filings.toolsNiSource (NI) 10-K risk factor changes: FY2019 vs FY2018
The 2019-12-31 10-K against the 2018-12-31 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 1A16 rewritten12 added65 removed47 unchanged
All filing items1,458 rewritten1,497 added864 removed1,940 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, 1,497 added, 864 removed, 1,458 rewritten and 1,940 unchanged across 21 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 FY2019; struck-through words were in FY2018. Sentences that are wholly new or wholly gone are labelled rather than marked.
Item 1A. RISK FACTORS
16 rewritten, 12 added, 65 removed, 47 unchanged
[removed: A] [added: A] cyber-attack on any of our or certain third-party computer systems upon which we rely may adversely affect our ability to [removed: operate.][added: operate and could lead to a loss or misuse of confidential and proprietary information or potential liability.]
In addition to general information and cyber risks that all large corporations face (e.g., malware, unauthorized access attempts, phishing attacks, malicious intent by insiders and inadvertent disclosure of sensitive information), the utility industry faces evolving [added: and increasingly complex] cybersecurity risks associated with protecting sensitive and confidential customer information, electric grid infrastructure, and natural gas infrastructure.
Although we attempt to maintain adequate defenses to these attacks and work through industry groups and trade associations to identify common threats and assess our countermeasures, a security breach of our information [added: systems, or a security breach of the information] systems [added: of our customers, suppliers or others with whom we do business,] could (i) impact the reliability of our generation, transmission and distribution systems and potentially negatively impact our compliance with certain mandatory reliability standards, (ii) subject us to reputational and other harm [added: or liabilities] associated with theft or inappropriate release of certain types of information such as system operating information or information, personal or otherwise, relating to our customers or employees, (iii) impact our ability to manage our businesses, and/or (iv) subject us to legal and regulatory proceedings and claims from third parties, in addition to remediation costs, any of which, in turn, could have a material adverse effect on our businesses, cash flows, financial condition, results of operations and/or prospects.
[removed: Our] [added: Our] capital projects and programs subject us to construction risks and natural gas costs and supply risks, and require numerous permits, approvals and certificates from various governmental [removed: agencies.][added: agencies.]
We also may not receive the anticipated increases in revenue and cash flows resulting from such projects and programs until after their [removed: completion][added: completion.]
[removed: Sustained] [added: Sustained] extreme weather conditions may negatively impact our [removed: operations.][added: operations.]
[removed: Despite preventative maintenance efforts, persistent weather related stress] on our infrastructure may reveal weaknesses in our systems not previously known to us or otherwise present various operational challenges across all business segments.
[removed: Failure] [added: Failure] to attract and retain an appropriately qualified [removed: workforce] [added: workforce, and maintain good labor relations,] could harm our results of [removed: operations.][added: operations.]
[removed: We] [added: We] are a holding company and are dependent on cash generated by our subsidiaries to meet our debt obligations and pay dividends on our [removed: stock.][added: stock.]
We are a holding company and conduct our operations primarily through our [removed: subsidiaries.][added: subsidiaries, which are separate and distinct legal entities.]
[removed: If] [added: If] we cannot effectively manage new initiatives and organizational changes, we will be unable to address the opportunities and challenges presented by our strategy and the business and regulatory [removed: environment.][added: environment.]
[removed: We] [added: We] outsource certain business functions to third-party suppliers and service providers, and substandard performance by those third parties could harm our business, reputation and results of [removed: operations.][added: operations.]
[removed: Changes] [added: Changes] in the method for determining LIBOR and the potential replacement of the LIBOR benchmark interest rate could adversely affect our business, financial condition, results of operations and cash [removed: flows.][added: flows.]
Some of our indebtedness, including borrowings under our revolving credit [added: agreement and term loan] agreement, bears interest at a variable rate based on LIBOR.
[removed: In addition, these hedging instruments, as well as hedging instruments that our subsidiaries] use for hedging natural gas price and basis risk, rely on LIBOR-based rates to calculate interest accrued on certain payments that may be required to be made under these agreements, such as late payments or interest accrued if any cash collateral should be held by a counterparty.
Any changes announced by [removed: the FCA, other] regulators [removed: or any other successor governance or oversight body, or future changes adopted by such body,] in the method pursuant to which the LIBOR rates are determined may result in a sudden or prolonged increase or decrease in the reported LIBOR rates.
NISOURCE INC.
Although we do maintain cyber insurance, it is possible that such insurance will not adequately cover any losses or liabilities we may incur as a result of any cybersecurity-related litigation.
Other construction risks include changes in costs of materials, equipment, commodities or labor (including changes to tariffs on materials), delays caused by construction incidents or injuries, work stoppages, shortages in qualified labor, poor initial cost estimates, unforeseen engineering issues, the ability to obtain necessary rights-of-way, easements and transmissions connections and general contractors and subcontractors not performing as required under their contracts.
Despite preventative maintenance efforts, persistent weather related stress
NISOURCE INC.
In addition, these hedging instruments, as well as hedging instruments that our subsidiaries
NISOURCE INC.
However, because SOFR is a broad U.S. Treasury repurchase agreement financing rate that represents overnight secured funding transactions, it differs fundamentally from LIBOR.
For example, SOFR is a secured overnight rate, while LIBOR is an unsecured rate that represents interbank funding over different maturities.
In addition, because SOFR is a transaction-based rate, it is backward-looking, whereas LIBOR is forward-looking.
Because of these and other differences, there is no assurance that SOFR will perform in the same way as LIBOR would have performed at any time, and there is no guarantee that it is a comparable substitute for LIBOR.
SOFR may fail to gain market acceptance.
NISOURCE INC.
Business operations throughout our service territories have been and may continue to be adversely affected by economic events at the national and local level where it operates.
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.
The U.S. manufacturing industry continues to adjust to changing market conditions including international competition, increasing costs, and fluctuating demand for its products.
The implementation of NIPSCO’s electric generation strategy, including the retirement of its coal generation units, may not achieve intended results.
On October 31, 2018, NIPSCO submitted its 2018 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.
The plan evaluated demand-side and supply-side resource alternatives to reliably and cost-effectively meet NIPSCO customers' future energy requirements over the ensuing 20 years.
The preferred option within the Integrated Resource Plan sets forth a schedule to retire R.M. Schahfer Generating Station (Units 14, 15, 17, and 18) by 2023 and Michigan City Generating Station (Unit 12) by 2028.
The current replacement plan includes renewable sources of energy, including wind, solar, and battery storage.
However, there are inherent risks and uncertainties, including changes in market conditions, regulatory approvals, environmental regulations, commodity costs and customer expectations, which may impede NIPSCO’s ability to achieve these intended results.
NIPSCO’s future success will depend, in part, on its ability to successfully implement its long-term electric generation plans, to offer services that meet customer demands and evolving industry standards, and to recover all, or a significant portion of, any unrecovered investment in obsolete assets.
NIPSCO’s electric generation strategy could require significant future capital expenditures, operating costs and charges to earnings that may negatively impact our financial position, financial results and cash flows.
Fluctuations in the price of energy commodities or their related transportation costs or an inability to obtain an adequate, reliable and cost-effective fuel supply to meet customer demands may have a negative impact on our financial results.
Our electric generating fleet is dependent on coal and natural gas for fuel, and our gas distribution operations purchase and resell much of the natural gas we deliver to our customers.
These energy commodities are vulnerable to price fluctuations and fluctuations in associated transportation costs.
From time to time, we have also used hedging in order to offset fluctuations in commodity supply prices.
We rely on regulatory recovery mechanisms in the various jurisdictions in order to fully recover the commodity costs incurred in providing service.
However, while we have historically been successful in the recovery of costs related to such commodity prices, there can be no assurance that such costs will be fully recovered through rates in a timely manner.
In addition, we depend on electric transmission lines, natural gas pipelines, and other transportation facilities owned and operated by third parties to deliver the electricity and natural gas we sell to wholesale markets, supply natural gas to our gas storage and electric generation facilities, and provide retail energy services to customers.
If transportation is disrupted, or if capacity is inadequate, we may be unable to sell and deliver our gas and electric services to some or all of our customers.
As a result, we may be required to procure additional or alternative electricity and/or natural gas supplies at then-current market rates, which, if recovery of related costs is disallowed, could have a material adverse effect on our businesses, financial condition, cash flows, results of operations and/or prospects.
We are exposed to risk that customers will not remit payment for delivered energy or services, and that suppliers or counterparties will not perform under various financial or operating agreements.
Our extension of credit is governed by a Corporate Credit Risk Policy, involves considerable judgment and is based on an evaluation of a customer or counterparty’s financial condition, credit history and other factors.
We monitor our credit risk exposure by obtaining credit reports and updated financial information for customers and suppliers, and by evaluating the financial status of our banking partners and other counterparties by reference to market-based metrics such as credit default swap pricing levels, and to traditional credit ratings provided by the major credit rating agencies.
Adverse economic conditions could result in an increase in defaults by customers, suppliers and counterparties.
We have significant goodwill and definite-lived intangible assets.
An impairment of goodwill or definite-lived intangible assets could result in a significant charge to earnings and negatively impact our compliance with certain covenants under financing agreements.
In accordance with GAAP, we test goodwill for impairment at least annually and review our definite-lived intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
Goodwill also is tested for impairment when factors, examples of which include reduced cash flow estimates, a sustained decline in stock price or market capitalization below book value, indicate that the carrying value may not be recoverable.
We have tested and will continue to monitor the goodwill of Columbia of Massachusetts for impairment in connection with the Greater Lawrence Incident.
To date,
ITEM 1A.
RISK FACTORS
these tests do not indicate the need for an impairment of the goodwill balance.
We would be required to record a charge in our financial statements for the period in which any impairment of the goodwill or definite-lived intangible assets is determined, negatively impacting the results of operations.
A significant charge could impact the capitalization ratio covenant under certain financing agreements.
We are subject to a financial covenant under our five-year revolving credit facility, which requires us to maintain a debt to capitalization ratio that does not exceed 70%.
A similar covenant in a 2005 private placement note purchase agreement requires us to maintain a debt to capitalization ratio that does not exceed 75%.
As of December 31, 2018, the ratio was 61.4%.
Changes in taxation and the ability to quantify such changes could adversely affect our financial results.
An excerpt. Shown here: all 16 rewritten, all 12 added and 40 of 65 removed. The counts are complete. For every sentence, read Item 1A. RISK FACTORS in the FY2019 filing and the FY2018 filing.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
35 rewritten, 132 added, 14 removed, 55 unchanged
[removed: Other Information][added: Other Information]
[added: Basis of Accounting for Rate-Regulated Subsidiaries.] ASC Topic 980, [removed: Regulated Operations,] [added: *Regulated Operations*,] provides that rate-regulated subsidiaries account for and report assets and liabilities consistent with the economic effect of the way in which regulators establish rates, if the rates established are designed to recover the costs of providing the regulated service and if the competitive environment makes it probable that such rates can be charged and collected.
The total amounts of regulatory assets and liabilities reflected on the Consolidated Balance Sheets were [removed: $2,237.5] [added: $2,239.6] million and [removed: $2,660.0] [added: $2,512.2] million at December 31, [removed: 2018,] [added: 2019,] and [removed: $1,801.2] [added: $2,237.5] million and [removed: $2,795.6] [added: $2,660.0] million at December 31, [removed: 2017,] [added: 2018,] respectively.
In the event that regulation significantly changes the opportunity for us to recover our costs in the future, all or a portion of our regulated operations may no longer meet the criteria for the application of ASC Topic 980, [removed: Regulated Operations.][added: *Regulated Operations*.]
If we were unable to continue to apply the provisions of ASC Topic 980, [removed: Regulated Operations,] [added: *Regulated Operations*,] we would be required to apply the provisions of ASC Topic 980-20, [removed: Discontinuation] [added: *Discontinuation] of Rate-Regulated [removed: Accounting.][added: Accounting*.]
In management’s opinion, our regulated subsidiaries will be subject to ASC Topic 980, [removed: Regulated Operations] [added: *Regulated Operations*] for the foreseeable future.
Regulatory assets requiring specific regulatory action amounted to [removed: $320.4] [added: $307.2] million at December 31, [removed: 2018.][added: 2019.]
The passage of the TCJA into law [added: in December 2017] necessitated the remeasurement of our deferred income tax balances to reflect the [removed: new U.S. corporate income] [added: change in the statutory federal] tax rate [removed: of] [added: from 35% to] 21%.
For additional information, refer to Note [added: 8, "Regulatory Matters," and Note] 10, "Income Taxes," in the Notes to Consolidated Financial Statements.
As discussed in Note [removed: 18-E,] [added: 19-E,] "Other Matters - Greater Lawrence Pipeline Replacement," [added: since the Greater Lawrence Incident and through December 31, 2019,] we [removed: incurred] [added: have invested] approximately [removed: $167] [added: $258] million of capital spend for [added: the] pipeline replacement in the affected [removed: communities during 2018.][added: communities; this work was completed in 2019.]
The recovery of any capital investment not reimbursed through insurance will be addressed in a future regulatory [removed: proceeding.][added: proceeding; a future regulatory proceeding is dependent on the outcome of the sale of the Massachusetts Business.]
The outcome of such a proceeding [added: (if any)] is uncertain.
[added: Pension and Postretirement Benefits.] We have defined benefit plans for both pension and other postretirement benefits.
For measurement of [removed: 2019] [added: 2020] net periodic benefit cost, we selected an expected pre-tax long-term rate of return of [removed: 6.10%] [added: 5.70%] and [removed: 5.80%] [added: 5.67%] for our pension and other postretirement benefit plan assets, respectively.
| | Impact on December 31, [removed: 2018] [added: 2019] Projected Benefit Obligation Increase/(Decrease) | | | | | | |
| Change in Assumptions [removed: (in millions)] [added: *(in millions)*] | Pension Benefits | | | | Other Postretirement Benefits | | |
| +50 basis points change in discount rate | $ | [removed: (79.6] [added: (89.9] | ) | | $ | [removed: (23.6] [added: (29.0] | ) |
| \-50 basis points change in discount rate | [removed: 86.2] [added: 97.7] | | | | [removed: 25.8] [added: 31.8] | | |
| +50 basis points change in health care trend rates | | | | | [removed: 12.5] [added: 15.0] | | |
| \-50 basis points change in health care trend rates | | | | | [removed: (11.0] [added: (13.1] | | ) |
| | Impact on [removed: 2018] [added: 2019] Expense Increase/(Decrease)(1) | | | | | | |
| [removed: +50] [added: \-50] basis points change in discount rate | [removed: $] [added: 1.9] | [removed: (3.3] | [removed: )] | | [removed: $] [added: 0.7] | [removed: (0.7] | [removed: )] |
| [removed: \-50] [added: +50] basis points change in discount rate | [removed: 2.8] [added: $] | [added: (1.8] | [added: )] | | [removed: 0.8] [added: $] | [added: 0.3] | |
| +50 basis points change in expected long-term rate of return on plan assets | [removed: (10.3] [added: (8.9] | | ) | | [removed: (1.3] [added: (1.2] | | ) |
| \-50 basis points change in expected long-term rate of return on plan assets | [removed: 10.3] [added: 8.9] | | | | [removed: 1.3] [added: 1.2] | | |
[added: Goodwill and Intangible Assets.] We have seven goodwill reporting units, comprised of the seven state operating companies within the Gas Distribution Operations reportable segment.
Our goodwill assets at December 31, [removed: 2018] [added: 2019] were [removed: $1,690.7] [added: $1,486] million, most of which resulted from the acquisition of Columbia on November 1, 2000.
Our annual goodwill test takes place in the second quarter of each year and was [removed: most recently finalized as of] [added: performed on] May 1, [removed: 2018.][added: 2019.]
The [removed: quantitative] [added: year-end] impairment analysis [removed: as of September 30, 2018 determined] [added: indicated that] the fair value of [added: the] Columbia of Massachusetts reporting unit [removed: continued to exceed] [added: was below] its carrying value.
[removed: For additional information, refer to] [added: See] Note 6, "Goodwill and Other Intangible Assets," in the Notes to Consolidated Financial [removed: Statements.][added: Statements for more information.]
Consistent with our historical impairment testing of goodwill, fair value of [removed: the] [added: this] reporting [removed: units] [added: unit] was determined based on a weighting of income and market approaches.
[removed: We] [added: In the Step 0 analysis, we] assessed various assumptions, events and circumstances that would have affected the estimated fair value of the [added: applicable] reporting units [removed: in our] [added: as compared to their] baseline May 1, 2016 [removed: test.][added: “step 1” fair value measurement.]
The results of this assessment indicated that it is not more likely than not that [removed: its] [added: these] reporting [removed: unit] [added: units] fair values are less than [removed: the] [added: their] reporting unit carrying [removed: values and] [added: values; therefore,] no [removed: impairments are necessary.][added: “step 1” analysis was required.]
[removed: The long-term growth rate is subject to change depending on inflationary impacts to] the U.S. economy and the individual business environments in which each reporting unit operates.
[added: Revenue Recognition.] Revenue is recorded as products and services are delivered.
NISOURCE INC.
Contractual Obligations. We have certain contractual obligations requiring payments at specified periods.
The obligations include long-term debt, lease obligations, energy commodity contracts and obligations for various services including pipeline capacity and outsourcing of IT services.
