filings.toolsItem 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
NIPSCO Operations
Financial and operational data for the NIPSCO Operations segment, which services both gas and electric customers, for the three and six months ended June 30, 2025 and 2024 are presented below.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Favorable (Unfavorable) | 2025 | 2024 | Favorable (Unfavorable) | |||||||||||||||||||||||||||||
| NIPSCO Operations | |||||||||||||||||||||||||||||||||||
| Operating Revenues | $ | 680.8 | $ | 597.4 | $ | 83.4 | $ | 1,622.5 | $ | 1,350.1 | $ | 272.4 | |||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||
| Cost of energy | 151.4 | 108.4 | (43.0) | 419.1 | 304.6 | (114.5) | |||||||||||||||||||||||||||||
| Operation and maintenance | 211.0 | 187.5 | (23.5) | 413.0 | 378.8 | (34.2) | |||||||||||||||||||||||||||||
| Depreciation and amortization | 165.9 | 143.0 | (22.9) | 307.2 | 275.7 | (31.5) | |||||||||||||||||||||||||||||
| Loss on impairment of assets | 0.4 | — | (0.4) | 0.7 | — | (0.7) | |||||||||||||||||||||||||||||
| Gain on sale of assets | — | (0.1) | (0.1) | — | (0.1) | (0.1) | |||||||||||||||||||||||||||||
| Other taxes | 18.1 | 16.3 | (1.8) | 36.6 | 32.4 | (4.2) | |||||||||||||||||||||||||||||
| Total Operating Expenses | 546.8 | 455.1 | (91.7) | 1,176.6 | 991.4 | (185.2) | |||||||||||||||||||||||||||||
| Operating Income | $ | 134.0 | $ | 142.3 | $ | (8.3) | $ | 445.9 | $ | 358.7 | $ | 87.2 | |||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Favorable (Unfavorable) | 2025 | 2024 | Favorable (Unfavorable) | |||||||||||||||||||||||||||||
| NIPSCO Electric | |||||||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||
| Residential | $ | 164.6 | $ | 156.9 | $ | 7.7 | $ | 332.5 | $ | 300.7 | $ | 31.8 | |||||||||||||||||||||||
| Commercial | 161.7 | 154.4 | 7.3 | 321.8 | 297.3 | 24.5 | |||||||||||||||||||||||||||||
| Industrial | 134.4 | 119.9 | 14.5 | 277.2 | 236.0 | 41.2 | |||||||||||||||||||||||||||||
| Wholesale and Other | 33.0 | 38.0 | (5.0) | 63.4 | 69.2 | (5.8) | |||||||||||||||||||||||||||||
| Total | $ | 493.7 | $ | 469.2 | $ | 24.5 | $ | 994.9 | $ | 903.2 | $ | 91.7 | |||||||||||||||||||||||
| Sales (GWh) | |||||||||||||||||||||||||||||||||||
| Residential | 804.3 | 828.8 | (24.5) | 1,614.7 | 1,593.7 | 21.0 | |||||||||||||||||||||||||||||
| Commercial | 896.7 | 926.9 | (30.2) | 1,781.5 | 1,805.6 | (24.1) | |||||||||||||||||||||||||||||
| Industrial | 2,034.0 | 1,945.1 | 88.9 | 4,170.0 | 3,777.8 | 392.2 | |||||||||||||||||||||||||||||
| Wholesale and Other | 286.2 | 317.8 | (31.6) | 466.7 | 490.4 | (23.7) | |||||||||||||||||||||||||||||
| Total | 4,021.2 | 4,018.6 | 2.6 | 8,032.9 | 7,667.5 | 365.4 | |||||||||||||||||||||||||||||
| Cooling Degree Days | 301 | 326 | (25) | 301 | 326 | (25) | |||||||||||||||||||||||||||||
| Normal Cooling Degree Days | 264 | 248 | 16 | 264 | 248 | 16 | |||||||||||||||||||||||||||||
| % Warmer than Normal | 14 | % | 31 | % | 14 | % | 31 | % | |||||||||||||||||||||||||||
| % Colder than prior year | (8) | % | (8) | % | |||||||||||||||||||||||||||||||
| NIPSCO Electric Customers | |||||||||||||||||||||||||||||||||||
| Residential | 432,133 | 428,348 | 3,785 | ||||||||||||||||||||||||||||||||
| Commercial | 59,416 | 58,979 | 437 | ||||||||||||||||||||||||||||||||
| Industrial | 2,110 | 2,118 | (8) | ||||||||||||||||||||||||||||||||
| Wholesale and Other | 705 | 710 | (5) | ||||||||||||||||||||||||||||||||
| Total | 494,364 | 490,155 | 4,209 | ||||||||||||||||||||||||||||||||
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
NIPSCO Operations
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | Favorable (Unfavorable) | 2025 | 2024 | Favorable (Unfavorable) | |||||||||||||||||||||||||||||
| NIPSCO Gas | |||||||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||
