NiSource 10-Q 2022-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-16189

NiSource Inc.

(Exact name of registrant as specified in its charter)

DE									35-2108964
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)
801 East 86th Avenue
Merrillville,			IN						46410
(Address of principal executive offices)									(Zip Code)

(877) 647-5990

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class			Trading Symbol(s)			Name of Each Exchange on Which Registered
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 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			NI PR B			NYSE
Series A Corporate Units			NIMC			NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.)

Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ¨ Emerging growth company ☐ Non-accelerated filer ¨ Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Stock, $0.01 Par Value: 406,134,342 shares outstanding at October 31, 2022.

NISOURCE INC.

FORM 10-Q QUARTERLY REPORT

FOR THE QUARTER ENDED SEPTEMBER 30, 2022

Table of Contents

									Page
			Defined Terms						3
PART I			FINANCIAL INFORMATION
			Item 1.			Financial Statements - unaudited
						Condensed Statements of Consolidated Income (unaudited)			7
						Condensed Statements of Consolidated Comprehensive Income (unaudited)			8
						Condensed Consolidated Balance Sheets (unaudited)			9
						Condensed Statements of Consolidated Cash Flows (unaudited)			11
						Condensed Statements of Consolidated Equity (unaudited)			12
						Notes to Condensed Consolidated Financial Statements (unaudited)			15
			Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			36
			Item 3.			Quantitative and Qualitative Disclosures About Market Risk			57
			Item 4.			Controls and Procedures			57
PART II			OTHER INFORMATION
			Item 1.			Legal Proceedings			58
			Item 1A.			Risk Factors			58
			Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			58
			Item 3.			Defaults Upon Senior Securities			58
			Item 4.			Mine Safety Disclosures			58
			Item 5.			Other Information			58
			Item 6.			Exhibits			59
			Signature						60

DEFINED TERMS
The following is a list of frequently used abbreviations or acronyms that are found in this report:
NiSource Subsidiaries and Affiliates
Columbia of Kentucky			Columbia Gas of Kentucky, Inc.
Columbia of Maryland			Columbia Gas of Maryland, Inc.
Columbia of Massachusetts			Bay State Gas Company
Columbia of Ohio			Columbia Gas of Ohio, Inc.
Columbia of Pennsylvania			Columbia Gas of Pennsylvania, Inc.
Columbia of Virginia			Columbia Gas of Virginia, Inc.
NIPSCO			Northern Indiana Public Service Company LLC
NiSource ("we," "us" or "our")			NiSource Inc.
Rosewater			Rosewater Wind Generation LLC and its wholly owned subsidiary, Rosewater Wind Farm LLC
Indiana Crossroads Wind			Indiana Crossroads Wind Generation LLC and its wholly owned subsidiary, Indiana Crossroads Wind Farm LLC
Abbreviations and Other
AFUDC			Allowance for funds used during construction
AOCI			Accumulated Other Comprehensive Income (Loss)
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
ATM			At-the-market
BTA			Build-transfer agreement
CCRs			Coal Combustion Residuals
CEP			Capital Expenditure Program
CERCLA			Comprehensive Environmental Response Compensation and Liability Act (also known as Superfund)
Corporate Units			Series A Corporate Units
COVID-19 ("the COVID-19 pandemic" or "the pandemic")			Novel Coronavirus 2019 and its variants, including the Delta and Omicron variants, and any other variant that may emerge
DPU			Department of Public Utilities
DSIC			Distribution System Improvement Charge
EPA			United States Environmental Protection Agency
EPS			Earnings per share
Equity Units			Series A Equity Units
FAC			Fuel adjustment clause
FASB			Financial Accounting Standards Board
FMCA			Federally Mandated Cost Adjustment
GAAP			Generally Accepted Accounting Principles
GCA			Gas cost adjustment
GHG			Greenhouse gases
GWh			Gigawatt hours
IRA			Inflation Reduction Act
IRP			Infrastructure Replacement Program
IURC			Indiana Utility Regulatory Commission
LIBOR			London InterBank Offered Rate