The total contractual obligations in existence at December 31, 2019 and their maturities were:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| *(in millions)* | Total | | | | 2020 | | | | 2021 | | | | 2022 | | | | 2023 | | | | 2024 | | | | After | | |
| Long-term debt (1) | $ | 7,738.6 | | | $ | — | | | $ | 63.6 | | | $ | 530.0 | | | $ | 600.0 | | | $ | — | | | $ | 6,545.0 | |
| Interest payments on long-term debt | 6,214.2 | | | | 342.0 | | | | 340.7 | | | | 337.1 | | | | 311.1 | | | | 299.9 | | | | 4,583.4 | | |
| Finance leases(2) | 325.9 | | | | 27.2 | | | | 27.3 | | | | 26.8 | | | | 23.1 | | | | 19.9 | | | | 201.6 | | |
| Operating leases(3) | 79.1 | | | | 15.6 | | | | 9.4 | | | | 8.2 | | | | 7.6 | | | | 6.6 | | | | 31.7 | | |
| Energy commodity contracts(4) | 95.9 | | | | 65.5 | | | | 30.4 | | | | — | | | | — | | | | — | | | | — | | |
| Service obligations: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pipeline service obligations | 3,450.7 | | | | 605.0 | | | | 590.1 | | | | 546.8 | | | | 357.2 | | | | 237.5 | | | | 1,114.1 | | |
| IT service obligations | 153.2 | | | | 63.6 | | | | 49.4 | | | | 38.0 | | | | 1.1 | | | | 1.1 | | | | — | | |
| Other service obligations(5) | 59.8 | | | | 45.8 | | | | 14.0 | | | | — | | | | — | | | | — | | | | — | | |
| Other liabilities | 27.3 | | | | 27.3 | | | | — | | | | — | | | | — | | | | — | | | | — | | |
| Total contractual obligations | $ | 18,144.7 | | | $ | 1,192.0 | | | $ | 1,124.9 | | | $ | 1,486.9 | | | $ | 1,300.1 | | | $ | 565.0 | | | $ | 12,475.8 | |
(1) Long-term debt balance excludes unamortized issuance costs and discounts of $70.5 million.
(2) Finance lease payments shown above are inclusive of interest totaling $108.3 million.
(3) Operating lease payments shown above are inclusive of interest totaling $14.3 million.
Operating lease balances do not include obligations for possible fleet vehicle lease renewals beyond the initial lease term.
While we have the ability to renew these leases beyond the initial term, we are not reasonably certain (as that term is defined in ASC 842) to do so.
If we were to continue the fleet vehicle leases outstanding at December 31, 2019, payments would be $34.5 million in 2020, $28.3 million in 2021, $23.4 million in 2022, $19.9 million in 2023, $15.2 million in 2024 and $15.2 million thereafter.
(4)In January 2020, NIPSCO signed new coal contract commitments of $14.4 million for 2020.
These contracts are not included above.
(5)In February 2020, NIPSCO signed a new railcar coal transportation contract commitment of $12.0 million for 2020.
This contract is not included above.
Our calculated estimated interest payments for long-term debt is based on the stated coupon and payment dates.
For 2020, we project that we will be required to make interest payments of approximately $368.2 million, which includes $342.0 million of interest payments related to our long-term debt outstanding as of December 31, 2019.
At December 31, 2019, we had $1,773.2 million in short-term borrowings outstanding.
Our expected payments included within “Other liabilities” in the table of contractual commitments above contains employer contributions to pension and other postretirement benefits plans expected to be made in 2020.
Plan contributions beyond 2020 are dependent upon a number of factors, including actual returns on plan assets, which cannot be reliably estimated at this time.
In 2020, we expect to make contributions of approximately $3.0 million to our pension plans and approximately $24.0 million to our postretirement medical and life plans.
Refer to Note 11, “Pension and Other Postretirement Benefits,” in the Notes to Consolidated Financial Statements for more information.
We cannot reasonably estimate the settlement amounts or timing of cash flows related to long-term obligations classified as “Total Other Liabilities” on the Consolidated Balance Sheets, other than those described above.
We also have obligations associated with income, property, gross receipts, franchise, payroll, sales and use, and various other taxes and expect to make tax payments of approximately $247.1 million in 2020, which are not included in the table above.
In addition, we have uncertain income tax positions that are not included in the table above as we are unable to predict when the matters will be resolved.
Refer to Note 10, "Income Taxes," in the Notes to Consolidated Financial Statements for more information.
NISOURCE INC.
Basis of Accounting for Rate-Regulated Subsidiaries.
For our regulated entities, substantially all of the impact of this remeasurement was recorded to a regulatory asset or regulatory liability, as appropriate, until such time that we receive final regulatory orders prescribing the required accounting treatment and related impact on future customer rates.
We estimate this replacement work will cost between $220 million and $230 million in total.
Columbia of Massachusetts has provided notice to its property insurer of the Greater Lawrence Incident and discussions around the claim and recovery have commenced.
Pension and Postretirement Benefits.
Goodwill.
In the third quarter of 2018, we determined the Greater Lawrence Incident represented a triggering event that required an impairment analysis of goodwill.
The incident specifically impacts our Columbia of Massachusetts reporting unit.
We completed a quantitative ("step 1") fair value measurement of our reporting units during the May 1, 2016 goodwill test.
A qualitative ("step 0") test was completed on May 1, 2018.
The May 1, 2016 test indicated the fair value of each of the reporting units that carry or are allocated goodwill exceeded their carrying values, indicating that no impairment existed under the step 1 annual impairment test.
If the estimates of free cash flow used in this step 1 analysis had been 10% lower, the resulting fair values would have still been greater than the carrying value for each of the reporting units tested, holding all other assumptions constant.
Revenue Recognition.
An excerpt. Shown here: all 35 rewritten, 40 of 132 added and all 14 removed. The counts are complete. For every sentence, read Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) in the FY2019 filing and the FY2018 filing.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
399 rewritten, 290 added, 152 removed, 339 unchanged
| [removed: Index] [added: Index] | [removed: Page] [added: Page] |
[removed: | [Report of Independent Registered Public Accounting Firm](#s8629591AB0C058EB9871736383571EAE) | [46](#s8629591AB0C058EB9871736383571EAE) |][added: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM]
[removed: | [Statements of Consolidated Income (Loss)](#s3214D3090C7155D0985C9190BD40C581) | [48](#s3214D3090C7155D0985C9190BD40C581) |][added: STATEMENTS OF CONSOLIDATED INCOME (LOSS)]
[removed: | [Statements of Consolidated Comprehensive Income (Loss)](#s22E3364D843B57A1B86C5F3819609F7A) | [49](#s22E3364D843B57A1B86C5F3819609F7A) |][added: STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)]
[removed: | [Consolidated Balance Sheets](#sE86D98CD8EB55BC5BEB251A1936CC25D) | [50](#sE86D98CD8EB55BC5BEB251A1936CC25D) |][added: CONSOLIDATED BALANCE SHEETS]
[removed: | [Statements of Consolidated Cash Flows](#s5422A694303D5175B8CBE8DF4814D30E) | [52](#s5422A694303D5175B8CBE8DF4814D30E) |][added: STATEMENTS OF CONSOLIDATED CASH FLOWS]
[removed: | [Statements of Consolidated Stockholders' Equity](#s94293891B5895F099841FA1AB8E5D6F5) | [53](#s94293891B5895F099841FA1AB8E5D6F5) |][added: STATEMENTS OF CONSOLIDATED STOCKHOLDERS’ EQUITY]
[removed: | [Notes] [added: Notes] to Consolidated Financial [removed: Statements](#sB3DF3303194D5025BDB0C4033B436AA9) | [56](#sB3DF3303194D5025BDB0C4033B436AA9) |][added: Statements]
[removed: | [1.] Nature of Operations and Summary of Significant Accounting [removed: Policies](#sD2045C71B2D558A1BBF081DFF9BF76F6) | [56](#sD2045C71B2D558A1BBF081DFF9BF76F6) |][added: Policies]
[removed: | [2.] Recent Accounting [removed: Pronouncements](#sD4379B2657E453E0ACA3169AABA94BFE) | [59](#sD4379B2657E453E0ACA3169AABA94BFE) |][added: Pronouncements]
[removed: | [3.] Revenue [removed: Recognition](#s796665D25BD955E8997ACDAD37DC3C25) | [62](#s796665D25BD955E8997ACDAD37DC3C25) |][added: Recognition]
[removed: | [4.] Earnings Per [removed: Share](#s9465232638F55749B89F43C373F186FF) | [64](#s9465232638F55749B89F43C373F186FF) |][added: Share]
| [removed: [5. Property,] [added: Property,] Plant and [removed: Equipment](#s29BE452FB6165AB3B01C58C34D3889B3)] [added: Equipment] | [removed: [65](#s29BE452FB6165AB3B01C58C34D3889B3)] | [added: | | | | | |]
[removed: | [6.] Goodwill and Other Intangible [removed: Assets](#s3EF85038EB7550EE810496434A8B2235) | [65](#s3EF85038EB7550EE810496434A8B2235) |][added: Assets]
[removed: | [7.] Asset Retirement [removed: Obligations](#sC5B53E2D19D2567DAF2FCE62F446EBF4) | [66](#sC5B53E2D19D2567DAF2FCE62F446EBF4) |][added: Obligations]
[removed: | [8. Regulatory Matters](#s3CC9D8776F415207ABA118A2FE730F40) | [67](#s3CC9D8776F415207ABA118A2FE730F40) |][added: Regulatory Matters]
| [9. Risk Management [removed: Activities](#sE2211DACE40E5248A111DCF65D700F97)] [added: Activities](#s4A5C61F4FDCD59C5877C107309B7CB83)] | [removed: [75](#sE2211DACE40E5248A111DCF65D700F97)] [added: [79](#s4A5C61F4FDCD59C5877C107309B7CB83)] |
| [10. Income [removed: Taxes](#s9868084F475C5644B6AC7CEE0D4B4E86)] [added: Taxes](#sC6F9039A825A59619B2F9D8D5477ABCB)] | [removed: [76](#s9868084F475C5644B6AC7CEE0D4B4E86)] [added: [81](#sC6F9039A825A59619B2F9D8D5477ABCB)] |
| [11. Pension and Other Postretirement [removed: Benefits](#s39FC46FCDDE9532F87A631133D21B2E3)] [added: Benefits](#s98EC032120B357CA9D697FDC29CDA795)] | [removed: [79](#s39FC46FCDDE9532F87A631133D21B2E3)] [added: [83](#s98EC032120B357CA9D697FDC29CDA795)] |
| [12. [removed: Equity](#s47B3B46C14245C4292704D79966B87A4)] [added: Equity](#s9A82FC2D498A5D34B9453C1328EBAF69)] | [removed: [89](#s47B3B46C14245C4292704D79966B87A4)] [added: [95](#s9A82FC2D498A5D34B9453C1328EBAF69)] |
| [13. Share-Based [removed: Compensation](#s04A04245424A5456B4A6FD5607BE9C79)] [added: Compensation](#s2ABB2DCD0B825B34BF0E77824FCE7D79)] | [removed: [91](#s04A04245424A5456B4A6FD5607BE9C79)] [added: [98](#s2ABB2DCD0B825B34BF0E77824FCE7D79)] |
| [14. Long-Term [removed: Debt](#s7F2DB7A5E3FB55DC80B13834391459D0)] [added: Debt](#s3D2E91AB729E5FCD9787C1E62BE31113)] | [removed: [95](#s7F2DB7A5E3FB55DC80B13834391459D0)] [added: [101](#s3D2E91AB729E5FCD9787C1E62BE31113)] |
| [15. Short-Term [removed: Borrowings](#s5C4E5BD4B99F5B5A9DC3DC1EFAB47AB4)] [added: Borrowings](#s4FF6BDC85DA55187807038474FDEE7FB)] | [removed: [97](#s5C4E5BD4B99F5B5A9DC3DC1EFAB47AB4)] [added: [102](#s4FF6BDC85DA55187807038474FDEE7FB)] |
| [removed: [18. Other] [added: Commitments and Contingencies (Refer to Note 19, "Other] Commitments and [removed: Contingencies](#s2A000624FCD25324A4C4DD3396367BA4)] [added: Contingencies")] | [removed: [101](#s2A000624FCD25324A4C4DD3396367BA4)] [added: —] | [added: | | | — | | |]
| [removed: [19.] Accumulated [removed: Other Comprehensive Loss](#s6B725FC311CE52A49215FC300C6FB91D)] [added: other comprehensive loss] | [removed: [109](#s6B725FC311CE52A49215FC300C6FB91D)] [added: (92.6] | [added: | ) | | (37.2 | | ) |]
| [removed: [23.] [added: [24.] Quarterly Financial Data [removed: (Unaudited)](#sE9B7A185C4FE5434B55A73ED5C8F42FC)] [added: (Unaudited)](#sB3A6D81AAF455049B9083032B53265EB)] | [removed: [112](#sE9B7A185C4FE5434B55A73ED5C8F42FC)] [added: [122](#sB3A6D81AAF455049B9083032B53265EB)] |
| [removed: [24.] [added: [25.] Supplemental Cash Flow [removed: Information](#s3D43CCADCFA05C6C8ED94418B404740B)] [added: Information](#sC2724136B76A5788B1A41F0F460FD18D)] | [removed: [113](#s3D43CCADCFA05C6C8ED94418B404740B)] [added: [122](#sC2724136B76A5788B1A41F0F460FD18D)] |
[removed: REPORT] [added: REPORT] OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING [removed: FIRM][added: FIRM]
To the [removed: shareholders] [added: stockholders] and the Board of Directors of NiSource Inc.
[removed: Opinion] [added: Opinion] on the Financial [removed: Statements][added: Statements]
We have audited the accompanying consolidated balance sheets of NiSource Inc. and subsidiaries (the "Company") as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] the related statements of consolidated income (loss), comprehensive income (loss), stockholders' equity, and cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] and the related notes and the schedule listed in the Index at [removed: item] [added: Item] 15 (collectively referred to as the "financial statements").
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February [removed: 20, 2019,] [added: 27, 2020,] expressed an unqualified opinion on the Company's internal control over financial reporting.
[removed: Basis] [added: Basis] for [removed: Opinion][added: Opinion]
[removed: STATEMENTS OF CONSOLIDATED INCOME (LOSS)][added: | [Statements of Consolidated Income (Loss)](#s0D49F76862C65DC9B8D568E0F3132445) | [54](#s0D49F76862C65DC9B8D568E0F3132445) |]
| Year Ended December [removed: 31,] [added: 31*,] (in millions, except per share [removed: amounts)] [added: amounts)*] | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | |
| [removed: Operating Revenues] [added: Operating Revenues] | | | | | | | | | | | |
| Customer revenues | [removed: $] [added: $] | [removed: 4,991.1] [added: 5,053.4] | | | $ | [removed: 4,730.2] [added: 4,991.1] | | | $ | [removed: 4,392.5] [added: 4,730.2] | |
| Other revenues | [removed: 123.4] [added: 155.5] | | | | [removed: 144.4] [added: 123.4] | | | | [removed: 100.0] [added: 144.4] | | |
| Total Operating Revenues | [removed: 5,114.5] [added: 5,208.9] | | | | [removed: 4,874.6] [added: 5,114.5] | | | | [removed: 4,492.5] [added: 4,874.6] | | |
NISOURCE INC.
NISOURCE INC.
| [Report of Independent Registered Public Accounting Firm](#s546BEB7BEFE05C3F97A9ABFA75585DC5) | [51](#s546BEB7BEFE05C3F97A9ABFA75585DC5) |
| [Consolidated Balance Sheets](#s790187DA0A8D5472B55F22D8F52FB965) | [56](#s790187DA0A8D5472B55F22D8F52FB965) |
| [Statements of Consolidated Stockholders' Equity](#s76D09C32CB1950D5B7D0C3807EEF7B7E) | [59](#s76D09C32CB1950D5B7D0C3807EEF7B7E) |
| [Notes to Consolidated Financial Statements](#s6DD56C2BC81258D9B61DAD084D957180) | [61](#s6DD56C2BC81258D9B61DAD084D957180) |
| [16. Leases](#s8ebc3075570444afb5eefe4d7e551e3e) | [103](#s8ebc3075570444afb5eefe4d7e551e3e) |
| [17. Fair Value](#s1694F76CF79258069370DE1C30BC413C) | [106](#s1694F76CF79258069370DE1C30BC413C) |
| [18. Transfers of Financial Assets](#s7E6F0D9D8DCA5D1DB852FE97D3736EE9) | [109](#s7E6F0D9D8DCA5D1DB852FE97D3736EE9) |
| [19. Other Commitments and Contingencies](#s5B727001564A5B4E926CF3AFBD7F0D80) | [110](#s5B727001564A5B4E926CF3AFBD7F0D80) |
| [21. Other, Net](#s21BCE95BFFF05D18A0ABCC9C971FDA2C) | [119](#s21BCE95BFFF05D18A0ABCC9C971FDA2C) |
| [22. Interest Expense, Net](#s3ABF47AD5F3857D3BDCFC638FFE05115) | [120](#s3ABF47AD5F3857D3BDCFC638FFE05115) |
| [23. Segments of Business](#sD14885E600B456C580B530C37447376C) | [120](#sD14885E600B456C580B530C37447376C) |
| [26. Subsequent Event](#s600578333EBA5FDAB5F2FAF999E9C35A) | [123](#s600578333EBA5FDAB5F2FAF999E9C35A) |
| [Schedule II](#sDD86E6C65AF254189BDE80AE346DDFAE) | [124](#sDD86E6C65AF254189BDE80AE346DDFAE) |
NISOURCE INC.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Impact of Rate Regulation on the Financial Statements - Refer to Notes 1, 8, 19, and 26 to the financial statements
*Critical Audit Matter Description*
Certain subsidiaries of NiSource Inc. are fully regulated natural gas and electric utility companies serving customers in seven states.
