filings.toolsItem 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NIS****OURCE INC.
Regulatory Capital Improvement Programs. In 2020, we continued to move forward on core infrastructure and environmental investment programs supported by complementary regulatory and customer initiatives across all seven states of our operating area. The following table describes 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:
| (in millions) | ||||||||||||||||||||||||||
| Company | Program | Incremental Revenue | Incremental Capital Investment | Investment Period | Costs Covered(1) | Rates Effective | ||||||||||||||||||||
| Columbia of Ohio | IRP - 2020 | $ | 32.9 | $ | 234.4 | 1/19-12/19 | Replacement of (1) hazardous service lines, (2) cast iron, wrought iron, uncoated steel, and bare steel pipe, (3) natural gas risers prone to failure and installation of AMR devices. | May 2020 | ||||||||||||||||||
| Columbia of Ohio | CEP - 2020 | $ | 18.0 | $ | 185.1 | 1/19-12/19 | Assets not included in the IRP. | September 2020 | ||||||||||||||||||
| NIPSCO - Gas | TDSIC 1 | $ | 0.6 | $ | 26.0 | 1/20-6/20 | New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development. | January 2021 | ||||||||||||||||||
| NIPSCO - Gas | FMCA 5 | $ | 4.8 | $ | 42.3 | 4/20-9/20 | Project costs to comply with federal mandates. | April 2021 | ||||||||||||||||||
| Columbia of Pennsylvania | DSIC-Q4 2020(2) | $ | 0.8 | $ | 25.0 | 9/20-11/20 | Eligible project costs including piping, couplings, gas service lines, excess flow valves, risers, meter bars, meters, and other related capitalized cost, to improve the distribution system. | January 2021 | ||||||||||||||||||
| Columbia of Virginia | SAVE - 2021 | $ | 5.2 | $ | 46.4 | 1/21-12/21 | Replacement projects that (1) enhance system safety or reliability, or (2) reduce, or potentially reduce, greenhouse gas emissions. | January 2021 | ||||||||||||||||||
| Columbia of Kentucky | SMRP - 2021(3) | $ | 5.8 | $ | 50.0 | 1/21-12/21 | Replacement of mains and inclusion of system safety investments. | Q2 2021 | ||||||||||||||||||
| Columbia of Maryland | STRIDE - 2021 | $ | 1.3 | $ | 16.9 | 1/21-12/21 | Pipeline upgrades designed to improve public safety or infrastructure reliability. | January 2021 | ||||||||||||||||||
| NIPSCO - Electric | TDSIC - 7(4) | $ | 11.3 | $ | 122.3 | 7/19-7/20 | New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development. | February 2021 | ||||||||||||||||||
| NIPSCO - Electric | FMCA - 13(5)(6) | $ | (1.2) | $ | — | 9/19-2/20 | Project costs to comply with federal mandates. | August 2020 |
(1)Programs do not include any costs already included in base rates.
(2)Due to a cap on the revenues permitted to flow through the DSIC, Columbia Gas of Pennsylvania is only able to request recovery of a portion of the capital investment for this period.
(3)On December 17, 2020, the Kentucky PSC issued an Order suspending the rates through May 30, 2021. An Order for approval can be received from the Commission prior to this date.
(4)Incremental capital and revenue are net of amounts included in the step 2 rates. See Part 1, Item 1. "Business" for additional information.
(5)Incremental revenue is inclusive of tracker eligible operations and maintenance expense.
(6)No eligible capital investments were made during the investment period.
Refer to Note 9, “Regulatory Matters” and Note 20-E, "Other Matters," in the Notes to Consolidated Financial Statements for a further discussion of regulatory developments during 2020.
Financing Activities
Short-term Debt. Refer to Note 16, “Short-Term Borrowings,” in the Notes to Consolidated Financial Statements for information on short-term debt.
Long-term Debt. Refer to Note 15, “Long-Term Debt,” in the Notes to Consolidated Financial Statements for information on long-term debt.
Net Available Liquidity. As of December 31, 2020, an aggregate of $1,721.6 million of net liquidity was available, including cash and credit available under the revolving credit facility and accounts receivable securitization programs.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NIS****OURCE INC.
Sources of Liquidity
The following table displays our liquidity position as of December 31, 2020 and 2019:
| Year Ended December 31, (in millions) | 2020 | 2019 | ||||||
| Current Liquidity | ||||||||
| Revolving Credit Facility | $ | 1,850.0 | $ | 1,850.0 | ||||
| Accounts Receivable Program(1) | 273.3 | 353.2 | ||||||
| Less: | ||||||||
| Commercial Paper | 503.0 | 570.0 | ||||||
| Accounts Receivable Programs Utilized | — | 353.2 | ||||||
| Letters of Credit Outstanding Under Credit Facility | 15.2 | 10.2 | ||||||
| Add: | ||||||||
| Cash and Cash Equivalents | 116.5 | 139.3 | ||||||
| Net Available Liquidity | $ | 1,721.6 | $ | 1,409.1 |
(1)Represents the lesser of the seasonal limit or maximum borrowings supportable by the underlying receivables.
Debt Covenants**.** We are subject to a financial covenant under our revolving credit facility, which requires us to maintain a debt to capitalization ratio that does not exceed 70%. As of December 31, 2020, the ratio was 62.5%.
Sale of Trade Accounts Receivables**.** Refer to Note 19, “Transfers of Financial Assets,” in the Notes to Consolidated Financial Statements for information on the sale of trade accounts receivable.