DEFINED TERMS
LIHEAP			Low Income Heating Energy Assistance Programs
Massachusetts Business			All of the assets sold to, and liabilities assumed by, Eversource pursuant to the Asset Purchase Agreement
MGP			Manufactured Gas Plant
MISO			Midcontinent Independent System Operator
MMDth			Million dekatherms
MW			Megawatts
MWh			Megawatt hours
NTSB			National Transportation Safety Board
NYMEX			New York Mercantile Exchange
OPEB			Other Postemployment Benefits
PHMSA			Pipeline and Hazardous Materials Safety Administration
PPA			Power Purchase Agreement
PUCO			Public Utilities Commission of Ohio
RNG			Renewable Natural Gas
SAVE			Steps to Advance Virginia's Energy Plan
Scope 1 GHG Emissions			Direct emissions from sources owned or controlled by us (e.g., emissions from our combustion of fuel, vehicles, and process emissions and fugitive emissions)
SEC			Securities and Exchange Commission
Section 201 Tariffs			Tariffs imposed by Executive Order from the President of the U.S. on certain imported solar cells and modules at a rate of 15%, which were recently extended to 2026
SMRP			Safety Modification and Replacement Program
STRIDE			Strategic Infrastructure Development Enhancement
TCJA			An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018 (commonly known as the Tax Cuts and Jobs Act of 2017)
TDSIC			Transmission, Distribution and Storage System Improvement Charge
U.S. Attorney's Office			U.S. Attorney's Office for the District of Massachusetts
VIE			Variable Interest Entity

Note regarding forward-looking statements

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Investors and prospective investors should understand that many factors govern whether any forward-looking statement contained herein will be or can be realized. Any one of those factors could cause actual results to differ materially from those projected. These forward-looking statements include, but are not limited to, statements concerning our plans, strategies, objectives, expected performance, expenditures, recovery of expenditures through rates, stated on either a consolidated or segment basis, and any and all underlying assumptions and other statements that are other than statements of historical fact. Expressions of future goals and expectations and similar expressions, including "may," "will," "should," "could," "would," "aims," "seeks," "expects," "plans," "anticipates," "intends," "believes," "estimates," "predicts," "potential," "targets," "forecast," and "continue," reflecting something other than historical fact are intended to identify forward-looking statements. All forward-looking statements are based on assumptions that management believes to be reasonable; however, there can be no assurance that actual results will not differ materially.

Factors that could cause actual results to differ materially from the projections, forecasts, estimates and expectations discussed in this Quarterly Report on Form 10-Q include, among other things, our ability to execute our business plan or growth strategy, including utility infrastructure investments; potential incidents and other operating risks associated with our business; our ability to adapt to, and manage costs related to, advances in technology; impacts related to our aging infrastructure; our ability to obtain sufficient insurance coverage and whether such coverage will protect us against significant losses; the success of our electric generation strategy; construction risks and natural gas costs and supply risks; fluctuations in demand from residential