These rate-regulated subsidiaries account for and report assets and liabilities consistent with the economic effect of the manner in which regulators establish rates, if the rates established are designed to recover the costs of providing the regulated service and it is probable that such rates can be charged to and collected from customers.
Through December 31, 2019, the Company invested approximately $258 million of capital spend for the Greater Lawrence Incident pipeline replacement.
As of December 31, 2019, the Company determined that a disallowance of the Greater Lawrence Incident pipeline replacement capital expenditures was not probable.
On February 26, 2020, the Company and its wholly-owned subsidiary, Columbia of Massachusetts (CMA), agreed to sell substantially all of CMA's utility property, plant, and equipment (including the
NISOURCE INC.
Greater Lawrence Incident pipeline replacement assets) with other specified assets and liabilities, to a third party.
The Company estimates that the total pre-tax loss resulting from this sale will be approximately $360 million, based on December 31, 2019 asset and liability balances and estimated transaction costs.
We identified the accounting for rate-regulated subsidiaries as a critical audit matter due to the significant judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements.
Management judgments include assessing (1) the likelihood of recovery in future rates of incurred costs, (2) the likelihood of refund of amounts previously collected from customers, and (3) the probability of recovery of amounts capitalized related to the Greater Lawrence Incident pipeline replacement.
Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by regulatory commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the rate making process due its inherent complexities.
*How the Critical Audit Matter Was Addressed in the Audit*
Our audit procedures related to the uncertainty of future decisions by regulatory commissions included the following, among others:
| • | We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of amounts as property, plant, and equipment, including the Greater Lawrence Incident pipeline replacement; regulatory assets or liabilities; and the monitoring and evaluation of regulatory developments, that may affect the likelihood of recovering costs in future rates or of a future reduction in rates. |
| • | We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments. |
| • | We read relevant regulatory orders issued by regulatory commissions, regulatory statutes, interpretations, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedence of regulatory commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness. |
| • | For regulatory matters in process, including those that could impact the Greater Lawrence Incident pipeline replacement, we inspected the Company’s filings with regulatory commissions and the filings with regulatory commissions by intervenors for any evidence that might contradict management’s assertions related to recoverability of recorded assets*.* |
| • | We inquired of management about property, plant, and equipment that may be abandoned. We inspected minutes of meetings of the board of directors and regulatory orders and other filings with regulatory commissions to identify evidence that may contradict management’s assertion regarding probability of an abandonment. |
| • | We obtained an analysis from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or a future reduction in rates. |
NISOURCE INC.
| [16. Fair Value](#sD71C717F9B375DF3B5BF67D7AFF664F9) | [98](#sD71C717F9B375DF3B5BF67D7AFF664F9) |
| [17. Transfers of Financial Assets](#s40BF68E945015C74B0EF01E73A515263) | [100](#s40BF68E945015C74B0EF01E73A515263) |
| [20. Other, Net](#s26949B64588D5EA896C8BB295F5D2B77) | [109](#s26949B64588D5EA896C8BB295F5D2B77) |
| [21. Interest Expense, Net](#sB4297233669C5619B744F93AC3B2BE8C) | [110](#sB4297233669C5619B744F93AC3B2BE8C) |
| [22. Segments of Business](#s28B0F6B4B44553E0A1631A41F46C30A2) | [110](#s28B0F6B4B44553E0A1631A41F46C30A2) |
| [Schedule II](#sC1539D7689845727AACB3EDD9DA79D24) | [114](#sC1539D7689845727AACB3EDD9DA79D24) |
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
/s/ DELOITTE & TOUCHE LLP
Columbus, Ohio
February 20, 2019
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of NiSource Inc. and subsidiaries (the “Company”) as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the financial statements as of and for year ended December 31, 2018, of the Company and our report dated February 20, 2019, expressed an unqualified opinion on those financial statements.
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting.
Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
| Other accruals | 58.8 | | | | 78.3 | | |
| Risk management liabilities | 46.7 | | | | 28.5 | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Balance as of January 1, 2016 | $ | 3.2 | | | $ | (79.3 | ) | | $ | 5,078.0 | | | $ | (1,123.3 | ) | | $ | (35.1 | ) | | $ | 3,843.5 | |
| Common stock | 0.1 | | | | — | | | | — | | | | — | | | | — | | | | 0.1 | | |
| Dividend reinvestment plan | — | | | | — | | | | 6.4 | | | | — | | | | — | | | | 6.4 | | |
| (in millions) | Common Stock | | | | Preferred Stock | | | | Treasury Stock | | | | Additional Paid-In Capital | | | | Retained Deficit | | | | Accumulated Other Comprehensive Loss | | | | Total | | |
| Balance as of December 31, 2017 | $ | 3.4 | | | $ | — | | | $ | (95.9 | ) | | $ | 5,529.1 | | | $ | (1,073.1 | ) | | $ | (43.4 | ) | | $ | 4,320.1 | |
| Cumulative effect of change in accounting principle(1) | — | | | | — | | | | — | | | | — | | | | 9.5 | | | | (9.5 | | ) | | — | | |
| Balance as of January 1, 2016 | — | | | 322,181 | | | (3,071 | ) | | 319,110 | |
| Dividend reinvestment plan | — | | | 386 | | | — | | | 386 | |
| Treasury stock acquired | | | | | | | (293 | ) | | (293 | ) |
| Treasury stock acquired | | | | | | | (166 | ) | | (166 | ) |
An excerpt. Shown here: 40 of 399 rewritten, 40 of 290 added and 40 of 152 removed. The counts are complete. For every sentence, read Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK in the FY2019 filing and the FY2018 filing.
Item 1. BUSINESS
69 rewritten, 183 added, 17 removed, 151 unchanged
These strategies are intended to improve reliability and safety, enhance customer [removed: services] [added: service] and reduce emissions while generating sustainable returns.
Refer to Note [removed: 18-E,] [added: 19\-E,] "Other Matters," in the Notes to Consolidated Financial Statements for further discussion of these plans.
Residential usage for the year ended December 31, [removed: 2018 increased] [added: 2019 decreased] primarily due to [removed: colder] [added: warmer] weather in our operating area compared to the prior year.
Columbia of Ohio restructured its rate design through a base rate proceeding and has adopted a [removed: “de-coupled”] [added: decoupled] rate design which more closely links the recovery of fixed costs with fixed charges.
Columbia of Maryland, Columbia of Virginia and Columbia of Kentucky have had approval for a weather normalization adjustment [removed: for many years.]
In a prior [added: gas] base rate proceeding, NIPSCO implemented a higher fixed customer charge for residential and small customer classes moving toward full straight fixed variable rate design.
[removed: Natural] [added: Natural] Gas [removed: Competition.][added: 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 [added: and fuel oil.]
As of December 31, [removed: 2018,] [added: 2019,] we had [removed: 8,087] [added: 8,363] employees of whom [removed: 3,154] [added: 3,219] were subject to collective bargaining agreements.
Collective bargaining agreements for [removed: 1,918] [added: 96] employees are set to expire within one year.
We electronically file various reports with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports, as well as our proxy statements for the Company's annual meetings of stockholders at [removed: http://www.sec.gov.][added: *http://www.sec.gov*.]
Additionally, we make all SEC filings available without charge to the public on our web site at [removed: http://www.nisource.com.][added: *http://www.nisource.com*.]
[removed: We] [added: We] have substantial indebtedness which could adversely affect our financial [removed: condition.][added: condition.]
Our [removed: businesses are] [added: business is] capital intensive and we rely significantly on long-term debt to fund a portion of our capital expenditures and repay outstanding debt, and on short-term borrowings to fund a portion of day-to-day business operations.
We had total consolidated indebtedness of [removed: $9,132.6] [added: $9,642.8] million outstanding as of December 31, [removed: 2018.][added: 2019.]
[removed: A] [added: A] drop in our credit ratings could adversely impact our cash flows, results of operation, financial condition and [removed: liquidity.][added: liquidity.]
The credit rating agencies periodically review our ratings, taking into account factors such as our capital structure, earnings profile, and, in [removed: 2018,] [added: 2018 and 2019,] the impacts of the TCJA and the Greater Lawrence Incident.
We are committed to maintaining investment grade credit [removed: ratings,] [added: ratings;] however, there is no assurance we will be able to do so in the future.
As of December 31, [removed: 2018,] [added: 2019,] the collateral requirement that would be required in the event of a downgrade below the ratings trigger levels would amount to approximately [removed: $53.8] [added: $72.1] million.
If our or certain of our [removed: subsidiaries] [added: subsidiaries'] credit ratings were downgraded, especially below investment grade, financing costs and the principal amount of borrowings would likely increase due to the additional risk of our debt and because certain counterparties may require additional credit support as described above.
[added: Losing investment grade credit ratings may also result in more restrictive covenants] and reduced flexibility on repayment terms in debt issuances, lower share price and greater stockholder dilution from common equity issuances, in addition to reputational damage within the investment community.
[removed: We] [added: We] may not be able to execute our business plan or growth strategy, including utility infrastructure [removed: investments.][added: investments.]
Our customer and regulatory initiatives may not achieve planned [removed: results.]
Certain groups [added: and governmental entities] may continue to oppose natural gas delivery and infrastructure investments because of perceived environmental impacts associated with the natural gas supply chain and end use.
Energy conservation, energy efficiency, distributed generation, energy storage, policies favoring electric heat over gas heat and other factors may reduce [removed: energy demand.][added: demand for natural gas and energy.]
[removed: Adverse] [added: Adverse] economic and market conditions or increases in interest rates could materially and adversely affect our results of operations, cash flows, financial condition and [removed: liquidity.][added: liquidity.]
[removed: Capital] [added: Capital] market performance and other factors may decrease the value of benefit plan assets, which then could require significant additional funding and impact [removed: earnings.][added: earnings.]
[removed: The] [added: The] majority of our revenues are subject to economic regulation and are exposed to the impact of regulatory rate reviews and [removed: proceedings.][added: proceedings.]
Our financial results are dependent on frequent regulatory proceedings in order to ensure timely recovery of [removed: costs.][added: costs and investments.]
In addition to our ongoing regulatory proceedings, the recovery of the Greater Lawrence pipeline replacement capital investment will be addressed in a future regulatory proceeding as discussed in Note [removed: 18,] [added: 19,] "Other Commitments and Contingencies - E.
[removed: Failure] [added: Failure] to adapt to advances in technology and manage the related costs could make us less competitive and negatively impact our results of operations and financial [removed: condition.][added: condition.]
Advances in technology and changes in laws or regulations [added: (including subsidization)] are reducing 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 [removed: cost effective] [added: cost-effective] distributed generation.
New technologies may require us to make significant expenditures to remain competitive and may result in the obsolescence of certain [removed: of our] operating assets.
[removed: The] [added: The] Greater Lawrence Incident has [removed: had] [added: materially adversely affected] and may [removed: have an additional material adverse impact on] [added: continue to materially adversely affect] our financial condition, results of operations and cash [removed: flows.][added: flows.]
In connection with the Greater Lawrence Incident, we have incurred and will incur various costs and expenses as set forth [added: in Note 6, "Goodwill and Other Intangible Assets," Note 19, "Other Commitments and Contingencies - C.]
[removed: in] [added: See] Note [removed: 18 "Other] [added: 19, “Other] Commitments and Contingencies - C.
[removed: Legal] [added: "Legal] Proceedings," and [removed: " -] E.
As more information becomes known, [removed: including information resulting from the NTSB investigation,] management's estimates and assumptions regarding the costs and expenses to be incurred and the financial impact of the Greater Lawrence Incident may change.
[removed: Total expenses related to the incident] [added: While we] have [removed: exceeded] [added: recovered] the [removed: total] [added: full] amount of [added: our] liability insurance coverage available under our [removed: policies.][added: policies, total expenses related to the incident have exceeded such amount.]
We may also incur additional costs associated with the Greater Lawrence Incident, beyond the amount currently anticipated, [added: including] in connection with investigations by [removed: regulators, including the NTSB and Massachusetts DPU,] [added: regulators] as well as civil [removed: litigations.][added: litigation.]
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 4.0 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 September 13, 2018, a series of fires and explosions occurred in Lawrence, Andover and North Andover, Massachusetts related to the delivery of natural gas by Columbia of Massachusetts (referred to herein as the “Greater Lawrence Incident”).
The Greater Lawrence Incident resulted in one fatality and a number of injuries, damaged multiple homes and businesses, and caused the temporary evacuation of significant portions of each municipality.
The Massachusetts Governor’s Office declared a state of emergency, authorizing the Massachusetts DPU to order another utility company to coordinate the restoration of utility services in Lawrence, Andover and North Andover.
The incident resulted in the interruption of gas for approximately 7,500 gas meters, the majority of which served residences and approximately 700 of which served businesses, and the interruption of other utility service more broadly in the area.
Columbia of Massachusetts has replaced the cast iron and bare steel gas pipeline system in the affected area and restored service to nearly all of the gas meters.
Refer to Note 6, "Goodwill and Other Intangible Assets," Note 19\-C.
"Other Matters," in the Notes to Consolidated Financial Statements for more information.
On February 26, 2020, NiSource and Columbia of Massachusetts (together with NiSource, “Seller”) entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") with Eversource, a Massachusetts voluntary association.
Upon the terms and subject to the conditions set forth in the Asset Purchase Agreement, NiSource and Columbia of Massachusetts agreed to sell to Eversource, with certain additions and exceptions: (1) substantially all of the assets of Columbia of Massachusetts and (2) all of the assets held by any of Columbia of Massachusetts’ affiliates that primarily relate to the business of storing, distributing or transporting natural gas to residential, commercial and industrial customers in Massachusetts, as conducted by Columbia of Massachusetts, and Eversource agreed to assume certain liabilities of Columbia of Massachusetts and its affiliates.
The liabilities assumed by Eversource under the Asset Purchase Agreement do not include, among others, any liabilities arising out the Greater Lawrence Incident or liabilities of Columbia of Massachusetts or its affiliates pursuant to civil claims for injury of persons or damage to property to the extent such injury or damage occurs prior to the closing in connection with the Massachusetts Business.
The Asset Purchase Agreement provides for a purchase price of $1,100 million in cash, subject to adjustment based on Columbia of Massachusetts’ net working capital as of the closing.
The closing of the transactions contemplated by the Asset Purchase Agreement is subject to Hart-Scott-Rodino Antitrust Improvements Act of 1976 and regulatory approvals, resolution of certain proceedings before governmental bodies and other conditions.
For additional information, see Note 26, “Subsequent Event,” in the Notes to Consolidated Financial Statements.
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 23, "Segments of Business," in the Notes to Consolidated Financial Statements for additional information for each segment.
Gas Distribution Operations
Our natural gas distribution operations serve approximately 3.5 million customers in seven states and operate approximately 60,000 miles of pipeline located in our service areas described below.
Through our wholly-owned subsidiary NiSource Gas Distribution Group, Inc., we own six distribution subsidiaries that provide natural gas to approximately 2.7 million residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland and Massachusetts.
Additionally, we distribute natural gas to approximately 839,000 customers in northern Indiana through our wholly-owned subsidiary NIPSCO.
Electric Operations
We generate, transmit and distribute electricity through our subsidiary NIPSCO to approximately 476,000 customers in 20 counties in the northern part of Indiana and engage in wholesale and transmission transactions.
NIPSCO owns and operates two coal-fired electric generating stations: four units at R.M. Schahfer located in Wheatfield, IN and one unit at Michigan City located in Michigan City, IN.
The two operating facilities have a generating capacity of 2,080 MW.
NIPSCO also owns and operates Sugar Creek, a CCGT plant located in West Terre Haute, IN with generating capacity of 571 MW, three gas-fired generating units located at NIPSCO’s coal-fired electric generating stations with a generating capacity of 186 MW and two hydroelectric generating plants with a generating capacity of 10 MW: Oakdale located at Lake Freeman in Carroll County, IN and Norway located at Lake Schahfer in White County, IN.
These facilities provide for a total system operating generating capacity of 2,847 MW.
NISOURCE INC.
In May 2018, NIPSCO completed the retirement of two coal-burning units (Units 7 and 8) at Bailly Generating Station, located in Chesterton, IN.
These units had a generating capacity of approximately 460 MW.
NIPSCO’s transmission system, with voltages from 69,000 to 765,000 volts, consists of 3,005 circuit miles.
NIPSCO is interconnected with five neighboring electric utilities.
During the year ended December 31, 2019, NIPSCO generated 62.4% and purchased 37.6% of its electric requirements.
NIPSCO participates in the MISO transmission service and wholesale energy market.
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.
NISOURCE INC.
and fuel oil.
Electric Competition.
In March 2018, Moody’s affirmed our senior unsecured rating of Baa2 and our commercial paper rating of P-2, with stable outlooks.
Moody’s also affirmed NIPSCO’s Baa1 rating and Columbia of Massachusetts’s Baa2 rating, with stable outlooks.
In May 2018, Standard & Poor’s affirmed our BBB+ senior unsecured ratings and affirmed our commercial paper rating of A-2, but changed the outlook on each rating from stable to negative in September 2018 as a result of potential impacts of the Greater Lawrence Incident.
In June 2018, Fitch affirmed our and NIPSCO's long-term issuer default ratings of BBB and upgraded the commercial paper rating to F2 from F3, with stable outlooks.
A credit rating is not a recommendation to buy, sell or hold securities, and may be subject to revision or withdrawal at any time by the assigning rating organization.
