filings.toolsNiSource (NI) 10-K risk factor changes: FY2016 vs FY2015
The 2016-12-31 10-K against the 2015-12-31 one, compared heading by heading and sentence by sentence. One of these filings carries no fiscal year tag, so its year is the calendar year of the period end.
Item 1A9 rewritten15 added32 removed72 unchanged
All filing items1,060 rewritten1,096 added1,151 removed1,892 unchanged
Summary
counted, not written
- Item 1A headings could not be compared: only 0 carried over between the two years, which usually means one filing was read wrongly, so none is reported as new or removed.
- Sentence by sentence, 1,096 added, 1,151 removed, 1,060 rewritten and 1,892 unchanged across 18 items that differ.
Sentences by item
21 items, with every count and a link to each item that changed
Underlined words on a shaded ground are new in FY2016; struck-through words were in FY2015. Sentences that are wholly new or wholly gone are labelled rather than marked.
Item 1A. RISK FACTORS
9 rewritten, 15 added, 32 removed, 72 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
[removed: In particular, sales to large industrial customers, such as those in the steel,] oil refining, industrial gas and related industries, may be impacted by economic downturns.
NiSource monitors its credit risk exposure by obtaining credit reports and updated financial information for customers and suppliers, and by evaluating the financial status of its banking partners and other counterparties by reference to market-based metrics such as credit default swap pricing [added: levels, and to traditional credit ratings provided by the major credit rating agencies.]
As of December 31, [removed: 2015,] [added: 2016,] the ratio was [removed: 64%.][added: 66%.]
[removed: However, a challenge by a taxing authority, NiSource’s 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.
NiSource's gas distribution [removed: and transmission] activities, as well as generation, transmission, and distribution of electricity, involve a variety of inherent hazards and operating risks, such as gas leaks, downed power lines, incidents, including third-party damages, large scale outages, and mechanical problems, which could cause substantial financial losses.
The age of these assets may result in a need for replacement, a higher level of maintenance costs and unscheduled outages despite efforts by NiSource to properly maintain [added: or upgrade] these assets through inspection, scheduled maintenance and capital investment.
NiSource is engaged in [removed: an] intrastate natural gas pipeline modernization [removed: program] [added: programs] to maintain system integrity and enhance service reliability and flexibility.
Following the Separation, all of the entities formerly included in NiSource's Columbia Pipeline Group Operations segment have been separated from NiSource and are held by a separate [removed: publicly traded] company (CPG).
The Separation may [removed: not achieve the intended benefits and may] result in significant tax liabilities.
The implementation of NIPSCO’s electric generation strategy, including the retirement of its coal generation units, may not achieve intended results.
On November 1, 2016, NIPSCO submitted its Integrated Resource Plan with the IURC setting forth its short- and long-term electric generation plans in an effort to maintain affordability while providing reliable, flexible and cleaner sources of power.
However, there are inherent risks and uncertainties, including changes in market conditions, environmental regulations, commodity costs and customer expectations, which may impede NIPSCO’s ability to achieve these intended results.
In addition, the Integrated Resource Plan included an intention to retire the Bailly coal generation units (Units 7 and 8) as soon as mid-2018 and two units (Units 17 and 18) at the R.M. Schahfer Generating Station by the end of 2023.
The MISO subsequently approved NIPSCO’s plan to retire the two Bailly coal generation units by May 31, 2018.
NIPSCO’s electric generation strategy could require significant future capital expenditures, operating costs and charges to earnings that may negatively impact NiSource’s financial position, financial results and cash flows.
For example, the Trump Administration has recently called for substantial change to fiscal and tax policies, which may include comprehensive tax reform.
Separately, a challenge by a taxing authority, NiSource’s ability to utilize tax benefits
Failure to attract and retain an appropriately qualified workforce could harm NiSource’s results of operations.
NiSource operates in an industry that requires many of its employees to possess unique technical skill sets.
Events such as an aging workforce without appropriate replacements, the mismatch of skill sets to future needs, or the unavailability of contract resources may lead to operating challenges or increased costs.
These operating challenges include lack of resources, loss of knowledge, and a lengthy time period associated with skill development.
In addition, current and prospective employees may determine that they do not wish to work for NiSource due to market, economic, employment and other conditions.
Failure to hire and retain qualified employees, including the ability to transfer significant internal historical knowledge and expertise to the new employees, may adversely affect NiSource’s ability to manage and operate its business.
If NiSource is unable to successfully attract and retain an appropriately qualified workforce, its results of operations could be adversely affected.
NISOURCE INC.
which may not be fully recoverable from customers and would, therefore, reduce net income.
Moreover, such costs could materially affect the continued economic viability of one or more of NiSource’s facilities.
Even in instances where legal and regulatory requirements are already known or anticipated, the original cost estimates for cleanup and environmental capital projects can differ materially from the amount ultimately expended.
The actual future expenditures depend on many factors, including the nature and extent of impact, the method of cleanup, the cost of raw materials, contractor costs, and the availability of cost recovery.
Changes in costs and the ability to recover under regulatory mechanisms could affect NiSource’s financial position, operating results and cash flows.
Because NiSource operates fossil fuel facilities, emissions of GHGs are an expected aspect of the business.
While NiSource continues to reduce GHG emissions through efficiency programs, leak detection, and other programs, GHG emissions cannot be eliminated.
The EPA has made clear that it is focused on reducing GHG emissions from the energy industry.
On October 18, 2015, the EPA finalized its CPP, which regulates greenhouse gas emissions from coal and natural gas electric generating units.
The CPP is subject to various legal challenges, but, if the CPP survives these challenges, the compliance costs associated with CPP requirements could impact cash flow.
In addition, the CPP could increase NiSource’s cost of producing energy, which may impact customer demand and/or NiSource’s profitability.
The CPP requires states (or in some cases the EPA) to develop individualized plans to meet the CPP emission reduction requirements.
Depending on the array of programs chosen by the State of Indiana or EPA, NiSource’s CPP compliance costs could be substantial.
It is also possible that additional future GHG legislation and/or regulation could materially impact NiSource.
The cost impact of any new and/or amended GHG legislation or regulations would depend upon the specific requirements enacted and cannot be determined at this time.
A significant portion of the gas and electricity NiSource sells is used by residential and commercial customers for heating and air conditioning.
Accordingly, fluctuations in weather, gas and electricity commodity costs and economic conditions impact demand of our customers and our operating results.
Energy sales are sensitive to variations in weather.
Forecasts of energy sales are based on normal weather, which represents a long-term historical average.
Significant variations from normal weather could have, and have had, a material impact on energy sales.
Additionally, residential usage, and to some degree commercial usage is sensitive to fluctuations in commodity costs for gas and electricity, whereby usage declines with increased costs, thus affecting NiSource’s financial results.
Lastly, residential and commercial customers’ usage is sensitive to economic conditions and factors such as unemployment, consumption and consumer confidence.
Therefore, prevailing economic conditions may affect NiSource’s financial results.
NiSource’s business operations are subject to economic conditions in certain industries.
Business operations throughout NiSource’s service territories have been and may continue to be adversely affected by economic events at the national and local level where it operates.
ITEM 1A.
RISK FACTORS
levels, and to traditional credit ratings provided by the major credit rating agencies.
NiSource cannot predict with certainty when the benefits expected from the Separation will occur or the extent to which they will be achieved, if at all.
Furthermore, there are various uncertainties and risks relating to the process of the Separation that could have a negative impact on our financial condition, results of operations and cash flows, including disruption of our operations and impairment of our relationship with regulators, key personnel, customers and vendors.
As a result of the completion of the Separation, NiSource faces new and unique risks, including having fewer assets, reduced financial resources and less diversification of revenue sources.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
103 rewritten, 485 added, 108 removed, 60 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
[added: NiSource’s remaining reporting unit, NIPSCO Gas] Operations, was not impacted by the changes in reporting structure as it was [removed: historically] [added: historically,] and continues to [removed: be] [added: be,] reviewed by the chief operating decision maker at a state operating company level.
Refer to [removed: Notes 1-J and] [added: Note] 5, [removed: “Goodwill] [added: “Property, Plant] and [removed: Other Intangible Assets,”] [added: Equipment,” and Note 18-E, "Other Matters,"] in the Notes to Consolidated Financial Statements for [removed: additional] information.
Refer to Note [removed: 1-L,] [added: 1-I,] “Revenue Recognition,” in the Notes to Consolidated Financial Statements.
[removed: Refer] [added: For additional information, refer] to Note [removed: 18-C, “Environmental] [added: 8, “Regulatory] Matters,” in the Notes to Consolidated Financial [removed: Statements for additional information regarding environmental matters.][added: Statements.]
| Year Ended December 31, (in millions) | [added: 2016 | | | |] 2015 | | | | 2014 | | | | [removed: 2013] [added: 2016 vs. 2015] | | | [added: | 2015 vs. 2014 | | |]
| Net Revenues | | | | | | | | | | | | [added: | | | | | | | |]
| Sales revenues | $ | [added: 2,830.6 | | | $ |] 3,069.1 | | | $ | 3,593.9 | | | $ | [removed: 3,053.8] [added: (238.5] | [added: )] | [added: | $ | (524.8 | ) |]
| Less: Cost of gas sold (excluding depreciation and amortization) | [added: 895.4 | | | |] 1,155.5 | | | | 1,762.7 | | | | [removed: 1,419.7] [added: (260.1] | | [added: )] | [added: | (607.2 | | ) |]
| Net Revenues | [added: 1,935.2 | | | |] 1,913.6 | | | | 1,831.2 | | | | [removed: 1,634.1] [added: 21.6] | | | [added: | 82.4 | | |]
| Operating Expenses | | | | | | | | | | | | [added: | | | | | | | |]
| Operation and maintenance | [added: 937.2 | | | |] 945.3 | | | | 900.3 | | | | [removed: 824.8] [added: (8.1] | | [added: )] | [added: | 45.0 | | |]
| Depreciation and amortization | [added: 252.9 | | | |] 232.6 | | | | 217.6 | | | | [removed: 201.4] [added: 20.3] | | | [added: | 15.0 | | |]
| [removed: Loss] (Gain) [added: Loss] on sale of assets and [removed: impairment,] [added: impairments,] net | [added: — | | | |] 0.8 | | | | (0.2 | | ) | | [removed: 1.2] [added: (0.8] | | [added: )] | [added: | 1.0 | | |]
| Other taxes | [added: 171.1 | | | |] 179.1 | | | | 176.5 | | | | [removed: 161.3] [added: (8.0] | | [added: )] | [added: | 2.6 | | |]
| Total Operating Expenses | [added: 1,361.2 | | | |] 1,357.8 | | | | 1,294.2 | | | | [removed: 1,188.7] [added: 3.4] | | | [added: | 63.6 | | |]
| Operating Income | $ | [added: 574.0 | | | $ |] 555.8 | | | $ | 537.0 | | | $ | [removed: 445.4] [added: 18.2] | | [added: | $ | 18.8 | |]
| Revenues | | | | | | | | | | | | [added: | | | | | | | |]
| Residential | $ | [added: 1,823.4 | | | $ |] 2,055.2 | | | $ | 2,286.3 | | | $ | [removed: 1,901.0] [added: (231.8] | [added: )] | [added: | $ | (231.1 | ) |]
| Commercial | [added: 588.1 | | | |] 691.4 | | | | 800.6 | | | | [removed: 654.0] [added: (103.3] | | [added: )] | [added: | (109.2 | | ) |]
| Industrial | [added: 194.3 | | | |] 217.6 | | | | 231.3 | | | | [removed: 194.3] [added: (23.3] | | [added: )] | [added: | (13.7 | | ) |]
| Off-System [removed: Sales] [added: sales] | [added: 94.4 | | | |] 87.3 | | | | 199.4 | | | | [removed: 266.4] [added: 7.1] | | | [added: | (112.1 | | ) |]
| Other | [added: 130.4 | | | |] 17.6 | | | | 76.3 | | | | [removed: 38.1] [added: 112.8] | | | [added: | (58.7 | | ) |]
| Total | $ | [added: 2,830.6 | | | $ |] 3,069.1 | | | $ | 3,593.9 | | | $ | [removed: 3,053.8] [added: (238.5] | [added: )] | [added: | $ | (524.8 | ) |]
| Sales and Transportation (MMDth) | | | | | | | | | | | | [added: | | | | | | | |]
| Residential sales | [added: 248.9 | | | |] 262.0 | | | | 295.2 | | | | [removed: 272.3] [added: (13.1] | | [added: )] | [added: | (33.2 | | ) |]
| Commercial sales | [added: 165.6 | | | |] 171.5 | | | | 189.6 | | | | [removed: 172.9] [added: (5.9] | | [added: )] | [added: | (18.1 | | ) |]
| Industrial sales | [added: 517.7 | | | |] 522.7 | | | | 512.9 | | | | [removed: 494.5] [added: (5.0] | | [added: )] | [added: | 9.8 | | |]
| Off-System [removed: Sales] [added: sales] | [added: 39.6 | | | |] 32.7 | | | | 44.9 | | | | [removed: 70.4] [added: 6.9] | | | [added: | (12.2 | | ) |]
| Other | [added: (0.1 | | ) | |] (0.2 | | ) | | (0.1 | | ) | | [removed: 0.4] [added: 0.1] | | | [added: | (0.1 | | ) |]
| Total | [added: 971.7 | | | |] 988.7 | | | | 1,042.5 | | | | [removed: 1,010.5] [added: (17.0] | | [added: )] | [added: | (53.8 | | ) |]
| Heating Degree Days | [added: 5,148 | | | |] 5,459 | | | | 6,176 | | | | [removed: 5,698] [added: (311] | | [added: )] | [added: | (717 | | ) |]
| Normal Heating Degree Days | [removed: 5,610] [added: 5,642] | | | | 5,610 | | | | 5,610 | | | [added: | 32 | | | | — | | |]
| % Colder (Warmer) than Normal | [added: (9 | | )% | |] (3 | | )% | | 10 | | % | | [removed: 2] | | [removed: %] | [added: | | | |]
| [added: Electric] Customers | | | | | | | | | | | | [added: | | | | | | | |]
| Residential | [added: 3,141,722 | | | |] 3,113,324 | | | | 3,098,052 | | | | [removed: 3,079,575] [added: 28,398] | | | [added: | 15,272 | | |]
| Other | [added: 14 | | | |] 13 | | | | 15 | | | | [removed: 22] [added: 1] | | | [added: | (2 | | ) |]
[added: |] Gas Distribution Operations [removed: (continued)][added: | | | | | | | | | | | |]
The table below reflects [removed: actual] capital expenditures and [added: certain] other investing activities by [removed: category] [added: segment] for [removed: 2015, 2014 and 2013,] [added: 2016, 2015] and [removed: estimates for 2016.][added: 2014.]
| (in millions) | [removed: 2016E] [added: 2016] | | | | 2015 | | | | 2014 | | | [removed: | 2013 | | |]
This increased spending [removed: of $49.9 million] is mainly due to [removed: growth and betterment] [added: modernization] projects [removed: in 2016.][added: and segment growth at the Gas Distribution Operations segment.]