| Residential | $ | 115.1 | $ | 78.6 | $ | 36.5 | $ | 413.8 | $ | 290.7 | $ | 123.1 | |||||||||||||||||||||||
| Commercial | 45.7 | 30.8 | 14.9 | 150.8 | 105.5 | 45.3 | |||||||||||||||||||||||||||||
| Industrial | 22.6 | 16.1 | 6.5 | 54.0 | 39.9 | 14.1 | |||||||||||||||||||||||||||||
| Other | 3.7 | 2.7 | 1.0 | 9.0 | 10.8 | (1.8) | |||||||||||||||||||||||||||||
| Total | $ | 187.1 | $ | 128.2 | $ | 58.9 | $ | 627.6 | $ | 446.9 | $ | 180.7 | |||||||||||||||||||||||
| Sales and Transportation Volumes (MMDth) | |||||||||||||||||||||||||||||||||||
| Residential | 8.6 | 7.0 | 1.6 | 41.3 | 35.6 | 5.7 | |||||||||||||||||||||||||||||
| Commercial | 7.3 | 6.6 | 0.7 | 27.6 | 24.3 | 3.3 | |||||||||||||||||||||||||||||
| Industrial | 64.5 | 61.6 | 2.9 | 138.3 | 131.8 | 6.5 | |||||||||||||||||||||||||||||
| Total | 80.4 | 75.2 | 5.2 | 207.2 | 191.7 | 15.5 | |||||||||||||||||||||||||||||
| Heating Degree Days | 660 | 451 | 209 | 3,675 | 3,094 | 581 | |||||||||||||||||||||||||||||
| Normal Heating Degree Days | 640 | 640 | 0 | 3,719 | 3,781 | (62) | |||||||||||||||||||||||||||||
| % Colder (Warmer) than Normal | 3 | % | (30) | % | (1) | % | (18) | % | |||||||||||||||||||||||||||
| % Colder than prior year | 46 | % | 19 | % | |||||||||||||||||||||||||||||||
| NIPSCO Gas Customers | |||||||||||||||||||||||||||||||||||
| Residential | 803,375 | 796,779 | 6,596 | ||||||||||||||||||||||||||||||||
| Commercial | 66,554 | 66,276 | 278 | ||||||||||||||||||||||||||||||||
| Industrial | 2,696 | 2,749 | (53) | ||||||||||||||||||||||||||||||||
| Total | 872,625 | 865,804 | 6,821 |
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.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
NIPSCO Operations
The underlying reasons for changes in our operating revenues for the three and six months ended June 30, 2025 compared to the same period in 2024 are presented below.
| Favorable (Unfavorable) | |||||||||||
| Changes in Operating Revenues (in millions) | Three Months Ended June 30, 2025 vs 2024 | Six Months Ended June 30, 2025 vs 2024 | |||||||||
| New rates from base rate proceedings, regulatory capital and DSM programs | $ | 24.8 | $ | 106.9 | |||||||
| The effects of weather in 2025 compared to 2024 | 2.4 | 30.6 | |||||||||
| The effects of customer usage | 0.6 | 4.4 | |||||||||
| The effects of customer growth | 2.6 | 6.0 | |||||||||
| Renewable JV revenue, fully offset by JV operating expense and noncontrolling interest net income (loss) | (3.1) | (7.2) | |||||||||
| Other | (1.1) | (1.2) | |||||||||
| Change in operating revenues (before cost of energy and other tracked items) | $ | 26.2 | $ | 139.5 | |||||||
| Operating revenues offset in operating expense | |||||||||||
| Higher cost of energy billed to customers | 43.0 | 114.5 | |||||||||
| Higher tracker deferrals within operation and maintenance, depreciation and tax | 14.1 | 18.3 | |||||||||
| Total change in operating revenues | $ | 83.3 | $ | 272.3 |
Weather
The results of operations for the NIPSCO Operations segment include income from both electric and gas service lines. In general, we calculate the weather-related revenue variance based on changing customer demand driven by weather variance from normal cooling degree days and normal heating degree days, net of weather normalization mechanisms. Our composite cooling and heating degree days reported do not directly correlate to the weather-related dollar impact on the results of NIPSCO Operations. Cooling and heating degree days experienced during different times of the year or in different operating locations may have more or less impact on volume and dollars depending on when they occur. When the detailed results are combined for reporting, there may be weather-related dollar impacts on operations when there is not an apparent or significant change in our aggregated composite cooling and heating degree day comparison.