Losing investment grade credit ratings may also result in more restrictive covenants
We have significant obligations in these areas and hold significant assets in these trusts.
The outcomes of these proceedings are uncertain.
As a result of efforts to introduce market-based competition in certain markets where the regulated businesses conduct operations, we may compete with independent marketers for customers.
This competition exposes us to the risk that certain infrastructure investments may not be recoverable and may affect results of our growth strategy and financial position.
In addition, we are unable to predict the timing and amount of insurance recoveries.
In addition, there may be certain types of damages, expenses or claimed costs, such as fines or penalties, that may be excluded under the policies.
Losses for which we are not fully insured or that are not covered by insurance at all could materially adversely affect our results of operations, cash flows and financial position.
financial condition, results of operations, and cash flows could be materially and adversely affected.
An excerpt. Shown here: 40 of 69 rewritten, 40 of 183 added and all 17 removed. The counts are complete. For every sentence, read Item 1. BUSINESS in the FY2019 filing and the FY2018 filing.
Item 3. LEGAL PROCEEDINGS
1 rewritten, 0 added, 0 removed, 0 unchanged
For a description of our legal proceedings, see Note [removed: 18\-C] [added: 19\-C] "Legal Proceedings" in the Notes to Consolidated Financial Statements.
Cover and table of contents
46 rewritten, 21 added, 60 removed, 134 unchanged
[removed: UNITED STATES][added: UNITED STATES]
[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]
[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]
[removed: FORM 10-K][added: FORM 10-K]
| | [removed: þ] [added: ☑] | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR [removed: 15(d)] [added: 15(d)] | |
[removed: OF] [added: OF] THE SECURITIES EXCHANGE ACT OF [removed: 1934][added: 1934]
For the fiscal year ended December 31, [removed: 2018][added: 2019]
| | [removed: ¨] [added: ☐] | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR [removed: 15(d)] [added: 15(d)] | |
[removed: NiSource Inc.][added: NiSource Inc.]
| [removed: Delaware] [added: DE] | | [added: |] 35-2108964 |
| (State or other jurisdiction of incorporation or organization) | | [added: |] (I.R.S. Employer Identification No.) |
| 801 East 86th Avenue [removed: Merrillville, Indiana] | | [removed: 46410] | [added: |]
| (Address of principal executive offices) | | [added: |] (Zip Code) |
| [removed: | Title] [added: Title] of [removed: each class] [added: Each Class] | [added: Trading Symbol(s)] | [removed: Name] [added: Name] of [removed: each exchange] [added: Each Exchange] on [removed: which registered |] [added: Which Registered] |
Yes [removed: ¨] [added: ☐] No þ
[removed: |] Large [removed: accelerated filer] [added: Accelerated Filer] þ [removed: | |] Accelerated [removed: filer] [added: Filer] ¨ [removed: | |] Emerging [removed: growth company] [added: Growth Company ☐ Non-accelerated Filer] ¨ [removed: |][added: Smaller Reporting Company ☐]
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: $9,506,346,286] [added: $10,713,311,150] based upon the June [removed: 29, 2018,] [added: 28, 2019,] closing price of [removed: $26.28] [added: $28.80] on the New York Stock Exchange.
There were [removed: 372,494,365] [added: 382,263,348] shares of Common Stock outstanding as of February [removed: 12, 2019.][added: 18, 2020.]
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: 7, 2019.][added: 19, 2020.]
[removed: CONTENTS][added: CONTENTS]
| [Defined [removed: Terms](#sC5F1E3B8F50554F5833DA4B1BB75E545)] [added: Terms](#s4066BDF0426D56079152F8FAF271685C)] | | [removed: [3](#sC5F1E3B8F50554F5833DA4B1BB75E545)] [added: [3](#s4066BDF0426D56079152F8FAF271685C)] |
| Item 1. | [removed: [Business](#sE68DA678B8B85115928C6A966B656BC9)] [added: [Business](#s424854E07E125C4084E8B6AE05C21622)] | [removed: [6](#sE68DA678B8B85115928C6A966B656BC9)] [added: [6](#s424854E07E125C4084E8B6AE05C21622)] |
| Item 1A. | [Risk [removed: Factors](#sDAC25B8F9B6B56FCA89FF16331A46827)] [added: Factors](#sDC6D7ABCF859511B965C4821501C9446)] | [removed: [9](#sDAC25B8F9B6B56FCA89FF16331A46827)] [added: [9](#sDC6D7ABCF859511B965C4821501C9446)] |
| Item 1B. | [Unresolved Staff [removed: Comments](#s078237C30CFA597BAD60E08F82EC2EF6)] [added: Comments](#s5A9101670F0F526C81F385B9070D6C6B)] | [removed: [19](#s078237C30CFA597BAD60E08F82EC2EF6)] [added: [21](#s5A9101670F0F526C81F385B9070D6C6B)] |
| Item 2. | [removed: [Properties](#s26D3DAED71965AE6BACD26CE6A796C65)] [added: [Properties](#s28FC711495B552AB89091D168A2D7202)] | [removed: [19](#s26D3DAED71965AE6BACD26CE6A796C65)] [added: [21](#s28FC711495B552AB89091D168A2D7202)] |
| Item 3. | [Legal [removed: Proceedings](#s69E5A556450A5AF1842982157BDAA82D)] [added: Proceedings](#s7A712B5F2B645D14B64AB43FCF1FC10C)] | [removed: [19](#s69E5A556450A5AF1842982157BDAA82D)] [added: [21](#s7A712B5F2B645D14B64AB43FCF1FC10C)] |
| Item 4. | [Mine Safety [removed: Disclosures](#s69E5A556450A5AF1842982157BDAA82D)] [added: Disclosures](#s7A712B5F2B645D14B64AB43FCF1FC10C)] | [removed: [19](#s69E5A556450A5AF1842982157BDAA82D)] [added: [21](#s7A712B5F2B645D14B64AB43FCF1FC10C)] |
| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s6E01A250BA7152D9B35DDE10107B0A55)] [added: Securities](#sB947721CA55957BEB0E84CA7F1639F0F)] | [removed: [21](#s6E01A250BA7152D9B35DDE10107B0A55)] [added: [23](#sB947721CA55957BEB0E84CA7F1639F0F)] |
| Item 6. | [Selected Financial [removed: Data](#sD110E0EFAE505463AC50E1BCD38AED7C)] [added: Data](#s6B6B45C70E7355468FD7C0C2EC4262D2)] | [removed: [23](#sD110E0EFAE505463AC50E1BCD38AED7C)] [added: [25](#s6B6B45C70E7355468FD7C0C2EC4262D2)] |
| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sFF20F4F441B5511D8B7B07200029DB82)] [added: Operations](#sF421A737853D51FE9377F85BC059643C)] | [removed: [25](#sFF20F4F441B5511D8B7B07200029DB82)] [added: [27](#sF421A737853D51FE9377F85BC059643C)] |
| Item 7A. | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s2BFF6A43162F566C9BAA4D704A849C7D)] [added: Risk](#sA1B012CD98A65BD093ACA3C4D4D91D7B)] | [removed: [44](#s2BFF6A43162F566C9BAA4D704A849C7D)] [added: [49](#sA1B012CD98A65BD093ACA3C4D4D91D7B)] |
| Item 8. | [Financial Statements and Supplementary [removed: Data](#s68048D51042A59D0AA0118B2DE771087)] [added: Data](#sA784B6220B385456BC834A0A6BE5B32D)] | [removed: [45](#s68048D51042A59D0AA0118B2DE771087)] [added: [50](#sA784B6220B385456BC834A0A6BE5B32D)] |
| Item 9. | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#sF8C58F986E5C52398A6E53E9559DEF6F)] [added: Disclosure](#s8C7E293A2EDB5AA6A73F143498C62F5E)] | [removed: [115](#sF8C58F986E5C52398A6E53E9559DEF6F)] [added: [125](#s8C7E293A2EDB5AA6A73F143498C62F5E)] |
| Item 9A. | [Controls and [removed: Procedures](#s72A8E78043505B34A8106C8EF9E6FC36)] [added: Procedures](#sDCE48CB7B4025F98A38F518207280701)] | [removed: [115](#s72A8E78043505B34A8106C8EF9E6FC36)] [added: [125](#sDCE48CB7B4025F98A38F518207280701)] |
| Item 9B. | [Other [removed: Information](#s28200F5B367A5D7A95C1B37992EAEFB0)] [added: Information](#sFF7C631C56AE53ACB56D582CE6B1A497)] | [removed: [115](#s28200F5B367A5D7A95C1B37992EAEFB0)] [added: [126](#sFF7C631C56AE53ACB56D582CE6B1A497)] |
| [Part [removed: III](#s7F224E1F9AC156328F39B72EC1B3E0D6)] [added: III](#s871E554208FB5B68898A9DB6E0A5788C)] | | |
| Item 10. | [Directors, Executive Officers and Corporate [removed: Governance](#s7F224E1F9AC156328F39B72EC1B3E0D6)] [added: Governance](#s871E554208FB5B68898A9DB6E0A5788C)] | [removed: [116](#s7F224E1F9AC156328F39B72EC1B3E0D6)] [added: [128](#s871E554208FB5B68898A9DB6E0A5788C)] |
| Item 11. | [Executive [removed: Compensation](#s2F9AD443C8AB5ABFA32B1B7D817DC806)] [added: Compensation](#s271AC983057F5D41B18DE52CDE6329E0)] | [removed: [116](#s2F9AD443C8AB5ABFA32B1B7D817DC806)] [added: [128](#s271AC983057F5D41B18DE52CDE6329E0)] |
| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s34A81B1730C6579E8AC06B7C761FDED3)] [added: Matters](#s98784DCC44535375A53D490F79109D11)] | [removed: [116](#s34A81B1730C6579E8AC06B7C761FDED3)] [added: [128](#s98784DCC44535375A53D490F79109D11)] |
| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s17FC278A66FB512B9BB9CB35BC4B2297)] [added: Independence](#sE41A6D7E99FD5F038E0C79BDD6D3BCDA)] | [removed: [116](#s17FC278A66FB512B9BB9CB35BC4B2297)] [added: [128](#sE41A6D7E99FD5F038E0C79BDD6D3BCDA)] |
OF THE SECURITIES EXCHANGE ACT OF 1934
| | | | |
| --- | --- | --- | --- |
| | | | |
| | | | |
| Merrillville, | IN | | 46410 |
| Common Stock, par value $0.01 per share | NI | NYSE |
| Depositary Shares, each representing a 1/1,000th ownership interest in a share of 6.50% Series B | NI PR B | NYSE |
| Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share, liquidation preference $25,000 per share and a 1/1,000th ownership interest in a share of Series B-1 Preferred Stock, par value $0.01 per share, liquidation preference $0.01 per share | | |
| [Part I](#s7B4C71193BCF5CA5995BB209444B69EF) | | |
| [Supplemental Item. Information about our Executive Officers](#s78063F686668505A932845C49CE2FF0F) | | [22](#s78063F686668505A932845C49CE2FF0F) |
| [Part II](#sB947721CA55957BEB0E84CA7F1639F0F) | | |
| [Part IV](#s9AB477C36B3657EBB720FA19810A078D) | | |
| [Signatures](#s86CA9096A4D05E4B95BFD574B2453457) | | [134](#s86CA9096A4D05E4B95BFD574B2453457) |
| AMT | | Alternative Minimum Tax |
| DPA | | Deferred prosecution agreement |
| ELG | | Effluent Limitation Guidelines |
| MA DOR | | Massachusetts Department of Revenue |
| Massachusetts Business | | All of the assets being sold to, and liabilities being assumed by, Eversource pursuant to the Asset Purchase Agreement |
| SMRP | | Safety Modification and Replacement Program |
| U.S. Attorney's Office | | U.S. Attorney's Office for the District of Massachusetts |
10-K 1 ni-20181231x10k.htm 10-K
| | | | | |
| --- | --- | --- | --- | --- |
| | Common Stock | | New York | |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
| Non-accelerated filer ¨ | | Smaller reporting company ¨ | | |
| [Part I](#sBFAFB13BB2805861A06BCF0C963F9453) | | |
| [Supplemental Item. Executive Officers of the Registrant](#s70E700A6A6305A4A9FCDA452CE1177CE) | | [20](#s70E700A6A6305A4A9FCDA452CE1177CE) |
| [Part II](#s6E01A250BA7152D9B35DDE10107B0A55) | | |
| [Part IV](#sB8646D2E6706566AA5B47877E8A6C7E4) | | |
| [Signatures](#s1E51FA8E9A4550E1BED1E65B1DB664E7) | | [122](#s1E51FA8E9A4550E1BED1E65B1DB664E7) |
| Capital Markets (former subsidiary) | | NiSource Capital Markets, Inc. |
| Columbia (former subsidiary) | | Columbia Energy Group |
| NiSource Finance (former subsidiary) | | NiSource Finance Corporation |
| CAA | | Clean Air Act |
| CO2 | | Carbon dioxide |
| CPP | | Clean Power Plan |
| EGUs | | Electric Utility Steam Generating Units |
| ELG | | Effluence limitations guidelines |
| FTRs | | Financial Transmission Rights |
| Mizuho | | Mizuho Corporate Bank Ltd. |
| VIE | | Variable Interest Entity |
ITEM 1.
BUSINESS
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 4.0 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 September 13, 2018, a series of fires and explosions occurred in Lawrence, Andover and North Andover, Massachusetts related to the delivery of natural gas by Columbia of Massachusetts (referred to herein as the “Greater Lawrence Incident”).
The Greater Lawrence Incident resulted in one fatality and a number of injuries, damaged multiple homes and businesses, and caused the temporary evacuation of significant portions of each municipality.
The Massachusetts Governor’s Office declared a state of emergency, authorizing the Massachusetts DPU to order another utility company to coordinate the restoration of utility services in Lawrence, Andover and North Andover.
The incident resulted in the interruption of gas for approximately 7,500 gas meters, the majority of which serve residences and of which approximately 700 serve businesses, and the interruption of other utility service more broadly in the area.
Columbia of Massachusetts has replaced the cast iron and bare steel gas pipeline system in the affected area and restored service to nearly all of the gas meters.
Refer to Note 18\-C.
"Legal Proceedings," and E.
"Other Matters," in the Notes to Consolidated Financial Statements for more 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.
An excerpt. Shown here: 40 of 46 rewritten, all 21 added and 40 of 60 removed. The counts are complete. For every sentence, read Cover and table of contents in the FY2019 filing and the FY2018 filing.
Item 1B. UNRESOLVED STAFF COMMENTS
0 rewritten, 1 added, 1 removed, 1 unchanged
NISOURCE INC.
NISOURCE INC.
Item 2. PROPERTIES
2 rewritten, 0 added, 0 removed, 14 unchanged
Discussed below are the principal properties held by us and our subsidiaries as of December 31, [removed: 2018.][added: 2019.]
At the time each of the principal properties were [removed: purchased] [added: purchased,] a title search was made.
Item 4. MINE SAFETY DISCLOSURES
20 rewritten, 10 added, 5 removed, 12 unchanged
The following is a list of [removed: the Executive Officers of the Registrant,] [added: our executive officers,] including their names, ages, offices held and other recent business [removed: experience, as of February 1, 2019.][added: experience.]
| [removed: Name] [added: Name] | | [removed: Age] [added: Age] | | | [removed: Office(s)] [added: Office(s)] Held in Past 5 [removed: Years] [added: Years] |
| Joseph Hamrock | | [removed: 55] [added: 56] | | | President and Chief Executive Officer of NiSource since July [removed: 1,] 2015. |
| [removed: Donald E. Brown] [added: Carrie J. Hightman] | | [removed: 47] [added: 62] | | | Executive Vice President and Chief [removed: Financial] [added: Legal] Officer of NiSource since [removed: June 2016.] [added: 2007.] |
| | | | | | [removed: Executive Vice President, Chief Financial Officer and] Treasurer of NiSource from July 2015 to June 2016. |
| Peter T. Disser | | [removed: 50] [added: 51] | | | Vice President, Internal Audit of NiSource since January 2019. |
| | | | | | Chief Operating Officer of NiSource [removed: Corporate Services] from September 2018 [removed: through] [added: to] December 2018. |
| | | | | | Vice [removed: President of] [added: President,] Planning and Analysis of NiSource from June 2016 to November 2017. |
| | | | | | Chief Financial Officer of NIPSCO from 2012 to June [removed: 2016.] [added: 2015.] |
| Violet G. Sistovaris | | [removed: 57] [added: 58] | | | Executive Vice President and President, NIPSCO [added: of NiSource] since [removed: October 2016.] [added: July 2015.] |
| | | | | | Senior Vice [removed: President] [added: President, Customer Services] and [removed: Chief Information Officer] [added: New Business] of NiSource Corporate Services [added: Company] from [removed: 2008 to] May [removed: 2014.] [added: 2016 through December 2018.] |
| Suzanne K. Surface | | [removed: 54] [added: 55] | | | Chief Services Officer of NiSource since January 2019. |
| | | | | | Vice President, Audit of NiSource from September 2018 [removed: through] [added: to] December 2018. |
| | | | | | Vice President, Corporate Services Customer Value of NiSource [removed: Corporate Services] from November 2017 to August 2018. |
| | | | | | Vice [removed: President] [added: President,] Regulatory Strategy and Support of NiSource [added: Corporate Services Company] from July 2009 [removed: through] [added: to] June 2015. |
| Pablo A. Vegas | | [removed: 45] [added: 46] | | | Executive Vice President and President, Gas Utilities [added: of NiSource] since January 2019. |
| | | | | | Executive Vice President and Chief Restoration Officer of NiSource [removed: Corporate Services since] [added: from] September 2018 [removed: through] [added: to] December 2018. |
| | | | | | Executive [added: Vice] President, Gas [added: Business] Segment and Chief Customer Officer of NiSource from May 2017 to September 2018. |
| | | | | | President and Chief Operating Officer of American Electric Power [removed: Ohio] Company [added: of Ohio] from May 2012 to May 2016. |
[removed: PART II][added: PART II]
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
NISOURCE INC.
| Donald E. Brown | | 48 | | | Executive Vice President of NiSource since May 2015. |
| | | | | | Chief Financial Officer of NiSource since July 2015. |
| | | | | | Vice President, Strategy and Planning of NiSource Corporate Services Company from July 2015 to May 2016. |
| Kenneth E. Keener | | 55 | | | Senior Vice President and Chief Human Resources Officer of NiSource since August 2019. |
| | | | | | Vice President, Talent and Organizational Effectiveness of NiSource Corporate Services Company from June 2012 to July 2019. |
| Charles E. Shafer, II | | 50 | | | Senior Vice President and Chief Safety Officer of NiSource since October 2019. |
| | | | | | Senior Vice President, Gas Engineering and Gas Support Services of NiSource Corporate Services Company from January 2019 to September 2019. |
| | | | | | Vice President, Engineering and Construction of NiSource Corporate Services Company from June 2012 to May 2016. |
EXECUTIVE OFFICERS OF THE REGISTRANT
NISOURCE INC.
| | | | | | Executive Vice President, Finance Department of NiSource from March 2015 to July 2015. |
| Carrie J. Hightman | | 61 | | | Executive Vice President and Chief Legal Officer of NiSource since 2007. |
| | | | | | Executive Vice President, NIPSCO from June 2015 to October 2016. |
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
4 rewritten, 2 added, 1 removed, 14 unchanged
At its [removed: February 1, 2019] [added: January 31, 2020] meeting, the Board declared a quarterly common dividend of [removed: $0.20] [added: $0.21] per share, payable on February 20, [removed: 2019] [added: 2020] to holders of record on February 11, [removed: 2019.][added: 2020.]
