedges, net of $0.1 million tax benefit, $36.4 million tax expense and $8.4 million tax expense in 2023, 2022 and 2021, respectively.
(2) Net unrealized (loss) gain on derivatives qualifying as cash flow hedges, net of $0.1 million tax benefit, $0.1 million tax benefit and $36.4 million tax expense in 2024, 2023 and 2022, respectively.
Refer to Note 4, "Noncontrolling Interest," for additional information. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 62 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued) N I S OURCE I NC .
Refer to Note 4, "Noncontrolling Interests," for additional information. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 64 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued) N I S OURCE I NC .
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME Year Ended December 31, (in millions, net of taxes) 2023 2022 2021 Net Income $ 674.4 $ 791.8 $ 588.8 Other comprehensive income: Net unrealized gain (loss) on available-for-sale securities (1) 3.9 (13.3) (3.9) Net unrealized (loss) gain on cash flow hedges (2) (0.2) 109.9 25.4 Unrecognized pension and OPEB benefit (costs) (3) (0.2) (6.9) 8.4 Total other comprehensive income 3.5 89.7 29.9 Total Comprehensive Income $ 677.9 $ 881.5 $ 618.7 (1) Net unrealized gain (loss) on available-for-sale securities, net of $1.0 million tax expense, $3.5 million tax benefit and $1.0 million tax benefit in 2023, 2022 and 2021, respectively.
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME Year Ended December 31, (in millions, net of taxes) 2024 2023 2022 Net Income $ 844.7 $ 674.4 $ 791.8 Other comprehensive income: Net unrealized gain (loss) on available-for-sale securities (1) 3.3 3.9 (13.3) Net unrealized (loss) gain on cash flow hedges (2) (0.4) (0.2) 109.9 Unrecognized pension and OPEB benefit (costs) (3) 0.3 (0.2) (6.9) Total other comprehensive income 3.2 3.5 89.7 Total Comprehensive Income $ 847.9 $ 677.9 $ 881.5 (1) Net unrealized gain (loss) on available-for-sale securities, net of $0.9 million tax expense, $1.0 million tax expense and $3.5 million tax benefit in 2024, 2023 and 2022, respectively.
Interest Expense, Net 117 24 . Supplemental Cash Flow Information 118 Schedule II 119 56 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued) N I S OURCE I NC . REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of NiSource Inc.
Interest Expense, Net 120 24 . Supplemental Cash Flow Information 120 Schedule II 121 57 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued) N I S OURCE I NC . REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of NiSource Inc.
We also evaluated the appropriateness of the offset to the regulatory liability or asset recorded in depreciation expense. /s/ DELOITTE & TOUCHE LLP Columbus, Ohio February 21, 2024 We have served as the Company's auditor since 2002. 59 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued) N I S OURCE I NC .
We also evaluated the appropriateness of the offset to the regulatory liability recorded in depreciation expense. /s/ DELOITTE & TOUCHE LLP Columbus, Ohio February 12, 2025 We have served as the Company's auditor since 2002. 60 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued) N I S OURCE I NC .
Recent Accounting Pronouncements 70 3 . Revenue Recognition 71 4 . Noncontrolling Interest 74 5 . Earnings Per Share 76 6 . Equity 77 7 . Short-Term Borrowings 80 8 . Long-Term Debt 82 9 . Property, Plant and Equipment 84 10 . Goodwill 85 11 . Asset Retirement Obligations 85 12 . Regulatory Matters 85 13 .
Recent Accounting Pronouncements 71 3 . Revenue Recognition 72 4 . Noncontrolling Interests 76 5 . Earnings Per Share 77 6 . Equity 78 7 . Short-Term Borrowings 80 8 . Long-Term Debt 81 9 . Property, Plant and Equipment 83 10 . Goodwill 84 11 . Asset Retirement Obligations 84 12 . Regulatory Matters 85 13 .
Risk Management Activities 89 14 . Fair Value 90 15 . Income Taxes 93 16 . Pension and Other Postretirement Benefits 96 17 . Share-Based Compensation 106 18 . Leases 109 19 . Other Commitments and Contingencies 112 20 . Accumulated Other Comprehensive Loss 115 21 . Business Segment Information 115 22 . Other, Net 117 23 .