Sales
The increase in total volumes sold to electric customers for the three months ended June 30, 2025 compared to the same period in 2024 was primarily attributable to increased industrial usage, offset by decreased commercial and wholesale and other usage. The increase in total volumes sold to electric customers for the six months ended June 30, 2025 compared to the same period in 2024 was primarily attributable to increased industrial and residential usage, partially offset by decreased commercial and wholesale and other usage
The increase in total volumes sold to gas customers for the three and six months ended June 30, 2025 compared to the same period in 2024 was primarily attributable to increased usage by industrial customers as well as increased residential customer sales due to colder weather.
Commodity Price Impact
Cost of energy for the NIPSCO Operations segment's electric activities is principally comprised of the cost of coal, natural gas purchased for internal generation of electricity, transportation of coal and natural gas, and the cost of power purchased from generators of electricity for its generation and transmission activities. For its gas distribution activities, NIPSCO Operations' cost of energy is principally comprised of the cost of natural gas procured on behalf of and sold to customers while providing transportation and distribution services. NIPSCO Operations has state-approved recovery mechanisms that provide a means for full recovery of prudently incurred costs of energy. The majority of these costs of energy are passed through directly to the customer, and the costs of energy included in operating revenues are matched with the cost of energy expense recorded in the period. Any difference in actual costs incurred and amounts billed to customers is recorded on the Condensed Consolidated Balance Sheets (unaudited) as under-recovered or over-recovered fuel and gas costs to be included in future customer billings.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
NIPSCO Operations
Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and have essentially no impact on net income.
The underlying reasons for changes in our operating expenses for the three and six months ended June 30, 2025 compared to the same period in 2024 are presented below.
| Favorable (Unfavorable) | |||||||||||
| Changes in Operating Expenses (in millions) | Three Months Ended June 30, 2025 vs 2024 | Six Months Ended June 30, 2025 vs 2024 | |||||||||
| Higher depreciation and amortization expense driven by new base rates | (23.0) | $ | (32.2) | ||||||||
| Higher outside services expenses | (14.0) | (18.0) | |||||||||
| Lower environmental remediation costs | 5.8 | 3.3 | |||||||||
| Higher employee and administrative expenses | (1.1) | (3.1) | |||||||||
| Higher JV expenses | (3.5) | (3.4) | |||||||||
| Other | 1.0 | (0.1) | |||||||||
| Change in operating expenses (before cost of energy and other tracked items) | $ | (34.8) | $ | (53.5) | |||||||
| Operating expenses offset in operating revenue | |||||||||||
| Higher cost of energy billed to customers | (43.0) | (114.5) | |||||||||
| Higher tracker deferrals within operation and maintenance, depreciation and tax | (13.9) | (17.2) | |||||||||
| Total change in operating expense | $ | (91.7) | $ | (185.2) |
Electric Supply and Generation Transition
NIPSCO continues to execute on an electric generation transition consistent with the 2018 Plan and 2021 Plan and maintained in the 2024 Plan. The 2024 plan outlines the path to retire the remaining two coal units at R.M. Schahfer by the end of 2025 and the remaining coal-fired generation at Michigan City by the end of 2028, to be replaced by lower-cost, reliable and cleaner options. NIPSCO is evaluating potential impacts of federal and state executive orders on its generation transition plans.
The current replacement plan primarily includes renewable sources of energy, including wind, solar, battery storage, and flexible natural gas resources to be obtained through a combination of NIPSCO ownership and PPAs. NIPSCO has sold, and may in the future sell, renewable energy credits from its renewable generation to third parties to offset customer costs. Since 2020, two wind and one solar PPA projects and seven owned projects (two wind, three solar and two solar plus storage) have been placed into service totaling 2,651 MW of nameplate capacity, including Dunns Bridge II and Fairbanks, which were placed into service in January and May 2025, respectively. 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 has an associated nameplate capacity, and payments under the PPAs will not begin until the associated generation facility is constructed by the owner/seller. See "Executive Summary - Energy Transition" in this Management's Discussion for additional information. We expect the majority of our remaining BTA and PPA projects to be placed in service between 2025 and 2027.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
NIPSCO Operations
| Remaining Renewables Projects | Transaction Type | Technology | Nameplate Capacity (MW) | Storage Capacity (MW) | |||||||||||||||||||
| Gibson | BTA | Solar | 200 | — | |||||||||||||||||||
| Templeton | BTA(1) | Wind | 200 | — | |||||||||||||||||||
| Appleseed | 20 year PPA | Solar | 200 | — | |||||||||||||||||||
| Carpenter | 20 year PPA | Wind | 200 | — |
(1) Pending regulatory approval.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Liquidity and Capital Resources
We continually evaluate the availability of adequate financing to fund our ongoing business operations, working capital and core safety and infrastructure investment programs. Our financing is sourced through cash flow from operations and the issuance of debt and/or equity. External debt financing is provided primarily through the issuance of long-term debt, accounts receivable securitization programs and our $1.85 billion commercial paper program, which is backstopped by our committed revolving credit facility with a total availability from third-party lenders of $1.85 billion. We believe these sources provide adequate capital to fund our operating activities and capital expenditures in 2025 and beyond. Sources of financing activities for the current year are as follows:
ATM program
-
As of June 30, 2025, the ATM program (inclusive of the forward sale agreements) had approximately $47.5 million of equity available for issuance.