and commercial customers; fluctuations in the price of energy commodities and related transportation costs or an inability to obtain an adequate, reliable and cost-effective fuel supply to meet customer demands; the attraction and retention of a qualified, diverse workforce and ability to maintain good labor relations; our ability to manage new initiatives and organizational changes; the actions of activist stockholders; the performance of third-party suppliers and service providers; potential cybersecurity attacks; increased requirements and costs related to cybersecurity; any damage to our reputation; any remaining liabilities or impact related to the sale of the Massachusetts Business; the impacts of natural disasters, potential terrorist attacks or other catastrophic events; the physical impacts of climate change and the transition to a lower carbon future; our ability to manage the financial and operational risks related to achieving our carbon emission reduction goals, including our Net-Zero Goal (as defined below); our debt obligations; any changes to our credit rating or the credit rating of certain of our subsidiaries; any adverse effects related to our equity units; adverse economic and capital market conditions or increases in interest rates; inflation; recessions; economic regulation and the impact of regulatory rate reviews; our ability to obtain expected financial or regulatory outcomes; continuing and potential future impacts from the COVID-19 pandemic; economic conditions in certain industries; the reliability of customers and suppliers to fulfill their payment and contractual obligations; the ability of our subsidiaries to generate cash; pension funding obligations; potential impairments of goodwill; changes in the method for determining LIBOR and the potential replacement of the LIBOR benchmark interest rate; the outcome of legal and regulatory proceedings, investigations, incidents, claims and litigation; potential remaining liabilities related to the Greater Lawrence Incident; compliance with the agreements entered into with the U.S. Attorney's Office to settle the U.S. Attorney's Office's investigation relating to the Greater Lawrence Incident; compliance with applicable laws, regulations and tariffs; compliance with environmental laws and the costs of associated liabilities; changes in taxation; other matters in the "Risk Factors" section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022, many of which risks are beyond our control. In addition, the relative contributions to profitability by each business segment, and the assumptions underlying the forward-looking statements relating thereto, may change over time.

All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to, and expressly disclaim any such obligation to, update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events or changes to the future results over time or otherwise, except as required by law.

Index			Page
Condensed Statements of Consolidated Income (unaudited)			7
Condensed Statements of Consolidated Comprehensive Income (unaudited)			8
Condensed Consolidated Balance Sheets (unaudited)			9
Condensed Statements of Consolidated Cash Flows (unaudited)			11
Condensed Statements of Consolidated Equity (unaudited)			12
Notes to Condensed Consolidated Financial Statements (unaudited)			15
1. Basis of Accounting Presentation			15
2. Recent Accounting Pronouncements			15
3. Revenue Recognition			15
4. Earnings Per Share			19
5. Equity			20
6. Regulatory Matters			21
7. Risk Management Activities			22
8. Fair Value			24
9. Income Taxes			27
10. Pension and Other Postretirement Benefits			27
11. Variable Interest Entities			28
12. Long-Term Debt			30
13. Short-Term Borrowings			30
14. Other Commitments and Contingencies			31
15. Accumulated Other Comprehensive Loss			34
16. Other, Net			35
17. Business Segment Information			35

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS

NiSource Inc.

Condensed Statements of Consolidated Income (unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
(in millions, except per share amounts)			2022						2021						2022						2021
Operating Revenues
Customer revenues			$	1,058.2					$	918.8					$	4,055.0					$	3,377.7
Other revenues			31.3						40.6						91.0						113.3
Total Operating Revenues			1,089.5						959.4						4,146.0						3,491.0
Operating Expenses
Cost of energy			330.8						208.3						1,421.2						913.4
Operation and maintenance			347.9						351.1						1,124.1						1,075.4
Depreciation and amortization			203.2						188.9						604.6						560.2
Loss (gain) on sale of assets, net			(0.3)						(1.1)						(105.3)						6.9
Other taxes			51.2						65.1						201.1						212.6
Total Operating Expenses			932.8						812.3						3,245.7						2,768.5
Operating Income			156.7						147.1						900.3						722.5
Other Income (Deductions)
Interest expense, net			(91.6)						(84.4)						(259.8)						(253.5)
Other, net			10.1						14.3						30.0						37.2
Total Other Deductions, Net			(81.5)						(70.1)						(229.8)						(216.3)
Income before Income Taxes			75.2						77.0						670.5						506.2
Income Taxes			11.7						14.8						119.9						90.6
Net Income			63.5						62.2						550.6						415.6
Net loss attributable to noncontrolling interest			(2.3)						(1.0)						(9.0)						(3.4)
Net Income Attributable to NiSource			65.8						63.2						559.6						419.0
Preferred dividends			(13.8)						(13.8)						(41.4)						(41.4)
Net Income Available to Common Shareholders			52.0						49.4						518.2						377.6
Earnings Per Share
Basic Earnings Per Share			$	0.13					$	0.13					$	1.28					$	0.96
Diluted Earnings Per Share			$	0.12					$	0.12					$	1.18					$	0.91
Basic Average Common Shares Outstanding			406.5						393.2						406.3						392.9
Diluted Average Common Shares			443.4						430.3						441.7						415.8