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| • | In December 2016, NIPSCO announced plans to retire two coal-fired units at its Bailly Generation station earlier than previously estimated. This decision was based on an analysis of current economic and legislative conditions including the decreasing cost of natural gas relative to coal and the increased cost of compliance with current and future environmental regulations. |
Results of Operations
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| Year Ended December 31, (in millions, except per share amounts) | 2016 | | | | 2015 | | | | 2014 | | | | 2016 vs. 2015 | | | | 2015 vs. 2014 | | |
| Total Net Revenues | $ | 3,102.3 | | | $ | 3,008.1 | | | $ | 2,899.5 | | | $ | 94.2 | | | $ | 108.6 | |
| Total Operating Expenses | 2,244.1 | | | | 2,208.2 | | | | 2,110.4 | | | | 35.9 | | | | 97.8 | | |
| Operating Income | 858.2 | | | | 799.9 | | | | 789.1 | | | | 58.3 | | | | 10.8 | | |
| Total Other Income (Deductions) | (348.0 | | ) | | (460.0 | | ) | | (366.1 | | ) | | 112.0 | | | | (93.9 | | ) |
| Income Taxes | 182.1 | | | | 141.3 | | | | 166.8 | | | | 40.8 | | | | (25.5 | | ) |
| Income from Continuing Operations | 328.1 | | | | 198.6 | | | | 256.2 | | | | 129.5 | | | | (57.6 | | ) |
| Basic Earnings Per Share from Continuing Operations | $ | 1.02 | | | $ | 0.63 | | | $ | 0.81 | | | $ | 0.39 | | | $ | (0.18 | ) |
| Basic Average Common Shares Outstanding | 321.8 | | | | 317.7 | | | | 315.1 | | | | 4.1 | | | | 2.6 | | |
Substantially all of NiSource's operating income is generated by the Gas Distribution Operations and Electric Operations segments, the results of which are discussed in further detail within "Results and Discussion of Segment Operations."
Other Income (Deductions)
Other income (deductions) in 2016 reduced income $348.0 million compared to a reduction of $460.0 million in 2015.
This change is primarily due to a loss on early extinguishment of long-term debt of $97.2 million in 2015 and decreased interest expense of $30.7 million primarily resulting from maturities of long-term debt.
These changes were partially offset by a 2016 charge resulting from a tax notice impacting NIPSCO's TUAs.
Other income (deductions) in 2015 reduced income $460.0 million compared to a reduction of $366.1 million in 2014.
The increase in deductions is primarily due to a loss on early extinguishment of long-term debt of $97.2 million.
Income Taxes
Refer to Note 10, "Income Taxes," in the Notes to the Consolidated Financial Statements for further information on Income Taxes.
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| Gas Distribution Customers | | | | | | | | | | | | | | | | | | | |
| Commercial | 279,556 | | | | 277,239 | | | | 277,057 | | | | 2,317 | | | | 182 | | |
| Industrial | 6,240 | | | | 6,465 | | | | 6,681 | | | | (225 | | ) | | (216 | | ) |
| Total | 3,427,532 | | | | 3,397,041 | | | | 3,381,805 | | | | 30,491 | | | | 15,236 | | |
NiSource analyzes its operating results using net revenues.
Net revenues are calculated as gross revenues less the associated cost of sales (excluding depreciation and amortization).
Cost of sales at the Gas Distribution Operations segment is principally comprised of the cost of natural gas used while providing transportation and distribution services to its customers.
NiSource believes net revenues are a better measure to analyze profitability than gross revenues because the majority of the cost of sales are tracked costs that are passed through directly to the customer resulting in an equal and offsetting amount reflected in gross revenues.
Comparability of line item operating results may also be impacted by regulatory, tax and depreciation trackers (other than those for cost of sales) that allow for the recovery in rates of certain costs such as bad debt expense.
Therefore, increases in these tracked operating expenses are offset by increases in net revenues and have essentially no impact on income from continuing operations.
The change in net revenues was primarily driven by:
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All of NiSource’s goodwill reporting units at December 31, 2015 remain within the Gas Distribution Operations reportable segment.
Environmental Matters
NiSource is subject to regulation by various federal, state and local authorities in the areas of air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters.
NiSource believes that it is in substantial compliance with those environmental regulations currently applicable to NiSource’s business and operations.
Bargaining Unit Contract
As of December 31, 2015, NiSource had 7,596 employees of whom 3,157 were subject to collective bargaining agreements.
Agreements were reached with the respective unions whose collective bargaining agreements were set to expire during 2015.
Six additional collective bargaining contracts, covering approximately 400 employees, are set to expire during 2016.
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| Commercial | 283,357 | | | | 282,749 | | | | 281,535 | | |
| Industrial | 7,578 | | | | 7,637 | | | | 7,663 | | |
| Total | 3,404,272 | | | | 3,388,453 | | | | 3,368,795 | | |
Competition
Gas Distribution Operations competes with investor-owned, municipal, and cooperative electric utilities throughout its service areas as well as other regulated and unregulated natural gas intra and interstate pipelines and other alternate fuels, such as propane and fuel oil.
Gas Distribution Operations continues to be a strong competitor in the energy market as a result of strong customer preference for natural gas.
Competition with providers of electricity has traditionally been the strongest in the residential and commercial markets of Kentucky, southern Ohio, central Pennsylvania and western Virginia due to comparatively low electric rates.
Natural gas competes with fuel oil and propane in the Massachusetts market mainly due to the installed base of fuel oil and propane-based heating which has comprised a declining percentage of the overall market over the last few years.
However, fuel oil and propane are more viable in today’s depressed oil market.
Market Conditions
Spot prices at the Henry Hub for the winter through December 2015 have primarily been in the $1.54 to $2.40 per Dth range compared to the price range of $2.75 to $4.28 per Dth experienced during the winter through December 2014.
Entering the 2015 - 2016 winter season, national storage levels were 371 Bcf above the prior year and 147 Bcf above the five- year average inventory level (based on October 30, 2015 Energy Information Administration storage report).
During the summer of 2015, prices ranged between $2.08 and $3.07 per Dth averaging below the range of $3.52 to $4.80 per Dth experienced during the summer of 2014.
The Gas Distribution Operations companies have pursued non-traditional revenue sources within the evolving natural gas marketplace.
These efforts include the sale of products and services upstream of the companies’ service territory, the sale of products and services in the companies’ service territories, and gas supply cost incentive mechanisms for service to their core markets.
The upstream products are made up of transactions that occur between an individual Gas Distribution Operations company and a buyer for the sales of unbundled or rebundled gas supply and capacity.
The on-system services are offered by NiSource to customers and include products such as the transportation and balancing of gas on the Gas Distribution Operations company system.
The incentive mechanisms give the Gas Distribution Operations companies an opportunity to share in the savings created from such situations as gas purchase prices paid below an agreed upon benchmark and their ability to reduce pipeline capacity charges with their customers.
Capital Expenditures and Other Investing Activities
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| System Growth | $ | 168.3 | | | $ | 157.8 | | | $ | 175.9 | | | $ | 166.8 | |
| Maintenance and Other | 798.6 | | | | 759.2 | | | | 684.4 | | | | 624.0 | | |
| Total | $ | 966.9 | | | $ | 917.0 | | | $ | 860.3 | | | $ | 790.8 | |
The Gas Distribution Operations segment’s capital expenditures and other investing activities were $917.0 million in 2015 and are projected to be $966.9 million in 2016.
Capital expenditures for 2015 were higher than 2014 by approximately $56.7 million primarily due to increased TDSIC spend.
The Gas Distribution Operations segment’s capital expenditures for 2014 were higher than 2013 by approximately $69.5 million primarily due to increased spending on infrastructure replacement projects.
An excerpt. Shown here: 40 of 103 rewritten, 40 of 485 added and 40 of 108 removed. The counts are complete. For every sentence, read Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS in the FY2016 filing and the FY2015 filing.
Item 1. BUSINESS
13 rewritten, 57 added, 50 removed, 99 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
Indiana electric utilities generally have exclusive service areas under Indiana [removed: regulations] [added: regulations,] and retail electric customers in Indiana do not have the ability to choose their electric supplier.
As of December 31, [removed: 2015,] [added: 2016,] NiSource had [removed: 7,596] [added: 8,007] employees of whom [removed: 3,157] [added: 3,175] were subject to collective bargaining agreements.
NiSource had total consolidated indebtedness of [removed: $6,949.6] [added: $7,909.3] million outstanding as of December 31, [removed: 2015.][added: 2016.]
In [removed: 2015,] [added: 2016,] Moody’s affirmed the NiSource senior unsecured rating of Baa2 and its commercial paper rating of P-2, with stable outlooks.
Moody’s also affirmed NIPSCO’s Baa1 rating and Columbia [removed: Gas] of Massachusetts’s Baa2 rating, with stable outlooks.
In [removed: 2015,] [added: 2016,] Standard & Poor’s [removed: raised] [added: affirmed] the [added: BBB+] senior unsecured ratings of NiSource and its subsidiaries [removed: to BBB+] and [added: affirmed] NiSource’s commercial paper rating [removed: to] [added: of] A-2, with stable outlooks.
As of December 31, [removed: 2015] [added: 2016,] the collateral requirement that would be required in the event of a downgrade below the ratings trigger levels would amount to approximately [removed: $26.9] [added: $35.4] million.
The Company relies on access to the capital markets to finance [removed: our] [added: its] liquidity and long-term capital requirements.
Market turmoil could adversely affect our ability to raise additional capital or refinance [removed: debt at reasonable borrowing costs and terms.][added: debt.]
[removed: NiSource is] [added: NiSource’s businesses are] subject to extensive federal, state and local environmental [removed: requirements that,] [added: laws and rules that regulate,] among other things, [removed: regulate] air emissions, water usage and discharges, [removed: remediation] and [removed: the management of chemicals, hazardous waste, solid waste, and] [added: waste products such as] coal combustion residuals.
Compliance with these legal obligations requires NiSource to make expenditures for installation of pollution control equipment, remediation, environmental monitoring, emissions [removed: fees] [added: fees,] and permits at many of NiSource’s facilities.
Furthermore, if NiSource fails to comply with environmental laws and regulations or is found to have caused damage to the environment or persons, even if caused by factors beyond NiSource’s control, that failure or harm may result in the assessment of civil or criminal penalties and damages against [removed: NiSource.][added: NiSource and injunctions to remedy the failure or harm.]
Revised or additional laws and regulations [removed: could] [added: may] result in significant additional expense and operating restrictions on NiSource’s facilities or increased compliance costs, [added: which may not be fully recoverable from customers through regulated rates and could, therefore, impact NiSource’s financial position, financial results, and cash flow.]
markets.
The upstream products are made up of transactions that occur between an individual Gas Distribution Operations company and a buyer for the sales of unbundled or rebundled gas supply and capacity.
The on-system services are offered by NiSource to customers and include products such as the transportation and balancing of gas on the Gas Distribution Operations company system.
The incentive mechanisms give the Gas Distribution Operations companies an opportunity to share in the savings created from such situations as gas purchase prices paid below an agreed upon benchmark and their ability to reduce pipeline capacity charges with their customers.
Increased efficiency of natural gas appliances and improvements in home building codes and standards has contributed to a long-term trend of declining average use per customer.
Usage for the year ended December 31, 2016 decreased from the same period last year primarily due to warmer weather in the Company's operating area compared to the prior year.
While historically rate design at the distribution level has been structured such that a large portion of cost recovery is based upon throughput rather than in a fixed charge, operating costs are largely incurred on a fixed basis and do not fluctuate due to changes in customer usage.
As a result, Gas Distribution Operations have pursued changes in rate design to more effectively match recoveries with costs incurred.
Each of the states in which Gas Distribution Operations operate has different requirements regarding the procedure for establishing changes to rate design.
Columbia of Ohio restructured its rate design through a base rate proceeding and has adopted a “de-coupled” rate design which more closely links the recovery of fixed costs with fixed charges.
Columbia of Massachusetts received regulatory approval of a decoupling mechanism which adjusts revenues to an approved benchmark level through a volumetric adjustment factor.
Columbia of Maryland and Columbia of Virginia have received regulatory approval to implement a revenue normalization adjustment for certain customer classes, a decoupling mechanism whereby monthly revenues that exceed or fall short of approved levels are reconciled in subsequent months.
In a prior base rate proceeding, Columbia of Pennsylvania implemented a pilot residential weather normalization adjustment.
Columbia of Kentucky has had approval for a weather normalization adjustment for many years.
In a prior base rate proceeding, NIPSCO implemented a higher fixed customer charge for residential and small customer classes moving toward full straight fixed variable rate design.
Gas Distribution Operations competes with investor-owned, municipal, and cooperative electric utilities throughout its service areas as well as other regulated and unregulated natural gas intra and interstate pipelines and other alternate fuels, such as propane and fuel oil.
Gas Distribution Operations continues to be a strong competitor in the energy market as a result of strong customer preference for natural gas.
Competition with providers of electricity has traditionally been the strongest in the residential and commercial markets of Kentucky, southern Ohio, central Pennsylvania and western Virginia due to comparatively low electric rates.
Natural gas competes with fuel oil and propane in the Massachusetts market mainly due to the installed base of fuel oil and propane-based heating which has comprised a declining percentage of the overall market over the last few years.