-
In February 2025, we executed a forward sale agreement, which allows us to issue a fixed number of shares at a price to be settled in the future. The forward purchaser under our forward sale agreement borrowed 2,000,000 shares from third parties, which the forward purchaser sold, through its affiliated agent, at a weighted average price of $40.10 per share.
-
In March 2025, we executed a forward sale agreement, which allows us to issue a fixed number of shares at a price to be settled in the future. The forward purchaser under our forward sale agreement borrowed 1,707,320 shares from third parties, which the forward purchaser sold, through its affiliated agent, at a weighted average price of $41.00 per share.
-
In June 2025, we executed a forward sale agreement, which allows us to issue a fixed number of shares at a price to be settled in the future. The forward purchaser under our forward sale agreement borrowed 2,518,393 shares from third parties, which the forward purchaser sold, through its affiliated agent, at a weighted average price of $39.71 per share.
Long-Term Debt
-
On March 27, 2025 we completed the issuance and sale of $750.0 million of 5.850% senior unsecured notes maturing in 2055, which resulted in approximately $739.6 million of net proceeds after discount and debt issuance costs.
-
On June 27, 2025, we completed the issuance and sale of an additional $750.0 million of 5.850% senior unsecured notes maturing in 2055 (the "2055 Notes"). The terms of the 2055 Notes, other than the issue date and the price to the public, are identical to the terms of, and constitute a reopening of, our 5.850% senior unsecured notes maturing in 2055 issued on March 27, 2025. With the incremental issuance, we now have $1.5 billion of 5.850% senior unsecured notes maturing in 2055. On June 27, 2025, we also completed the issuance and sale of $900.0 million of 5.350% senior unsecured notes maturing in 2035 (the "2035 Notes"). These issuances of the additional 2055 Notes and the 2035 Notes resulted in approximately $1.616 billion of total net proceeds after discount and debt issuance costs.
See Note 6, "Equity," Note 7, "Short-Term Borrowings," and Note 8, "Long-Term Debt," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for more information on our financing activities.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Cash Flow Activities
The following table summarizes our cash flow activities:
| Six Months Ended June 30, | |||||||||||||||||
| (in millions) | 2025 | 2024 | Change in 2025 vs 2024 | ||||||||||||||
| Cash from (used for): | |||||||||||||||||
| Operating Activities | $ | 1,181.8 | $ | 901.7 | $ | 280.1 | |||||||||||
| Investing Activities | (2,566.3) | (1,594.0) | (972.3) | ||||||||||||||
| Financing Activities | 1,551.5 | (1,452.9) | 3,004.4 |
Operating Activities
The increase in cash from operating activities was primarily driven by year over year change in exchange gas receivables, higher net income, deferred income taxes and investments, partially offset by higher inventory and accounts receivables due to colder weather.
Investing Activities
Year over year increase in investing activities was primarily comprised of milestone payments to renewable generation asset developers for certain of our BTA projects and advanced deposits.
We remain on track to make capital investments totaling $4.0 billion to $4.3 billion during the 2025 period. In addition to ongoing capital expenditures, these capital investments include advanced deposits for project costs as well as milestone payments to the renewable generation asset developers. We also expect to invest approximately $19.4 billion during the 2025-2029 period, including capital investments to support our generation transition strategy. These forecasted capital investments are subject to continuing review and adjustment. Actual capital investments may vary from these estimates.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Regulatory Capital Programs. We are in the process of upgrading and modernizing our electric system to enhance safety and reliability by addressing aged infrastructure and deploying advanced grid technologies. We are also upgrading and modernizing our gas infrastructure to enhance safety and reliability by reducing leaks. An ancillary benefit of these programs is the reduction of GHG emissions. In 2025, we continue to move forward on core infrastructure investment programs supported by complementary regulatory and customer initiatives across all six 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:
| (in millions) | ||||||||||||||||||||
| Company | Program | Capital Investment | Investment Period | Filing Date | Costs Covered(1) | |||||||||||||||
| Approved | ||||||||||||||||||||
| Columbia of Ohio | IRP - 2025 | $ | 978.7 | 4/21-12/24 | 2/27/2025 | Replacement of hazardous service lines, cast iron, wrought iron, uncoated steel, and bare steel pipe. | ||||||||||||||
| Columbia of Ohio | PHMSA IRP - 2025 | $ | 78.2 | 1/23-12/24 | 2/28/2025 | Investments necessary to comply with the PHMSA Mega Rule. | ||||||||||||||