Credit Ratings**.** The credit rating agencies periodically review our ratings, taking into account factors such as our capital structure and earnings profile. The following table includes our and certain of our subsidiaries' credit ratings and ratings outlook as of December 31, 2020. In February 2020, S&P changed our and certain of our subsidiaries' outlook from Negative to Stable. There were no other changes to the below credit ratings or outlooks since December 31, 2019.
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.
| S&P | Moody's | Fitch | ||||||||||||||||||
| Rating | Outlook | Rating | Outlook | Rating | Outlook | |||||||||||||||
| NiSource | BBB+ | Stable | Baa2 | Stable | BBB | Stable | ||||||||||||||
| NIPSCO | BBB+ | Stable | Baa1 | Stable | BBB | Stable | ||||||||||||||
| Columbia of Massachusetts | BBB+ | Stable | Baa2 | Stable | Not rated | Not rated | ||||||||||||||
| Commercial Paper | A-2 | Stable | P-2 | Stable | F2 | Stable |
Certain of our subsidiaries have agreements that contain “ratings triggers” that require increased collateral if our credit ratings or the credit ratings of certain of our subsidiaries are below investment grade. These agreements are primarily for insurance purposes and for the physical purchase or sale of power. As of December 31, 2020, the collateral requirement that would be required in the event of a downgrade below the ratings trigger levels would amount to approximately $53.9 million. In addition to agreements with ratings triggers, there are other agreements that contain “adequate assurance” or “material adverse change” provisions that could necessitate additional credit support such as letters of credit and cash collateral to transact business.
Equity. Our authorized capital stock consists of 620,000,000 shares, $0.01 par value, of which 600,000,000 are common stock and 20,000,000 are preferred stock. As of December 31, 2020, 391,760,051 shares of common stock and 440,000 shares of preferred stock were outstanding. For more information regarding our common and preferred stock, see Note 13, "Equity," in the Notes to Consolidated Financial Statements.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NIS****OURCE 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, 2020 and their maturities were:
| (in millions) | Total | 2021 | 2022 | 2023 | 2024 | 2025 | After | ||||||||||||||||||||||||||||||||||
| Long-term debt (1) | $ | 9,135.0 | $ | — | $ | 30.0 | $ | — | $ | — | $ | 1,260.0 | $ | 7,845.0 | |||||||||||||||||||||||||||
| Interest payments on long-term debt | 6,046.3 | 336.3 | 335.7 | 334.1 | 334.1 | 334.1 | 4,372.0 | ||||||||||||||||||||||||||||||||||
| Finance leases(2) | 264.7 | 32.7 | 32.2 | 28.8 | 20.8 | 16.1 | 134.1 | ||||||||||||||||||||||||||||||||||
| Operating leases(3) | 48.0 | 11.7 | 5.2 | 4.7 | 4.5 | 3.7 | 18.2 | ||||||||||||||||||||||||||||||||||
| Energy commodity contracts | 42.1 | 42.1 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Service obligations: | |||||||||||||||||||||||||||||||||||||||||
| Pipeline service obligations(4) | 1,495.6 | 468.7 | 422.5 | 256.0 | 150.5 | 56.2 | 141.7 | ||||||||||||||||||||||||||||||||||
| IT service obligations | 240.3 | 74.9 | 74.0 | 38.1 | 30.5 | 22.8 | — | ||||||||||||||||||||||||||||||||||
| Other service obligations(5) | 12.6 | 12.6 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other liabilities(6) | 116.9 | 26.0 | 0.8 | 90.1 | — | — | — | ||||||||||||||||||||||||||||||||||
| Total contractual obligations | $ | 17,401.5 | $ | 1,005.0 | $ | 900.4 | $ | 751.8 | $ | 540.4 | $ | 1,692.9 | $ | 12,511.0 |
(1) Long-term debt balance excludes unamortized issuance costs and discounts of $86.9 million.
(2) Finance lease payments shown above are inclusive of interest totaling $69.7 million.
(3) Operating lease payments shown above are inclusive of interest totaling $7.8 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 as they are renewed month-to-month after the first year. If we were to continue the fleet vehicle leases outstanding at December 31, 2020, payments would be $30.0 million in 2021, $27.7 million in 2022, $24.9 million in 2023, $22.0 million in 2024, $19.0 million in 2025 and $21.5 million thereafter.
(4)In February 2021, the demand rate increased for our pipeline service obligations, resulting in a total increase of $638.6 million in addition to our future pipeline service obligations shown above.
(5)On February 9, 2021, a rail transportation contract for the transportation of coal was fully executed between NIPSCO and a counterparty, replacing the prior agreement. The minimum coal tonnage shipment commitment for 2021 was eliminated under the new agreement, reducing our contractual obligation for 2021 by $12.1 million.
(6)Other liabilities shown above are inclusive of the Rosewater Developer payment due in 2023.
Our calculated estimated interest payments for long-term debt is based on the stated coupon and payment dates. For 2021, we project that we will be required to make interest payments of approximately $339.4 million, which includes $336.3 million of interest payments related to our long-term debt outstanding as of December 31, 2020. At December 31, 2020, we had $503.0 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 2021. Plan contributions beyond 2021 are dependent upon a number of factors, including actual returns on plan assets, which cannot be reliably estimated at this time. In 2021, we expect to make contributions of approximately $2.9 million to our pension plans and approximately $21.8 million to our postretirement medical and life plans. Refer to Note 12, “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, sales and use, and various other taxes and expect to make tax payments of approximately $253.4 million in 2021, 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 14, "Income Taxes," in the Notes to Consolidated Financial Statements for more information.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NIS****OURCE INC.