The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Condensed Statements of Consolidated Comprehensive Income (unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
(in millions, net of taxes)			2022						2021						2022						2021
Net Income			$	63.5					$	62.2					$	550.6					$	415.6
Other comprehensive income:
Net unrealized loss on available-for-sale debt securities(1)			(4.5)						(0.8)						(14.1)						(2.4)
Net unrealized gain on cash flow hedges(2)			16.2						6.6						119.2						41.4
Unrecognized pension and OPEB benefit (costs)(3)			0.6						0.4						(1.8)						0.3
Total other comprehensive income			12.3						6.2						103.3						39.3
Comprehensive Income			$	75.8					$	68.4					$	653.9					$	454.9

(1)Net unrealized loss on available-for-sale debt securities, net of $1.1 million and $0.2 million tax benefit in the third quarter of 2022 and 2021, respectively, and $3.7 million and $0.6 million tax benefit for the nine months ended 2022 and 2021, respectively.

(2)Net unrealized gain on cash flow hedges, net of $5.3 million and $2.2 million tax expense in the third quarter of 2022 and 2021, respectively, and $39.4 million and $13.7 million tax expense for the nine months ended 2022 and 2021, respectively.

(3)Unrecognized pension and OPEB benefit (costs), net of $0.2 million and $0.2 million tax expense in the third quarter of 2022 and 2021, respectively, and $0.6 million tax benefit and $1.3 million tax expense for the nine months ended 2022 and 2021, respectively.

The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Condensed Consolidated Balance Sheets (unaudited)

(in millions)			September 30, 2022						December 31, 2021
ASSETS
Property, Plant and Equipment
Plant			$	26,641.1					$	25,171.3
Accumulated depreciation and amortization			(7,650.1)						(7,289.5)
Net Property, Plant and Equipment(1)			18,991.0						17,881.8
Investments and Other Assets
Unconsolidated affiliates			1.6						0.8
Available-for-sale debt securities (amortized cost of $174.6 and $169.3, allowance for credit losses of $1.7 and $0.2, respectively)			157.8						171.8
Other investments			68.8						87.1
Total Investments and Other Assets			228.2						259.7
Current Assets
Cash and cash equivalents			35.8						84.2
Restricted cash			42.8						10.7
Accounts receivable			605.9						849.1
Allowance for credit losses			(19.2)						(23.5)
Accounts receivable, net			586.7						825.6
Gas inventory			606.3						327.4
Materials and supplies, at average cost			141.4						139.1
Electric production fuel, at average cost			52.4						32.2
Exchange gas receivable			184.7						99.6
Regulatory assets			245.7						206.2
Prepayments and other			332.8						195.8
Total Current Assets(1)			2,228.6						1,920.8
Other Assets
Regulatory assets			2,240.3						2,286.0
Goodwill			1,485.9						1,485.9
Deferred charges and other			402.4						322.7
Total Other Assets			4,128.6						4,094.6
Total Assets			$	25,576.4					$	24,156.9

(1)Includes $678.8 million and $695.9 million at September 30, 2022 and December 31, 2021, respectively, of net property, plant and equipment assets and $20.4 million and $14.3 million at September 30, 2022 and December 31, 2021, respectively, of current assets of consolidated VIEs that may be used only to settle obligations of the consolidated VIEs. Refer to Note 11, "Variable Interest Entities," for additional information.