| Columbia of Ohio | CEP - 2024 | $ | 763.3 | 4/21-12/23 | 2/26/2024 | Assets not included in the IRP or PHMSA IRP. | ||||||||||||||
| Columbia of Virginia | SAVE - 2025 | $ | 89.0 | 10/24-12/25 | 8/15/2024 | Replacement projects that (1) enhance system safety or reliability, or (2) reduce, or potentially reduce, greenhouse gas emissions. Includes costs associated with Advanced Leak Detection and Repair. | ||||||||||||||
| Columbia of Kentucky | SMRP - 2025 | $ | 128.5 | 1/23-12/25 | 10/15/2024 | Replacement of mains and inclusion of system safety investments. | ||||||||||||||
| NIPSCO - Electric(2) | TDSIC - 6 | $ | 555.0 | 7/22-9/24 | 11/26/2024 | New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development. | ||||||||||||||
| NIPSCO - Electric(3) | GCT - 1 | $ | 149.4 | 9/23-10/25 | 12/16/2024 | New gas peaker generation project costs forecasted through Oct. 2025. | ||||||||||||||
| NIPSCO - Gas(4) | TDSIC - 8 | $ | 8.3 | 1/23-2/24 | 4/30/2024 | New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development. | ||||||||||||||
| NIPSCO - Gas | FMCA - 4 | $ | 9.4 | 6/24-12/24 | 2/25/2025 | Project costs to comply with federal mandates. | ||||||||||||||
| Pending Commission Approval | ||||||||||||||||||||
| NIPSCO - Gas | TDSIC - 9 | $ | 35.3 | 3/24-3/25 | 5/23/2025 | New or replacement projects undertaken for the purpose of safety, reliability, system modernization, or economic development. | ||||||||||||||
| NIPSCO - Electric(5) | TDSIC - 7 | $ | 315.6 | 7/22-3/25 | 5/27/2025 | New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development. | ||||||||||||||
| NIPSCO - Electric | GCT - 2 | $ | 80.1 | 11/25-4/26 | 6/18/2025 | New gas peaker generation project costs forecasted through April 2026. | ||||||||||||||
| Columbia of Ohio | CEP - 2025 | $ | 1,030.0 | 4/21-12/24 | 2/27/2025 | Assets not included in the IRP or PHMSA IRP. |
(1)Programs do not include any costs already included in base rates.
(2)The capital investment remaining within the tracker after the Step 1 Compliance Filing, on June 30, 2025, is $203.7 million for TDISC-6.
(3)Capital investment is based on a projected amount. The capital investment has not all been incurred to date and represents a forecasted average for the billing period.
(4)The capital investment remaining after the Step 2 Compliance Filing, on February 13, 2025, is $5.8 million for TDSIC-8.
(5)TDISC – 7 was originally filed on May 27, 2025 and refiled on July 2, 2025, due to the Electric Rate Case Order. The refiling adjusted the capital in the tracker to go down from $744.7 million to $315.6 million.
NIPSCO Gas filed an FMCA CPCN on April 21, 2025. The petition is seeking recovery of spend incurred related to certain federally mandated Pipeline Safety IV Compliance Plan costs. The request includes $244.1 million of estimated capital, including indirect costs and AFUDC.
Financing Activities
Common Stock. Refer to Note 6, "Equity," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for information on common stock.
Long-Term Debt. Refer to Note 8, "Long-Term Debt," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for information on long-term debt activity.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Short-Term Debt. Refer to Note 7, "Short-Term Borrowings," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for information on short-term debt activity.
Noncontrolling Interest**.** Refer to Note 4, "Noncontrolling Interests," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for information on contributions and distributions from noncontrolling interests.
Sources of Liquidity
The following table displays our liquidity position as of June 30, 2025 and December 31, 2024:
| (in millions) | June 30, 2025 | December 31, 2024 | ||||||
| Current Liquidity | ||||||||
| Revolving Credit Facility | $ | 1,850.0 | $ | 1,850.0 | ||||
| Accounts Receivable Programs(1) | 245.0 | 175.0 | ||||||
| Less: | ||||||||
| Commercial Paper | — | 604.6 | ||||||
| Letters of Credit Outstanding Under Credit Facility | — | 9.4 | ||||||
| Add: | ||||||||
| Cash and Cash Equivalents | 335.4 | 156.6 | ||||||
| Net Available Liquidity | $ | 2,430.4 | $ | 1,567.6 |
(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 70.0%. As of June 30, 2025, the ratio was 55.2%.
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 NIPSCO's credit ratings and ratings outlook as of June 30, 2025. There were no changes to the below credit ratings or outlooks since February 2020.
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 | ||||||||||||||
| 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 rating 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 June 30, 2025, the collateral requirement that would be required in the event of a downgrade below the ratings trigger levels would amount to approximately $145.0 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 770,000,000 shares, $0.01 par value, 750,000,000 are common stock and 20,000,000 are preferred stock. As of June 30, 2025, 470,784,423 shares of common stock were outstanding and no shares of preferred stock were outstanding.