Risk Management Activities 89 14 . Fair Value 90 15 . Income Taxes 93 16 . Pension and Other Postretirement Benefits 96 17 . Share-Based Compensation 107 18 . Leases 110 19 . Other Commitments and Contingencies 113 20 . Accumulated Other Comprehensive Loss 116 21 . Business Segment Information 117 22 . Other, Net 119 23 .
Index Page Report of Independent Registered Public Accounting Firm 57 Statements of Consolidated Income 60 Statements of Consolidated Comprehensive Income 61 Consolidated Balance Sheets 62 Statements of Consolidated Cash Flows 64 Statements of Consolidated Stockholders' Equity 65 Notes to Consolidated Financial Statements 67 1 . Nature of Operations and Summary of Significant Accounting Policies 67 2 .
Index Page Report of Independent Registered Public Accounting Firm 58 Statements of Consolidated Income 61 Statements of Consolidated Comprehensive Income 62 Consolidated Balance Sheets 63 Statements of Consolidated Cash Flows 65 Statements of Consolidated Stockholders' Equity 66 Notes to Consolidated Financial Statements 68 1 . Nature of Operations and Summary of Significant Accounting Policies 68 2 .
Certain expenses and credits subject to utility regulation or rate determination normally reflected in income are deferred on the consolidated balance sheets and are later recognized in income as the related amounts are included in customer rates and recovered from or refunded to customers. The Company’s subsidiaries’ rates are subject to regulatory rate-setting processes.
Certain expenses and credits subject to utility regulation or rate determination normally reflected in income are deferred on the consolidated balance sheets and are later recognized in income as the related amounts are included in customer rates and recovered from or refunded to customers. 58 Table of Contents ITEM 8.
STATEMENTS OF CONSOLIDATED INCOME Year Ended December 31 , (in millions, except per share amounts) 2023 2022 2021 Operating Revenues Customer revenues $ 5,347.8 $ 5,738.6 $ 4,731.3 Other revenues 157.6 112.0 168.3 Total Operating Revenues 5,505.4 5,850.6 4,899.6 Operating Expenses Cost of energy 1,533.3 2,110.5 1,392.3 Operation and maintenance 1,494.9 1,489.4 1,456.0 Depreciation and amortization 908.2 820.8 748.4 Loss (gain) on sale of assets, net 2.9 (104.2) 7.7 Other taxes 270.6 268.3 288.3 Total Operating Expenses 4,209.9 4,584.8 3,892.7 Operating Income 1,295.5 1,265.8 1,006.9 Other Income (Deductions) Interest expense, net (489.6) (361.6) (341.1) Other, net 8.0 52.2 40.8 Total Other Deductions, Net (481.6) (309.4) (300.3) Income before Income Taxes 813.9 956.4 706.6 Income Taxes 139.5 164.6 117.8 Net Income 674.4 791.8 588.8 Net (loss) income attributable to noncontrolling interest (39.9) (12.3) 3.9 Net Income attributable to NiSource 714.3 804.1 584.9 Preferred dividends (42.8) (55.1) (55.1) Preferred redemption premium (9.8) — — Net Income Available to Common Shareholders 661.7 749.0 529.8 Earnings Per Share Basic Earnings Per Share $ 1.59 $ 1.84 $ 1.35 Diluted Earnings Per Share $ 1.48 $ 1.70 $ 1.27 Basic Average Common Shares Outstanding 416.1 407.1 393.6 Diluted Average Common Shares 447.9 442.7 417.3 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 60 Table of Contents ITEM 8.