NIPSCO has executed several PPAs to purchase 100% of the output from renewable generation facilities at a fixed price per MWh. Each facility supplying the energy will have an associated nameplate capacity, and payments under the PPAs will not begin until the associated generation facility is constructed by the owner/seller. NIPSCO has also executed several BTAs with developers to construct renewable generation facilities. NIPSCO's purchase requirement under the BTAs is dependent on satisfactory approval of the BTA by the IURC, successful execution of an agreement with a tax equity partner and timely completion of construction. NIPSCO and the tax equity partner are obligated to make cash contributions to the partnership at the date construction is substantially complete. Once the tax equity partner has earned their negotiated rate of return and we have reached the agreed upon contractual date, NIPSCO has the option to purchase at fair market value from the tax equity partner the remaining interest in the aforementioned joint venture. See Note 20-A, “Contractual Obligations,” and Note 20-E. “Other Matters - NIPSCO 2018 Integrated Resource Plan,” in the Notes to Consolidated Financial Statements for additional information.
Off-Balance Sheet Arrangements
We, along with certain of our subsidiaries, enter into various agreements providing financial or performance assurance to third parties on behalf of certain subsidiaries. Such agreements include guarantees and stand-by letters of credit.
Refer to Note 20, “Other Commitments and Contingencies,” in the Notes to Consolidated Financial Statements for additional information about such arrangements.
Market Risk Disclosures
Risk is an inherent part of our businesses. The extent to which we properly and effectively identify, assess, monitor and manage each of the various types of risk involved in our businesses is critical to our profitability. We seek to identify, assess, monitor and manage, in accordance with defined policies and procedures, the following principal market risks that are involved in our businesses: commodity price risk, interest rate risk and credit risk. We manage risk through a multi-faceted process with oversight by the Risk Management Committee that requires constant communication, judgment and knowledge of specialized products and markets. Our senior management takes an active role in the risk management process and has developed policies and procedures that require specific administrative and business functions to assist in the identification, assessment and control of various risks. These may include, but are not limited to market, operational, financial, compliance and strategic risk types. In recognition of the increasingly varied and complex nature of the energy business, our risk management process, policies and procedures continue to evolve and are subject to ongoing review and modification.
Commodity Price Risk
We are exposed to commodity price risk as a result of our subsidiaries’ operations involving natural gas and power. To manage this market risk, our subsidiaries use derivatives, including commodity futures contracts, swaps, forwards and options. We do not participate in speculative energy trading activity.
Commodity price risk resulting from derivative activities at our rate-regulated subsidiaries is limited, since regulations allow recovery of prudently incurred purchased power, fuel and gas costs through the rate-making process, including gains or losses on these derivative instruments. If states should explore additional regulatory reform, these subsidiaries may begin providing services without the benefit of the traditional rate-making process and may be more exposed to commodity price risk.
Our subsidiaries are required to make cash margin deposits with their brokers to cover actual and potential losses in the value of outstanding exchange traded derivative contracts. The amount of these deposits, some of which is reflected in our restricted cash balance, may fluctuate significantly during periods of high volatility in the energy commodity markets.
Refer to Note 10, "Risk Management Activities," in the Notes to the Consolidated Financial Statements for further information on our commodity price risk assets and liabilities as of December 31, 2020 and 2019.
Interest Rate Risk
We are exposed to interest rate risk as a result of changes in interest rates on borrowings under our revolving credit agreement, commercial paper program, accounts receivable programs and now-settled term loan, which have interest rates that are indexed to short-term market interest rates. Based upon average borrowings and debt obligations subject to fluctuations in short-term market interest rates, an increase (or decrease) in short-term interest rates of 100 basis points (1%) would have increased (or decreased) interest expense by $12.3 million and $19.0 million for 2020 and 2019, respectively. We are also exposed to interest rate risk as a result of changes in benchmark rates that can influence the interest rates of future debt issuances.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NIS****OURCE INC.
Refer to Note 10, "Risk Management Activities," in the Notes to Consolidated Financial Statements for further information on our interest rate risk assets and liabilities as of December 31, 2020 and 2019.
Credit Risk
Due to the nature of the industry, credit risk is embedded in many of our business activities. Our extension of credit is governed by a Corporate Credit Risk Policy. In addition, Risk Management Committee guidelines are in place which document management approval levels for credit limits, evaluation of creditworthiness, and credit risk mitigation efforts. Exposures to credit risks are monitored by the risk management function, which is independent of commercial operations. Credit risk arises due to the possibility that a customer, supplier or counterparty will not be able or willing to fulfill its obligations on a transaction on or before the settlement date. For derivative-related contracts, credit risk arises when counterparties are obligated to deliver or purchase defined commodity units of gas or power to us at a future date per execution of contractual terms and conditions. Exposure to credit risk is measured in terms of both current obligations and the market value of forward positions net of any posted collateral such as cash and letters of credit.
We closely monitor the financial status of our banking credit providers. We evaluate the financial status of our banking partners through the use of market-based metrics such as credit default swap pricing levels, and also through traditional credit ratings provided by major credit rating agencies.
Certain individual state regulatory commissions instituted regulatory moratoriums in connection with the COVID-19 pandemic that impacted our ability to pursue our credit risk mitigation practices for customer accounts receivable. Following the issuances of these moratoriums, certain of our regulated operations have been authorized to recognize a regulatory asset for bad debt costs above levels currently in rates. We have reinstated our common credit mitigation practices where moratoriums have expired. See the COVID-19 pandemic discussion in Part I. Item 1A, "Risk Factors" for risks that have been identified related to the pandemic and refer to Note 9, "Regulatory Matters" in the Notes to Consolidated Financial Statements for state specific regulatory moratoriums.