The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Condensed Consolidated Balance Sheets (unaudited) (continued)

(in millions, except share amounts)			September 30, 2022						December 31, 2021
CAPITALIZATION AND LIABILITIES
Capitalization
Stockholders’ Equity
Common stock - $0.01 par value, 600,000,000 shares authorized; 406,049,747 and 405,303,023 shares outstanding, respectively			$	4.1					$	4.1
Preferred stock - $0.01 par value, 20,000,000 shares authorized; 1,302,500 shares outstanding			1,546.5						1,546.5
Treasury stock			(99.9)						(99.9)
Additional paid-in capital			7,224.8						7,204.3
Retained deficit			(1,458.1)						(1,580.9)
Accumulated other comprehensive loss			(23.5)						(126.8)
Total NiSource Stockholders’ Equity			7,193.9						6,947.3
Noncontrolling interest in consolidated subsidiaries			311.8						325.6
Total Equity			7,505.7						7,272.9
Long-term debt, excluding amounts due within one year			9,521.2						9,183.4
Total Capitalization			17,026.9						16,456.3
Current Liabilities
Current portion of long-term debt			28.6						58.1
Short-term borrowings			1,274.2						560.0
Accounts payable			666.5						697.8
Dividends payable - common stock			95.6						—
Dividends payable - preferred stock			19.4						—
Customer deposits and credits			314.5						237.9
Taxes accrued			189.7						277.1
Interest accrued			124.1						105.5
Exchange gas payable			170.9						107.7
Regulatory liabilities			288.9						137.4
Accrued compensation and employee benefits			150.5						182.7
Other accruals			588.2						382.0
Total Current Liabilities(1)			3,911.1						2,746.2
Other Liabilities
Deferred income taxes			1,803.7						1,659.4
Accrued liability for postretirement and postemployment benefits			277.2						292.5
Regulatory liabilities			1,810.3						1,842.6
Asset retirement obligations			458.7						469.7
Other noncurrent liabilities			288.5						690.2
Total Other Liabilities(1)			4,638.4						4,954.4
Commitments and Contingencies (Refer to Note 14, "Other Commitments and Contingencies")
Total Capitalization and Liabilities			$	25,576.4					$	24,156.9

(1)Includes $7.8 million and $10.0 million at September 30, 2022 and December 31, 2021, respectively, of current liabilities and $20.9 million and $20.5 million at September 30, 2022 and December 31, 2021, respectively, of other liabilities of consolidated VIEs that creditors do not have recourse to our general credit. Refer to Note 11, "Variable Interest Entities," for additional information.

The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Condensed Statements of Consolidated Cash Flows (unaudited)

Nine Months Ended September 30, (in millions)			2022						2021
Operating Activities
Net Income			$	550.6					$	415.6
Adjustments to Reconcile Net Income to Net Cash from Operating Activities:
Depreciation and amortization			604.6						560.2
Deferred income taxes and investment tax credits			118.3						89.0
Loss (gain) on sale of assets			(105.3)						6.4
Other adjustments			27.7						17.3
Changes in Assets and Liabilities:
Components of working capital			(115.2)						(154.4)
Regulatory assets/liabilities			(17.4)						54.8
Deferred charges and other noncurrent assets			(16.8)						1.4
Other noncurrent liabilities			(10.3)						(51.0)
Net Cash Flows from Operating Activities			1,036.2						939.3
Investing Activities
Capital expenditures			(1,523.0)						(1,292.8)
Insurance recoveries			105.0						—
Cost of removal			(108.6)						(94.0)
Payment to renewable generation asset developer			(150.9)						(7.4)
Other investing activities			(5.2)						—
Net Cash Flows used for Investing Activities			(1,682.7)						(1,394.2)
Financing Activities
Issuance of long-term debt, net of discount and underwriting costs			345.6						—
Repayments of long-term debt and finance lease obligations			(52.5)						(18.7)
Change in short-term borrowings, net (maturity ≤ 90 days)			714.2						(123.0)
Issuance of common stock, net of issuance costs			9.1						8.8
Equity costs, premiums and other debt related costs			(10.1)						(9.7)
Contributions from noncontrolling interest			—						7.0
Distributions to noncontrolling interest			(4.8)						—
Issuance of equity units, net of underwriting costs			—						839.9
Dividends paid - common stock			(286.0)						(258.8)
Dividends paid - preferred stock			(35.7)						(35.7)
Contract liability payment			(49.6)						(24.2)
Net Cash Flows from Financing Activities			630.2						385.6
Change in cash, cash equivalents and restricted cash			(16.3)						(69.3)
Cash, cash equivalents and restricted cash at beginning of period			94.9						125.6
Cash, Cash Equivalents and Restricted Cash at End of Period			$	78.6					$	56.3