However, fuel oil and propane are more viable in today’s oil market.
In 2016, Fitch upgraded the long-term issuer default ratings of NiSource and NIPSCO to BBB and affirmed the commercial paper rating of F3, with stable outlooks.
Failure to adapt to advances in technology could make NiSource less competitive.
A key element of NiSource’s business model is that generating power at central station power plants achieves economies of scale and produces power at a competitive cost.
Research and development activities are ongoing for new technologies that produce power or reduce power consumption.
These technologies include renewable energy, customer-oriented generation, energy storage, and energy efficiency.
Advances in technology or changes in laws or regulations could reduce the cost of these or other alternative methods of producing power to a level that is competitive with that of most central station power electric production or result in smaller-scale, more fuel efficient, and/or more cost effective distributed generation.
This could cause our market share to erode and the value of our generating facilities to decline.
In addition, a failure by NiSource to effectively adapt to changes in technology could harm NiSource’s ability to remain competitive in the marketplace for its products, services and processes.
ITEM 1A.
RISK FACTORS
NISOURCE INC.
NiSource is exposed to significant reputational risks, which make it vulnerable to a loss of cost recovery, increased litigation and negative public perception.
As a utility company, NiSource is subject to adverse publicity focused on the reliability of our services and the speed with which NiSource is able to respond effectively to electric outages, natural gas leaks and similar interruptions caused by storm damage or other unanticipated events, as well as our own or third parties' actions or failure to act.
If customers, legislators, or regulators have or develop a negative opinion of NiSource, this could result in less favorable legislative and regulatory outcomes or increased regulatory oversight, increased litigation and negative public perception.
The imposition of any of the foregoing could have a material adverse effect on the business, results of operations, cash flow and financial condition of NiSource.
NiSource’s businesses are regulated under numerous environmental laws.
The cost of compliance with these laws, and changes to or additions to, or reinterpretations of the laws, could be significant.
Liability from the failure to comply with existing or changed laws could have a material adverse effect on the business, results of operations, cash flows, and the financial condition of NiSource.
Moreover, such costs could materially affect the continued economic viability of one or more of NiSource’s facilities.
An area of significant uncertainty and risk are the laws concerning emission of GHG.
NiSource Inc. (the "Company") is 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 approximately 3.9 million customers in seven states.
NiSource is the successor to an Indiana corporation organized in 1987 under the name of NIPSCO Industries, Inc., which changed its name to NiSource on April 14, 1999.
NiSource is one of the nation’s largest natural gas distribution companies, as measured by number of customers.
NiSource’s principal subsidiaries include NiSource Gas Distribution Group, Inc., a natural gas distribution holding company, and NIPSCO, a gas and electric company.
NiSource derives substantially all of its revenues and earnings from the operating results of these rate-regulated businesses.
On July 1, 2015, NiSource completed the Separation of CPG from NiSource.
CPG's operations consisted of all of NiSource's Columbia Pipeline Group Operations segment prior to the Separation.
Following the Separation, NiSource retained no ownership interest in CPG.
The results of operations and cash flows for the former Columbia Pipeline Group Operations segment have been reported as discontinued operations for all periods presented.
Additionally, the assets and liabilities of the former Columbia Pipeline Group Operations segment were reclassified as assets and liabilities of discontinued operations for all prior periods.
See Note 3, "Discontinued Operations," in the Notes to Consolidated Financial Statements for additional information.
NiSource’s reportable segments are: Gas Distribution Operations and Electric Operations.
The following is a summary of the business for each reporting segment.
Refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 22, "Segments of Business," in the Notes to Consolidated Financial Statements for additional information for each segment.
Gas Distribution Operations
NiSource’s natural gas distribution operations serve approximately 3.4 million customers in seven states and operate approximately 59,000 miles of pipeline.
Through its wholly-owned subsidiary NiSource Gas Distribution Group, Inc., NiSource owns six distribution subsidiaries that provide natural gas to approximately 2.6 million residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland and Massachusetts.
Additionally, NiSource also distributes natural gas to approximately 812,000 customers in northern Indiana through its wholly-owned subsidiary NIPSCO.
Electric Operations
NiSource generates, transmits and distributes electricity through its subsidiary NIPSCO to approximately 463,000 customers in 20 counties in the northern part of Indiana and engages in wholesale and transmission transactions.
NIPSCO owns and operates three coal-fired electric generating stations.
The three operating facilities have a net capability of 2,540 mw.
NIPSCO also owns and operates Sugar Creek, a CCGT plant with net capability of 535 mw, three gas-fired generating units located at NIPSCO’s coal-fired electric generating stations with a net capability of 196 mw and two hydroelectric generating plants with a net capability of 10 mw.
These facilities provide for a total system operating net capability of 3,281 mw.
NIPSCO’s transmission system, with voltages from 69,000 to 345,000 volts, consists of 2,805 circuit miles.
NIPSCO is interconnected with five neighboring electric utilities.
During the year ended December 31, 2015, NIPSCO generated 67.4% and purchased 32.6% of its electric requirements.
NIPSCO participates in the MISO transmission service and wholesale energy market.
The MISO is a nonprofit organization created in compliance with FERC regulations to improve the flow of electricity in the regional marketplace and to enhance electric reliability.
Additionally, the MISO is responsible for managing energy markets, transmission constraints and the day-ahead, real-time, FTR and ancillary markets.
NIPSCO transferred functional control of its electric transmission assets to the MISO and transmission service for NIPSCO occurs under the MISO Open Access Transmission Tariff.
Divestiture of Non-Core Assets
In recent years, NiSource sold certain businesses judged to be non-core to NiSource’s strategy.
Lake Erie Land Company, a wholly-owned subsidiary of NiSource, is pursuing the sale of the real estate assets it owns.
NDC Douglas Properties, a subsidiary of NiSource Development Company, is in the process of exiting its low-income housing investments.
NiSource sold the service plan and leasing business lines of its retail services business in January 2013.
NiSource also sold the commercial and industrial natural gas portfolio of its unregulated natural gas marketing business in September 2013.
Business Strategy
NiSource focuses its business strategy on its core, rate-regulated asset-based businesses with most of its operating income generated from the rate-regulated businesses.
NiSource’s utilities continue to move forward on core infrastructure and environmental investment programs supported by complementary regulatory and customer initiatives across all seven states in which it operates.
An excerpt. Shown here: all 13 rewritten, 40 of 57 added and 40 of 50 removed. The counts are complete. For every sentence, read Item 1. BUSINESS in the FY2016 filing and the FY2015 filing.
Item 3. LEGAL PROCEEDINGS
0 rewritten, 0 added, 1 removed, 3 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
NISOURCE INC.
Cover and table of contents
28 rewritten, 70 added, 25 removed, 155 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
For the fiscal year ended December 31, [removed: 2015][added: 2016]
The aggregate market value of the registrant's common stock, par value $0.01 per share (the "Common Stock") held by non-affiliates was approximately [removed: $14,408,583,291] [added: $8,497,589,485] based upon the June 30, [removed: 2015,] [added: 2016,] closing price of [removed: $45.59] [added: $26.52] on the New York Stock Exchange.
There were [removed: 319,741,768] [added: 323,445,821] shares of Common Stock outstanding as of February [removed: 10, 2016.][added: 14, 2017.]
Part III of this report incorporates by reference specific portions of the Registrant’s Notice of Annual Meeting and Proxy Statement relating to the Annual Meeting of Stockholders to be held on May [removed: 11, 2016.][added: 9, 2017.]
| [Defined [removed: Terms](#sDDAF70464389A36BA17CFC04092BECD2)] [added: Terms](#sDFE9071C1A68558CB4DB40A0F71E1447)] | | [removed: [3](#sDDAF70464389A36BA17CFC04092BECD2)] [added: [3](#sDFE9071C1A68558CB4DB40A0F71E1447)] |
| Item 1. | [removed: [Business](#s7170446945448114CE07FC03ECDD954D)] [added: [Business](#s8A2D33CFE4FB555B8A4CA359E7EBE37A)] | [removed: [6](#s7170446945448114CE07FC03ECDD954D)] [added: [6](#s8A2D33CFE4FB555B8A4CA359E7EBE37A)] |
| Item 1A. | [Risk [removed: Factors](#sD01BD2FA21B0DA1688DDFC0409B09F6D)] [added: Factors](#s941C808FE2C4558DB5A062B738D8A1F3)] | [removed: [8](#sD01BD2FA21B0DA1688DDFC0409B09F6D)] [added: [9](#s941C808FE2C4558DB5A062B738D8A1F3)] |
| Item 1B. | [Unresolved Staff [removed: Comments](#s2A3242B738714A6FBD8AFC0409D1BF31)] [added: Comments](#s5BB7BBFCFE025B32B09E4619C3CF88A7)] | [removed: [13](#s2A3242B738714A6FBD8AFC0409D1BF31)] [added: [15](#s5BB7BBFCFE025B32B09E4619C3CF88A7)] |
| Item 2. | [removed: [Properties](#sA304283189C413C388A2FC040A08EB68)] [added: [Properties](#s8416DE428B095FEAA5699A08EFF9B62B)] | [removed: [14](#sA304283189C413C388A2FC040A08EB68)] [added: [15](#s8416DE428B095FEAA5699A08EFF9B62B)] |
| Item 3. | [Legal [removed: Proceedings](#sA65611C66F6E7E1D51A2FC040A252849)] [added: Proceedings](#s7F6A21AF33D05029B005ECECDA652AEB)] | [removed: [15](#sA65611C66F6E7E1D51A2FC040A252849)] [added: [15](#s7F6A21AF33D05029B005ECECDA652AEB)] |
| Item 4. | [Mine Safety [removed: Disclosures](#sEF31EE5C61740EDBFCCBFC0584B0DD50)] [added: Disclosures](#s7F6A21AF33D05029B005ECECDA652AEB)] | [removed: [15](#sA65611C66F6E7E1D51A2FC040A252849)] [added: [15](#s7F6A21AF33D05029B005ECECDA652AEB)] |
| [Supplemental Item. Executive Officers of the [removed: Registrant](#s92EFB2A153179ECEE46BFC040A5741EE)] [added: Registrant](#s1300269B42C5599DABE90206B23525D6)] | | [removed: [16](#s92EFB2A153179ECEE46BFC040A5741EE)] [added: [16](#s1300269B42C5599DABE90206B23525D6)] |
| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s7BE3A50E6C787BCFA1B7FC0584BD349E)] [added: Securities](#sE9CE01192E2255A3812EE0F7385BC8C8)] | [removed: [17](#s6769E7AECADE950BB562FC040A789CD6)] [added: [17](#sE9CE01192E2255A3812EE0F7385BC8C8)] |
| Item 6. | [Selected Financial [removed: Data](#sBFA6D452AC591D82E127FC03E455D78D)] [added: Data](#s724914CCC18B586CB151C672179DBA8E)] | [removed: [19](#sBFA6D452AC591D82E127FC03E455D78D)] [added: [19](#s724914CCC18B586CB151C672179DBA8E)] |
| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sC8B22A234CA547FCB852FC040ACC5D49)] [added: Operations](#s6CC28CCED4715C2597524D86A1ABFE97)] | [removed: [21](#sC8B22A234CA547FCB852FC040ACC5D49)] [added: [20](#s6CC28CCED4715C2597524D86A1ABFE97)] |
| Item 7A. | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sFC18E08BFFF186AF4F47FC040D433F6B)] [added: Risk](#sB67764A49ABC57CD9FF2E6319F9D1E57)] | [removed: [40](#sFC18E08BFFF186AF4F47FC040D433F6B)] [added: [38](#sB67764A49ABC57CD9FF2E6319F9D1E57)] |
| Item 8. | [Financial Statements and Supplementary [removed: Data](#sCF312F5B2FED4C609FE4FC040D6480C9)] [added: Data](#sDC3BCBF527C555B2AD419C5895CD371B)] | [removed: [41](#sCF312F5B2FED4C609FE4FC040D6480C9)] [added: [39](#sDC3BCBF527C555B2AD419C5895CD371B)] |
| Item 9. | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#s510B5C9E267275C80CC2FC04173202DF)] [added: Disclosure](#s84960AB5E63D5BF68225D1FA68BC9CEA)] | [removed: [107](#s510B5C9E267275C80CC2FC04173202DF)] [added: [101](#s84960AB5E63D5BF68225D1FA68BC9CEA)] |
| Item 9A. | [Controls and [removed: Procedures](#s5BE4069EFD54E3383E4EFC04175BCF5D)] [added: Procedures](#s750B5C9A8C1A57FF9B101ABA73D44031)] | [removed: [107](#s5BE4069EFD54E3383E4EFC04175BCF5D)] [added: [101](#s750B5C9A8C1A57FF9B101ABA73D44031)] |
| Item 9B. | [Other [removed: Information](#s8AD06FCA4CAE9DF8B5FBFC0417828483)] [added: Information](#sC07F2F297E185DB0A778B640CEA380DC)] | [removed: [107](#s8AD06FCA4CAE9DF8B5FBFC0417828483)] [added: [101](#sC07F2F297E185DB0A778B640CEA380DC)] |
| [Part [removed: III](#s3A5DA5630D68F062DBB8FC0417B32702)] [added: III](#sA124F1E244CD53A28E02B22C1C5852D3)] | | |
| Item 10. | [Directors, Executive Officers and Corporate [removed: Governance](#s7628883127BECCAD2BE9FC0584E96348)] [added: Governance](#sA124F1E244CD53A28E02B22C1C5852D3)] | [removed: [108](#s3A5DA5630D68F062DBB8FC0417B32702)] [added: [102](#sA124F1E244CD53A28E02B22C1C5852D3)] |
| Item 11. | [Executive [removed: Compensation](#s8DE022E84FCF42E33C7EFC0417D20785)] [added: Compensation](#s789F6B032B505DEC8D7F58F8C3A73C2C)] | [removed: [108](#s8DE022E84FCF42E33C7EFC0417D20785)] [added: [102](#s789F6B032B505DEC8D7F58F8C3A73C2C)] |
| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s35A7FD1B33B1F928F080FC041804965E)] [added: Matters](#sA0B53311508A5E529A4BF21578691C56)] | [removed: [108](#s35A7FD1B33B1F928F080FC041804965E)] [added: [102](#sA0B53311508A5E529A4BF21578691C56)] |
| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#sE55E3C1CB2102B9891CBFC04182426AE)] [added: Independence](#sA8EE19980610570EB81A22E01158C80B)] | [removed: [108](#sE55E3C1CB2102B9891CBFC04182426AE)] [added: [102](#sA8EE19980610570EB81A22E01158C80B)] |
| Item 14. | [Principal Accounting Fees and [removed: Services](#s0C42625220F0E2DEBB7BFC041856B91E)] [added: Services](#sAB7BD9C604E3510BBC98CC50EF64CC01)] | [removed: [108](#s0C42625220F0E2DEBB7BFC041856B91E)] [added: [102](#sAB7BD9C604E3510BBC98CC50EF64CC01)] |
| Item 15. | [Exhibits, Financial Statement [removed: Schedules](#s17D3F7F9A7B1ADD15FDFFC0585046CB4)] [added: Schedules](#s4CEC37F04D845C4281750A7552BF0F97)] | [removed: [109](#s431D538926BB6E806941FC04187AE893)] [added: [103](#s4CEC37F04D845C4281750A7552BF0F97)] |
| CAP | | Compliance Assurance [removed: Program] [added: Process] |
10-K 1 ni-20161231x10k.htm 10-K
| [Part I](#sCC70F23AB75054C98431E86717D2EF4D) | | |
| [Part II](#sE9CE01192E2255A3812EE0F7385BC8C8) | | |
| [Part IV](#s4CEC37F04D845C4281750A7552BF0F97) | | |
| [Signatures](#sB56E38AEB5345E7E9A3ABD517782D1CF) | | [104](#sB56E38AEB5345E7E9A3ABD517782D1CF) |
| [Exhibit Index](#sFFB8705F4B3B5A2FA5297C9E04170A6A) | | [105](#sFFB8705F4B3B5A2FA5297C9E04170A6A) |
| Company | | NiSource Inc. and its subsidiaries, unless otherwise indicated by the context |
| EFV | | Excess flow valve |
| EGUs | | Electric utility steam generating unit |
| ELG | | Effluence limitations guidelines |
| GCA | | Gas cost adjustment |
| GSEP | | Gas System Enhancement Program |
| MPSC | | Maryland Public Service Commission |
| NOL | | Net Operating Loss |
| NYSE | | The New York Stock Exchange |
| PATH | | Protecting Americans from Tax Hikes Act of 2015 |
| PHMSA | | U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration |
| RCRA | | Resource Conservation and Recovery Act |
Note regarding forward-looking statements
This Annual Report on Form 10-K contains “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Investors and prospective investors should understand that many factors govern whether any forward-looking statement contained herein will be or can be realized.