Other Information
Critical Accounting Policies
We apply certain accounting policies based on the accounting requirements discussed below that have had, and may continue to have, significant impacts on our operations and Consolidated Financial Statements.
Basis of Accounting for Rate-Regulated Subsidiaries. ASC Topic 980, 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. Certain expenses and credits subject to utility regulation or rate determination normally reflected in income are deferred on the Consolidated Balance Sheets and are recognized in income as the related amounts are included in service rates and recovered from or refunded to customers. The total amounts of regulatory assets and liabilities reflected on the Consolidated Balance Sheets were $1,930.5 million and $2,065.5 million at December 31, 2020, and $2,239.6 million and $2,512.2 million at December 31, 2019, respectively. For additional information, refer to Note 9, “Regulatory Matters,” in the Notes to Consolidated Financial Statements.
In the event that regulation significantly changes the opportunity for us to recover our costs in the future, all or a portion of our regulated operations may no longer meet the criteria for the application of ASC Topic 980, Regulated Operations. In such event, a write-down of all or a portion of our existing regulatory assets and liabilities could result. If transition cost recovery is approved by the appropriate regulatory bodies that would meet the requirements under GAAP for continued accounting as regulatory assets and liabilities during such recovery period, the regulatory assets and liabilities would be reported at the recoverable amounts. If we were unable to continue to apply the provisions of ASC Topic 980, Regulated Operations, we would be required to apply the provisions of ASC Topic 980-20, Discontinuation of Rate-Regulated Accounting. In management’s opinion, our regulated subsidiaries will be subject to ASC Topic 980, Regulated Operations for the foreseeable future.
Certain of the regulatory assets reflected on our Consolidated Balance Sheets require specific regulatory action in order to be included in future service rates. Although recovery of these amounts is not guaranteed, we believe that these costs meet the requirements for deferral as regulatory assets. If we determine that the amounts included as regulatory assets are no longer recoverable, a charge to income would immediately be required to the extent of the unrecoverable amounts.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NIS****OURCE INC.
The passage of the TCJA into law in December 2017 necessitated the remeasurement of our deferred income tax balances to reflect the change in the statutory federal tax rate from 35% to 21%. For our regulated entities, substantially all of the impact of this remeasurement was recorded to a regulatory liability and is being passed backed to customers, as established during the rate making process. For additional information, refer to Note 9, "Regulatory Matters," and Note 11, "Income Taxes," in the Notes to Consolidated Financial Statements.
Pension and Postretirement Benefits. We have defined benefit plans for both pension and other postretirement benefits. The calculation of the net obligations and annual expense related to the plans requires a significant degree of judgment regarding the discount rates to be used in bringing the liabilities to present value, expected long-term rates of return on plan assets, health care trend rates, and mortality rates, among other assumptions. Due to the size of the plans and the long-term nature of the associated liabilities, changes in the assumptions used in the actuarial estimates could have material impacts on the measurement of the net obligations and annual expense recognition. Differences between actuarial assumptions and actual plan results are deferred into AOCI or a regulatory balance sheet account, depending on the jurisdiction of our entity. These deferred gains or losses are then amortized into the income statement when the accumulated differences exceed 10% of the greater of the projected benefit obligation or the fair value of plan assets (known in GAAP as the “corridor” method) or when settlement accounting is triggered.
The discount rates, expected long-term rates of return on plan assets, health care cost trend rates and mortality rates are critical assumptions. Methods used to develop these assumptions are described below. While a third party actuarial firm assists with the development of many of these assumptions, we are ultimately responsible for selecting the final assumptions.
The discount rate is utilized principally in calculating the actuarial present value of pension and other postretirement benefit obligations and net periodic pension and other postretirement benefit plan costs. Our discount rates for both pension and other postretirement benefits are determined using spot rates along an AA-rated above median yield curve with cash flows matching the expected duration of benefit payments to be made to plan participants.
The expected long-term rate of return on plan assets is a component utilized in calculating annual pension and other postretirement benefit plan costs. We estimate the expected return on plan assets by evaluating expected bond returns, equity risk premiums, target asset allocations, the effects of active plan management, the impact of periodic plan asset rebalancing and historical performance. We also consider the guidance from our investment advisors in making a final determination of our expected rate of return on assets. For measurement of 2021 net periodic benefit cost, we selected an expected pre-tax long-term rate of return of 5.20% and 5.50% for our pension and other postretirement benefit plan assets, respectively.
We estimate the assumed health care cost trend rate, which is used in determining our other postretirement benefit net expense, based upon our actual health care cost experience, the effects of recently enacted legislation, third-party actuarial surveys and general economic conditions.
We utilize a full yield curve approach to estimate the service and interest components of net periodic benefit cost for pension and other postretirement benefits by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. For further discussion of our pension and other postretirement benefits, see Note 12, “Pension and Other Postretirement Benefits,” in the Notes to Consolidated Financial Statements.
Typically, we use the Society of Actuaries’ most recently published mortality data in developing a best estimate of mortality as part of the calculation of the pension and other postretirement benefit obligations. Due to the ongoing COVID-19 pandemic, we adjusted our mortality assumption through 2023 to reflect anticipated slow recovery.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NIS****OURCE INC.