Contractual Obligations. A summary of contractual obligations is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Except for our March and June 2025 debt issuances, there were no additional material changes from year-end during the six months ended June 30, 2025. Refer to Note 8, "Long-Term Debt," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information regarding the debt issuances.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Guarantees, Indemnities and Other Off Balance Sheet Arrangements. We and certain of our subsidiaries enter into various agreements providing financial or performance assurance to third parties on behalf of certain subsidiaries as a part of normal business. Such agreements include guarantees and stand-by letters of credit. Refer to Note 15, "Other Commitments and Contingencies," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information about such arrangements.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Regulatory, Environmental and Safety Matters
Cost Recovery and Trackers
Comparability of our line item operating results is impacted by regulatory trackers that allow for the recovery in rates of certain costs such as those described below. Increases in the costs that are subject to approved regulatory tracker mechanisms generally lead to increased regulatory assets, which ultimately result in a corresponding increases in operating revenues and expenses and, therefore, have essentially no impact on total operating income results. Certain approved regulatory tracker mechanisms allow for abbreviated regulatory proceedings in order for the operating companies to quickly implement revised rates and recover associated costs.
A portion of the Columbia Operations' and NIPSCO Operations' revenue is related to the recovery of gas costs, the review and recovery of which occurs through standard regulatory proceedings. All states in our operating area require periodic review of actual gas procurement activity to determine prudence and to confirm the recovery of prudently incurred energy commodity costs supplied to customers.
We recognize that energy efficiency reduces emissions, conserves natural resources and saves our customers money. Our gas distribution companies offer programs such as energy efficiency upgrades, home checkups and weatherization services. The increased efficiency of natural gas appliances and improvements in home building codes and standards contributes to a long-term trend of declining average use per customer. While we are looking to expand offerings so the energy efficiency programs can benefit as many customers as possible, our gas distribution operations utilities have pursued changes in rate design to more effectively match recoveries with costs incurred. Columbia of Ohio has adopted a straight fixed variable rate design for residential and small commercial customers that closely links the recovery of fixed costs with fixed charges. Columbia of Maryland and Columbia of Virginia have regulatory approval for weather and revenue normalization adjustments for certain customer classes, which adjust monthly revenues that exceed or fall short of approved levels. Columbia of Pennsylvania continues to operate its pilot residential weather normalization adjustment and also has a fixed customer charge. This weather normalization adjustment only adjusts revenues when actual weather compared to normal varies by more than 3%. Columbia of Kentucky charges certain customer classes a mix of fixed and weather normalized volumetric rates during the peak heating season. NIPSCO Gas and Electric include a fixed customer charge for residential and small commercial and industrial customer classes. NIPSCO Gas has implemented a weather normalization adjustment for certain of its customer classes.
A portion of the NIPSCO Operations' revenue is related to the recovery of fuel costs to generate power and the fuel costs related to purchased power. These costs are recovered through a FAC, which is updated quarterly to reflect actual costs incurred to supply electricity to customers.
While increased efficiency of electric appliances and improvements in home building codes and standards have similarly impacted the average use per electric customer in recent years, NIPSCO expects future growth in per customer usage as a result of increasing electric applications, such as electric vehicles. These ongoing changes in use of electricity will likely lead to development of innovative rate designs, and NIPSCO will continue efforts to design rates that increase the certainty of recovery of fixed costs.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Regulatory, Environmental and Safety Matters
Rate Case Actions
The following table describes current rate case actions as applicable in each of our jurisdictions net of tracker impacts:
| (in millions) | |||||||||||||||||
| Company | Approved ROE | Requested Incremental Revenue | Approved Incremental Revenue | Filing Date | Rates Effective | ||||||||||||
| Approved Rate Cases | |||||||||||||||||
| Columbia of Pennsylvania(1) | None specified | $ | 124.1 | $ | 74.0 | March 15, 2024 | December 2024 | ||||||||||
| Columbia of Maryland | 9.80 | % | $ | 10.7 | $ | 7.8 | September 24, 2024 | April 2025 | |||||||||
| Columbia of Kentucky | 9.75 | % | $ | 23.8 | $ | 14.3 | May 16, 2024 | January 2025 | |||||||||
| Columbia of Virginia(2) | 9.75 | % | $ | 37.2 | $ | 28.2 | April 29, 2024 | October 2024 | |||||||||
| Columbia of Ohio | 9.60 | % | $ | 221.4 | $ | 68.3 | June 30, 2021 | March 2023 | |||||||||
| NIPSCO - Gas(3) | 9.75 | % | $ | 161.9 | $ | 120.9 | October 25, 2023 | August 2024 | |||||||||
| NIPSCO - Electric(4) | 9.75 | % | $ | 368.7 | $ | 257.0 | September 12, 2024 | July 2025 | |||||||||
| Pending Rate Cases | |||||||||||||||||
| Columbia of Pennsylvania | In process | $ | 110.5 | In process | March 20, 2025 | December 2025 |
(1)No approved ROE is identified for this matter since the approved revenue increase is the result of a black box settlement under which parties agree upon the amount of increase.