Any one of those factors could cause actual results to differ materially from those projected.
These forward-looking statements include, but are not limited to, statements concerning NiSource’s plans, strategies, objectives, expected performance, expenditures, recovery of expenditures through rates, stated on either a consolidated or segment basis, and any and all underlying assumptions and other statements that are other than statements of historical fact.
All forward-looking statements are based on assumptions that management believes to be reasonable; however, there can be no assurance that actual results will not differ materially.
Factors that could cause actual results to differ materially from the projections, forecasts, estimates and expectations discussed in this Annual Report on Form 10-K include, among other things, NiSource’s debt obligations; any changes in NiSource’s credit rating; NiSource’s ability to execute its growth strategy; changes in general economic, capital and commodity market conditions; pension funding obligations; economic regulation and the impact of regulatory rate reviews; NiSource's ability to obtain expected financial or regulatory outcomes; any damage to NiSource's reputation; compliance with environmental laws and the costs of associated liabilities; fluctuations in demand from residential and commercial customers; economic conditions of certain industries; the success of NIPSCO's electric generation strategy; the price of energy commodities and related transportation costs; the reliability of customers and suppliers to fulfill their payment and contractual obligations; potential impairments of goodwill or definite-lived intangible assets; changes in taxation and accounting principles; potential incidents and other operating risks associated with our business; the impact of an aging infrastructure; the impact of climate change; potential cyber-attacks; construction risks and natural gas costs and supply risks; extreme weather conditions; the attraction and retention of a qualified workforce; advances in technology; the ability of NiSource's subsidiaries to generate cash; uncertainties related to the expected benefits of the Separation and other matters set forth in Item 1A, “Risk Factors” of this report, many of which risks are beyond the control of NiSource.
In addition, the relative contributions to profitability by each business segment, and the assumptions underlying the forward-looking statements relating thereto, may change over time.
All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements.
NiSource undertakes no obligation to, and expressly disclaims any such obligation to, update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events or changes to the future results over time or otherwise, except as required by law.
ITEM 1.
BUSINESS
NISOURCE INC.
NiSource Inc. is 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 approximately 3.9 million customers in seven states.
NiSource is the successor to an Indiana corporation organized in 1987 under the name of NIPSCO Industries, Inc., which changed its name to NiSource on April 14, 1999.
NiSource is one of the nation’s largest natural gas distribution companies, as measured by number of customers.
NiSource’s principal subsidiaries include NiSource Gas Distribution Group, Inc., a natural gas distribution holding company, and NIPSCO, a gas and electric company.
NiSource derives substantially all of its revenues and earnings from the operating results of these rate-regulated businesses.
On July 1, 2015, NiSource completed the Separation of CPG from NiSource.
CPG's operations consisted of all of NiSource's Columbia Pipeline Group Operations segment prior to the Separation.
Following the Separation, NiSource retained no ownership interest in CPG.
NiSource’s reportable segments are: Gas Distribution Operations and Electric Operations.
10-K 1 ni-20151231x10kq4.htm 10-K
| [Part I](#sA2E4743F8E4EB5290105FC04095CC189) | | |
| [Part II](#s6769E7AECADE950BB562FC040A789CD6) | | |
| [Part IV](#s431D538926BB6E806941FC04187AE893) | | |
| [Signatures](#s1553639D7213C3E5F550FC0418AD6508) | | [110](#s1553639D7213C3E5F550FC0418AD6508) |
| [Exhibit Index](#s2A29F05B068A0D6241BAFC05850E50E4) | | [111](#sA0154BA48CD3D5E07DFAFC03E5B21AB7) |
| Crossroads Pipeline | | Crossroads Pipeline Company |
| NDC Douglas Properties | | NDC Douglas Properties, Inc. |
| BBA | | British Banker Association |
| Bcf | | Billion cubic feet |
| ECRM | | Environmental Cost Recovery Mechanism |
| FGD | | Flue Gas Desulfurization |
| hp | | Horsepower |
| IDEM | | Indiana Department of Environmental Management |
| kV | | Kilovolt |
| LDAF | | Local Distribution Adjustment Factor |
| LIBOR | | London InterBank Offered Rate |
| LNG | | Liquefied Natural Gas |
| MATS | | Mercury and Air Toxics Standards |
| Mcf | | Thousand cubic feet |
| NAV | | Net Asset Value per Share |
| NOx | | Nitrogen oxides |
| OUCC | | Indiana Office of Utility Consumer Counselor |
| PEF | | Pension Expense Factor |
| SO2 | | Sulfur dioxide |
An excerpt. Shown here: all 28 rewritten, 40 of 70 added and all 25 removed. The counts are complete. For every sentence, read Cover and table of contents in the FY2016 filing and the FY2015 filing.
Item 1B. UNRESOLVED STAFF COMMENTS
0 rewritten, 1 added, 0 removed, 1 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
NISOURCE INC.
Item 2. PROPERTIES
6 rewritten, 2 added, 3 removed, 8 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
Discussed below are the principal properties held by NiSource and its subsidiaries as of December 31, [removed: 2015.][added: 2016.]
Gas Distribution [removed: Operations.][added: Operations]
Refer to Item 1, [removed: "Business"] [added: "Business - Gas Distribution Operations"] of this report for further information on Gas Distribution Operations properties.
Refer to Item 1, [removed: "Business"] [added: "Business - Electric Operations"] of this report for further information on Electric Operations properties.
Corporate and Other [removed: Operations.][added: Operations]
It is NiSource’s practice [removed: regularly] to [added: regularly] pay such amounts, as and when due, unless contested in good faith.
Electric Operations
Character of Ownership
NISOURCE INC.
Electric Operations.
Character of Ownership.
Item 4. MINE SAFETY DISCLOSURES
12 rewritten, 8 added, 2 removed, 17 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
The following is a list of the Executive Officers of the Registrant, including their names, ages, offices held and other recent business experience, as of February 1, [removed: 2016.][added: 2017.]
| Joseph Hamrock | | [removed: 52] [added: 53] | | | President and Chief Executive Officer of NiSource since July 1, 2015. |
| | | | | | President and Chief Operating [removed: Officer,] [added: Officer of] American Electric Power Company (electric utility company) - Ohio from January 2008 to May 2012. |
| Donald E. Brown | | [removed: 44] [added: 45] | | | Executive Vice President and Chief Financial Officer [removed: and Treasurer] of NiSource since July [removed: 1, 2015.] [added: 2015 (also Treasurer from July 2015 to June 2016).] |
| | | | | | Vice President and Chief Financial [removed: Officer,] [added: Officer of] UGI Utilities, a division of UGI Corporation (gas and electric utility company) from 2010 to March 2015. |
| [removed: Robert D. Campbell] [added: Jim L. Stanley] | | [removed: 56] [added: 61] | | | Executive Vice [removed: President, Corporate Affairs] [added: President] and [removed: Human Resources] [added: Chief Operating Officer] of NiSource since July 1, 2015. |
| Carrie J. Hightman | | [removed: 58] [added: 59] | | | Executive Vice President and Chief Legal Officer of NiSource since December 2007. |
| [removed: Carl W. Levander] | | [removed: 54] | | | Executive Vice President and Chief Regulatory Officer of NiSource [removed: since] [added: from] July [removed: 1, 2015.] [added: 2015 to May 2016.] |
| Violet G. Sistovaris | | [removed: 54] [added: 55] | | | Executive Vice [added: President and] President, NIPSCO since [removed: July 1, 2015.] [added: October 3, 2016.] |
| Joseph W. Mulpas | | [removed: 44] [added: 45] | | | Vice President and Chief Accounting Officer of NiSource since May 2014. |
| | | | | | Assistant Controller, FirstEnergy [removed: Corp] [added: Corp.] (diversified energy [removed: company)] [added: corporation)] from November 2012 to [removed: April] [added: March] 2014. |
| | | | | | Vice [removed: President] [added: President, Controller] and Chief Accounting [removed: Officer,] [added: Officer of] DPL Inc. and its subsidiary, The Dayton Power and Light Company (electric utility company) from May 2009 to June 2012. |
| Carl W. Levander | | 55 | | | Executive Vice President, Regulatory Policy and Corporate Affairs of NiSource since May 11, 2016. |
| | | | | | Executive Vice President, NIPSCO from July 2015 to October 2016. |
| Pablo A. Vegas | | 43 | | | Executive Vice President and President, Columbia Gas Group since May 3, 2016. |
| | | | | | President and Chief Operating Officer of American Electric Power Company from May 2012 to May 2016. |
| | | | | | Vice President and Chief Information Officer of American Electric Power Company from July 2010 to May 2012. |
| Teresa M. Smith | | 53 | | | Vice President of Human Resources for NiSource Corporate Services Company since January 2010. |
| Suzanne K. Surface | | 52 | | | Vice President, Audit of NiSource since July 1, 2015. |
| | | | | | Vice President of Regulatory Strategy and Support of NiSource from July 2009 to June 2015. |
| | | | | | Senior Vice President, Human Resources of NiSource from May 2006 to July 2015. |
| Jim L. Stanley | | 60 | | | Executive Vice President and Chief Operating Officer of NiSource since July 1, 2015. |
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
9 rewritten, 2 added, 2 removed, 24 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
NiSource’s common stock is listed and traded on the New York Stock Exchange under the symbol “NI.” The table below indicates the high and low sales prices of NiSource’s common stock, [removed: on the composite tape,] [added: and dividends per share declared,] during the periods indicated.
| First Quarter | $ | [removed: 45.10] [added: 23.74] | | | $ | [removed: 40.89] [added: 19.05] | | | $ | [removed: 0.260] [added: 0.155] | | | $ | [removed: 36.82] [added: 45.10] | | | $ | [removed: 32.11] [added: 40.89] | | | $ | [removed: 0.250] [added: 0.260] | |
| Second Quarter | [removed: 49.16] [added: 26.53] | | | | [removed: 42.25] [added: 21.97] | | | | [removed: 0.260] [added: 0.155] | | | | [removed: 39.69] [added: 49.16] | | | | [removed: 34.36] [added: 42.25] | | | | [removed: 0.250] [added: 0.260] | | |
| Third Quarter | [removed: 45.71(1)] [added: 26.94] | | | | [removed: 16.04(1)] [added: 23.20] | | | | [removed: 0.155(2)] [added: 0.165] | | | | [removed: 41.70] [added: 45.71(1)] | | | | [removed: 36.00] [added: 16.04(1)] | | | | [removed: 0.260] [added: 0.155(2)] | | |
| Fourth Quarter | [removed: 20.13(1)] [added: 24.06] | | | | [removed: 18.33(1)] [added: 21.17] | | | | [removed: 0.155(2)] [added: 0.165] | | | | [removed: 44.91] [added: 20.13(1)] | | | | [removed: 37.58] [added: 18.33(1)] | | | | [removed: 0.260] [added: 0.155(2)] | | |
Holders of shares of NiSource’s common stock are entitled to receive dividends [removed: when, as] [added: if,] and [removed: if] [added: when] declared by NiSource’s Board out of funds legally available.
At its January 27, [removed: 2016,] [added: 2017,] meeting, the Board declared a quarterly common dividend of [removed: $0.155] [added: $0.175] per share, payable on February [removed: 19, 2016] [added: 17, 2017] to holders of record on February [removed: 8, 2016.][added: 10, 2017.]
As of February [removed: 10, 2016,] [added: 14, 2017,] NiSource had [removed: 30,389] [added: 22,485] common stockholders of record and [removed: 319,741,768] [added: 323,445,821] shares outstanding.