As of February [removed: 12, 2019,] [added: 18, 2020,] NiSource had [removed: 20,064] [added: 18,868] common stockholders of record and [removed: 372,494,365] [added: 382,263,348] shares outstanding.
[removed: PART II][added: PART II]
[removed: ][added: ]
NISOURCE INC.
NISOURCE INC.
NISOURCE INC.
Item 6. SELECTED FINANCIAL DATA
231 rewritten, 154 added, 152 removed, 311 unchanged
The selected data presented below as of and for the five years ended December 31, [removed: 2018,] [added: 2019,] are derived from our Consolidated Financial Statements.
| Year Ended December 31, [removed: (dollars in] [added: (*in] millions except per share [removed: data)] [added: data*)] | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |
| [removed: Statement] [added: Statement] of Income [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | |
| Total Operating Revenues | [removed: $] [added: $] | [removed: 5,114.5] [added: 5,208.9] | | | $ | [removed: 4,874.6] [added: 5,114.5] | | | $ | [removed: 4,492.5] [added: 4,874.6] | | | $ | [removed: 4,651.8] [added: 4,492.5] | | | $ | [removed: 5,272.4] [added: 4,651.8] | |
| Net Income (Loss) Available to Common Shareholders | [added: 328.0 | | | |] (65.6 | | ) | | 128.5 | | | | 331.5 | | | | 198.6 | | | [removed: | 256.2 | | |]
| [removed: Balance] [added: Balance] Sheet [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | |
| Total Assets | [removed: 21,804.0] [added: 22,659.8] | | | | [removed: 19,961.7] [added: 21,804.0] | | | | [removed: 18,691.9] [added: 19,961.7] | | | | [removed: 17,492.5] [added: 18,691.9] | | | | [removed: 24,589.8] [added: 17,492.5] | | |
| Stockholders’ equity | [removed: 5,750.9] [added: 5,986.7] | | | | [removed: 4,320.1] [added: 5,750.9] | | | | [removed: 4,071.2] [added: 4,320.1] | | | | [removed: 3,843.5] [added: 4,071.2] | | | | [removed: 6,175.3] [added: 3,843.5] | | |
| Long-term debt, excluding amounts due within one year | [removed: 7,105.4] [added: 7,856.2] | | | | [removed: 7,512.2] [added: 7,105.4] | | | | [removed: 6,058.2] [added: 7,512.2] | | | | [removed: 5,948.5] [added: 6,058.2] | | | | [removed: 8,151.5] [added: 5,948.5] | | |
| Total Capitalization | [removed: $] [added: $] | [removed: 12,856.3] [added: 13,842.9] | | | $ | [removed: 11,832.3] [added: 12,856.3] | | | $ | [removed: 10,129.4] [added: 11,832.3] | | | $ | [removed: 9,792.0] [added: 10,129.4] | | | $ | [removed: 14,326.8] [added: 9,792.0] | |
| [removed: Per] [added: Per] Share [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | |
| Basic Earnings (Loss) Per Share ($) | [added: $ | 0.88 | | |] $ | (0.18 | ) | | $ | 0.39 | | | $ | 1.02 | | | $ | 0.63 | | [removed: | $ | 0.81 | |]
| Diluted Earnings (Loss) Per Share ($) | [added: $ | 0.87 | | |] $ | (0.18 | ) | | $ | 0.39 | | | $ | 1.01 | | | $ | 0.63 | | [removed: | $ | 0.81 | |]
| [removed: Other Data:] [added: Other Data:] | | | | | | | | | | | | | | | | | | | |
| Dividends declared per common share ($) | [removed: $] [added: $] | [removed: 0.78] [added: 0.80] | | | $ | [removed: 0.70] [added: 0.78] | | | $ | [removed: 0.64] [added: 0.70] | | | $ | [removed: 0.83] [added: 0.64] | | | $ | [removed: 1.02] [added: 0.83] | |
| Common shares outstanding at the end of the year (in thousands) | [removed: 372,363] [added: 382,136] | | | | [removed: 337,016] [added: 372,363] | | | | [removed: 323,160] [added: 337,016] | | | | [removed: 319,110] [added: 323,160] | | | | [removed: 316,037] [added: 319,110] | | |
| Number of common stockholders | [removed: 19,889] [added: 18,725] | | | | [removed: 21,009] [added: 19,889] | | | | [removed: 22,272] [added: 21,009] | | | | [removed: 30,190] [added: 22,272] | | | | [removed: 25,233] [added: 30,190] | | |
| Dividends declared per Series A preferred share ($) | [removed: $] [added: $] | [removed: 28.88] [added: 56.50] | | | $ | [removed: —] [added: 28.88] | | | $ | — | | | $ | — | | | $ | — | |
| Capital expenditures | [removed: $] [added: $] | [removed: 1,814.6] [added: 1,867.8] | | | $ | [removed: 1,753.8] [added: 1,814.6] | | | $ | [removed: 1,490.4] [added: 1,753.8] | | | $ | [removed: 1,367.5] [added: 1,490.4] | | | $ | [removed: 1,339.6] [added: 1,367.5] | |
| Number of employees | [removed: 8,087] [added: 8,363] | | | | [removed: 8,175] [added: 8,087] | | | | [removed: 8,007] [added: 8,175] | | | | [removed: 7,596] [added: 8,007] | | | | [removed: 8,982] [added: 7,596] | | |
| • | [removed: In] [added: During] the second quarter of 2018, we completed the sale of 24,964,163 shares of $0.01 par value common stock at a price of $24.28 per share in a private placement to selected institutional and accredited investors and issued 400,000 shares of Series A preferred stock resulting in $400.0 million of gross proceeds or $393.9 million of net proceeds, after deducting commissions and sales expenses. Additionally, in the fourth quarter of [removed: 2018] [added: 2018,] we issued 20,000 shares of Series B preferred stock resulting in $500.0 million of gross proceeds or $486.1 million of net proceeds, after deducting commissions and sales expenses. |
| • | During [removed: 2018] [added: 2018,] we recorded a loss of approximately $757 million for third-party claims and approximately $266 million for other incident-related expenses in connection with the Greater Lawrence Incident. Columbia of Massachusetts recorded $135 million for insurance recoveries through December 31, 2018. [removed: The amounts set forth above do not include the estimated capital cost of the pipeline replacement, which is set forth in " - E.] [added: For additional information, see Note 19-C, "Legal Proceedings," and E,] Other [removed: Matters - Greater Lawrence Pipeline Replacement."] [added: Matters." in the Notes to Consolidated Financial Statements.] |
| • | During the second quarter of [removed: 2018] [added: 2018,] we executed a tender offer for $209.0 million of outstanding notes consisting of a combination of our 6.80% notes due 2019, 5.45% notes due 2020 and 6.125% notes due 2022. During the third quarter of 2018, we redeemed $551.1 million of outstanding notes representing the remainder of our 6.80% notes due 2019, 5.45% notes due 2020 and 6.125% notes due 2022. In conjunction with our debt retired, we recorded a $45.5 million loss on early extinguishment of long-term debt primarily attributable to early redemption premiums. |
| • | Prior to the Separation, CPG closed the placement of $2,750.0 million in aggregate principal amount of senior notes. Using the proceeds from this offering, CPG made cash payments to us representing the settlement of inter-company borrowings and the payment of a one-time special dividend. In May 2015, using proceeds from the cash payments from CPG, we settled two bank term loans in the amount of $1,075.0 million and executed a tender offer for $750.0 million consisting of a combination of its 5.25% notes due 2017, 6.40% notes due 2018 and 4.45% notes due 2021. In conjunction with the debt [added: retired, we recorded a $97.2 million loss on early extinguishment of long-term debt, primarily attributable to early redemption premiums.] |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS [added: (continued)]
| [removed: Index] [added: Index] | [removed: Page] [added: Page] |
[removed: | Executive Summary | [25](#s7B1A912E3621506B85032588D16F9901) |][added: EXECUTIVE SUMMARY]
[removed: | Summary] [added: Summary] of Consolidated Financial [removed: Results | [26](#s5D7C3A256E7C522B9D38508ABBED5C04) |][added: Results]
[removed: | Results and Discussion of Segment Operations | [29](#s1F77E68208C85A4FBDA3D7276C531EF3) |][added: RESULTS AND DISCUSSION OF SEGMENT OPERATIONS]
[removed: | Gas] [added: Gas] Distribution [removed: Operations | [30](#sEBEA0E489ADD5FCBB737A11F54446116) |][added: Operations]
[removed: | Electric Operations | [33](#s1FCC0C49A9EC5B508A879D7722BE134E) |][added: Electric Operations]
[removed: | [Liquidity] [added: Liquidity] and Capital [removed: Resources](#sEDE5F046EDD95ECF98D9D13E570C9909) | [37](#sEDE5F046EDD95ECF98D9D13E570C9909) |][added: Resources]
| [Off Balance [removed: Sheet](#s5D7ACE4B3E955F2BBDB442F0FC6C4690)] [added: Sheet](#s8B1861DD526D5206BBFF8914C1977ADF)] Arrangements | [removed: [40](#s5D7ACE4B3E955F2BBDB442F0FC6C4690)] [added: [44](#s8B1861DD526D5206BBFF8914C1977ADF)] |
| [Market Risk [removed: Disclosures](#s0D937876E36A5234A30E2D5F0C40DE76)] [added: Disclosures](#s6347D3A48E785A5A8AA90A7DD7EB08A1)] | [removed: [41](#s0D937876E36A5234A30E2D5F0C40DE76)] [added: [44](#s6347D3A48E785A5A8AA90A7DD7EB08A1)] |
| [Other [removed: Information](#s47CADB26F3285C35B526EB0EDB6E86B0)] [added: Information](#sCB12FDE8425053A68298F5BC7C451E6D)] | [removed: [42](#s47CADB26F3285C35B526EB0EDB6E86B0)] [added: [45](#sCB12FDE8425053A68298F5BC7C451E6D)] |
[removed: EXECUTIVE SUMMARY][added: | Executive Summary | [27](#s2532FF0E61E65C7EB221448E402A5DA0) |]
Refer to the “Business” section under Item 1 of this annual report and Note [removed: 22,] [added: 23,] "Segments of Business," in the Notes to [removed: the] Consolidated Financial Statements for further discussion of our regulated utility business segments.
Our goal is to develop strategies that benefit all stakeholders as we address changing customer conservation patterns, develops more contemporary pricing structures and embarks on long-term infrastructure investment [added: and safety] programs.
Refer also to the discussion of [removed: Electric Supply] [added: *Electric Supply*] within our Electric Operations Segment discussion for additional information on our long term electric generation strategy.
[removed: Greater] [added: Greater] Lawrence [removed: Incident:] [added: Incident:] The Greater Lawrence Incident occurred on September 13, 2018.
NISOURCE INC.
| Dividends declared per Series B preferred share ($) | $ | 1,674.65 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| • | During the fourth quarter of 2019, we recorded an impairment charge of $204.8 million for goodwill and an impairment charge of $209.7 million for franchise rights, in each case related to Columbia of Massachusetts. For additional information, see Note 6, “Goodwill and Other Intangible Assets,” in the Notes to Consolidated Financial Statements. |
| • | During the third quarter of 2019, we closed our placement of $750.0 million of 2.95% senior unsecured notes maturing in 2029. |
NISOURCE INC.
NISOURCE INC.
The following table summarizes expenses incurred and insurance recoveries recorded since the Greater Lawrence Incident.
Other Matters - Greater Lawrence Pipeline Replacement," in the Notes to Consolidated Financial Statements.
| | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | |
| | Year Ended | | | | Year Ended | | | | | |
| *(in millions)* | December 31, 2018 | | | | December 31, 2019 | | | Incident to Date | | |
| Third-party claims and government fines, penalties and settlements | $ | 757 | | | $ | 284 | | $ | 1,041 | |
| Other incident-related costs | 266 | | | | 154 | | | 420 | | |
| Total | 1,023 | | | | 438 | | | 1,461 | | |
| Insurance recoveries recorded | (135 | | ) | | (665 | | ) | (800 | | ) |
| Loss (benefit) to income before income taxes | $ | 888 | | | $ | (227 | ) | $ | 661 | |
Inclusive of the $1,041 million of third-party claims and fines, penalties and settlements associated with government investigations recorded incident to date, we estimate that total costs related to third-party claims and fines, penalties and settlements associated
NISOURCE INC.
with government investigations as set forth in Note 19, "Other Commitments and Contingencies - C.
These costs do not include costs of certain third-party claims and fines, penalties or settlements with government investigations that we are not able to estimate.
We expect to incur a total of $450 million to $460 million in other incident-related costs, inclusive of the $420 million recorded incident to date, as set forth in Note 19, "Other Commitments and Contingencies - E.
The process for estimating costs associated with third-party claims and fines, penalties and settlements associated with government investigations relating to the Greater Lawrence Incident requires management to exercise significant judgment based on a number of assumptions and subjective factors.
As more information becomes known, including additional information regarding ongoing investigations, management’s estimates and assumptions regarding the financial impact of the Greater Lawrence Incident may change.
The aggregate amount of third-party liability insurance coverage available for losses arising from the Greater Lawrence Incident is $800 million.
We have collected the entire $800 million as of December 31, 2019.
Expenses related to the incident have exceeded the total amount of insurance coverage available under our policies.
The following table presents activity related to our Greater Lawrence Incident insurance recovery.
| | | | |
| --- | --- | --- | --- |
| | | | |
| *(in millions)* | Insurance receivable(1) | | |
| Balance, December 31, 2018 | $ | 130 | |
| Insurance recoveries recorded in first quarter of 2019 | 100 | | |
| Cash collected from insurance recoveries in the first quarter of 2019 | (108 | | ) |
| Balance, March 31, 2019 | 122 | | |
| Insurance recoveries recorded in the second quarter of 2019 | 435 | | |
| Cash collected from insurance recoveries in the second quarter of 2019 | (297 | | ) |
| Balance, June 30, 2019 | $ | 260 | |
NISOURCE INC.
retired, we recorded a $97.2 million loss on early extinguishment of long-term debt, primarily attributable to early redemption premiums.
We estimate that total costs related to third-party claims as set forth in Note 18, "Other Commitments and Contingencies - C.
We expect to incur a total of $330 million to $345 million in other incident-related costs.
We also expect to incur expenses for which we cannot estimate the amounts of or the timing at this time, including expenses associated with government investigations and fines, penalties or settlements with governmental authorities in connection with the Greater Lawrence Incident.
Of this amount, $5 million was collected during 2018.
To the extent that we are not successful in collecting reimbursement in the amount recorded for such recoveries as of December 31, 2018, it could result in a charge to earnings.
Columbia of Massachusetts paid approximately $167 million for the replacement of the entire affected 45-mile cast iron and bare steel pipeline system that delivers gas to those impacted in the Greater Lawrence Incident during 2018.
We estimate this replacement work will cost between $220 million and $230 million in total.
Columbia of Massachusetts has provided notice to its property insurer of the Greater Lawrence Incident and discussions around the claim and recovery have commenced.
If at any point Columbia of Massachusetts concludes it is probable that any portion of this capital investment is not recoverable through customer rates, that portion of the capital investment, if estimable, would be immediately charged to earnings.
As discussed in Note 8, "Regulatory Matters," in the Notes to Consolidated Financial Statements, Columbia of Massachusetts withdrew its petition for a base rate revenue increase, resulting in delayed increases in forecasted revenues and cash flows beginning the first quarter of 2019.