(2)The approved rate case resulted in a black box settlement, representing a settlement to a specific revenue increase but not a specified ROE. The settlement provides use of a 9.75% ROE for future SAVE filings.
(3)New rates were implemented in 2 steps, with implementation of Step 1 rates effective in August 2024 and Step 2 rates effective in February 2025.
(4)New rates will be implemented in multiple steps, with implementation of the first step in July 2025 and final rates effective no later than March 2026.
PHMSA Legislation and Regulations
To fulfill our vision of being a trusted energy provider, we follow safety practices required by regulations and we implement our Safety Management System ("SMS"). SMS serves as the framework to identify and reduce risks and ensure consistent safety processes, procedures and operations across the organization.
As directed by law in the Protecting Our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act of 2020, PHMSA has revised, and continues to revise, the pipeline safety regulations focused on public safety and environmental hazard mitigation. The PIPES Act of 2020 specifically includes leak detection and repair criteria (the "LDAR" rule) and regulations that require operators to upgrade their existing low-pressure regulating stations with enhanced safeguards and update distribution integrity management plans, emergency response plans, and operation and maintenance plans (the Safety of Gas Distribution Pipelines, or "SGDP" rule).
In May 2023, PHMSA proposed regulatory revisions under the PIPES Act of 2020 to minimize methane emissions and improve public safety. Under these proposed revisions, our subsidiaries would be required to detect and repair an increased number of gas leaks, reduce the time to repair leaks, increase leak survey, and expand our existing advanced leak detection program. In January 2025, PHMSA withdrew the final LDAR rule and it has not gone into effect.
In September 2023, PHMSA proposed additional regulatory revisions under the PIPES Act of 2020 to enhance distribution system safety through equipment and procedural expectations in the form of the SGDP rule. Operators will be required to incorporate additional protections for low pressure distribution systems that prevent over-pressurization, amend construction procedures designed to minimize the risk of incidents caused by system over-pressurization, and update distribution integrity management programs to cover and prepare for over-pressurization incidents. PHMSA did not progress the SGDP rulemaking in 2024.
We continue to evaluate and monitor PHMSA-related legislation and regulations but cannot predict the impact of changing pipeline safety regulations on our business at this time.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Regulatory, Environmental and Safety Matters
Environmental and Climate Change Issues
On March 12, 2025, the EPA announced it will undertake 31 deregulatory actions to advance the administration’s policy priorities as directed by various executive orders. These actions will address multiple existing water, waste, air and climate regulations including, but not limited to, GHG rules and the Legacy CCR Rule. On July 29, 2025, the EPA proposed rescinding the 2009 Endangerment Finding, the scientific and legal foundation for federal GHG regulations under the Clean Air Act. NiSource will continue to monitor these matters and assess the impacts to our business as regulations are proposed and finalized, or as otherwise required by law.
Physical Climate Risks. Increased frequency of severe and extreme weather events associated with climate change could materially impact our facilities, energy sales, and results of operations. We are unable to predict these events. However, we perform assessments of physical risk, including physical climate risk, to our business. More extreme and volatile temperatures, increased storm intensity and flooding, and more volatile precipitation leading to changes in lake and river levels are among the weather events that are most likely to impact our business. Efforts to mitigate these physical risks continue to be implemented.
Transition Climate Risks and Opportunities. We actively engage with and monitor the impact that proposed legislative and regulatory programs related to GHG emissions, at both the federal and state levels, would have on our business.
Regarding federal policies, we continue to monitor the status of climate change-related legislation and regulation, including the OBBBA signed into law on July 4, 2025. As of the date of this filing, management has evaluated the provisions of the OBBBA and does not believe the bill will have a material impact on the Company’s financial position or results of operations. None of the Company’s in-flight renewable energy projects are impacted by the phaseout of tax credits in the OBBBA.
On June 11, 2025, the EPA proposed to repeal GHG emissions standards for fossil fuel-fired power plants that were finalized by the previous federal administration in May 2024. The proposed repeal would eliminate key requirements from the 2024 Carbon Pollution Standards, including capacity factor thresholds and carbon capture and storage (CCS) mandates. If finalized, this action would remove regulatory constraints that could significantly impact NIPSCO’s planned gas generation, allowing customers to avoid approximately $675 million in additional cost as assessed through the 2024 NIPSCO IRP.