[removed: ][added: ]
| | 2016 | | | | | | | | | | | | 2015 | | | | | | | | | | |
| | | | | | | | | | $ | 0.640 | | | | | | | | | | | $ | 0.830 | |
| | 2015 | | | | | | | | | | | | 2014 | | | | | | | | | | |
| | | | | | | | | | $ | 0.830 | | | | | | | | | | | $ | 1.020 | |
Item 6. SELECTED FINANCIAL DATA
45 rewritten, 20 added, 329 removed, 44 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
The selected data presented below as of and for the five years ended December 31, [removed: 2015,] [added: 2016,] are derived from the Consolidated Financial Statements of NiSource.
| Year Ended December 31, (dollars in millions except per share data) | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | |
| Gas Distribution | $ | [removed: 2,081.9] [added: 1,850.9] | | | $ | [removed: 2,597.8] [added: 2,081.9] | | | $ | [removed: 2,226.3] [added: 2,597.8] | | | $ | [removed: 1,959.8] [added: 2,226.3] | | | $ | [removed: 2,916.6] [added: 1,959.8] | |
| Gas Transportation | [removed: 969.8] [added: 964.6] | | | | [removed: 987.4] [added: 969.8] | | | | [removed: 820.0] [added: 987.4] | | | | [removed: 692.4] [added: 820.0] | | | | [removed: 531.9] [added: 692.4] | | |
| Electric | [removed: 1,572.9] [added: 1,660.8] | | | | [removed: 1,672.0] [added: 1,572.9] | | | | [removed: 1,563.4] [added: 1,672.0] | | | | [removed: 1,507.7] [added: 1,563.4] | | | | [removed: 1,427.7] [added: 1,507.7] | | |
| Other | [removed: 27.2] [added: 16.2] | | | | [removed: 15.2] [added: 27.2] | | | | [removed: 15.7] [added: 15.2] | | | | [removed: 18.1] [added: 15.7] | | | | [removed: 18.0] [added: 18.1] | | |
| Total Gross Revenues | [removed: 4,651.8] [added: 4,492.5] | | | | [removed: 5,272.4] [added: 4,651.8] | | | | [removed: 4,625.4] [added: 5,272.4] | | | | [removed: 4,178.0] [added: 4,625.4] | | | | [removed: 4,894.2] [added: 4,178.0] | | |
| Net Revenues (Gross Revenues less Cost of Sales, excluding depreciation and amortization) | [removed: 3,008.1] [added: 3,102.3] | | | | [removed: 2,899.5] [added: 3,008.1] | | | | [removed: 2,662.4] [added: 2,899.5] | | | | [removed: 2,513.9] [added: 2,662.4] | | | | [removed: 2,442.1] [added: 2,513.9] | | |
| Operating Income | [removed: 799.9] [added: 858.2] | | | | [removed: 789.1] [added: 799.9] | | | | [removed: 698.1] [added: 789.1] | | | | [removed: 638.6] [added: 698.1] | | | | [removed: 551.7] [added: 638.6] | | |
| Income from Continuing Operations | [removed: 198.6] [added: 328.1] | | | | [removed: 256.2] [added: 198.6] | | | | [removed: 221.0] [added: 256.2] | | | | [removed: 171.0] [added: 221.0] | | | | [removed: 108.9] [added: 171.0] | | |
| Total Assets | [removed: 17,492.5] [added: 18,691.9] | | | | [removed: 24,589.8] [added: 17,492.5] | | | | [removed: 22,473.6] [added: 24,589.8] | | | | [removed: 21,620.2] [added: 22,473.6] | | | | [removed: 20,571.5] [added: 21,620.2] | | |
| Common stockholders’ equity | [removed: 3,843.5] [added: 4,071.2] | | | | [removed: 6,175.3] [added: 3,843.5] | | | | [removed: 5,886.6] [added: 6,175.3] | | | | [removed: 5,554.3] [added: 5,886.6] | | | | [removed: 4,997.3] [added: 5,554.3] | | |
| Long-term debt, excluding amounts due within one year | [removed: 5,948.5] [added: 6,058.2] | | | | [removed: 8,151.5] [added: 5,948.5] | | | | [removed: 7,588.2] [added: 8,151.5] | | | | [removed: 6,813.7] [added: 7,588.2] | | | | [removed: 6,261.1] [added: 6,813.7] | | |
| Total Capitalization | $ | [removed: 9,792.0] [added: 10,129.4] | | | $ | [removed: 14,326.8] [added: 9,792.0] | | | $ | [removed: 13,474.8] [added: 14,326.8] | | | $ | [removed: 12,368.0] [added: 13,474.8] | | | $ | [removed: 11,258.4] [added: 12,368.0] | |
| Basic Earnings Per Share from Continuing Operations ($) | $ | [removed: 0.63] [added: 1.02] | | | $ | [removed: 0.81] [added: 0.63] | | | $ | [removed: 0.71] [added: 0.81] | | | $ | [removed: 0.59] [added: 0.71] | | | $ | [removed: 0.39] [added: 0.59] | |
| Diluted Earnings Per Share from Continuing Operations ($) | $ | [removed: 0.63] [added: 1.01] | | | $ | [removed: 0.81] [added: 0.63] | | | $ | [removed: 0.71] [added: 0.81] | | | $ | [removed: 0.57] [added: 0.71] | | | $ | [removed: 0.38] [added: 0.57] | |
| Dividends declared per share ($) | $ | [removed: 0.83] [added: 0.64] | | | $ | [removed: 1.02] [added: 0.83] | | | $ | [removed: 0.98] [added: 1.02] | | | $ | [removed: 0.94] [added: 0.98] | | | $ | [removed: 0.92] [added: 0.94] | |
| Shares outstanding at the end of the year (in thousands) | [removed: 319,110] [added: 323,160] | | | | [removed: 316,037] [added: 319,110] | | | | [removed: 313,676] [added: 316,037] | | | | [removed: 310,281] [added: 313,676] | | | | [removed: 281,854] [added: 310,281] | | |
| Number of common stockholders | [removed: 30,190] [added: 22,272] | | | | [removed: 25,233] [added: 30,190] | | | | [removed: 26,965] [added: 25,233] | | | | [removed: 28,823] [added: 26,965] | | | | [removed: 30,663] [added: 28,823] | | |
| Capital expenditures [removed: ($ in millions)] | $ | [removed: 1,367.5] [added: 1,490.4] | | | $ | [removed: 1,339.6] [added: 1,367.5] | | | $ | [removed: 1,248.5] [added: 1,339.6] | | | $ | [removed: 1,095.5] [added: 1,248.5] | | | $ | [removed: 812.6] [added: 1,095.5] | |
| Number of employees | [removed: 7,596] [added: 8,007] | | | | [removed: 8,982] [added: 7,596] | | | | [removed: 8,477] [added: 8,982] | | | | [removed: 8,286] [added: 8,477] | | | | [removed: 7,957] [added: 8,286] | | |
[removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS][added: This Management’s Discussion and Analysis of Financial Condition and Results of Operations (Management’s Discussion) analyzes the financial condition, results of operations and cash flows of NiSource and its subsidiaries.]
| [Consolidated [removed: Review](#s25BECC6C464D06C1C39CFC040B02AD34)] [added: Review](#s898485404FAA5E588E54F5C08B88C88A)] | [removed: [21](#s25BECC6C464D06C1C39CFC040B02AD34)] [added: [20](#s898485404FAA5E588E54F5C08B88C88A)] |
| [Executive [removed: Summary](#s0339162F5F9E5AF9F2CBFC040B1FCB9B)] [added: Summary](#sB247629AE2AB5AC988E0D4D80B451C57)] | [removed: [21](#s0339162F5F9E5AF9F2CBFC040B1FCB9B)] [added: [20](#sB247629AE2AB5AC988E0D4D80B451C57)] |
| [Results of [removed: Operations](#s5A04B779C8BE05E935BFFC040B51A982)] [added: Operations](#sE12CACB512945384B5450429AA1CD6E8)] | [removed: [23](#s5A04B779C8BE05E935BFFC040B51A982)] [added: [22](#sE12CACB512945384B5450429AA1CD6E8)] |
| [Liquidity and Capital [removed: Resources](#s250ADF2694721A6FBCE6FC03E451D8D9)] [added: Resources](#sEFB7DFE632D550EBB02746627BB6347E)] | [removed: [25](#s250ADF2694721A6FBCE6FC03E451D8D9)] [added: [30](#sEFB7DFE632D550EBB02746627BB6347E)] |
| [Off Balance [removed: Sheet](#s6568C88EA24889813BF3FC040BA801F0)] [added: Sheet](#s8ADF015EE5005C7F9E351FFB99CF6A5E)] Arrangements | [removed: [28](#s6568C88EA24889813BF3FC040BA801F0)] [added: [32](#s8ADF015EE5005C7F9E351FFB99CF6A5E)] |
| [Market Risk [removed: Disclosures](#s4323BD21A895260A165CFC040BCAF05C)] [added: Disclosures](#s18FE3696D56A5EAE8C5F2FE68701B402)] | [removed: [28](#s4323BD21A895260A165CFC040BCAF05C)] [added: [33](#s18FE3696D56A5EAE8C5F2FE68701B402)] |
| [Other [removed: Information](#sF01967EBF318AF4E2453FC040BFBC31B)] [added: Information](#s723E95555F5755ACBB262A1DB897F069)] | [removed: [29](#sF01967EBF318AF4E2453FC040BFBC31B)] [added: [34](#s723E95555F5755ACBB262A1DB897F069)] |
| [removed: [Results] [added: Results] and Discussion of Segment [removed: Operations](#s805523147DD32C3B02E6FC040C18E77D)] [added: Operations] | [removed: [32](#s805523147DD32C3B02E6FC040C18E77D)] [added: [22](#s224E8FC8CC5A5690910E928AAB32CF6B)] |
| [removed: [Gas] [added: Gas] Distribution [removed: Operations](#sCF955E63E40FCB9BCB5FFC03E4B85346)] [added: Operations] | [removed: [33](#sCF955E63E40FCB9BCB5FFC03E4B85346)] [added: [23](#s561A589DAFEF5D4F85AAF9C6B097F495)] |
| [removed: [Electric Operations](#sD8E8186C70A3E77B4AA8FC03E498C308)] [added: Electric Operations] | [removed: [37](#sD8E8186C70A3E77B4AA8FC03E498C308)] [added: [26](#s326BB73450D750C7A7EFB17DF3AE270C)] |
[added: On a consolidated basis,] NiSource reported [removed: lower] [added: higher] income from continuing operations of [removed: $198.6] [added: $328.1] million or [removed: $0.63] [added: $1.02] per basic share for the twelve months ended December 31, [removed: 2015] [added: 2016] compared to [removed: $256.2] [added: $198.6] million or [removed: $0.81] [added: $0.63] per basic share for the same period in [removed: 2014.][added: 2015.]
[added: The increase in income] from continuing operations during [removed: 2015] [added: 2016] was due primarily to [added: increased operating income, as discussed below, along with] a $97.2 million loss on early extinguishment of long-term debt recorded as a result of the debt restructuring that occurred in 2015 as part of the Separation.
For the twelve months ended December 31, [removed: 2015,] [added: 2016,] NiSource reported operating income of [removed: $799.9] [added: $858.2] million compared to [removed: $789.1] [added: $799.9] million for the same period in [removed: 2014.][added: 2015.]
The [removed: slightly] higher operating income was primarily due to increased net revenues from [removed: gas distribution] regulatory and service [removed: programs,] [added: programs and] increased [removed: return on environmental] [added: rates from incremental] capital [removed: investment] [added: spend on electric transmission projects] at [removed: NIPSCO] [added: NIPSCO,] partially offset by lower net revenues due to warmer than normal [removed: weather and lower industrial customer usage.][added: weather.]
NiSource believes that through income generated from operating activities, amounts available under its short-term revolving credit facility, commercial paper program, accounts receivable securitization facilities, long-term debt agreements and NiSource’s ability to access the capital markets, there is adequate capital available to fund its operating activities and capital expenditures in [removed: 2016.][added: 2017 and beyond.]
At December 31, [added: 2016 and] 2015, NiSource had approximately [removed: $1,179.4] [added: $683.7] million [added: and $1,179.4 million, respectively,] of [added: net] liquidity available, consisting of cash and available capacity under credit facilities.
These factors and other impacts to the financial results are discussed in more detail within the following discussions of “Results of [removed: Operations” and] [added: Operations,”] “Results and Discussion of Segment [removed: Operations.”][added: Operations” and “Liquidity and Capital Resources.”]
[removed: NiSource’s utilities continue] [added: In 2016, NiSource continued] to move forward on core infrastructure and environmental investment programs supported by complementary regulatory and customer initiatives across all seven [removed: states.][added: states of its operating area.]
It also includes management’s analysis of past financial results and potential factors that may affect future results, potential future risks and approaches that may be used to manage those risks.
Management’s Discussion is designed to provide an understanding of our operations and financial performance and should be read in conjunction with the Company's Consolidated Financial Statements and the related Notes to Consolidated Financial Statements in this annual report.
NiSource generates substantially all of its 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.
Refer to the Business section under Item 1 of this report and Note 22, "Segments of Business," in the Notes to Consolidated Financial Statements for further discussion of our regulated utility business segments.
Additionally, NiSource continues to pursue regulatory and legislative initiatives that will allow residential customers not currently on NiSource's system to obtain gas service in a cost effective manner.
Summary of Consolidated Financial Results
Operating expenses increased due to higher outside service costs, primarily due to generation-related maintenance, increased depreciation expense, plant retirement costs and higher employee and administrative expenses, partially offset by decreased property taxes and lower environmental expenses.
Capital Investment.
These expenditures were primarily aimed at furthering the safety and reliability of our gas distribution system, construction of new electric transmission assets and maintaining NiSource’s existing electric generation fleet.
Liquidity.