The following tables illustrate the effects of changes in these actuarial assumptions while holding all other assumptions constant:
| Impact on December 31, 2020 Projected Benefit Obligation Increase/(Decrease) | |||||||||||
| Change in Assumptions (in millions) | Pension Benefits | Other Postretirement Benefits | |||||||||
| +50 basis points change in discount rate | $ | (88.7) | $ | (29.8) | |||||||
| -50 basis points change in discount rate | 96.5 | 32.7 | |||||||||
| Impact on 2020 Expense Increase/(Decrease)(1) | |||||||||||
| Change in Assumptions (in millions) | Pension Benefits | Other Postretirement Benefits | |||||||||
| +50 basis points change in discount rate | $ | (2.0) | $ | (0.8) | |||||||
| -50 basis points change in discount rate | 1.6 | 0.9 | |||||||||
| +50 basis points change in expected long-term rate of return on plan assets | (9.8) | (1.3) | |||||||||
| -50 basis points change in expected long-term rate of return on plan assets | 9.8 | 1.3 | |||||||||
(1)Before labor capitalization and regulatory deferrals.
Goodwill and Other Intangible Assets. We have six goodwill reporting units, comprised of the six state operating companies within the Gas Distribution Operations reportable segment. Our goodwill assets at December 31, 2020 were $1,486 million, most of which resulted from the acquisition of Columbia on November 1, 2000.
As required by GAAP, we test for impairment of goodwill on an annual basis and on an interim basis when events or circumstances indicate that a potential impairment may exist. Our annual goodwill test takes place in the second quarter of each year and was performed on May 1, 2020.
A quantitative ("step 1") test was completed on May 1, 2020 for all reporting units. Columbia of Massachusetts was not considered to be a reporting unit for the May 1, 2020 fair value measurement as the goodwill balance had been reduced to zero as of December 31, 2019. Consistent with our historical impairment testing of goodwill, fair value of the reporting units was determined based on a weighting of income and market approaches. These approaches require significant judgments including appropriate long-term growth rates and discount rates for the income approach and appropriate multiples of earnings for peer companies and control premiums for the market approach. The discount rates were derived using peer company data compiled with the assistance of a third party valuation services firm. The discount rates used are subject to change based on changes in tax rates at both the state and federal level, debt and equity ratios at each reporting unit and general economic conditions. The long-term growth rate was derived by evaluating historic growth rates, new business and investment opportunities beyond the near term horizon. 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. The Step 1 analysis performed indicated that the fair value of each of the reporting units exceeds their carrying value. As a result, no impairment charges were recorded.
We recorded impairment charges related to goodwill and other intangible assets in 2019. See Note 7, "Goodwill and Other Intangible Assets," in the Notes to Consolidated Financial Statements for information regarding our 2019 analyses and assumptions.
Revenue Recognition. Revenue is recorded as products and services are delivered. Utility revenues are billed to customers monthly on a cycle basis. Revenues are recorded on the accrual basis and include estimates for electricity and gas delivered but not billed.
We adopted the provisions of ASC 606 beginning on January 1, 2018 using a modified retrospective method, which was applied to all contracts. No material adjustments were made to January 1, 2018 opening balances and no material changes in the amount or timing of future revenue recognition occurred as a result of the adoption of ASC 606. Refer to Note 3 "Revenue Recognition," in the Notes to Consolidated Financial Statements for additional information regarding our significant judgments and estimates related to revenue recognition.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NIS****OURCE INC.
Variable Interest Entities. A VIE is an entity in which the controlling interest is determined through means other than a majority voting interest. The primary beneficiary of a VIE is the business enterprise which has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Also, the primary beneficiary either absorbs a significant amount of the VIE’s losses or has the right to receive benefits that could be significant to the VIE. We consider these qualitative elements in determining whether we are the primary beneficiary of a VIE, and we consolidate those VIEs for which we are determined to be the primary beneficiary. As the managing member of a partnership, we would control decisions that are significant to the ongoing operations and economic results. Therefore, we have concluded that we are the primary beneficiary of Rosewater and have consolidated Rosewater even though we own less than 100% of the total equity membership interest.
We have determined that the use of HLBV accounting is reasonable and appropriate to attribute income and loss to the noncontrolling interest held by the tax equity partner. HLBV accounting was selected as the allocation of Rosewater's economic results to members differ from the members' relative ownership percentages. Using the HLBV method, our earnings are calculated based on how the partnership would distribute its cash if it were to hypothetically sell all of its assets for their carrying amounts and liquidate at each reporting period. Under HLBV, we calculate the liquidation value allocable to each partner at the beginning and end of each period based on the contractual liquidation waterfall and adjust our income for the period to reflect the change our associated book value. Refer to Note 4, "Variable Interest Entities" in the Notes to Consolidated Financial Statements.
Recently Issued Accounting Pronouncements
Refer to Note 2, "Recent Accounting Pronouncements," in the Notes to Consolidated Financial Statements.
Quantitative and Qualitative Disclosures about Market Risk are reported in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk Disclosures.”
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NIS****OURCE INC.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)
NIS****OURCE INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of NiSource Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of NiSource Inc. and subsidiaries (the "Company") as of December 31, 2020 and 2019, 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, 2020, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 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, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 17, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Impact of Rate Regulation on the Financial Statements - Refer to Note 9 to the consolidated financial statements
Critical Audit Matter Description
The Company’s subsidiaries are fully regulated natural gas and electric utility companies serving customers in six 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. Certain expenses and credits subject to utility regulation or rate determination normally reflected in income are deferred on the consolidated balance sheets and are later recognized in income as the related amounts are included in customer rates and recovered from or refunded to customers.
The Company’s subsidiaries’ rates are subject to regulatory rate-setting processes. Rates are determined and approved in regulatory proceedings based on an analysis of the subsidiaries’ costs to provide utility service and a return on, and recovery of, the subsidiaries’ investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment, and the timing and amount of assets to be recovered by rates. The respective commissions' regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. Decisions to be made by the commission in the future will impact the accounting for regulated operations, including
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)
NIS****OURCE INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
decisions about the amount of allowable costs and return on invested capital included in rates and any refunds that may be required. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the commission will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of all amounts invested in the utility business and a reasonable return on that investment.