Reconciliation to Balance Sheet

Nine Months Ended September 30, (in millions)			2022
Cash and cash equivalents			35.8
Restricted Cash			42.8
Total Cash, Cash Equivalents and Restricted Cash			78.6

Supplemental Disclosures of Cash Flow Information

Nine Months Ended September 30, (in millions)			2022						2021
Non-cash transactions:
Capital expenditures included in current liabilities			$	280.4					$	217.0
Dividends declared but not paid			115.0						105.8
Purchase contract liability(1)			81.1						145.4
Obligation to developer at formation of joint venture			$	—					$	6.0

(1)Refer to Note 5, "Equity," for additional information.

The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

NiSource Inc.

Condensed Statements of Consolidated Equity (unaudited)

(in millions)			Common Stock						Preferred Stock**(1)**						Treasury Stock						Additional Paid-In Capital						Retained Deficit						Accumulated Other Comprehensive Loss						Noncontrolling Interest in Consolidated Subsidiaries						Total
Balance as of July 1, 2022			$	4.1					$	1,546.5					$	(99.9)					$	7,218.6					$	(1,408.9)					$	(35.8)					$	315.8					$	7,540.4
Comprehensive Income:
Net income (loss)			—						—						—						—						65.8						—						(2.3)						63.5
Other comprehensive income, net of tax			—						—						—						—						—						12.3						—						12.3
Dividends:
Common stock ($0.24 per share)			—						—						—						—						(95.6)						—						—						(95.6)
Preferred stock (See Note 5)			—						—						—						—						(19.4)						—						—						(19.4)
Distributions to noncontrolling interests			—						—						—						—						—						—						(1.7)						(1.7)
Stock issuances:
Employee stock purchase plan			—						—						—						1.3						—						—						—						1.3
Long-term incentive plan			—						—						—						2.6						—						—						—						2.6
401(k) and profit sharing			—						—						—						2.4						—						—						—						2.4
ATM program			—						—						—						(0.1)						—						—						—						(0.1)
Balance as of September 30, 2022			$	4.1					$	1,546.5					$	(99.9)					$	7,224.8					$	(1,458.1)					$	(23.5)					$	311.8					$	7,505.7
(1)Series A, Series B, and Series C shares have an aggregate liquidation preference of $400M, $500M, and $863M, respectively. See Note 5, "Equity," for additional information.
(in millions)			Common Stock						Preferred Stock**(1)**						Treasury Stock						Additional Paid-In Capital						Retained Deficit						Accumulated Other Comprehensive Loss						Noncontrolling Interest in Consolidated Subsidiaries						Total
Balance as of January 1, 2022			$	4.1					$	1,546.5					$	(99.9)					$	7,204.3					$	(1,580.9)					$	(126.8)					$	325.6					$	7,272.9
Comprehensive Income:
Net income (loss)			—						—						—						—						559.6						—						(9.0)						550.6
Other comprehensive income, net of tax			—						—						—						—						—						103.3						—						103.3
Dividends:
Common stock ($0.94 per share)			—						—						—						—						(381.7)						—						—						(381.7)
Preferred stock (See Note 5)			—						—						—						—						(55.1)						—						—						(55.1)
Distributions to noncontrolling interests			—						—						—						—						—						—						(4.8)						(4.8)
Stock issuances:
Employee stock purchase plan			—						—						—						3.8						—						—						—						3.8
Long-term incentive plan			—						—						—						9.5						—						—						—						9.5
401(k) and profit sharing			—						—						—						7.3						—						—						—						7.3
ATM program			—						—						—						(0.1)						—						—						—

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NiSource Inc.