Regulatory Developments
The discussion below summarizes significant regulatory developments that transpired during 2016:
| • | On April 20, 2016, the PUCO approved Columbia of Ohio's annual IRP rider. The rider provides for continued support of Columbia of Ohio's well-established pipeline replacement program. This order authorized approximately $21 million in increased annual revenue related to 2015 infrastructure investments of approximately $185 million. |
| • | On September 28, 2016, Columbia of Virginia implemented updated interim base rates subject to refund. The new rates are part of its base rate case which remains pending before the VSCC. On January 17, 2017, Columbia of Virginia presented to the VSCC a stipulation and proposed recommendation representing a settlement by all parties to the proceeding that included a base revenue increase of $28.5 million. On February 8, 2017, the Hearing Examiner in the case filed a report recommending approval of the stipulation and proposed recommendation. A VSCC decision is expected in the first half of 2017. |
| • | On October 27, 2016, the Pennsylvania PUC approved a joint settlement agreement in Columbia of Pennsylvania's base rate case. The settlement includes an annual revenue increase of $35.0 million and incentives to expand gas service to commercial customers. New rates went into effect on December 19, 2016. |
| • | On October 20, 2016, a settlement was reached with the Kentucky PSC on Columbia of Kentucky's base rate case. The settlement includes a revenue increase of $13.4 million and will allow for continued system modernization and pipeline safety investments to improve overall system safety and reliability. On December 22, 2016, the Kentucky PSC issued an order modifying the stipulation resulting in an annual revenue increase of $13.1 million. Columbia of Kentucky accepted this modification, and rates went into effect on December 27, 2016. |
| • | NIPSCO continues to execute on its seven-year, $824 million gas infrastructure modernization program to further improve system reliability and safety. In August, NIPSCO filed its semi-annual tracker update covering $67 million of investments made in the first half of 2016. On December 28, 2016, the IURC issued an order approving the tracker update. New rates became effective January 1, 2017. |
Electric Operations.
| • | New rates became effective October 1, 2016 under NIPSCO's electric base rate case settlement, which was approved by the IURC on July 18, 2016. The settlement provides a platform for NIPSCO’s continued electric infrastructure investments and service improvements for customers, and increases NIPSCO’s annual base rate revenues by $72.5 million. |
| • | NIPSCO is focused on executing its seven-year electric infrastructure modernization program, which includes enhancements to electric transmission and distribution infrastructure designed to improve system safety and reliability. On July 12, 2016, the IURC approved NIPSCO’s settlement related to the program. The order included approval to recover approximately $1.25 billion of investments made through 2022. Per an IURC order received on January 25, 2017, NIPSCO began recovering on $45.5 million of these investments with the first billing cycle of February 2017. |
NISOURCE INC.
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| • | On February 14, 2012, Columbia of Ohio held its first standard choice offer auction which resulted in a retail price adjustment of $1.53 per Mcf. On February 14, 2012, the PUCO issued an entry that approved the results of the auction with the new retail price adjustment level effective April 1, 2012. As a result of the implementation of the standard choice offer, Columbia of Ohio reports lower gross revenues and lower cost of sales. There is no impact on net revenues. |
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| • | On November 14, 2011, NiSource Finance commenced a cash tender offer for up to $250.0 million aggregate principal amount of its outstanding 10.75% notes due 2016 and 6.15% notes due 2013. A condition of the offering was that all validly tendered 2016 notes would be accepted for purchase before any 2013 notes were accepted. On December 13, 2011, NiSource Finance |
ITEM 6.
SELECTED FINANCIAL DATA
NISOURCE INC.
announced that approximately $125.3 million aggregate principal amount of its outstanding 10.75% notes due 2016 were validly tendered and accepted for purchase.
In addition, approximately $228.7 million aggregate principal amount of outstanding 6.15% notes due 2013 were validly tendered, of which $124.7 million were accepted for purchase.
NiSource Finance recorded a $53.9 million loss on early extinguishment of long-term debt, primarily attributable to early redemption premiums and unamortized discounts and fees.
ITEM 7.
NISOURCE INC.
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Note regarding forward-looking statements
This Management’s Discussion and Analysis of Financial Condition and Results of Operations, including statements regarding market risk sensitive instruments, contains “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Investors and prospective investors should understand that many factors govern whether any forward-looking statement contained herein will be or can be realized.
Any one of those factors could cause actual results to differ materially from those projected.
These forward-looking statements include, but are not limited to, statements concerning NiSource’s plans, objectives, expected performance, expenditures, recovery of expenditures through rates, stated on either a consolidated or segment basis, and any and all underlying assumptions and other statements that are other than statements of historical fact.
From time to time, NiSource may publish or otherwise make available forward-looking statements of this nature.
All such subsequent forward-looking statements, whether written or oral and whether made by or on behalf of NiSource, are also expressly qualified by these cautionary statements.
All forward-looking statements are based on assumptions that management believes to be reasonable; however, there can be no assurance that actual results will not differ materially.
Factors that could cause actual results to differ materially from the projections, forecasts, estimates and expectations discussed in this Annual Report on Form 10-K include, among other things, NiSource’s debt obligations; any changes in NiSource’s credit rating; NiSource’s ability to execute its growth strategy; changes in general economic, capital and commodity market conditions; pension funding obligations; economic regulation and the impact of regulatory rate reviews; compliance with environmental laws and the costs of associated liabilities; fluctuations in demand from residential and commercial customers; economic conditions of certain industries; the price of energy commodities and related transportation costs; the reliability of customers and suppliers to fulfill their payment and contractual obligations; potential impairments of goodwill or definite-lived intangible assets; changes in taxation and accounting principles; potential incidents and other operating risks associated with our business; the impact of an aging infrastructure; the impact of climate change; potential cyber-attacks; risks associated with construction and natural gas cost and supply; extreme weather conditions; the ability of subsidiaries to generate cash; uncertainties related to the expected benefits of the Separation and the matters set forth in Item 1A, “Risk Factors” of this report, many of which risks are beyond the control of NiSource.
In addition, the relative contributions to profitability by each segment, and the assumptions underlying the forward-looking statements relating thereto, may change over time.
NiSource generates substantially all of its operating income through these rate-regulated businesses.
A significant portion of NiSource’s operations is subject to seasonal fluctuations in sales.
During the heating season, which is primarily from November through March, net revenues from gas sales are more significant, and during the cooling season, which is primarily from June through September, net revenues from electric sales are more significant, than in other months.
The lower income
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NISOURCE INC.
Operating expenses were higher due to increased employee and administrative expenses, higher environmental remediation costs and increased depreciation expense.
An excerpt. Shown here: 40 of 45 rewritten, all 20 added and 40 of 329 removed. The counts are complete. For every sentence, read Item 6. SELECTED FINANCIAL DATA in the FY2016 filing and the FY2015 filing.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
782 rewritten, 428 added, 583 removed, 1,244 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
| [Report of Independent Registered Public Accounting [removed: Firm](#sE908B09E230A25549ED0FC040D97AC24)] [added: Firm](#s5762BF656F7B57EE8544BA561CDD0B19)] | [removed: [42](#sE908B09E230A25549ED0FC040D97AC24)] [added: [40](#s5762BF656F7B57EE8544BA561CDD0B19)] |
| [Statements of Consolidated [removed: Income](#sEACFCC608421DF6CA9A4FC03D1789500)] [added: Income](#sD5ECA4BF7A0D53A3865D4D83EBD27DBE)] | [removed: [44](#sEACFCC608421DF6CA9A4FC03D1789500)] [added: [42](#sD5ECA4BF7A0D53A3865D4D83EBD27DBE)] |
| [Statements of Consolidated Comprehensive [removed: Income](#s33ECF23610CDE2086101FC03CFF9414E)] [added: Income](#sACCBBF48B2425BBE9E99769D5B3FC3F9)] | [removed: [45](#s33ECF23610CDE2086101FC03CFF9414E)] [added: [43](#sACCBBF48B2425BBE9E99769D5B3FC3F9)] |
| [Consolidated Balance [removed: Sheets](#sE1CD954EDD7066E97A59FC03D22DB2DB)] [added: Sheets](#s2714E570953A5017B576523A2EE237D7)] | [removed: [46](#sE1CD954EDD7066E97A59FC03D22DB2DB)] [added: [44](#s2714E570953A5017B576523A2EE237D7)] |
| [Statements of Consolidated Cash [removed: Flows](#s20B0AC3EBBC551421CABFC03D0D72B38)] [added: Flows](#sE9C7D228A92C580FA54CE4F85A8ED87B)] | [removed: [48](#s20B0AC3EBBC551421CABFC03D0D72B38)] [added: [46](#sE9C7D228A92C580FA54CE4F85A8ED87B)] |
| [Statements of Consolidated Common Stockholders’ [removed: Equity](#sBED2507C87375547FA44FC03CFEC49B8)] [added: Equity](#s32C318DEBB7458CCBBB652E10A677691)] | [removed: [51](#sBED2507C87375547FA44FC03CFEC49B8)] [added: [47](#s32C318DEBB7458CCBBB652E10A677691)] |
| [Notes to Consolidated Financial [removed: Statements](#s4CE44CA643C30D862101FC040F0A779D)] [added: Statements](#s5CDEAD72D8B350BAB774AF9509B840EB)] | [removed: [53](#s4CE44CA643C30D862101FC040F0A779D)] [added: [49](#s5CDEAD72D8B350BAB774AF9509B840EB)] |
To the Board of Directors and Stockholders of NiSource [removed: Inc.:][added: Inc.]
We have audited the accompanying consolidated balance sheets [removed: and statements] of [removed: consolidated long-term debt of] NiSource Inc. and subsidiaries (the “Company”) as of December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] and the related consolidated statements of income, comprehensive income, common stockholders’ equity, and cash flows for each of the three years in the period ended December 31, [removed: 2015.][added: 2016.]
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of [removed: the] NiSource Inc. and subsidiaries as of December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] and the results of their operations and their cash flows for each of the three years in the period ended December 31, [removed: 2015,] [added: 2016,] in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note [removed: 22] [added: 3] to the consolidated financial statements, on July 1, 2015 the Company completed the spin-off of its subsidiary Columbia Pipeline Group, Inc.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, [removed: 2015,] [added: 2016,] based on the criteria established in Internal Control -Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February [removed: 18, 2016] [added: 22, 2017] expressed an unqualified opinion on the Company’s internal control over financial reporting.
To the Board of Directors and Stockholders of NiSource [removed: Inc.:][added: Inc.]