We also continue to monitor evolving state policies related to GHG emissions from our gas distribution companies. The Climate Solutions Now Act of 2022 requires Maryland to reduce GHG emissions by 60% by 2031 (from 2006 levels), and it requires the state to reach net zero emissions by 2045. The Maryland Department of the Environment ("MDE") adopted a plan to achieve its 2031 goal and is required to adopt a plan for their 2045 net zero goal by 2030. The Act also enacts a state policy to move to broader electrification of both existing buildings and new construction. In December 2024, the MDE issued final Building Energy Performance Standards, which would require net zero direct GHG emissions from large buildings by 2040 with interim targets, or payments of an alternative compliance fee. Columbia of Maryland is advocating for compliance pathways that use RNG, hydrogen, new technologies and emissions offsets. Under an executive order, Maryland is also developing a Clean Heat Standard and a Zero-Emission Heating Equipment Standard that are intended to transition gas appliances to electric heat pumps. Separately, the Public Service Commission ("PSC") has also initiated a proceeding related to Near-Term, Priority Actions and Comprehensive, Long-Term Planning for Maryland's Gas Companies. On June 17, 2025, the PSC issued an order directing its Staff to prepare proposed regulations by December 1, 2025, eliminating Company contributions to main or service extensions to new residential and commercial customers. Columbia of Maryland cannot predict the final impact of these policies on our business at this time.
Net Zero Goal. In November 2022, we announced a goal of net zero GHG emissions by 2040 covering both Scope 1 and Scope 2 GHG emissions ("Net Zero Goal"). Our Net Zero Goal builds on GHG emission reductions achieved to-date. We plan to achieve our Net Zero Goal primarily through continuation and enhancement of existing programs, such as retiring and replacing coal-fired electric generation with low- or zero-emission electric generation, ongoing pipe replacement and modernization programs, and deployment of advanced leak-detection technologies. In addition, we plan to advance other low- and zero-emission energy resources and technologies, which may include hydrogen, renewable natural gas, long-duration storage, and/or deployment of carbon capture and utilization technologies, if and when these become technologically and economically feasible. Carbon offsets and renewable energy credits may also be used to support achievement of our Net Zero Goal. As of the end of 2024, we had reduced Scope 1 GHG emissions by approximately 72% from 2005 levels.
Our GHG emissions projections, including achieving a Net Zero Goal, are subject to various assumptions that involve risks and uncertainties, and did not include any assumptions related to data center development and associated load growth. We remain
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Regulatory, Environmental and Safety Matters
committed to our Net Zero Goal, however, certain of our interim goals may evolve as we assess and respond to business opportunities such as data centers. Achievement of our Net Zero Goal by 2040 will require supportive regulatory and legislative policies, favorable stakeholder environments and advancement of technologies that are not currently economically or technologically feasible to deploy at scale, as well as execution of our business plan. Otherwise, our actual results or ability to achieve our Net Zero Goal, including by 2040, may differ materially.
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
Our gas and electric subsidiaries have commodity price risk primarily related to the purchases of 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 and does not bear significant exposure to earnings risk, since our current regulatory mechanisms allow recovery of prudently incurred purchased power, fuel and gas costs through the rate-making process, including gains or losses on these derivative instruments. These changes are included in the GCA and FAC regulatory rate-recovery mechanisms. If these mechanisms were to be adjusted or eliminated, these subsidiaries may begin providing services without the benefit of the traditional rate-making process and may be more exposed to commodity price risk. For additional information, see "Results and Discussion of Segment Operations" in this Management's Discussion.
Our subsidiaries are required to make cash margin deposits with their brokers to cover actual and potential losses in the value of outstanding exchange traded derivative contracts. The amount of these deposits, some of which are reflected in our restricted cash balance, may fluctuate significantly during periods of high volatility in the energy commodity markets.
Refer to Note 10, "Risk Management Activities," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for further information on our commodity price risk assets and liabilities.
Interest Rate Risk
We are exposed to interest rate risk as a result of changes in interest rates on borrowings under our revolving credit agreement, commercial paper program, and accounts receivable programs, which have interest rates that are indexed to short-term market interest rates. 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 $1.8 million and $4.3 million for the three and six months ended June 30, 2025 and $2.6 million and $5.2 million for the three and six months ended June 30, 2024, 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 long-term debt issuances. From time to time we may enter into forward interest rate instruments to lock in long term interest costs and/ or rates.
Credit Risk
Due to the nature of the industry, credit risk is embedded in many of our business activities. Our extension of credit is governed by a Corporate Credit Risk Management Policy which establishes guidelines for documenting management approval levels for credit limits, evaluating creditworthiness, and credit risk mitigation efforts. 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,
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
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.
The financial status of our banking partners is periodically assessed through traditional credit ratings provided by major credit rating agencies.
Other Information
Critical Accounting Estimates
A summary of our critical accounting estimates is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. There were no material changes made as of June 30, 2025.
Recently Issued Accounting Pronouncements
Refer to Note 2, "Recent Accounting Pronouncements," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information about recently issued and adopted accounting pronouncements.
NiSource Inc.
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