Additionally, as discussed in Note 6, "Goodwill and Other Intangible Assets," we concluded the Greater Lawrence Incident was a triggering event requiring a quantitative analysis of goodwill for the Columbia of Massachusetts reporting unit.
While no impairment of the goodwill balance was recorded in 2018, future unfavorable events that transpire at Columbia of Massachusetts could trigger the need for another quantitative analysis and a goodwill impairment loss would be required if it's determined Columbia of Massachusetts fair value is less than its book value.
Item 1A.
"Risk Factors" for additional information related to the Greater Lawrence Incident.
The decrease in net income during 2018 was primarily due to expenses related to the Greater Lawrence Incident restoration, dilution resulting from preferred stock dividend commitments and other changes in operating income, as discussed below, partially offset by the effects of implementing the TCJA and higher losses on early extinguishment of long-term debt expenses in 2017.
The decreased operating income was primarily due to increased operation and maintenance expenses related to the Greater Lawrence Incident, decreased net revenues resulting from TCJA impacts on revenue and increased depreciation due to capital expenditures placed in service.
These increases were partially offset by higher rates from infrastructure replacement programs and base-rate proceedings, decreased outside service costs and employee and administrative expenses, as well as net favorable effects of year-over-year weather variations, which increased revenue in 2018.
This change is primarily due to lower losses on early extinguishment of long-term debt in 2018 of $66.0 million, an interest rate swap settlement gain in 2018 of $46.2 million and higher actuarial investment returns resulting from pension contributions made in 2017.
On December 22, 2017, the President signed into law the TCJA, which, among other things, enacted significant changes to the Internal Revenue Code, as amended, including a reduction in the maximum U.S. federal corporate income tax rate from 35% to 21%, and certain other provisions related specifically to the public utility industry, including the continuation of certain interest expense deductibility and excluding 100% expensing of capital investments.
These changes are effective January 1, 2018.
GAAP requires the effect of a change in tax law to be recorded in the period of enactment.
As a result, in December 2017, NiSource recorded a $161.1 million net increase in tax expense related primarily to the remeasurement of deferred tax assets for NOL carryforwards.
The decrease in income tax expense from 2017 to 2018 is primarily attributable to the decrease in the federal corporate income tax rate, true-ups to tax expense in 2018 to reflect regulatory outcomes associated with excess deferred income taxes, the effect of amortizing the regulatory liability associated with excess deferred income taxes and lower pre-tax income resulting from expenses incurred for the Greater Lawrence Incident.
As discussed in further detail below in “Liquidity and Capital Resources,” the TCJA has and will continue to have an unfavorable impact on our liquidity.
Additionally, expenses paid for the Greater Lawrence Incident are expected to have a short term negative impact on liquidity as recoveries from insurance lag behind our cash outlay.
Liquidity will also be negatively impacted to the extent certain costs associated with the Greater Lawrence Incident are not recovered from insurance.
| Commercial | 281,563 | | | | 280,362 | | | | 279,556 | | | | 1,201 | | | | 806 | | |
| Industrial | 6,038 | | | | 6,228 | | | | 6,240 | | | | (190 | | ) | | (12 | | ) |
| Total | 3,482,266 | | | | 3,455,110 | | | | 3,427,532 | | | | 27,156 | | | | 27,578 | | |
| • | Higher revenues from increased industrial usage of $5.8 million. |
Operating expenses were $181.5 million higher in 2017 compared to 2016.
| • | Higher outside service costs of $52.8 million due to IT service provider transition costs, increased spend on strategic initiatives to enhance safety, reliability and customer value and higher pipeline maintenance expenses. |
| • | Increased property taxes of $8.1 million due to higher capital expenditures placed in service and an accrual adjustment recorded in 2016. |
| • | Higher environmental costs of $4.7 million. |
| • | Increased materials and supplies expenses of $3.4 million from maintenance-related activities. |
| • | New rates from base-rate proceedings of $63.6 million. |
| • | New rates from infrastructure replacement programs of $6.0 million. |
| • | The effects of increased customer count of $3.4 million. |
An excerpt. Shown here: 40 of 231 rewritten, 40 of 154 added and 40 of 152 removed. The counts are complete. For every sentence, read Item 6. SELECTED FINANCIAL DATA in the FY2019 filing and the FY2018 filing.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)
553 rewritten, 631 added, 374 removed, 678 unchanged
[removed: Actual costs that exceed the projected] federally mandated costs of the approved compliance project by more than twenty-five percent shall require specific justification by NIPSCO and specific approval by the IURC before being authorized in the next general rate case.
[removed: Columbia] [added: Columbia] of Massachusetts, [removed: GSEP] [added: GSEP] - On July 7, 2014, the Governor of Massachusetts signed into law Chapter 149 of the Acts of 2014, an Act Relative to Natural Gas Leaks (“the Act”).
[removed: The] [added: 164, § 145, the] Act authorizes natural gas distribution companies to file a GSEP for capital investments made on or after January 1, 2015, that are not included in the [removed: Company’s] [added: company’s] current rate base as determined in the most recent base rate case, with the Massachusetts DPU to (1) address the replacement or improvement of existing aging natural gas pipeline infrastructure to improve public safety or infrastructure reliability, and (2) reduce the lost and unaccounted for natural gas through a reduction in natural gas system leaks.
Any over-collection or under-collection balance is passed back to, or recovered from, customers [added: through the surcharge] over a 12-month period beginning in November.
[removed: Columbia] [added: Columbia] of Pennsylvania, [removed: DSIC] [added: DSIC] - On February 14, 2012, the Governor of Pennsylvania signed into law Act 11 of 2012, which provided a DSIC mechanism for certain utilities to recover costs related to repair, replacement or improvement of eligible distribution property that has not previously been reflected in rates or rate base.
Accordingly, Columbia of Pennsylvania is authorized to recover the cost of eligible plant associated with repair, replacement or improvement that was not [added: previously reflected in rate base and has been placed in service during the applicable three-month period.]
[removed: NISOURCE INC.][added: NISOURCE INC.]
[removed: Notes] [added: Notes] to Consolidated Financial [removed: Statements][added: Statements]
[removed: Columbia] [added: Columbia] of Virginia, SAVE [removed: -] [added: -] On March 11, 2010, the Virginia Governor signed legislation into law that allows natural gas utilities to implement programs to replace qualifying infrastructure on an expedited basis and provides for timely cost recovery.
Columbia of Virginia’s current five year SAVE plan was approved by the VSCC in 2016 and amended in 2017 for the years 2016 through [added: 2020 and amended in 2019 for calendar year] 2020.
[removed: Columbia] [added: Columbia] of Kentucky, [removed: AMRP] [added: SMRP (formerly AMRP)] - On October 26, 2009, the Kentucky PSC approved a mechanism for recovering the costs of Columbia of Kentucky’s AMRP not previously reflected in rate base through an annual fixed monthly rate rider filed in October.
[removed: Columbia] [added: Columbia] of Maryland, [removed: STRIDE] [added: STRIDE] - On May 2, 2013, the Governor of Maryland signed Senate Bill 8 into law, authorizing gas companies to accelerate recovery of eligible infrastructure replacement, effective June 1, 2013.
The STRIDE statute provides recovery for gas pipeline upgrades outside of the context of a base rate proceeding through an annual surcharge, IRIS, as approved [removed: by,] [added: by the] Maryland PSC.
Any over-collection or under-collection balance is passed back to, or recovered from, customers through the surcharge effective in May of the subsequent [removed: year.][added: year, subject to the cap.]
The following table describes [added: the most recent vintage of our] regulatory programs to recover infrastructure replacement and other federally-mandated compliance investments currently in rates and those pending commission approval:
| [removed: (in millions)] [added: *(in millions)*] | | | | | | | | | | | |
| Columbia of Ohio | IRP - [removed: 2018(1)] [added: 2019(1)] | $ | [removed: 2.3] [added: 18.2] | | $ | [removed: 207.0] [added: 199.6] | | [removed: 1/17-12/17] [added: 1/18-12/18] | February [removed: 27, 2018] [added: 28, 2019] | Approved April [removed: 25, 2018] [added: 24, 2019] | May [removed: 2018] [added: 2019] |
| NIPSCO - Gas | TDSIC [removed: 7] [added: 9(1)(2)] | $ | [removed: 1.5] [added: (10.6] | [added: )] | $ | [removed: 59.0] [added: 54.4] | | [removed: 1/17-6/17] [added: 1/18-6/18] | August [removed: 31, 2017] [added: 28, 2018] | Approved December [removed: 28, 2017] [added: 27, 2018] | January [removed: 2018] [added: 2019] |
| NIPSCO - [removed: Gas] [added: Electric] | TDSIC [removed: 9(1)(2)] [added: - 6] | $ | [removed: (10.6] [added: 28.1] | [removed: )] | $ | [removed: 54.4] [added: 131.1] | | [removed: 1/18 - 6/18] [added: 12/18-6/19] | August [removed: 28, 2018] [added: 21, 2019] | Approved December [removed: 27, 2018] [added: 18, 2019] | January [removed: 2019] [added: 2020] |
| NIPSCO - Gas | FMCA [removed: 1] [added: 1(5)] | $ | 9.9 | | $ | 1.5 | | 11/17-9/18 | November 30, 2018 | [removed: Order Expected Q1] [added: Approved March 27,] 2019 | April 2019 |
| Columbia of Massachusetts | GSEP - [removed: 2018(1)(3)] [added: 2019(6)] | $ | [removed: 6.5] [added: 9.6] | | $ | [removed: 80.0] [added: 36.0] | | [removed: 1/18-12/18] [added: 1/19-12/19] | October 31, [removed: 2017] [added: 2018] | Approved April 30, [removed: 2018] [added: 2019] | May [removed: 2018] [added: 2019] |
| Columbia of Massachusetts | GSEP - [removed: 2019(4)] [added: 2020(6)(7)] | $ | [removed: 10.7] [added: 2.4] | | $ | [removed: 64.0] [added: 75.0] | | [removed: 1/19-12/19] [added: 1/20-12/20] | October 31, [removed: 2018] [added: 2019] | Order [removed: expected Q2 2019] [added: Expected April 2020] | May [removed: 2019] [added: 2020] |
| Columbia of Virginia | SAVE - [removed: 2018] [added: 2020] | $ | [removed: 2.9] [added: 3.8] | | $ | [removed: 33.3] [added: 50.0] | | [removed: 1/18-12/18] [added: 1/20-12/20] | August [removed: 18, 2017] [added: 15, 2019] | Approved December [removed: 13, 2017] [added: 6, 2019] | January [removed: 2018] [added: 2020] |
| Columbia of [removed: Maryland] [added: Ohio] | [removed: STRIDE] [added: CEP] - 2018 | $ | [removed: 1.2] [added: 74.5] | | $ | [removed: 20.8] [added: 659.9] | | [removed: 1/18-12/18] [added: 1/11-12/17] | [removed: November] [added: December] 1, 2017 | Approved [removed: December 20, 2017] [added: November 28, 2018] | [removed: January] [added: December] 2018 |
| NIPSCO - Electric | TDSIC - [removed: 3] [added: 5(1)] | $ | [removed: (2.0] [added: 15.9] | [removed: )] | $ | [removed: 75.0] [added: 58.8] | | [removed: 5/17-11/17] [added: 6/18-11/18] | January [removed: 30, 2018] [added: 29, 2019] | Approved [removed: May 30, 2018] [added: June 12, 2019] | June [removed: 2018] [added: 2019] |
| NIPSCO - Electric | FMCA - [removed: 9] [added: 11(5)] | $ | [removed: 4.1] [added: 0.9] | | $ | [removed: 90.2] [added: 22.4] | | [removed: 10/17-3/18] [added: 9/18-2/19] | April [removed: 27, 2018] [added: 17, 2019] | Approved July [removed: 25, 2018] [added: 29, 2019] | August [removed: 2018] [added: 2019] |
| NIPSCO - Electric | FMCA - [removed: 10] [added: 12(5)] | $ | [removed: 2.2] [added: 1.6] | | $ | [removed: 45.7] [added: 4.7] | | [removed: 4/18-8/18] [added: 3/19-8/19] | October 18, [removed: 2018] [added: 2019] | Approved January 29, [removed: 2019] [added: 2020] | February [removed: 2019] [added: 2020] |
| [removed: (in millions)] [added: *(in millions)*] | | | | | | | | | |
| NIPSCO - Gas(1) | $ | 138.1 | | $ | [removed: 107.3] [added: 105.6] | | September 27, 2017 | Approved September 19, 2018 | October 2018 |
| Columbia of Virginia(2) | $ | 14.2 | | [removed: In process] [added: $] | [added: 1.3] | | August 28, 2018 | [removed: Order expected Second half of] [added: Approved June 12,] 2019 | February 2019 |
| NIPSCO - [removed: Electric] [added: Electric(3)] | $ | 21.4 | | [removed: In process] [added: $] | [added: (53.5] | [added: )] | October 31, 2018 | [removed: Order expected Q3] [added: Approved December 4,] 2019 | [removed: September 2019] [added: January 2020] |
(1)Rates [removed: will be] [added: were] implemented in three steps, with implementation of step 1 rates effective October 1, 2018.
Step 2 rates [removed: will be] [added: were] effective on [removed: or about] March 1, 2019, and step 3 rates [removed: will be] [added: were] effective on January 1, 2020.
[removed: Refer to] [added: See] Note [removed: 18-E,] [added: 19\-E,] "Other [removed: Matters," in the Notes to Consolidated Financial Statements] [added: Matters"] for additional information.
[added: NIPSCO Electric.] On March 29, 2018, WCE, which is currently owned by BP p.l.c ("BP") and BP Products North America, which operates the BP Refinery, filed a petition at the IURC asking that the combined operations of WCE and BP be treated as a single premise, and the WCE generation be dedicated primarily to BP Refinery operations beginning in May 2019 as WCE has self-certified as a qualifying facility at FERC.
[removed: A] [added: BP Refinery planned to continue to purchase electric service from NIPSCO at a reduced demand level beginning in May 2019; however, a] settlement agreement was filed on November 2, 2018 agreeing that BP and WCE would not move forward with construction of a private transmission line to serve BP until conclusion of NIPSCO’s pending electric rate case.
[removed: | 9. |] Risk Management [removed: Activities |][added: Activities]
| December 31, [removed: (in millions)] [added: *(in millions)*] | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | |
| Interest rate risk programs | [removed: $] [added: $] | [removed: —] [added: —] | | | $ | [removed: 14.0] [added: —] | |
| Commodity price risk programs | [removed: 1.1] [added: 0.6] | | | | [removed: 0.5] [added: 1.1] | | |
Adopted into the Massachusetts Utility Provisions, G.L. c.
Beginning with the 2019 GSEP, rates are subject to a capped annual revenue increase of three percent of total annual firm delivery revenues, plus imputed gas revenues for sales and transportation customers, calculated as the product of (1) the historical average cost of gas per therm, and (2) the average weather normalized sales, for the period beginning with 2013 and ending with the most recent year that actual data is available at the time of the October GSEP Plan filing, per the Massachusetts DPU order in Columbia of Massachusetts' 2019 GSEP.
Prior to the 2019 GSEP, the annual revenue increase was capped at one and a half percent.
On October 31, 2019, the Massachusetts DPU issued an order on Columbia of Massachusetts' GSEP reconciliation proceeding finding that, due to pending investigations of the Greater Lawrence Incident and other operational matters, the Massachusetts DPU could not, at this time, make a finding of prudence with respect to the Columbia of Massachusetts' 2018 GSEP investments and deferred the decision on the prudency of the 2018 GSEP investments in the annual GSEP and GSEP reconciliation filings until the investigations by the DPU are complete.
The DPU added that its inability to make a finding of prudence did not constitute a finding of imprudence.
Columbia of Massachusetts' current five year GSEP plan for the periods 2019-2023 was approved April 30, 2019.
NISOURCE INC.
On July 29, 2019, CKY filed its SMRP to clarify approval of low pressure project spend and expand its AMRP to include for recovery of system safety investments, including low pressure project spend.
On November 7, 2019, the Commission approved Columbia of Kentucky's request to amend and expand its annual AMRP to become the SMRP.
STRIDE investments, and recovery thereof, are subject to prudency review by the Maryland PSC in the context of quarterly STRIDE update filings and in subsequent rate proceedings where STRIDE assets are rolled into rate base for recovery in base rates.
NISOURCE INC.
Notes to Consolidated Financial Statements
| Columbia of Ohio | CEP - 2019 | $ | 15.0 | | $ | 121.7 | | 1/18-12/18 | February 28, 2019 | Approved August 28, 2019 | September 2019 |
| NIPSCO - Gas | TDSIC 10(3) | $ | 1.6 | | $ | 12.4 | | 7/18-4/19 | June 25, 2019 | Approved October 16, 2019 | November 2019 |
| NIPSCO - Gas | TDSIC 11(4) | $ | (1.7 | ) | $ | 38.7 | | 5/19-12/19 | February 25, 2020 | Order Expected June 2020 | July 2020 |
| NIPSCO - Gas | FMCA 2(5) | $ | (3.5 | ) | $ | 1.8 | | 10/18-3/19 | May 29, 2019 | Approved September 25, 2019 | October 2019 |
| NIPSCO - Gas | FMCA 3(5) | $ | 0.3 | | $ | 43.0 | | 4/19-9/19 | November 26, 2019 | Order Expected March 2020 | April 2020 |
| Columbia of Kentucky | SMRP - 2020 | $ | 4.2 | | $ | 40.4 | | 1/20-12/20 | October 15, 2019 | Approved December 20, 2019 | January 2020 |
| Columbia of Maryland | STRIDE - 2020 | $ | 1.3 | | $ | 15.0 | | 1/20-12/20 | January 29, 2020 | Approved February 19, 2020 | February 2020 |
(3)Incremental capital and revenue are net of amounts included in the step 2 rates.