We have audited the internal control over financial reporting of NiSource Inc. and subsidiaries (the "Company") as of December 31, [removed: 2015,] [added: 2016,] based on [added: the] criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
| Year Ended December 31, (in millions, except per share amounts) | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |
| Gas Distribution | $ | [removed: 2,081.9] [added: 1,850.9] | | | $ | [removed: 2,597.8] [added: 2,081.9] | | | $ | [removed: 2,226.3] [added: 2,597.8] | |
| Gas Transportation | [removed: 969.8] [added: 964.6] | | | | [removed: 987.4] [added: 969.8] | | | | [removed: 820.0] [added: 987.4] | | |
| Electric | [removed: 1,572.9] [added: 1,660.8] | | | | [removed: 1,672.0] [added: 1,572.9] | | | | [removed: 1,563.4] [added: 1,672.0] | | |
| Other | [removed: 27.2] [added: 16.2] | | | | [removed: 15.2] [added: 27.2] | | | | [removed: 15.7] [added: 15.2] | | |
| Gross Revenues | [removed: 4,651.8] [added: 4,492.5] | | | | [removed: 5,272.4] [added: 4,651.8] | | | | [removed: 4,625.4] [added: 5,272.4] | | |
| Cost of Sales (excluding depreciation and amortization) | [removed: 1,643.7] [added: 1,390.2] | | | | [removed: 2,372.9] [added: 1,643.7] | | | | [removed: 1,963.0] [added: 2,372.9] | | |
| Total Net Revenues | [removed: 3,008.1] [added: 3,102.3] | | | | [removed: 2,899.5] [added: 3,008.1] | | | | [removed: 2,662.4] [added: 2,899.5] | | |
| Operation and maintenance | [removed: 1,426.1] [added: 1,453.7] | | | | [removed: 1,367.3] [added: 1,426.1] | | | | [removed: 1,254.4] [added: 1,367.3] | | |
| Depreciation and amortization | [removed: 524.4] [added: 547.1] | | | | [removed: 486.9] [added: 524.4] | | | | [removed: 470.4] [added: 486.9] | | |
| [removed: Loss] [added: Gain (Loss)] on sale of assets and impairments, net | [removed: 1.6] [added: (1.0] | | [added: )] | | [removed: 3.0] [added: 1.6] | | | | [removed: 1.1] [added: 3.0] | | |
| Other taxes | [removed: 256.1] [added: 244.3] | | | | [removed: 253.2] [added: 256.1] | | | | [removed: 238.4] [added: 253.2] | | |
| Total Operating Expenses | [removed: 2,208.2] [added: 2,244.1] | | | | [removed: 2,110.4] [added: 2,208.2] | | | | [removed: 1,964.3] [added: 2,110.4] | | |
| Operating Income | [removed: 799.9] [added: 858.2] | | | | [removed: 789.1] [added: 799.9] | | | | [removed: 698.1] [added: 789.1] | | |
| Interest expense, net | [removed: (380.2] [added: (349.5] | | ) | | [removed: (379.5] [added: (380.2] | | ) | | [removed: (375.3] [added: (379.5] | | ) |
| Other, net | [removed: 17.4] [added: 1.5] | | | | [removed: 13.4] [added: 17.4] | | | | [removed: 6.8] [added: 13.4] | | |
| Loss on early extinguishment of long-term debt | [removed: (97.2] [added: —] | | [removed: )] | | [removed: —] [added: (97.2] | | [added: )] | | — | | |
| Total Other Deductions | [removed: (460.0] [added: (348.0] | | ) | | [removed: (366.1] [added: (460.0] | | ) | | [removed: (368.5] [added: (366.1] | | ) |
| Income from Continuing Operations before Income Taxes | [removed: 339.9] [added: 510.2] | | | | [removed: 423.0] [added: 339.9] | | | | [removed: 329.6] [added: 423.0] | | |
| Income Taxes | [removed: 141.3] [added: 182.1] | | | | [removed: 166.8] [added: 141.3] | | | | [removed: 108.6] [added: 166.8] | | |
| Income from Continuing Operations | [removed: 198.6] [added: 328.1] | | | | [removed: 256.2] [added: 198.6] | | | | [removed: 221.0] [added: 256.2] | | |
| Income from Discontinued Operations - net of taxes | [removed: 103.5] [added: 3.4] | | | | [removed: 273.8] [added: 103.5] | | | | [removed: 276.2] [added: 273.8] | | |
| Net Income | $ | [removed: 302.1] [added: 331.5] | | | $ | [removed: 530.0] [added: 302.1] | | | $ | [removed: 532.1] [added: 530.0] | |
| Less: Net income attributable to noncontrolling interest | [removed: 15.6] [added: —] | | | | [removed: —] [added: 15.6] | | | | — | | |
| Net Income attributable to NiSource | $ | [removed: 286.5] [added: 331.5] | | | $ | [removed: 530.0] [added: 286.5] | | | $ | [removed: 532.1] [added: 530.0] | |
| Income from continuing operations | $ | [removed: 198.6] [added: 328.1] | | | $ | [removed: 256.2] [added: 198.6] | | | $ | [removed: 221.0] [added: 256.2] | |
| [1. Nature of Operations and Summary of Significant Accounting Policies](#sCA425D021A635B69B61F58B4E686C49E) | [49](#sCA425D021A635B69B61F58B4E686C49E) |
| [2. Recent Accounting Pronouncements](#sEF58B85B1E755D24846A7AA6D7B06F63) | [52](#sEF58B85B1E755D24846A7AA6D7B06F63) |
| [3. Discontinued Operations and Assets and Liabilities Held for Sale](#s4821B2B8C3515D3B8850658F09FF07F4) | [55](#s4821B2B8C3515D3B8850658F09FF07F4) |
| [4. Earnings Per Share](#s9c9dfc67528f45798c5d1deb52f61101) | [57](#s9c9dfc67528f45798c5d1deb52f61101) |
| [8. Regulatory Matters](#sA8F75D90F2BB5C57A54086D2726251F3) | [59](#sA8F75D90F2BB5C57A54086D2726251F3) |
| [9. Risk Management Activities](#s7B616A3DAD6B5441AADE54FD72566C2C) | [65](#s7B616A3DAD6B5441AADE54FD72566C2C) |
| [11. Pension and Other Postretirement Benefits](#s7581C5AAF4D75FB897649EF2587A3719) | [70](#s7581C5AAF4D75FB897649EF2587A3719) |
| [12. Common Stock](#s40E3EC8E926C5042BC2CDA0FBA8585AF) | [80](#s40E3EC8E926C5042BC2CDA0FBA8585AF) |
| [13. Share-Based Compensation](#sEE2A1F2A7AA2524081047BB268131468) | [81](#sEE2A1F2A7AA2524081047BB268131468) |
| [15. Short-Term Borrowings](#s72CB9BB049A65E1497DA48AED5C689C9) | [86](#s72CB9BB049A65E1497DA48AED5C689C9) |
| [16. Fair Value Disclosures](#s5C4A52FBE1165D04985CA1D5D4EBE303) | [87](#s5C4A52FBE1165D04985CA1D5D4EBE303) |
| [17. Transfers of Financial Assets](#s814D3F01640A5C1DA6FA9A4C26132038) | [89](#s814D3F01640A5C1DA6FA9A4C26132038) |
| [18. Other Commitments and Contingencies](#s51E943176D425DC29B1DBC1CB4564369) | [90](#s51E943176D425DC29B1DBC1CB4564369) |
| [19. Accumulated Other Comprehensive Loss](#s993D1794B9AA592A964E71C9D3783D76) | [95](#s993D1794B9AA592A964E71C9D3783D76) |
| [20. Other, Net](#s08813B88BB3B5385BF7B03FC60B6CFBE) | [95](#s08813B88BB3B5385BF7B03FC60B6CFBE) |
| [22. Segments of Business](#s71F9AFEBC91E512C9A30400E4C60DEAD) | [96](#s71F9AFEBC91E512C9A30400E4C60DEAD) |
| [23. Quarterly Financial Data (Unaudited)](#s62F23AB57C1E5E3683DE3D3C9920AEB7) | [98](#s62F23AB57C1E5E3683DE3D3C9920AEB7) |
| [24. Supplemental Cash Flow Information](#s3277EF7BC6CB56DABAD329FEA2A22D64) | [99](#s3277EF7BC6CB56DABAD329FEA2A22D64) |
| [Schedule II](#s03EBB5CA26C65BBD9A17DA8B04EA780D) | [100](#s03EBB5CA26C65BBD9A17DA8B04EA780D) |
Merrillville, Indiana
February 22, 2017
Merrillville, Indiana
February 22, 2017
| Accrued insurance liabilities | 82.8 | | | | 87.2 | | |
| Other adjustments | (3.8 | | ) | | 13.1 | | | | 6.3 | | |
| Regulatory assets/liabilities | (187.9 | | ) | | 82.0 | | | | (227.7 | | ) |
| Cost of removal | (110.1 | | ) | | (79.2 | | ) | | (46.5 | | ) |
| Other investing activities | (17.7 | | ) | | 21.5 | | | | 32.6 | | |
| Stock issuances: | | | | | | | | | | | | | | | | | | | | | | | |
| Stock issuances: | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2015 | $ | 3.2 | | | $ | (79.3 | ) | | $ | 5,078.0 | | | $ | (1,123.3 | ) | | $ | (35.1 | ) | | $ | 3,843.5 | |
| Net Income | — | | | | — | | | | — | | | | 331.5 | | | | — | | | | 331.5 | | |
| Cumulative effect of change in accounting principle | — | | | | — | | | | — | | | | 25.3 | | | | — | | | | 25.3 | | |
| Stock issuances: | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2016 | $ | 3.3 | | | $ | (88.7 | ) | | $ | 5,153.9 | | | $ | (972.2 | ) | | $ | (25.1 | ) | | $ | 4,071.2 | |
| Balance December 31, 2016 | 326,664 | | | (3,504 | ) | | 323,160 | |
Non-utility property is generally depreciated on a straight-line basis over the life of the associated asset.
Refer to Note 5, "Property, Plant and Equipment," for additional information related to depreciation expense at Units 7 and 8 at Bailly Generating Station.
When NiSource’s subsidiaries retire regulated property, plant and equipment, original cost plus the cost of retirement, less salvage value, is charged to accumulated depreciation.
However, when it becomes probable a regulated asset will be retired substantially in advance of its original expected useful life or is abandoned, the cost of the asset and the corresponding accumulated depreciation is recognized as a separate asset.
NISOURCE INC.
| [Statements of Consolidated Long-Term Debt](#s70C907CFD26A1C8ED3CEFC03CFC1513E) | [49](#s70C907CFD26A1C8ED3CEFC03CFC1513E) |
| [Schedule II](#s1CB3E541E6AA71B10405FC03D050BC63) | [106](#s1CB3E541E6AA71B10405FC03D050BC63) |
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)
NISOURCE INC.
February 18, 2016
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)
NISOURCE INC.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on the criteria established in Internal Control -Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2015, of the Company and our report dated February 18, 2016 expressed an unqualified opinion on those financial statements and financial statement schedule and included an explanatory paragraph relating to the Company’s spin-off of its subsidiary Columbia Pipeline Group, Inc. on July 1, 2015.
February 18, 2016
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)
NISOURCE INC.
| | | | | | | | | | | | |
| Net Revenues | | | | | | | | | | | |
| Operating Expenses | | | | | | | | | | | |
| Other Income (Deductions) | | | | | | | | | | | |
| Gain on Disposition of Discontinued Operations - net of taxes | — | | | | — | | | | 34.9 | | |
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
| | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | |
| Regulatory assets | 172.1 | | | | 187.4 | | |
| | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | |
| Deferred revenue | 6.6 | | | | 3.4 | | |
| Liabilities of discontinued operations | 0.3 | | | | 369.0 | | |
| Other accruals | 114.7 | | | | 144.5 | | |
| Deferred credits | 90.7 | | | | 100.9 | | |
| Accrued liability for postretirement and postemployment benefits | 759.7 | | | | 733.9 | | |
| Liabilities of discontinued operations | — | | | | 1,558.4 | | |
| Net changes in price risk management assets and liabilities | 3.7 | | | | 2.6 | | | | 2.6 | | |
| Deferred revenue | 7.2 | | | | (0.1 | | ) | | 0.6 | | |
An excerpt. Shown here: 40 of 782 rewritten, 40 of 428 added and 40 of 583 removed. The counts are complete. For every sentence, read Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA in the FY2016 filing and the FY2015 filing.
Item 9A. CONTROLS AND PROCEDURES
5 rewritten, 0 added, 0 removed, 9 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
NiSource’s chief executive officer and its [removed: principal] [added: chief] financial [removed: officer,] [added: officer] are responsible for evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)).
NiSource's disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including NiSource's chief executive officer and [removed: principal] [added: chief] financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.
Based upon that evaluation, NiSource's chief executive officer and [removed: principal] [added: chief] financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that financial information was processed, recorded and reported accurately.
NiSource management, including NiSource’s [removed: principal] [added: chief] executive officer and [removed: principal] [added: chief] financial officer, are responsible for establishing and maintaining NiSource’s internal control over financial reporting, as such term is defined under Rule 13a-15(f) or Rule 15d-15(f) promulgated under the Exchange Act.
During [removed: 2015,] [added: 2016,] NiSource conducted an evaluation of its internal control over financial reporting.
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
2 rewritten, 0 added, 0 removed, 2 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
Except for the information required by this item with respect to our executive officers included at the end of [removed: Item 4 of] Part I of this report on Form 10-K and [added: information regarding] our Code of Business [removed: Conduct,] [added: Conduct below,] the information required by this Item 10 is incorporated herein by reference to the discussion in "Proposal 1 Election of Directors," "Corporate Governance," [added: and] "Section 16(a) Beneficial Ownership Reporting Compliance," of the Proxy Statement for the Annual Meeting of Stockholders to be held on May [removed: 11, 2016.][added: 9, 2017.]
A copy of our Code of Business Conduct is available on our website at [removed: http://ir.nisource.com/governance.com] [added: www.nisource.com/investors/governance] and also is available to any stockholder upon written request to our Corporate Secretary.
Item 11. EXECUTIVE COMPENSATION
1 rewritten, 0 added, 0 removed, 0 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
The information required by this Item 11 is incorporated herein by reference to the discussion in "Corporate Governance - Compensation Committee Interlocks and Insider Participation," "Director Compensation," "Executive Compensation," and "Executive Compensation - Compensation Committee Report," of the Proxy Statement for the Annual Meeting of Stockholders to be held on May [removed: 11, 2016.][added: 9, 2017.]
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
1 rewritten, 0 added, 0 removed, 0 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
The information required by this Item 12 is incorporated herein by reference to the discussion in "Security Ownership of Certain Beneficial Owners and Management" and "Equity Compensation Plan Information" of the Proxy Statement for the Annual Meeting of Stockholders to be held on May [removed: 11, 2016.][added: 9, 2017.]
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
1 rewritten, 0 added, 0 removed, 0 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
The information required by this Item 13 is incorporated herein by reference to the discussion in "Corporate Governance - Policies and Procedures with Respect to Transactions with Related Persons" and "Corporate Governance - Director Independence" of the Proxy Statement for the Annual Meeting of Stockholders to be held on May [removed: 11, 2016.][added: 9, 2017.]
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
1 rewritten, 0 added, 0 removed, 2 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
The information required by this Item 14 is incorporated herein by reference to the discussion in "Independent Auditor Fees" of the Proxy Statement for the Annual Meeting of Stockholders to be held on May [removed: 11, 2016.][added: 9, 2017.]