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 and (2) the likelihood of refund of amounts previously collected from customers. 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 the 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; 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 the commissions for the Company, regulatory statutes, interpretations, procedural memorandums, 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 precedents of the commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared to management’s recorded regulatory asset and liability balances for completeness.
-
For regulatory matters in process, we inspected the Company’s filings with the commissions and the filings with the commissions by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions related to recoverability of recorded assets*.*
-
We inquired of management about property, plant, and equipment that may be abandoned. For assets that were abandoned, we inquired of management about their considerations regarding the abandonment. We inspected minutes of the board of directors and regulatory orders and other filings with the 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.
/s/ DELOITTE & TOUCHE LLP
Columbus, Ohio
February 17, 2021
We have served as the Company's auditor since 2002.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)
NIS****OURCE INC.
STATEMENTS OF CONSOLIDATED INCOME (LOSS)
| Year Ended December 31*, (in millions, except per share amounts)* | 2020 | 2019 | 2018 | ||||||||||||||
| Operating Revenues | |||||||||||||||||
| Customer revenues | $ | 4,473.2 | $ | 5,053.4 | $ | 4,991.1 | |||||||||||
| Other revenues | 208.5 | 155.5 | 123.4 | ||||||||||||||
| Total Operating Revenues | 4,681.7 | 5,208.9 | 5,114.5 | ||||||||||||||
| Operating Expenses | |||||||||||||||||
| Cost of energy | 1,109.3 | 1,534.8 | 1,761.3 | ||||||||||||||
| Operation and maintenance | 1,585.9 | 1,354.7 | 2,352.9 | ||||||||||||||
| Depreciation and amortization | 725.9 | 717.4 | 599.6 | ||||||||||||||
| Impairment of goodwill and intangible assets | — | 414.5 | — | ||||||||||||||
| Loss on sale of assets, net | 410.6 | — | 1.2 | ||||||||||||||
| Other taxes | 299.2 | 296.8 | 274.8 | ||||||||||||||
| Total Operating Expenses | 4,130.9 | 4,318.2 | 4,989.8 | ||||||||||||||
| Operating Income | 550.8 | 890.7 | 124.7 | ||||||||||||||
| Other Income (Deductions) | |||||||||||||||||
| Interest expense, net | (370.7) | (378.9) | (353.3) | ||||||||||||||
| Other, net | 32.1 | (5.2) | 43.5 | ||||||||||||||
| Loss on early extinguishment of long-term debt | (243.5) | — | (45.5) | ||||||||||||||
| Total Other Deductions, Net | (582.1) | (384.1) | (355.3) | ||||||||||||||
| Income (Loss) before Income Taxes | (31.3) | 506.6 | (230.6) | ||||||||||||||
| Income Taxes | (17.1) | 123.5 | (180.0) | ||||||||||||||
| Net Income (Loss) | (14.2) | 383.1 | (50.6) | ||||||||||||||
| Net income attributable to noncontrolling interest | 3.4 | — | — | ||||||||||||||
| Net Income (Loss) attributable to NiSource | (17.6) | 383.1 | (50.6) | ||||||||||||||
| Preferred dividends | (55.1) | (55.1) | (15.0) | ||||||||||||||
| Net Income (Loss) Available to Common Shareholders | (72.7) | 328.0 | (65.6) | ||||||||||||||
| Earnings (Loss) Per Share | |||||||||||||||||
| Basic Earnings (Loss) Per Share | $ | (0.19) | $ | 0.88 | $ | (0.18) | |||||||||||
| Diluted Earnings (Loss) Per Share | $ | (0.19) | $ | 0.87 | $ | (0.18) | |||||||||||
| Basic Average Common Shares Outstanding | 384.3 | 374.6 | 356.5 | ||||||||||||||
| Diluted Average Common Shares | 384.3 | 376.0 | 356.5 |
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)
NIS****OURCE INC.
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)
| Year Ended December 31, (in millions, net of taxes) | 2020 | 2019 | 2018 | ||||||||||||||
| Net Income (Loss) | $ | (14.2) | $ | 383.1 | $ | (50.6) | |||||||||||
| Other comprehensive income (loss): | |||||||||||||||||
| Net unrealized gain (loss) on available-for-sale securities(1) | 2.7 | 5.7 | (2.6) | ||||||||||||||
| Net unrealized gain (loss) on cash flow hedges(2) | (70.7) | (64.2) | 22.7 | ||||||||||||||
| Unrecognized pension and OPEB benefit (costs)(3) | 3.9 | 3.1 | (4.4) | ||||||||||||||
| Total other comprehensive income (loss) | (64.1) | (55.4) | 15.7 | ||||||||||||||
| Total Comprehensive Income (Loss) | $ | (78.3) | $ | 327.7 | $ | (34.9) | |||||||||||
(1) Net unrealized gain (loss) on available-for-sale securities, net of $0.7 million tax expense, $1.5 million tax expense and $0.6 million tax benefit in 2020, 2019 and 2018, respectively.
(2) Net unrealized gain (loss) on derivatives qualifying as cash flow hedges, net of $23.4 million tax benefit, $21.2 million tax benefit and $7.5 million tax expense in 2020, 2019 and 2018, respectively.
(3) Unrecognized pension and OPEB benefit (costs), net of $0.1 million tax benefit, $1.6 million tax expense and $1.5 million tax benefit in 2020, 2019 and 2018, respectively.
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)
NIS****OURCE INC.