(4)Incremental revenue is net of amounts included in the step 2 rates and reflects a more typical filing period.
(5)Incremental revenue is inclusive of tracker eligible operations and maintenance expense.
(6)Due to an order from the Massachusetts DPU on October 3, 2019 imposing work restrictions on Columbia of Massachusetts, Columbia of Massachusetts did not meet the approved projected 2019 GSEP spend of $64 million and associated incremental revenue of $10.7 million.
In the 2020 GSEP, Columbia of Massachusetts reduced the projected capital spend for calendar year 2019 to $36 million and the associated incremental revenue in 2019 GSEP to $9.6 million.
(7)Incremental capital investment is anticipated to be lower than $75 million in 2020 due to the Massachusetts DPU imposed work restrictions.
NISOURCE INC.
Notes to Consolidated Financial Statements
| Columbia of Maryland | $ | 2.5 | | $ | (0.1 | ) | May 22, 2019 | Approved December 18, 2019 | December 2019 |
The step 3 increase was approved based on actual information and revised from $107.3 million to $105.6 million.
(2)Rates, as originally filed, were implemented in February 2019 on an interim basis, subject to refund.
The final approved rates, which replaced interim rates, were implemented in July 2019.
(3)An order was received on December 4, 2019, which included the resolution of outstanding TCJA impacts to rates.
Incremental revenues decreased due to a reduction in fuel costs associated with the new industrial service structure.
Rates will be implemented in two steps, with implementation of step 1 rates effective January 2, 2020 and step 2 rates effective March 2, 2020.
The IURC approved the settlement agreement as filed on February 20, 2019.
On December 4, 2019, the IURC issued an order in the electric rate case approving the implementation of a new industrial service structure.
This resolved the issues included in BP’s original petition.
The December 4, 2019 electric rate case order approved the revenue requirement settlement filed in the case, with the exception of a change in the agreed to return on equity; the approved return on equity is 9.75%.
The order included approval of the depreciation rates as requested, as well as authorization to create a regulatory asset upon the retirement of R.M. Schahfer Generating Units 14, 15, 17 and 18 and Michigan City Generating Station Unit 12.
The order allows for the recovery of and on the net book value of the units by the end of 2032.
useful lives.
Each operating company's approach to cost recovery may be unique, given the different laws, regulations and precedent that exist in each jurisdiction.
Columbia of Ohio, IRP - On December 3, 2008, the PUCO issued an order which established Columbia of Ohio’s IRP.
Pursuant to that order, the IRP provides for recovery of costs resulting from: (1) the maintenance, repair and replacement of customer-owned service lines that have been determined by Columbia of Ohio to present an existing or probable hazard to persons and property; (2) Columbia of Ohio’s replacement of cast iron, wrought iron, unprotected coated steel and bare steel pipe and associated company and customer-owned metallic service lines; (3) the replacement of customer-owned natural gas risers identified by the PUCO as prone to failure; and (4) the installation of AMR devices on all residential and commercial meters served by Columbia of Ohio.
Recoverable costs include a return on investment, depreciation and property taxes, offset by specified cost savings.
Columbia of Ohio’s five-year IRP plan renewal was last approved on January 31, 2018 for the years 2018-2022.
NIPSCO Gas and Electric, TDSIC - On April 30, 2013, the Indiana Governor signed Senate Enrolled Act 560, known as the TDSIC statute, into law.
Among other provisions, the TDSIC statute provides for cost recovery outside of a base rate proceeding for new or replacement electric and gas transmission, distribution, and storage projects that a public utility undertakes for the purposes of safety, reliability, system modernization or economic development.
Provisions of the TDSIC statute require that, among other things, requests for recovery include a seven-year plan of eligible investments.
Once the plan is approved by the IURC, eighty percent of eligible costs can be recovered using a periodic rate adjustment mechanism, known as the TDSIC mechanism.
Recoverable costs include a return on the investment, including AFUDC, PISCC, operation and maintenance expenses, depreciation and property taxes.
The remaining twenty percent of recoverable costs are deferred for future recovery in NIPSCO's next general rate case.
The semi-annual rate adjustment mechanism is capped at an annual increase of two percent of total retail revenues.
NIPSCO Electric, ECRM - NIPSCO has approval from the IURC to recover certain environmental related costs through an ECT (environmental cost tracker).
Under the ECT, NIPSCO is permitted to recover (1) AFUDC and a return on the capital investment expended by NIPSCO to implement environmental compliance plan projects and (2) related operation and maintenance and depreciation expenses once the environmental facilities become operational.
NIPSCO Gas and Electric, FMCA - The FMCA statute provides for cost recovery outside of a base rate proceeding for projected federally mandated costs.
Once the plan is approved by the IURC, eighty percent of eligible costs can be recovered using a periodic rate adjustment mechanism, known as the FMCA mechanism.
Recoverable costs include a return on the investment, including AFUDC, PISCC, mandated operation and maintenance expenses, depreciation and property taxes.
Rates are subject to a capped annual revenue increase of one and a half percent of total annual delivery and cost of gas revenues from sales and transportation, including imputed gas revenues for transportation, for the calendar year preceding the projected GSEP calendar year being filed.
previously reflected in rate base and has been placed in service during the applicable three-month period.
| NIPSCO - Gas | TDSIC 8 | $ | 1.8 | | $ | 54.0 | | 7/17-12/17 | February 27, 2018 | Approved August 22, 2018 | September 2018 |
| Columbia of Pennsylvania | DSIC - 2018 | $ | 0.4 | | $ | 14.8 | | 12/17-2/18 | March 22, 2018 | Approved March 29, 2018 | April 2018 |
| Columbia of Pennsylvania | DSIC - 2018 | $ | 0.9 | | $ | 31.8 | | 3/18-5/18 | June 20, 2018 | Approved June 28, 2018 | July 2018 |
| Columbia of Pennsylvania | DSIC - 2018 | $ | 1.6 | | $ | 55.4 | | 6/18-8/18 | September 20, 2018 | Approved September 28, 2018 | October 2018 |
| Columbia of Kentucky | AMRP - 2018 | $ | 4.5 | | $ | 24.0 | | 1/18-12/18 | October 13, 2017 | Approved December 22, 2017 | January 2018 |
| NIPSCO - Electric | TDSIC - 4(1) | $ | (11.8 | ) | $ | 72.2 | | 12/17-5/18 | July 31, 2018 | Approved November 28, 2018 | December 2018 |
| NIPSCO - Electric | TDSIC - 5(1) | $ | 15.9 | | $ | 58.8 | | 6/18-11/18 | January 29, 2019 | Order Expected Q2 2019 | June 2019 |
| NIPSCO - Electric | ECRM - 31 | $ | (2.1 | ) | $ | 2.9 | | 6/17-12/17 | January 31, 2018 | Approved April 25, 2018 | May 2018 |
| NIPSCO - Electric | ECRM - 32 | $ | 1.0 | | $ | — | | 1/18-6/18 | July 31, 2018 | Approved October 11, 2018 | November 2018 |
| NIPSCO - Electric | FMCA - 8 | $ | 1.3 | | $ | 4.4 | | 4/17-9/17 | November 1, 2017 | Approved January 31, 2018 | February 2018 |
(3)A cap waiver was approved by the Massachusetts DPU on June 21, 2018 and related rates became effective July 2018.
(4)The filing included a request for approval of a waiver to allow collection of the $2.9 million revenue requirement that exceeds the GSEP cap provision.
| Columbia of Massachusetts | $ | 24.1 | | N/A | | | April 13, 2018 | Withdrawn September 19, 2018 | N/A |
| Columbia of Pennsylvania | $ | 46.9 | | $ | 26.0 | | March 16, 2018 | Approved December 6, 2018 | December 2018 |
| Columbia of Maryland | $ | 4.6 | | $ | 2.2 | | April 13, 2018 | Approved November 21, 2018 | November 2018 |
(2)Rates implemented subject to refund pending a final order from the VSCC.
Columbia of Ohio.
On December 1, 2017, Columbia of Ohio filed an application that requested authority to implement a rider to begin recovering plant and associated deferrals related to its CEP.
The CEP was established in 2011 and allows for deferral of interest, depreciation and property taxes on certain plant investments not recovered through its IRP modernization tracker.
The application requested authority to increase annual revenues, through the requested rider, by approximately $70 million, with biennial increases up to approximately $98 million in 2022.
An excerpt. Shown here: 40 of 553 rewritten, 40 of 631 added and 40 of 374 removed. The counts are complete. For every sentence, read Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued) in the FY2019 filing and the FY2018 filing.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
0 rewritten, 15 added, 0 removed, 1 unchanged
ITEM 9A.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our chief executive officer and chief financial officer are responsible for evaluating the effectiveness of disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)).
Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by the Company in reports that are filed or submitted under the Exchange Act are accumulated and communicated to management, including our chief executive officer and 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, our chief executive officer and chief financial officer concluded that, as of the end of the period covered by this report, disclosure controls and procedures were effective to provide reasonable assurance that financial information was processed, recorded and reported accurately.
Management’s Annual Report on Internal Control over Financial Reporting
Our management, including our chief executive officer and chief financial officer, are responsible for establishing and maintaining 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.
However, management would note that a control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
Our management has adopted the 2013 framework set forth in the Committee of Sponsoring Organizations of the Treadway Commission report, Internal Control - Integrated Framework, the most commonly used and understood framework for evaluating internal control over financial reporting, as its framework for evaluating the reliability and effectiveness of internal control over financial reporting.
During 2019, we conducted an evaluation of our internal control over financial reporting.
Based on this evaluation, management concluded that our internal control over financial reporting was effective as of the end of the period covered by this annual report.
Deloitte & Touche LLP, our independent registered public accounting firm, issued an attestation report on our internal controls over financial reporting which is included herein.
Changes in Internal Controls
There have been no changes in our internal control over financial reporting during the most recently completed quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9A. CONTROLS AND PROCEDURES
1 rewritten, 22 added, 12 removed, 0 unchanged
[removed: Management’s Annual Report] [added: Opinion] on Internal Control over Financial [removed: Reporting][added: Reporting]
NISOURCE INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of NiSource Inc.
We have audited the internal control over financial reporting of NiSource Inc. and subsidiaries (the “Company”) as of December 31, 2019, based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in *Internal Control - Integrated Framework (2013)* issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our report dated February 27, 2020, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting.
Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Columbus, Ohio
February 27, 2020
Evaluation of Disclosure Controls and Procedures
Our chief executive officer and chief financial officer are responsible for evaluating the effectiveness of disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)).
Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by the Company in reports that are filed or submitted under the Exchange Act are accumulated and communicated to management, including our chief executive officer and 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, our chief executive officer and chief financial officer concluded that, as of the end of the period covered by this report, disclosure controls and procedures were effective to provide reasonable assurance that financial information was processed, recorded and reported accurately.
Our management, including our chief executive officer and chief financial officer, are responsible for establishing and maintaining 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.
However, management would note that a control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
Our management has adopted the 2013 framework set forth in the Committee of Sponsoring Organizations of the Treadway Commission report, Internal Control - Integrated Framework, the most commonly used and understood framework for evaluating internal control over financial reporting, as its framework for evaluating the reliability and effectiveness of internal control over financial reporting.
During 2018, we conducted an evaluation of our internal control over financial reporting.
Based on this evaluation, management concluded that our internal control over financial reporting was effective as of the end of the period covered by this annual report.
Deloitte & Touche LLP, our independent registered public accounting firm, issued an attestation report on our internal controls over financial reporting which is contained in Item 8, “Financial Statements and Supplementary Data.”
Changes in Internal Controls
There have been no changes in our internal control over financial reporting during the most recently completed quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. OTHER INFORMATION
1 rewritten, 2 added, 1 removed, 1 unchanged
[removed: PART III][added: PART III]
NISOURCE INC.
NISOURCE INC.
NISOURCE INC.
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
1 rewritten, 0 added, 0 removed, 0 unchanged
Except for the information required by this item with respect to our executive officers included at the end of Part I of this report on Form 10-K, the information required by this Item 10 is incorporated herein by reference to the discussion in "Proposal 1 Election of Directors," [removed: "Corporate Governance,"] and [removed: "Section 16(a) Beneficial Ownership Reporting Compliance,"] [added: "Corporate Governance"] of the Proxy Statement for the Annual Meeting of Stockholders to be held on May [removed: 7, 2019.][added: 19, 2020.]
Item 11. EXECUTIVE COMPENSATION
1 rewritten, 0 added, 0 removed, 0 unchanged
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: 7, 2019.][added: 19, 2020.]
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
1 rewritten, 0 added, 0 removed, 0 unchanged
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: 7, 2019.][added: 19, 2020.]
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
1 rewritten, 0 added, 0 removed, 0 unchanged
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: 7, 2019.][added: 19, 2020.]
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
2 rewritten, 1 added, 1 removed, 0 unchanged
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: 7, 2019.][added: 19, 2020.]
[removed: PART IV][added: PART IV]
NISOURCE INC.
NISOURCE INC.