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
42 rewritten, 8 added, 16 removed, 145 unchanged
Read the full itemFY2016 item · filed February 22, 2017FY2015 item · filed February 18, 2016
| [Report of Independent Registered Public Accounting [removed: Firm](#sE908B09E230A25549ED0FC040D97AC24)] [added: Firm](#s5762BF656F7B57EE8544BA561CDD0B19)] | [removed: [42](#sE908B09E230A25549ED0FC040D97AC24)] [added: [40](#s5762BF656F7B57EE8544BA561CDD0B19)] |
| [Statements of Consolidated [removed: Income](#sEACFCC608421DF6CA9A4FC03D1789500)] [added: Income](#sD5ECA4BF7A0D53A3865D4D83EBD27DBE)] | [removed: [44](#sEACFCC608421DF6CA9A4FC03D1789500)] [added: [42](#sD5ECA4BF7A0D53A3865D4D83EBD27DBE)] |
| [Statements of Consolidated Comprehensive [removed: Income](#s33ECF23610CDE2086101FC03CFF9414E)] [added: Income](#sACCBBF48B2425BBE9E99769D5B3FC3F9)] | [removed: [45](#s33ECF23610CDE2086101FC03CFF9414E)] [added: [43](#sACCBBF48B2425BBE9E99769D5B3FC3F9)] |
| [Consolidated Balance [removed: Sheets](#sE1CD954EDD7066E97A59FC03D22DB2DB)] [added: Sheets](#s2714E570953A5017B576523A2EE237D7)] | [removed: [46](#sE1CD954EDD7066E97A59FC03D22DB2DB)] [added: [44](#s2714E570953A5017B576523A2EE237D7)] |
| [Statements of Consolidated Cash [removed: Flows](#s20B0AC3EBBC551421CABFC03D0D72B38)] [added: Flows](#sE9C7D228A92C580FA54CE4F85A8ED87B)] | [removed: [48](#s20B0AC3EBBC551421CABFC03D0D72B38)] [added: [46](#sE9C7D228A92C580FA54CE4F85A8ED87B)] |
| [Statements of Consolidated Common Stockholders’ [removed: Equity](#sBED2507C87375547FA44FC03CFEC49B8)] [added: Equity](#s32C318DEBB7458CCBBB652E10A677691)] | [removed: [51](#sBED2507C87375547FA44FC03CFEC49B8)] [added: [47](#s32C318DEBB7458CCBBB652E10A677691)] |
| [Notes to Consolidated Financial [removed: Statements](#s4CE44CA643C30D862101FC040F0A779D)] [added: Statements](#s5CDEAD72D8B350BAB774AF9509B840EB)] | [removed: [53](#s4CE44CA643C30D862101FC040F0A779D)] [added: [49](#s5CDEAD72D8B350BAB774AF9509B840EB)] |
| Date: February [removed: 18, 2016] [added: 22, 2017] | By: | /s/ JOSEPH HAMROCK |
| | | /s/ | JOSEPH HAMROCK | | President, Chief | Date: February [removed: 18, 2016] [added: 22, 2017] |
| | | /s/ | DONALD E. BROWN | | Executive Vice President and | Date: February [removed: 18, 2016] [added: 22, 2017] |
| | | | Donald E. Brown | | Chief Financial Officer [removed: and Treasurer] (Principal Financial Officer) | |
| | | /s/ | JOSEPH W. MULPAS | | Vice President and | Date: February [removed: 18, 2016] [added: 22, 2017] |
| | | /s/ | RICHARD L. THOMPSON | | Chairman and Director | Date: February [removed: 18, 2016] [added: 22, 2017] |
| | | /s/ | RICHARD A. ABDOO | | Director | Date: February [removed: 18, 2016] [added: 22, 2017] |
| | | /s/ | ARISTIDES S. CANDRIS | | Director | Date: February [removed: 18, 2016] [added: 22, 2017] |
| | | /s/ | DEBORAH A. HENRETTA | | Director | Date: February [removed: 18, 2016] [added: 22, 2017] |
| | | /s/ | MICHAEL E. JESANIS | | Director | Date: February [removed: 18, 2016] [added: 22, 2017] |
| | | /s/ | KEVIN T. KABAT | | Director | Date: February [removed: 18, 2016] [added: 22, 2017] |
| | | /s/ | CAROLYN Y. WOO | | Director | Date: February [removed: 18, 2016] [added: 22, 2017] |
| (10.5) | Form of Performance Share Award Agreement under the 2010 Omnibus Incentive [removed: Plan.] [added: Plan] (incorporated by reference to Exhibit 10.1 to the NiSource Inc. Form 10-Q filed on April 30, 2014.)* |
| [removed: (10.9)] [added: (10.15)] | Form of Restricted Stock Unit Award Agreement [added: for Nonemployee Directors] under the [removed: Columbia Pipeline Group, Inc. 2015] [added: 2010] Omnibus Incentive Plan [removed: relating to Vested but Unpaid NiSource Restricted Stock Unit Awards for Nonemployee Directors of Columbia Pipeline Group, Inc. entered into as of July 13, 2015] (incorporated by reference to Exhibit [removed: 10.4] [added: 10.1] to [removed: the] NiSource Inc. Form 10-Q filed on [removed: November 3, 2015).*] [added: August 2, 2011).*] |
| [removed: (10.10)] [added: (10.9)] | NiSource Inc. Nonemployee Director Retirement Plan, as amended and restated effective May 13, [removed: 2008.] [added: 2008] (incorporated by reference to Exhibit 10.2 to the NiSource Inc. Form 10-K filed on February 27, 2009).* |
| [removed: (10.11)] [added: (10.10)] | Supplemental Life Insurance Plan effective January 1, 1991, as amended, (incorporated by reference to Exhibit 2 to the NIPSCO Industries, Inc. Form 8-K filed on March 25, 1992).* |
| [removed: (10.12)] [added: (10.11)] | Form of Change in Control and Termination Agreement (incorporated by reference to Exhibit 99.1 to the NiSource Inc. Form 8-K filed January 6, 2014).* |
| [removed: (10.13)] [added: (10.12)] | Revised Form of Change in Control and Termination Agreement (incorporated by reference to Exhibit 10.2 to the NiSource Inc. Form 8-K filed on October 23, 2015.)* |
| [removed: (10.15)] [added: (10.20)] | [added: Amended and Restated Pension Restoration Plan for] NiSource Inc. [removed: 1994 Long-Term Incentive Plan, as amended] and [removed: restated] [added: Affiliates] effective [removed: January 1, 2005] [added: May 13, 2011] (incorporated by reference to Exhibit 10.4 to [removed: the] NiSource Inc. Form [removed: 8-K] [added: 10-Q] filed on [removed: December 2, 2005).*] [added: October 28, 2011).*] |
| [removed: (10.17)] [added: (10.13)] | Form of [removed: Nonqualified] [added: Restricted] Stock [removed: Option] Agreement under the [removed: NiSource Inc. 1994 Long-Term] [added: 2010 Omnibus] Incentive Plan (incorporated by reference to Exhibit [removed: 10.2] [added: 10.18] to the NiSource Inc. Form [removed: 8-K] [added: 10-K] filed on [removed: January 3, 2005).*] [added: February 28, 2011).*] |
| [removed: (10.18)] [added: (10.16)] | Form of [removed: Contingent Stock] [added: Performance Share Award] Agreement under the [removed: NiSource Inc. 1994 Long-Term] [added: 2010 Omnibus] Incentive Plan (incorporated by reference to Exhibit [removed: 10.1] [added: 10.3] to [added: the] NiSource Inc. Form 10-Q filed on May [removed: 4, 2010).*] [added: 3, 2016).*] |
| [removed: (10.19)] [added: (10.14)] | Form of Restricted Stock Unit [added: Award] Agreement [added: for Non-employee directors] under the [removed: NiSource Inc. 1994 Long-Term] [added: Non-employee Director Stock] Incentive Plan (incorporated by reference to Exhibit [removed: 10.17] [added: 10.19] to the NiSource Inc. Form 10-K filed on February 28, 2011).* |
| [removed: (10.21)] [added: (10.18)] | Form of Restricted Stock Unit Award Agreement for [removed: Non-employee directors] [added: Nonemployee Directors] under the [removed: Non-employee Director Stock] [added: 2010 Omnibus] Incentive [removed: Plan. (incorporated by reference to Exhibit 10.19 to the NiSource Inc. Form 10-K for the period ended December 31, 2010).*] [added: Plan.*] |
| [removed: (10.22)] [added: (10.17)] | Form of Restricted Stock Unit Award Agreement [removed: for Nonemployee Directors] under the 2010 Omnibus Incentive [removed: Plan (incorporated by reference to Exhibit 10.1 to NiSource Inc. Form 10-Q filed on August 2, 2011).*] [added: Plan.*] |
| [removed: (10.23)] [added: (10.19)] | Amended and Restated NiSource Inc. Supplemental Executive Retirement Plan effective May 13, 2011 (incorporated by reference to Exhibit 10.3 to NiSource Inc. Form 10-Q filed on October 28, 2011).* |
| [removed: (10.24)] [added: (10.21)] | Amended [removed: and] Restated [removed: Pension] [added: Savings] Restoration Plan for NiSource Inc. and Affiliates effective [removed: May 13, 2011] [added: October 22, 2012] (incorporated by reference to Exhibit [removed: 10.4] [added: 10.20] to [added: the] NiSource Inc. Form [removed: 10-Q] [added: 10-K] filed on [removed: October 28, 2011).*] [added: February 19, 2013).*] |
| [removed: (10.25)] [added: (10.22)] | Amended [added: and] Restated [removed: Savings Restoration Plan for] NiSource Inc. [removed: and Affiliates] [added: Executive Deferred Compensation Plan] effective [removed: October 22,] [added: November 1,] 2012 (incorporated by reference to Exhibit [removed: 10.20] [added: 10.21] to the NiSource Inc. Form 10-K filed on February 19, 2013).* |
| [removed: (10.26)] [added: (10.23)] | [removed: Amended and Restated] NiSource Inc. Executive [removed: Deferred Compensation Plan] [added: Severance Policy, as amended and restated,] effective [removed: November] [added: January] 1, [removed: 2012] [added: 2015] (incorporated by reference to Exhibit [removed: 10.21] [added: 10.22] to the NiSource Inc. Form 10-K filed on February 19, 2013).* |
| (10.28) | Letter [removed: Agreement] [added: Agreement, dated as of March 17, 2015, by and] between NiSource [removed: Corporate Services Company] [added: Inc.] and [removed: Stephen P. Smith dated May 14, 2008.] [added: Donald Brown.] (incorporated by reference [removed: to] Exhibit [removed: 10.24] [added: 10.1] to the NiSource Inc. Form [removed: 10-K] [added: 10-Q] filed on [removed: February 27, 2009).*] [added: April 30, 2015).*] |
| [removed: (10.29)] [added: (10.24)] | [removed: Second] [added: Fourth] Amended and Restated Revolving Credit Agreement, dated as of [removed: September 30, 2013, by and] [added: November 28, 2016,] among NiSource Finance Corp., as Borrower, NiSource Inc., [removed: as Guarantor,] the Lenders party [removed: thereto and] [added: thereto,] Barclays Bank PLC, as Administrative Agent, [removed: Credit Suisse Securities (USA) LLC, as Syndication Agent,] [added: JPMorgan Chase Bank, N.A.] and The Bank of Tokyo-Mitsubishi UFJ, [removed: LTD.,] [added: Ltd., as Co-Syndication Agents,] Citibank, [removed: N.A.] [added: N.A., Credit Suisse AG, Cayman Islands Branch] and [added: Wells Fargo Bank, National Association, as Co-Documentation Agents, and Barclays Bank PLC,] JPMorgan Chase Bank, N.A., [added: The Bank of Tokyo-Mitsubishi UFJ, Ltd., Credit Suisse Securities (USA) LLC, Citigroup Global Markets, Inc. and Wells Fargo Securities, LLC,] as [removed: Co-Documentation Agents] [added: Joint Lead Arrangers and Joint Bookrunners] (incorporated by reference to Exhibit 10.1 to the NiSource Inc. Form [removed: 10-Q] [added: 8-K] filed [removed: October 31, 2013).] [added: on November 28, 2016).] |
| [removed: (10.30)] [added: (10.27)] | [removed: Third Amended and Restated Revolving Credit] [added: Term Loan] Agreement, dated as of [removed: December 5, 2014,] [added: March 31, 2016,] by and among NiSource Finance Corp., as Borrower, NiSource Inc., as Guarantor, the Lenders party thereto, and [removed: Barclays Bank PLC,] [added: PNC Bank, National Association,] as Administrative Agent, [removed: Credit Suisse Securities (USA) LLC,] [added: JP Morgan Chase Bank, N.A.,] as Syndication Agent, and [removed: The Bank of Tokyo-Mitsubishi UFJ, LTD., Citibank, N.A. and JPMorgan Chase] [added: Mizuho] Bank, [removed: N.A.,] [added: Ltd.,] as [removed: Co-Documentation Agents] [added: Documentation Agent] (incorporated by reference to Exhibit [removed: 10.25] [added: 10.1] to the NiSource Inc. Form [removed: 10-K] [added: 10-Q] filed on [removed: February 18, 2015).] [added: May 3, 2016).] |
| [removed: (10.31)] [added: (10.25)] | Note Purchase Agreement, dated as of August 23, 2005, by and among NiSource Finance Corp., as issuer, NiSource Inc., as guarantor, and the purchasers named therein (incorporated by reference to Exhibit 10.1 to the NiSource Inc. Current Report on Form 8-K filed on August 26, 2005). |
| [removed: (10.32)] [added: (10.26)] | Amendment No. 1, dated as of November 10, 2008, to the Note Purchase Agreement by and among NiSource Finance Corp., as issuer, NiSource Inc., as guarantor, and the purchasers whose names appear on the signature page thereto (incorporated by reference to Exhibit 10.30 to the NiSource Inc. Form 10-K filed on February 27, 2009). |
| [Schedule II](#s03EBB5CA26C65BBD9A17DA8B04EA780D) | [100](#s03EBB5CA26C65BBD9A17DA8B04EA780D) |
| | | /s/ | WAYNE S. DEVEYDT | | Director | Date: February 22, 2017 |
| | | | Wayne S. DeVeydt | | | |
| | | | | | | |
| | | | | | | |
| | | /s/ | PETER A. ALTABEF | | Director | Date: February 22, 2017 |
| | | | Peter A. Altabef | | | |
| (10.29) | Letter Agreement, dated as of February 23, 2016, by and between NiSource Inc. and Pablo A. Vegas.* |
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| --- | --- |
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| [Statements of Consolidated Long-Term Debt](#s70C907CFD26A1C8ED3CEFC03CFC1513E) | [49](#s70C907CFD26A1C8ED3CEFC03CFC1513E) |
| [Schedule II](#s1CB3E541E6AA71B10405FC03D050BC63) | [106](#s1CB3E541E6AA71B10405FC03D050BC63) |
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| (10.14) | Form of Agreement between NiSource Inc. and certain officers of Columbia Energy Group and schedule of parties to such Agreements (incorporated by reference to Exhibit 10.33 to the NiSource Inc. Form 10-K filed on March 3, 2013).* |
| (10.16) | 1st Amendment to NiSource Inc. 1994 Long Term Incentive Plan, effective January 22, 2009. (incorporated by reference to Exhibit 10.10 to the NiSource Inc. Form 10-K filed on February 27, 2009).* |
| (10.20) | Form of Restricted Stock Agreement under the 2010 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.18 to the NiSource Inc. Form 10-K filed February 28, 2011).* |
| (10.27) | NiSource Inc. Executive Severance Policy, as amended and restated, effective January 1, 2015 (incorporated by reference to Exhibit 10.22 to the NiSource Inc. Form 10-K filed on February 19, 2013).* |
| (10.33) | Term Loan Agreement, dated as of August 20, 2014, by and among the lenders party thereto, CoBank, ACB, as Syndication Agent, JP Morgan Chase Bank, N.A. as Administrative Agent, and J.P. Morgan Securities LLC and CoBank,ACB, as Joint Lead Arrangers and Joint Bookrunners (incorporated by reference to Exhibit 10.1 to the NiSource Inc. Form 10-Q filed October 30, 2014). |
| (10.36) | Employee Matters Agreement, dated as of June 30, 2015, by and between NiSource Inc. and Columbia Pipeline Group, Inc. (incorporated by reference to Exhibit 10.2 of the NiSource Inc. Form 8-K filed on July 2, 2015). |
An excerpt. Shown here: 40 of 42 rewritten, all 8 added and all 16 removed. The counts are complete. For every sentence, read Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES in the FY2016 filing and the FY2015 filing.