STATEMENTS OF CONSOLIDATED INCOME Year Ended December 31 , (in millions, except per share amounts) 2024 2023 2022 Operating Revenues Customer revenues $ 5,282.9 $ 5,347.8 $ 5,738.6 Other revenues 172.2 157.6 112.0 Total Operating Revenues 5,455.1 5,505.4 5,850.6 Operating Expenses Cost of energy 1,132.2 1,533.3 2,110.5 Operation and maintenance 1,515.2 1,494.9 1,489.4 Depreciation and amortization 1,043.2 908.2 820.8 Loss on impairment of assets 6.1 — — Loss (gain) on sale of assets, net 2.9 2.9 (104.2) Other taxes 300.0 270.6 268.3 Total Operating Expenses 3,999.6 4,209.9 4,584.8 Operating Income 1,455.5 1,295.5 1,265.8 Other Income (Deductions) Interest expense, net (517.2) (489.6) (361.6) Other, net 64.5 8.0 52.2 Total Other Deductions, Net (452.7) (481.6) (309.4) Income before Income Taxes 1,002.8 813.9 956.4 Income Taxes 158.1 139.5 164.6 Net Income 844.7 674.4 791.8 Net income (loss) attributable to noncontrolling interest 84.3 (39.9) (12.3) Net Income attributable to NiSource 760.4 714.3 804.1 Preferred dividends (6.7) (42.8) (55.1) Preferred redemption premium (14.0) (9.8) — Net Income Available to Common Shareholders $ 739.7 $ 661.7 $ 749.0 Earnings Per Share Basic Earnings Per Share $ 1.63 $ 1.59 $ 1.84 Diluted Earnings Per Share $ 1.62 $ 1.48 $ 1.70 Basic Average Common Shares Outstanding 454.2 416.1 407.1 Diluted Average Common Shares 456.0 447.9 442.7 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 61 Table of Contents ITEM 8.
We evaluated the external information and compared to management’s recorded regulatory asset and liability balances for completeness, including the implementation of new rate orders at Northern Indiana Public Service Company LLC’s electric business and Columbia Gas of Ohio, Inc. • For the Northern Indiana Public Service Company LLC gas base rate case proceeding, we inspected the Company’s and intervenors’ filings with the commissions that may impact the Company’s future rates, for any evidence that might contradict management’s assertions related to recoverability of recorded assets. • We inquired of management about property, plant, and equipment that may be abandoned with an emphasis on the generation strategy related to Northern Indiana Public Service Company LLC’s R.M.
We evaluated this external information and compared to management’s recorded regulatory asset and liability balances for completeness, including the implementation of new rate orders at Northern Indiana Public Service Company LLC’s gas business. • We inspected minutes of the boards of directors for discussions of changes in legal, regulatory, or business factors which could impact management’s conclusions with respect to the financial statement impacts of rate regulation. • For the Northern Indiana Public Service Company LLC electric base rate case proceeding that is in-process, we inspected the Company’s and intervenors’ filings with the commission that may impact the Company’s future rates, for any evidence that might contradict management’s assertions related to recoverability of recorded assets. • We inquired of management about property, plant, and equipment that may be abandoned with an emphasis on the generation strategy related to Northern Indiana Public Service Company LLC’s R.M.
CONSOLIDATED BALANCE SHEETS (in millions) December 31, 2023 December 31, 2022 ASSETS Property, Plant and Equipment Plant $ 30,482.1 $ 27,551.3 Accumulated depreciation and amortization (8,207.2) (7,708.7) Net Property, Plant and Equipment (1) 22,274.9 19,842.6 Investments and Other Assets Unconsolidated affiliates 5.3 1.6 Available-for-sale debt securities (amortized cost of $169.0 and $166.7, allowance for credit losses of $0.6 and $0.9, respectively) 159.1 151.6 Other investments 82.7 71.0 Total Investments and Other Assets 247.1 224.2 Current Assets Cash and cash equivalents 2,245.4 40.8 Restricted cash 35.7 34.6 Accounts receivable 884.9 1,065.8 Allowance for credit losses (22.9) (23.9) Accounts receivable, net 862.0 1,041.9 Gas storage 265.8 531.7 Materials and supplies, at average cost 172.1 151.4 Electric production fuel, at average cost 65.3 68.8 Exchange gas receivable 66.0 128.1 Regulatory assets 214.3 233.2 Deposits to renewable generation asset developer 454.2 143.8 Prepayments and other 118.6 210.0 Total Current Assets (1) 4,499.4 2,584.3 Other Assets Regulatory assets 2,245.9 2,347.6 Goodwill 1,485.9 1,485.9 Deferred charges and other 324.0 252.0 Total Other Assets 4,055.8 4,085.5 Total Assets $ 31,077.2 $ 26,736.6 (1) Includes $1,369.8 million and $978.5 million in 2023 and 2022, respectively, of net property, plant and equipment assets and $63.6 million and $25.7 million in 2023 and 2022, respectively, of current assets of consolidated VIEs that may be used only to settle obligations of the consolidated VIEs.