CONSOLIDATED BALANCE SHEETS
| (in millions) | December 31, 2020 | December 31, 2019 | |||||||||
| ASSETS | |||||||||||
| Property, Plant and Equipment | |||||||||||
| Plant | $ | 24,179.9 | $ | 24,541.9 | |||||||
| Accumulated depreciation and amortization | (7,560.4) | (7,629.7) | |||||||||
| Net Property, Plant and Equipment(1) | 16,619.5 | 16,912.2 | |||||||||
| Investments and Other Assets | |||||||||||
| Unconsolidated affiliates | — | 1.3 | |||||||||
| Available-for-sale debt securities (amortized cost of $163.9 and $150.1, allowance for credit losses of $0.5 and $0, respectively) | 170.9 | 154.2 | |||||||||
| Other investments | 81.1 | 74.7 | |||||||||
| Total Investments and Other Assets | 252.0 | 230.2 | |||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | 116.5 | 139.3 | |||||||||
| Restricted cash | 9.1 | 9.1 | |||||||||
| Accounts receivable | 843.6 | 876.1 | |||||||||
| Allowance for credit losses | (52.3) | (19.2) | |||||||||
| Accounts receivable, net | 791.3 | 856.9 | |||||||||
| Gas inventory | 191.2 | 250.9 | |||||||||
| Materials and supplies, at average cost | 141.5 | 120.2 | |||||||||
| Electric production fuel, at average cost | 68.4 | 53.6 | |||||||||
| Exchange gas receivable | 34.1 | 48.5 | |||||||||
| Regulatory assets | 135.7 | 225.7 | |||||||||
| Deferred property taxes | 85.6 | 79.5 | |||||||||
| Prepayments and other | 86.0 | 70.2 | |||||||||
| Total Current Assets(1) | 1,659.4 | 1,853.9 | |||||||||
| Other Assets | |||||||||||
| Regulatory assets | 1,794.8 | 2,013.9 | |||||||||
| Goodwill | 1,485.9 | 1,485.9 | |||||||||
| Deferred charges and other | 228.9 | 163.7 | |||||||||
| Total Other Assets | 3,509.6 | 3,663.5 | |||||||||
| Total Assets | $ | 22,040.5 | $ | 22,659.8 |
(1)Includes $175.6 million of net property, plant and equipment assets and $1.7 million of current assets of a consolidated VIE that may be used only to settle obligations of the consolidated VIE. Refer to Note 4 "Variable Interest Entity" for additional information.
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)
NIS****OURCE INC.
CONSOLIDATED BALANCE SHEETS
| (in millions, except share amounts) | December 31, 2020 | December 31, 2019 | |||||||||
| CAPITALIZATION AND LIABILITIES | |||||||||||
| Capitalization | |||||||||||
| Stockholders’ Equity | |||||||||||
| Common stock - $0.01 par value, 600,000,000 shares authorized; 391,760,051 and 382,135,680 shares outstanding, respectively | $ | 3.9 | $ | 3.8 | |||||||
| Preferred stock - $0.01 par value, 20,000,000 shares authorized; 440,000 shares outstanding | 880.0 | 880.0 | |||||||||
| Treasury stock | (99.9) | (99.9) | |||||||||
| Additional paid-in capital | 6,890.1 | 6,666.2 | |||||||||
| Retained deficit | (1,765.2) | (1,370.8) | |||||||||
| Accumulated other comprehensive loss | (156.7) | (92.6) | |||||||||
| Total NiSource Stockholders' Equity | 5,752.2 | 5,986.7 | |||||||||
| Noncontrolling interest in consolidated subsidiaries | 85.6 | — | |||||||||
| Total Stockholders’ Equity | 5,837.8 | 5,986.7 | |||||||||
| Long-term debt, excluding amounts due within one year | 9,219.8 | 7,856.2 | |||||||||
| Total Capitalization | 15,057.6 | 13,842.9 | |||||||||
| Current Liabilities | |||||||||||
| Current portion of long-term debt | 23.3 | 13.4 | |||||||||
| Short-term borrowings | 503.0 | 1,773.2 | |||||||||
| Accounts payable | 589.0 | 666.0 | |||||||||
| Customer deposits and credits | 243.3 | 256.4 | |||||||||
| Taxes accrued | 244.1 | 231.6 | |||||||||
| Interest accrued | 104.7 | 99.4 | |||||||||
| Risk management liabilities | 78.2 | 12.6 | |||||||||
| Exchange gas payable | 48.5 | 59.7 | |||||||||
| Regulatory liabilities | 161.3 | 160.2 | |||||||||
| Accrued compensation and employee benefits | 141.8 | 156.3 | |||||||||
| Claims accrued | 28.6 | 165.4 | |||||||||
| Other accruals | 113.6 | 151.6 | |||||||||
| Total Current Liabilities | 2,279.4 | 3,745.8 | |||||||||
| Other Liabilities | |||||||||||
| Risk management liabilities | 144.6 | 134.0 | |||||||||
| Deferred income taxes | 1,470.6 | 1,485.3 | |||||||||
| Accrued insurance liabilities | 84.8 | 81.5 | |||||||||
| Accrued liability for postretirement and postemployment benefits | 336.1 | 373.2 | |||||||||
| Regulatory liabilities | 1,904.2 | 2,352.0 | |||||||||
| Asset retirement obligations | 477.1 | 416.9 | |||||||||
| Other noncurrent liabilities | 286.1 | 228.2 | |||||||||
| Total Other Liabilities | 4,703.5 | 5,071.1 | |||||||||
| Commitments and Contingencies (Refer to Note 20, "Other Commitments and Contingencies") | |||||||||||
| Total Capitalization and Liabilities | $ | 22,040.5 | $ | 22,659.8 |
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)
NIS****OURCE INC.