Electric Operations

Financial and operational data for the Electric Operations segment for the three and nine months ended September 30, 2022 and 2021 are presented below.

			Three Months Ended September 30,																		Nine Months Ended September 30,
(in millions)			2022						2021						Favorable (Unfavorable)						2022						2021						Favorable (Unfavorable)
Operating Revenues			$	516.5					$	479.1					$	37.4					$	1,384.1					$	1,285.5					$	98.6
Operating Expenses
Cost of energy			172.8						119.3						(53.5)						420.8						316.4						(104.4)
Operation and maintenance			126.5						120.5						(6.0)						367.3						366.9						(0.4)
Depreciation and amortization			88.1						83.3						(4.8)						267.0						250.4						(16.6)
Other taxes			5.8						15.6						9.8						33.9						43.9						10.0
Total Operating Expenses			393.2						338.7						(54.5)						1,089.0						977.6						(111.4)
Operating Income			$	123.3					$	140.4					$	(17.1)					$	295.1					$	307.9					$	(12.8)
Revenues
Residential			$	178.7					$	178.7					$	—					$	454.3					$	439.8					$	14.5
Commercial			158.9						151.6						7.3						428.1						404.4						23.7
Industrial			152.1						126.0						26.1						421.0						368.3						52.7
Wholesale			4.1						4.8						(0.7)						10.6						11.3						(0.7)
Other			22.7						18.0						4.7						70.1						61.7						8.4
Total			$	516.5					$	479.1					$	37.4					$	1,384.1					$	1,285.5					$	98.6
Sales (GWh)
Residential			1,080.6						1,159.4						(78.8)						2,745.2						2,785.0						(39.8)
Commercial			1,044.7						1,057.0						(12.3)						2,845.3						2,829.1						16.2
Industrial			2,076.3						2,081.0						(4.7)						6,078.8						6,295.1						(216.3)
Wholesale			4.9						37.2						(32.3)						37.0						81.7						(44.7)
Other			17.9						36.1						(18.2)						67.5						83.7						(16.2)
Total			4,224.4						4,370.7						(146.3)						11,773.8						12,074.6						(300.8)
Cooling Degree Days			592						658						(66)						934						976						(42)
Normal Cooling Degree Days			573						556						17						820						795						25
% Warmer than Normal			3		%				18		%										14		%				23		%
% Colder than 2021			(10)		%																(4)		%
Electric Customers
Residential																					423,764						421,074						2,690
Commercial																					58,196						57,860						336
Industrial																					2,133						2,140						(7)
Wholesale																					711						719						(8)
Other																					3						2						1
Total																					484,807						481,795						3,012

Comparability of operation and maintenance expenses and depreciation and amortization may be impacted by regulatory and depreciation trackers that allow for the recovery in rates of certain costs.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

NiSource Inc.

Electric Operations

The underlying reasons for changes in our operating revenues for the three and nine months ended September 30, 2022 compared to the same periods in 2021 are presented below.

			Favorable (Unfavorable)
Changes in Operating Revenues (in millions)			Three Months Ended September 30, 2022 vs 2021						Nine Months Ended September 30, 2022 vs 2021
PPA revenue from renewable joint venture projects, fully offset by JV operating expenses			$	3.6					$	18.3
Increased fuel handling costs			2.3						4.0
The effects of customer growth			1.3						3.8
New rates from regulatory capital and DSM programs			0.7						2.9
The effects of weather in 2022 compared to 2021			(7.5)						(4.0)
Reduction in gross receipts tax, offset in operating expenses			(6.5)						(5.9)
Decreased customer usage			(5

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