CONSOLIDATED BALANCE SHEETS (in millions) December 31, 2024 December 31, 2023 ASSETS Property, Plant and Equipment Plant $ 34,152.9 $ 30,482.1 Accumulated depreciation and amortization (8,699.0) (8,207.2) Net Property, Plant and Equipment (1) 25,453.9 22,274.9 Investments and Other Assets Unconsolidated affiliates 6.5 5.3 Available-for-sale debt securities (amortized cost of $91.9 and $169.0, allowance for credit losses of $0.1 and $0.6, respectively) 86.7 159.1 Other investments 85.5 82.7 Total Investments and Other Assets 178.7 247.1 Current Assets Cash and cash equivalents 156.6 2,245.4 Restricted cash 42.0 35.7 Accounts receivable 987.9 884.9 Allowance for credit losses (23.7) (22.9) Accounts receivable, net 964.2 862.0 Gas storage 179.6 265.8 Materials and supplies, at average cost 173.3 172.1 Electric production fuel, at average cost 36.2 65.3 Exchange gas receivable 45.7 66.0 Regulatory assets 319.9 214.3 Deposits to renewable generation asset developer — 454.2 Prepayments 138.5 105.5 Other current assets 24.2 13.1 Total Current Assets (1) 2,080.2 4,499.4 Other Assets Regulatory assets 2,157.4 2,245.9 Goodwill 1,485.9 1,485.9 Deferred charges and other 432.0 324.0 Total Other Assets 4,075.3 4,055.8 Total Assets $ 31,788.1 $ 31,077.2 (1) Includes $1,323.8 million and $1,369.8 million in 2024 and 2023, respectively, of net property, plant and equipment assets, $65.0 million and $63.6 million in 2024 and 2023, respectively, of current assets of consolidated VIEs that may be used only to settle obligations of the consolidated VIEs.
CONSOLIDATED BALANCE SHEETS (in millions, except share amounts) December 31, 2023 December 31, 2022 CAPITALIZATION AND LIABILITIES Capitalization Stockholders’ Equity Common stock - $0.01 par value, 750,000,000 shares authorized; 447,381,671 and 412,142,602 shares outstanding, respectively $ 4.5 $ 4.2 Preferred stock - $0.01 par value, 20,000,000 shares authorized; 40,000 and 1,302,500 shares outstanding, respectively 486.1 1,546.5 Treasury stock (99.9) (99.9) Additional paid-in capital 8,879.5 7,375.3 Retained deficit (967.0) (1,213.6) Accumulated other comprehensive loss (33.6) (37.1) Total NiSource Stockholders' Equity 8,269.6 7,575.4 Noncontrolling interest in consolidated subsidiaries 1,866.7 326.4 Total Stockholders’ Equity 10,136.3 7,901.8 Long-term debt, excluding amounts due within one year 11,055.5 9,523.6 Total Capitalization 21,191.8 17,425.4 Current Liabilities Current portion of long-term debt 23.8 30.0 Short-term borrowings 3,048.6 1,761.9 Accounts payable 749.4 899.5 Customer deposits and credits 294.4 324.7 Taxes accrued 166.2 246.2 Interest accrued 136.1 138.4 Asset retirement obligations 72.5 35.5 Exchange gas payable 50.5 147.6 Regulatory liabilities 278.6 236.8 Accrued compensation and employee benefits 227.6 167.5 Obligations to renewable generation asset developer — 347.2 Other accruals 217.4 325.2 Total Current Liabilities (1) 5,265.1 4,660.5 Other Liabilities Deferred income taxes 2,080.4 1,854.5 Accrued liability for postretirement and postemployment benefits 250.1 245.5 Regulatory liabilities 1,510.7 1,775.8 Asset retirement obligations 480.5 478.1 Other noncurrent liabilities and deferred credits 298.6 296.8 Total Other Liabilities (1) 4,620.3 4,650.7 Commitments and Contingencies (Refer to Note 19, "Other Commitments and Contingencies") Total Capitalization and Liabilities $ 31,077.2 $ 26,736.6 (1) Includes $68.3 million and $128.2 million in 2023 and 2022, respectively, of current liabilities and $55.7 million and $30.6 million in 2023 and 2022, respectively, of other liabilities of consolidated VIEs that creditors do not have recourse to our general credit.