STATEMENTS OF CONSOLIDATED CASH FLOWS
| Year Ended December 31, (in millions) | 2020 | 2019 | 2018 | ||||||||||||||
| Operating Activities | |||||||||||||||||
| Net Income (Loss) | $ | (14.2) | $ | 383.1 | $ | (50.6) | |||||||||||
| Adjustments to Reconcile Net Income (Loss) to Net Cash from Operating Activities: | |||||||||||||||||
| Loss on early extinguishment of debt | 243.5 | — | 45.5 | ||||||||||||||
| Depreciation and amortization | 725.9 | 717.4 | 599.6 | ||||||||||||||
| Deferred income taxes and investment tax credits | (29.0) | 118.2 | (188.2) | ||||||||||||||
| Stock compensation expense and 401(k) profit sharing contribution | 17.4 | 25.9 | 28.6 | ||||||||||||||
| Impairment of goodwill and intangible assets | — | 414.5 | — | ||||||||||||||
| Loss (gain) on sale of assets | 409.8 | (0.6) | 1.3 | ||||||||||||||
| Amortization of discount/premium on debt | 9.4 | 8.2 | 7.5 | ||||||||||||||
| AFUDC equity | (9.9) | (8.0) | (14.2) | ||||||||||||||
| Other adjustments | 0.2 | (0.3) | 0.4 | ||||||||||||||
| Changes in Assets and Liabilities: | |||||||||||||||||
| Accounts receivable | (3.9) | 187.8 | (186.2) | ||||||||||||||
| Inventories | (1.5) | (2.0) | 41.4 | ||||||||||||||
| Accounts payable | (29.7) | (299.9) | 268.4 | ||||||||||||||
| Customer deposits and credits | 10.0 | 16.9 | (25.4) | ||||||||||||||
| Taxes accrued | 28.4 | 7.3 | 20.2 | ||||||||||||||
| Interest accrued | 5.3 | 8.8 | (21.7) | ||||||||||||||
| Exchange gas receivable/payable | (6.9) | 55.5 | (21.5) | ||||||||||||||
| Other accruals | (218.8) | 105.3 | 43.5 | ||||||||||||||
| Prepayments and other current assets | (5.9) | (33.6) | (14.5) | ||||||||||||||
| Regulatory assets/liabilities | 70.8 | (85.6) | (53.2) | ||||||||||||||
| Postretirement and postemployment benefits | (103.6) | (21.1) | 58.2 | ||||||||||||||
| Deferred charges and other noncurrent assets | (15.0) | (76.1) | 3.8 | ||||||||||||||
| Other noncurrent liabilities | 21.7 | 61.6 | (2.8) | ||||||||||||||
| Net Cash Flows from Operating Activities | 1,104.0 | 1,583.3 | 540.1 | ||||||||||||||
| Investing Activities | |||||||||||||||||
| Capital expenditures | (1,758.1) | (1,802.4) | (1,818.2) | ||||||||||||||
| Cost of removal | (138.2) | (113.2) | (104.3) | ||||||||||||||
| Proceeds from disposition of assets | 1,115.9 | 0.4 | 1.8 | ||||||||||||||
| Purchases of available-for-sale securities | (144.7) | (140.4) | (90.0) | ||||||||||||||
| Sales of available-for-sale securities | 131.4 | 132.1 | 82.3 | ||||||||||||||
| Payment to renewable generation asset developer | (85.3) | — | — | ||||||||||||||
| Other investing activities | (0.1) | 1.1 | 2.3 | ||||||||||||||
| Net Cash Flows used for Investing Activities | (879.1) | (1,922.4) | (1,926.1) | ||||||||||||||
| Financing Activities | |||||||||||||||||
| Proceeds from issuance of long-term debt | 2,974.0 | 750.0 | 350.0 | ||||||||||||||
| Repayments of long-term debt and finance lease obligations | (1,622.0) | (51.6) | (1,046.1) | ||||||||||||||
| Issuance of short-term debt (maturity > 90 days) | 1,350.0 | 600.0 | 950.0 | ||||||||||||||
| Repayment of short-term debt (maturity > 90 days) | (2,200.0) | (700.0) | — | ||||||||||||||
| Change in short-term borrowings, net (maturity ≤ 90 days) | (420.1) | (104.0) | (178.5) | ||||||||||||||
| Issuance of common stock, net of issuance costs | 211.4 | 244.4 | 848.2 | ||||||||||||||
| Issuance of preferred stock, net of issuance costs | — | — | 880.0 | ||||||||||||||
| Equity costs, premiums and other debt related costs | (246.5) | (17.8) | (46.0) | ||||||||||||||
| Acquisition of treasury stock | — | — | (4.0) | ||||||||||||||
| Contributions from non-controlling interest, net of issuance costs | 82.2 | — | — | ||||||||||||||
| Dividends paid - common stock | (321.6) | (298.5) | (273.3) | ||||||||||||||
| Dividends paid - preferred stock | (55.1) | (56.1) | (11.6) | ||||||||||||||
| Net Cash Flows from Financing Activities | (247.7) | 366.4 | 1,468.7 | ||||||||||||||
| Change in cash, cash equivalents and restricted cash | (22.8) | 27.3 | 82.7 | ||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 148.4 | 121.1 | 38.4 | ||||||||||||||
| Cash, Cash Equivalents and Restricted Cash at End of Period | $ | 125.6 | $ | 148.4 | $ | 121.1 |
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
Previous: Item 6. SELECTED FINANCIAL DATA · Next: Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)