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
74 rewritten, 21 added, 9 removed, 182 unchanged
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| [Statements of Consolidated Income [removed: (Loss)](#s3214D3090C7155D0985C9190BD40C581)] [added: (Loss)](#s0D49F76862C65DC9B8D568E0F3132445)] | [removed: [48](#s3214D3090C7155D0985C9190BD40C581)] [added: [54](#s0D49F76862C65DC9B8D568E0F3132445)] |
| [Statements of Consolidated Comprehensive Income [removed: (Loss)](#s22E3364D843B57A1B86C5F3819609F7A)] [added: (Loss)](#sF9B80047ED3A5720B7FF3CFA3F7A2A12)] | [removed: [49](#s22E3364D843B57A1B86C5F3819609F7A)] [added: [55](#sF9B80047ED3A5720B7FF3CFA3F7A2A12)] |
| [Consolidated Balance [removed: Sheets](#sE86D98CD8EB55BC5BEB251A1936CC25D)] [added: Sheets](#s790187DA0A8D5472B55F22D8F52FB965)] | [removed: [50](#sE86D98CD8EB55BC5BEB251A1936CC25D)] [added: [56](#s790187DA0A8D5472B55F22D8F52FB965)] |
| [Statements of Consolidated Cash [removed: Flows](#s5422A694303D5175B8CBE8DF4814D30E)] [added: Flows](#s95E5985C295756A3AB70458072C8847C)] | [removed: [52](#s5422A694303D5175B8CBE8DF4814D30E)] [added: [58](#s95E5985C295756A3AB70458072C8847C)] |
| [Statements of Consolidated Stockholders’ [removed: Equity](#s94293891B5895F099841FA1AB8E5D6F5)] [added: Equity](#s76D09C32CB1950D5B7D0C3807EEF7B7E)] | [removed: [53](#s94293891B5895F099841FA1AB8E5D6F5)] [added: [59](#s76D09C32CB1950D5B7D0C3807EEF7B7E)] |
| [Notes to Consolidated Financial [removed: Statements](#sB3DF3303194D5025BDB0C4033B436AA9)] [added: Statements](#s6DD56C2BC81258D9B61DAD084D957180)] | [removed: [56](#sB3DF3303194D5025BDB0C4033B436AA9)] [added: [61](#s6DD56C2BC81258D9B61DAD084D957180)] |
| [removed: (3.1)] [added: (3.3)] | [removed: Amended and Restated Certificate] [added: Bylaws] of [removed: Incorporation] [added: NiSource Inc., as amended and restated through January 26, 2018] (incorporated by reference to [Exhibit 3.1 to the NiSource Inc. Form 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000111171118000003/a8-kexhibit31x12618.htm) filed on January 26, 2018). |
| (3.2) | [removed: Bylaws] [added: Certificate] of [removed: NiSource Inc., as amended] [added: Amendment of Amended] and [removed: restated through January 26, 2018] [added: Restated Certificate of Incorporation of NiSource dated May 7, 2019] (incorporated by reference to [Exhibit 3.1 [removed: to] [added: of] the NiSource Inc. Form [removed: 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000111171118000003/a8-kexhibit31x12618.htm)] [added: 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312519141386/d744998dex31.htm)] filed on [removed: January 26, 2018).] [added: May 8, 2019).] |
| [removed: (3.3)] [added: (3.4)] | Certificate of Designations of 5.65% Series A Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock (incorporated by reference to [Exhibit 3.1 of the NiSource Inc. Form 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312518190569/d604264dex31.htm) filed on June 12, 2018). |
| [removed: (3.4)] [added: (3.5)] | Form of Certificate of Designations of 6.50% Series B Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock (incorporated by reference to [Exhibit 3.1 of the NiSource Inc. Form 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312518338090/d663540dex31.htm) filed on November 29, 2018). |
| [removed: (3.5)] [added: (3.6)] | Certificate of Designations of 6.50% Series B Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock (incorporated by reference to [Exhibit 3.1 of the NiSource Inc. Form 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312518342891/d664536dex31.htm) filed on December 6, 2018). |
| [removed: (3.6)] [added: (3.7)] | Certificate of Designations of Series B-1 Preferred Stock (incorporated by reference to [Exhibit 3.1 to the NiSource Inc. Form 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312518359251/d628782dex31.htm) filed on December 27, 2018). |
| [removed: (10.5)] [added: (10.24)] | Form of Performance Share Award Agreement under the 2010 Omnibus Incentive Plan (incorporated by reference to [Exhibit [removed: 10.1] [added: 10.33] to the NiSource [removed: Inc.] Form [removed: 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000111171114000036/ni-ex101_2014331.htm)] [added: 10-K](http://www.sec.gov/Archives/edgar/data/1111711/000111171118000008/ni-20171231xex1033.htm)] filed on [removed: April 30, 2014.)*] [added: February 20, 2018).*] |
| [removed: (10.6)] [added: (10.5)] | Form of Amended and Restated 2013 Performance Share Agreement effective on implementation of the spin-off on July 1, 2015, (under the 2010 Omnibus Incentive Plan)(incorporated by reference to [Exhibit 10.1 to the NiSource Inc. Form 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000111171115000037/ni-ex101_2015930.htm) filed on November 3, 2015).* |
| [removed: (10.7)] [added: (10.6)] | Form of Amended and Restated 2014 Performance Share Agreement effective on the implementation of the spin-off on July 1, 2015, (under the 2010 Omnibus Incentive Plan)(incorporated by reference to [Exhibit 10.2 to the NiSource Inc. Form 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000111171115000037/ni-ex102_2015930.htm) filed on November 3, 2015).* |
| [removed: (10.8)] [added: (10.7)] | Form of Amendment to Restricted Stock Unit Award Agreement related to Vested but Unpaid NiSource Restricted Stock Unit Awards for Nonemployee Directors of NiSource entered into as of July 13, 2015 (incorporated by reference to [Exhibit 10.3 to the NiSource Inc. Form 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000111171115000037/ni-ex103_2015930.htm) filed on November 3, 2015).* |
| [removed: (10.9)] [added: (10.8)] | NiSource Inc. Nonemployee Director Retirement Plan, as amended and restated effective May 13, 2008 (incorporated by reference to [Exhibit 10.2 to the NiSource Inc. Form 10-K](http://www.sec.gov/Archives/edgar/data/1111711/000095015209001944/c48955exv10w2.htm) filed on February 27, 2009).* |
| [removed: (10.10)] [added: (10.9)] | 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: (10.11)] [added: (10.10)] | [added: Revised] Form of Change in Control and Termination Agreement (incorporated by reference to [Exhibit [removed: 99.1] [added: 10.2] to the NiSource Inc. Form [removed: 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000111171114000006/ni-ex991_20140106.htm)] [added: 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312515352043/d85968dex102.htm)] filed [removed: January 6, 2014).*] [added: on October 23, 2015.)*] |
| [removed: (10.12)] [added: (10.23)] | [removed: Revised] Form of Change in Control and Termination Agreement (incorporated by reference to [Exhibit [removed: 10.2] [added: 10.1] to the NiSource Inc. Form [removed: 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312515352043/d85968dex102.htm)] [added: 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000111171117000052/ni-ex101_201763010q.htm)] filed on [removed: October 23, 2015.)*] [added: August 2, 2017).] |
| [removed: (10.13)] [added: (10.11)] | 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](http://www.sec.gov/Archives/edgar/data/1111711/000095012311019598/c62032exv10w18.htm) filed on February 28, 2011).* |
| [removed: (10.14)] [added: (10.12)] | Form of Restricted Stock Unit Award Agreement for Non-employee directors under the Non-employee Director Stock Incentive Plan (incorporated by reference to [Exhibit 10.19 to the NiSource Inc. Form 10-K](http://www.sec.gov/Archives/edgar/data/1111711/000095012311019598/c62032exv10w19.htm) filed on February 28, 2011).* |
| [removed: (10.15)] [added: (10.13)] | Form of Restricted Stock Unit Award Agreement for Nonemployee Directors under the 2010 Omnibus Incentive Plan (incorporated by reference to [Exhibit 10.1 to NiSource Inc. Form 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000095012311071412/c65179exv10w1.htm) filed on August 2, 2011).* |
| [removed: (10.16)] [added: (10.35)] | Form of [added: 2019] Performance Share Award Agreement under the 2010 Omnibus Incentive [removed: Plan] [added: Plan.] (incorporated by reference to [Exhibit [removed: 10.3 to] [added: 10.45 of] the NiSource Inc. Form [removed: 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000111171116000064/ni-ex103_201633110q.htm)] [added: 10-K](http://www.sec.gov/Archives/edgar/data/1111711/000111171119000008/ni-20181231xex1045.htm)] filed on [removed: May 3, 2016).*] [added: February 20, 2019).] |
| [removed: (10.17)] [added: (10.14)] | Form of Restricted Stock Unit Award Agreement under the 2010 Omnibus Incentive Plan.* (incorporated by reference to [Exhibit 10.17 to the NiSource Inc. Form 10-K](http://www.sec.gov/Archives/edgar/data/1111711/000111171117000011/ni-20161231xex1017.htm) filed on February 22, 2017) |
| [removed: (10.18)] [added: (10.15)] | Form of Restricted Stock Unit Award Agreement for Nonemployee Directors under the 2010 Omnibus Incentive Plan. (incorporated by reference to [Exhibit 10.18 to the NiSource Inc. Form 10-K](http://www.sec.gov/Archives/edgar/data/1111711/000111171117000011/ni-20161231xex1018.htm) filed on February 22, 2017) * |
| [removed: (10.19)] [added: (10.32)] | Amended and Restated NiSource Inc. Supplemental Executive Retirement Plan effective [removed: May 13, 2011] [added: August 10, 2017] (incorporated by reference to [Exhibit [removed: 10.3 to] [added: 10.1 of the] NiSource Inc. Form [removed: 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000119312511285590/d230358dex103.htm)] [added: 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000111171118000049/ni-ex101_2018930.htm)] filed on [removed: October 28, 2011).*] [added: November 1, 2018).] |
| [removed: (10.20)] [added: (10.33)] | Amended and Restated Pension Restoration Plan for NiSource Inc. and Affiliates effective [removed: May 13, 2011] [added: August 10, 2017] (incorporated by reference to [Exhibit [removed: 10.4 to] [added: 10.2 of the] NiSource Inc. Form [removed: 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000119312511285590/d230358dex104.htm)] [added: 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000111171118000049/ni-ex102_2018930.htm)] filed on [removed: October 28, 2011).*] [added: November 1, 2018).] |
| [removed: (10.21)] [added: (10.16)] | 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 [removed: 10-K](http://www.sec.gov/Archives/edgar/data/1111711/000111171113000007/ni-20121231xex1020.htm)] [added: 10-K](http://www.sec.gov/Archives/edgar/data/1111711/000111171113000007/ni-20121231xex1021.htm)] filed on February 19, 2013).* |
| [removed: (10.22)] [added: (10.17)] | [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 10.21 to the NiSource Inc. Form [removed: 10-K](http://www.sec.gov/Archives/edgar/data/1111711/000111171113000007/ni-20121231xex1021.htm)] [added: 10-K](http://www.sec.gov/Archives/edgar/data/1111711/000111171115000008/ni-20141231xex1021.htm)] filed on February [removed: 19, 2013).*] [added: 18, 2015).*] |
| [removed: (10.23)] [added: (10.21)] | [added: Letter Agreement, dated as of February 23, 2016, by and between] NiSource Inc. [removed: Executive Severance Policy, as amended] and [removed: restated, effective January 1, 2015] [added: Pablo A. Vegas.] (incorporated by reference [removed: to] [Exhibit [removed: 10.21] [added: 10.29] to the NiSource Inc. Form [removed: 10-K](http://www.sec.gov/Archives/edgar/data/1111711/000111171115000008/ni-20141231xex1021.htm)] [added: 10-K](http://www.sec.gov/Archives/edgar/data/1111711/000111171117000011/ni-20161231xex1029.htm)] filed on February [removed: 18, 2015).*] [added: 22, 2017).*] |
| [removed: (10.24)] [added: (10.36)] | [removed: Fourth] [added: Fifth] Amended and Restated Revolving Credit Agreement, dated as of [removed: November 28, 2016,] [added: February 20, 2019,] among NiSource [removed: Finance Corp.,] [added: Inc.,] as Borrower, [removed: NiSource Inc.,] the Lenders party thereto, Barclays Bank PLC, as Administrative Agent, [removed: JPMorgan Chase Bank,] [added: Citibank,] N.A. and [removed: The Bank of Tokyo-Mitsubishi UFJ,] [added: MUFG Bank,] Ltd., as Co-Syndication Agents, [removed: Citibank, N.A.,] Credit Suisse AG, Cayman Islands [removed: Branch] [added: Branch, JPMorgan Chase Bank, N.A.] and Wells Fargo Bank, National Association, as Co-Documentation Agents, and Barclays Bank PLC, [removed: JPMorgan Chase Bank,] [added: Citibank,] N.A., [removed: The Bank of Tokyo-Mitsubishi UFJ,] [added: MUFG Bank,] Ltd., Credit Suisse [removed: Securities (USA)] [added: Loan Funding] LLC, [removed: Citigroup Global Markets, Inc.] [added: JPMorgan Chase Bank, N.A.] and Wells Fargo Securities, LLC, as Joint Lead Arrangers and Joint Bookrunners (incorporated by reference to [Exhibit 10.1 [removed: to] [added: of] the NiSource Inc. Form [removed: 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312516778168/d301157dex101.htm)] [added: 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312519045655/d708597dex101.htm)] filed on [removed: November 28, 2016).] [added: February 20, 2019).] |
| [removed: (10.25)] [added: (10.18)] | 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](http://www.sec.gov/Archives/edgar/data/1111711/000095013705010764/c98081exv10w1.htm) filed on August 26, 2005). |
| [removed: (10.26)] [added: (10.19)] | 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](http://www.sec.gov/Archives/edgar/data/1111711/000095015209001944/c48955exv10w30.htm) filed on February 27, 2009). |
| [removed: (10.27)] [added: (10.38)] | [added: Amended and Restated] Term Loan Agreement, dated as of [removed: March 31, 2016, by and] [added: April 17, 2019,] among NiSource [removed: Finance Corp., as Borrower, NiSource] Inc., as [removed: Guarantor,] [added: Borrower,] the Lenders party thereto, and [removed: PNC Bank, National Association, as Administrative Agent, JP Morgan Chase Bank, N.A., as Syndication Agent, and Mizuho Bank,] [added: MUFG Bank] Ltd., as [removed: Documentation] [added: Administrative] Agent [added: and Sole Lead Arranger and Sole Bookrunner] (incorporated by reference to [Exhibit 10.1 [removed: to] [added: of] the NiSource Inc. Form [removed: 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000111171116000064/ni-ex101_201633110q.htm)] [added: 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312519109276/d735475dex101.htm)] filed on [removed: May 3, 2016).] [added: April 17, 2019).] |
| [removed: (10.28)] [added: (10.20)] | Letter Agreement, dated as of March 17, 2015, by and between NiSource Inc. and Donald Brown. (incorporated by reference [Exhibit 10.1 to the NiSource Inc. Form 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000111171115000022/ni-ex101_2015331.htm) filed on April 30, 2015).* |
| [removed: (10.29)] [added: (10.43)] | [removed: Letter Agreement,] [added: NiSource Deferred Prosecution Agreement] dated [removed: as of] February [removed: 23, 2016, by and between NiSource Inc. and Pablo A. Vegas.] [added: 26, 2020] (incorporated by reference [removed: [Exhibit 10.29] to [added: [Exhibit 10.1 of] the NiSource Inc. Form [removed: 10-K](http://www.sec.gov/Archives/edgar/data/1111711/000111171117000011/ni-20161231xex1029.htm)] [added: 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312520051063/d872025dex101.htm)] filed on February [removed: 22, 2017).*] [added: 27, 2020).] |
| [removed: (10.30)] [added: (10.22)] | [removed: Tax Allocation] [added: Employee Matters] Agreement, dated as of June 30, 2015, by and between NiSource Inc. and Columbia Pipeline Group, Inc. (incorporated by reference to [Exhibit [removed: 10.1] [added: 10.2] of the NiSource Inc. Form [removed: 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312515243668/d116426dex101.htm)] [added: 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312515243668/d116426dex102.htm)] filed on July 2, 2015). |
| [removed: (10.31)] [added: (10.42)] | [removed: Employee Matters Agreement, dated as of June 30, 2015, by and between NiSource Inc. and] Columbia [removed: Pipeline Group, Inc.] [added: Gas of Massachusetts Plea Agreement dated February 26, 2020] (incorporated by reference to [Exhibit 10.2 of the NiSource Inc. Form [removed: 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312515243668/d116426dex102.htm)] [added: 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312520051063/d872025dex102.htm)] filed on [removed: July 2, 2015).] [added: February 27, 2020).] |
| [Schedule II](#sDD86E6C65AF254189BDE80AE346DDFAE) | [124](#sDD86E6C65AF254189BDE80AE346DDFAE) |
| (2.2) | Asset Purchase Agreement, dated as of February 26, 2020, by and among NiSource Inc., Bay State Gas Company d/b/a Columbia Gas of Massachusetts and Eversource Energy (incorporated by reference to [Exhibit 2.1 of the NiSource Inc. Form 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312520050938/d896652dex21.htm) filed on February 27, 2020).* |
| (3.1) | Amended and Restated Certificate of Incorporation (incorporated by reference to [Exhibit 3.1 to the Registrant’s Form 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000111171115000030/ni-ex31_2015630.htm), filed with the Commission on August 3, 2015). |
| (4.18) | Form of 2.950% Notes due 2029 (incorporated by reference to [Exhibit 4.1 to NiSource Inc. Form 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312519218646/d790350dex41.htm) filed on August 12, 2019). |
| (4.19) | Amended and Restated NiSource Inc. Employee Stock Purchase Plan (incorporated by [reference to Exhibit C to the Registrant’s Definitive Proxy Statement on Schedule 14A](http://www.sec.gov/Archives/edgar/data/1111711/000114036119006160/bp18980x2_def14a.htm), filed with the Commission on April 1, 2019). |
| (4.20) | [Description of NiSource Inc.’s Securities Registered Under Section 12 of the Exchange Act.](https://www.sec.gov/Archives/edgar/data/1111711/000111171120000013/ni-20191231xex420.htm) |
| (10.37) | Amended and Restated NiSource Inc. Employee Stock Purchase Plan adopted as of February 1, 2019 (incorporated by reference to [Exhibit C to the NiSource Inc. Definitive Proxy Statement](http://www.sec.gov/Archives/edgar/data/1111711/000114036119006160/bp18980x2_def14a.htm) to Stockholders for the Annual Meeting to be held on May 7, 2019, filed on April 1, 2019). |
| (10.40) | [Form of Restricted Stock Unit Award Agreement](https://www.sec.gov/Archives/edgar/data/1111711/000111171120000013/ni-20191231xex1040.htm)* |
| (10.41) | [Form of Cash-Based Award Agreement](https://www.sec.gov/Archives/edgar/data/1111711/000111171120000013/ni-20191231xex1041.htm)* |
| (101.INS) | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| (104) | Cover page Interactive Data File (formatted as inline XBRL, and contained in Exhibit 101.) |
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| * | Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. NiSource agrees to furnish supplementally a copy of any omitted schedules or exhibits to the SEC upon request. |
| | | /s/ | DEBORAH A.P. HERSMAN | | Director | Date: February 27, 2020 |
| | | | Deborah A. P. Hersman | | | |
| [Schedule II](#sC1539D7689845727AACB3EDD9DA79D24) | [114](#sC1539D7689845727AACB3EDD9DA79D24) |
| (10.34) | Form of Restricted Stock Unit Award Agreement under the 2010 Omnibus Incentive Plan (incorporated by reference to [Exhibit 10.34 to the NiSource Form 10-K](http://www.sec.gov/Archives/edgar/data/1111711/000111171118000008/ni-20171231xex1034.htm) filed on February 20, 2018).* |
| (10.35) | Term Loan Agreement dated as of April 18, 2018 among NiSource Inc., as borrower, the lenders party thereto and MUFG Bank, Ltd., as administrative agent and as sole lead arranger and sole bookrunner (incorporated by reference to [Exhibit 10.1 of the NiSource Inc. Form 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312518121401/d539836dex101.htm) filed on April 19, 2018). |
| (10.41) | Registration Rights Agreement, dated as of June 11, 2018, by and among NiSource Inc. and Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and MUFG Securities Americas Inc., as representatives, relating to the 3.650% Notes due 2023 (incorporated by reference to [Exhibit 10.4 of the NiSource Inc. Form 8-K](http://www.sec.gov/Archives/edgar/data/1111711/000119312518190569/d604264dex104.htm) filed on June 12, 2018). |
| (10.43) | Amended and Restated Pension Restoration Plan for NiSource Inc. and Affiliates effective August 10, 2017 (incorporated by reference to [Exhibit 10.2 of the NiSource Inc. Form 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000111171118000049/ni-ex102_2018930.htm) filed on November 1, 2018). |
| (10.44) | Amended Restated Savings Restoration Plan for NiSource Inc. and Affiliates effective August 10, 2017 (incorporated by reference to [Exhibit 10.3 of the NiSource Inc. Form 10-Q](http://www.sec.gov/Archives/edgar/data/1111711/000111171118000049/ni-ex103_2018930.htm) filed on November 1, 2018). |
| (101.INS) | XBRL Instance Document. |
| | | | Richard L. Thompson | | | |
| | | /s/ | KEVIN T. KABAT | | Director | Date: February 20, 2019 |
An excerpt. Shown here: 40 of 74 rewritten, all 21 added and all 9 removed. The counts are complete. For every sentence, read Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES in the FY2019 filing and the FY2018 filing.