CONSOLIDATED BALANCE SHEETS (in millions, except share amounts) December 31, 2024 December 31, 2023 CAPITALIZATION AND LIABILITIES Capitalization Stockholders’ Equity Common stock - $0.01 par value, 750,000,000 shares authorized; 469,822,472 and 447,381,671 shares outstanding, respectively $ 4.7 $ 4.5 Preferred stock - $0.01 par value, 20,000,000 shares authorized; 0 and 40,000 shares outstanding, respectively — 486.1 Treasury stock (99.9) (99.9) Additional paid-in capital 9,521.5 8,879.5 Retained deficit (711.7) (967.0) Accumulated other comprehensive loss (30.4) (33.6) Total NiSource Stockholders' Equity 8,684.2 8,269.6 Noncontrolling interest in consolidated subsidiaries 1,984.1 1,866.7 Total Stockholders’ Equity 10,668.3 10,136.3 Long-term debt, excluding amounts due within one year 12,074.5 11,055.5 Total Capitalization 22,742.8 21,191.8 Current Liabilities Current portion of long-term debt 1,281.2 23.8 Short-term borrowings 604.6 3,048.6 Accounts payable 863.1 749.4 Customer deposits and credits 268.8 294.4 Taxes accrued 173.4 166.2 Interest accrued 157.0 136.1 Asset retirement obligations 84.6 72.5 Exchange gas payable 91.8 50.5 Regulatory liabilities 150.5 278.6 Accrued compensation and employee benefits 268.2 227.6 Other accruals 170.2 217.4 Total Current Liabilities (1) 4,113.4 5,265.1 Other Liabilities Deferred income taxes 2,281.6 2,080.4 Accrued liability for postretirement and postemployment benefits 207.5 250.1 Regulatory liabilities 1,431.2 1,510.7 Asset retirement obligations 698.6 480.5 Other noncurrent liabilities and deferred credits 313.0 298.6 Total Other Liabilities (1) 4,931.9 4,620.3 Commitments and Contingencies (Refer to Note 19, "Other Commitments and Contingencies") Total Capitalization and Liabilities $ 31,788.1 $ 31,077.2 (1) Includes $53.7 million and $68.3 million in 2024 and 2023, respectively, of current liabilities, $58.3 million and $55.7 million in 2024 and 2023, respectively, of other liabilities, and finance leases of $40.4 million in 2024, of consolidated VIEs that creditors do not have recourse to our general credit.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM • We tested the effectiveness of management’s controls over (1) the evaluation of the likelihood of (a) the recovery of costs deferred as regulatory assets in future periods, and (b) regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates; and (2) the evaluation of Hypothetical Liquidation Book Value (HLBV) Models for the company’s Renewable Joint Ventures and its impact on the Company’s regulatory assets for recovery in rate base. • We read relevant regulatory orders issued by the IURC and the PUCO, including regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates or a future reduction in rates based on precedents of the commissions’ treatment of similar costs under similar circumstances.
How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the application of specialized rules to account for the effects of cost-based rate regulation related to the uncertainty of future decisions by the rate regulators, specifically the Indiana Utility Regulatory Commission (IURC) and the Public Utility Commission of Ohio (PUCO), included the following, among others: • We tested the effectiveness of management’s controls over (1) the evaluation of the likelihood of (a) the recovery of costs deferred as regulatory assets in future periods, and (b) regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates; and (2) the evaluation of Hypothetical Liquidation Book Value (HLBV) accounting for the company’s Renewable Joint Ventures and its impact on the Company’s regulatory liability. • We evaluated Northern Indiana Public Service Company LLC and Columbia Gas of Ohio, Inc.’s disclosures related to the financial statement impacts of rate regulation. • We read relevant regulatory orders issued by the IURC and the PUCO, including regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates or a future reduction in rates based on precedents of the commissions’ treatment of similar costs under similar circumstances.
We evaluated the appropriateness of recognizing a regulatory liability or asset representing timing differences between the profit allocated under the HLBV method related to the consolidated joint ventures and the allowed earnings included in regulatory rates.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM • We read the relevant regulatory orders issued by the IURC for the Company’s renewable energy investments. We evaluated the appropriateness of recognizing a regulatory liability representing timing differences between the profit allocated under the HLBV method related to the consolidated joint ventures and the allowed earnings included in regulatory rates.
Rates are determined and approved in regulatory proceedings based on an analysis of the subsidiaries’ costs to provide utility service and a return on, and recovery of, the subsidiaries’ investment in the utility business.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued) N I S OURCE I NC . REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Company’s subsidiaries’ rates are determined and approved in regulatory proceedings based on an analysis of the subsidiaries’ costs to provide utility service and a return on, and recovery of, the subsidiaries’ investment in the utility business.
Schahfer and Michigan City Generating Stations. We inspected minutes of the board of directors and regulatory orders and other filings with the IURC to identify evidence that may contradict management’s assertion regarding probability of an abandonment. • We read the relevant regulatory orders issued by the IURC for the Company’s renewable energy investments.
Schahfer and Michigan City Generating Stations. We inspected minutes of the board of directors and regulatory orders and other filings with the IURC to identify evidence that may contradict management’s assertion regarding probability of an abandonment. 59 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued) N I S OURCE I NC .
Removed
Non-Controlling Interest - Minority Interest Investment in NIPSCO Holdings II LLC – Refer to Notes 1, 4, 6, and 15 to the financial statements Critical Audit Matter Description On December 31, 2023, the Company consummated the closing of the issuance of a 19.9% equity interest in NIPSCO Holdings II LLC, a wholly-owned subsidiary of the Company and the sole owner of Northern Indiana Public Service Company LLC (“NIPSCO”), to BIP BLUE BUYER L.L.C., an affiliate of Blackstone Infrastructure Partners.
Removed
At closing, BIP BLUE BUYER L.L.C., acquired a 19.9% equity interest in NIPSCO Holdings II LLC in exchange for making a capital contribution of $2.16 billion in cash to NIPSCO Holdings II LLC.
Removed
Upon consummation of the minority interest transaction, the Company owns an 80.1% controlling indirect equity interest in NIPSCO LLC while BIP BLUE BUYER L.L.C., owns the remaining 19.9% indirect equity interest.
Removed
We identified the $2.16 billion minority interest investment in NIPSCO Holdings II LLC as a critical audit matter due to the significant degree of judgement involved in complex accounting and tax conclusions.
Removed
This required a significant degree of auditor judgment when performing audit procedures, including the need to involve professionals in our firm with the 57 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued) N I S OURCE I NC .
Removed
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM appropriate expertise to assist us in evaluating management’s conclusions around the accounting and tax treatment for the transaction.
Removed
How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the minority interest investment in NIPSCO Holdings II LLC included the following, among others: • We tested the effectiveness of controls over the accounting assessment for this transaction, including the controls over technical accounting conclusions and income tax treatment of this transaction. • We evaluated management’s conclusions related to accounting for the transaction by: ▪ Obtaining and reading the contractual agreements related to this transaction, ▪ Involving professionals in our firm with the appropriate expertise in accounting for minority interest transactions to evaluate the work performed by management related to the accounting treatment of the transaction, ▪ Involving professionals in our firm with the appropriate expertise in income taxes to evaluate the work performed by management related to the tax treatment of the transaction, • We evaluated the appropriateness of the Company’s disclosures related to the minority interest investment, including balances recorded.
Removed
How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the application of specialized rules to account for the effects of cost-based rate regulation related to the uncertainty of future decisions by the rate regulators, specifically the Indiana Utility Regulatory Commission (IURC) and the Public Utility Commission of Ohio (PUCO), included the following, among others: 58 Table of Contents ITEM 8.
Removed
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued) N I S OURCE I NC .

Other NI 10-K year-over-year comparisons