Item 1A. RISK FACTORS

NiSource Inc.

existing indebtedness. The LLC Agreement and Amended LLC Agreement will allow for additional capital contributions from affiliates of Blackstone to NIPSCO Holdings II and Generation Holdings II in connection with such Blackstone affiliates’ minority interest investments in those entities. In addition, we may consider other funding sources, structures, or partnerships as market conditions and strategic considerations evolve. The amount of additional long-term debt or NiSource equity needed to support construction of the Contract Assets and any generation and transmission assets to support future data center contracts could increase, potentially significantly, from our current expectations if we experience construction delays or cost overruns.

External factors such as inflation, monetary policy or other market conditions could impact our cost of borrowing and could make it more difficult to obtain the financing that is required to construct the Contract Assets on favorable terms, or at all. The issuance of additional debt could negatively impact our credit ratings and overall cost of capital, which could in turn adversely affect our future results and liquidity. In addition, an economic downturn or uncertainty, market turmoil, changes in interest rates, changes in tax policy, challenges faced by financial institutions, or a change in investor sentiment toward us or the utilities industry or the cloud-computing, artificial intelligence and data center industry generally could adversely affect our ability to raise the necessary capital. Reduced access to capital markets, increased borrowing costs, and/or lower equity valuation levels could jeopardize our ability to complete construction of the Contract Assets on-time and within budget, and could reduce future earnings per share and cash flows. In addition, any rise in interest rates may lead to higher borrowing costs, which may adversely impact reported earnings, cost of capital and capital holdings.

Pursuit of our partnership with Customer creates significant opportunity costs and reduces our strategic and financial flexibility in the near term.

We expect to incur significant indebtedness to fund our construction of the Contract Assets. Doing so will reduce our ability to incur further indebtedness to pursue other strategic opportunities, such as partnerships with other large data center customers or strategic mergers and acquisitions, while at the same time maintaining our investment grade credit ratings, which may require us to rely to a greater degree on equity financing in connection with future data center contracts and also may increase our reliance on equity financing for future investments in our existing traditionally regulated utility business, each of which could lead to substantial dilution of our existing shareholders. In addition, our credit rating agencies consider the percentage of our business comprised of traditionally regulated utility operations in their analysis of our credit quality.

In addition to these factors relating to our financing and credit ratings, our partnership with Customer is expected to employ a significant amount of our existing excess transmission infrastructure, which will limit our ability to use these assets for other opportunities, including additional data center opportunities. Furthermore, effectively overseeing the construction and financing of the Contract Assets will require significant time and attention of our management, which could detract from their oversight of our existing business and ability to pursue other strategic opportunities.

The return structure and risk profile of Data Center Contract and related development of the Contract Assets differ from those of NIPSCO’s traditionally regulated utility operations. Any future data center contracts we enter into are expected to have a comparable structure and risk profile.

NIPSCO’s and GenCo’s operations under the Data Center Contract will be, and under future data center contracts are expected to be, regulated by the IURC in a different way from the regulatory mechanisms applicable to NIPSCO’s historical operations, which could affect the manner in which we recover our investment costs and earn a return on our investment. NIPSCO’s electric utility rates historically have been determined and approved in regulatory proceedings with the IURC based on an analysis of NIPSCO’s costs to provide utility service and a return on, and recovery of, NIPSCO’s investment in the utility business. Through the IURC rate-making process, retail rates may be adjusted over time, and NIPSCO may request additional revenue, in order to cover ongoing costs and investment and earn an adequate return.

In contrast, the terms of the Data Center Contract were, and the terms of any future data center contracts will be, determined by commercial negotiation with Customer. In the case of the Data Center Contract, these terms include the charges that we receive from Customer, which are designed to allow us to recover the costs that we incur to construct and operate the Contract Assets and earn a return, and provisions that may result in adjustments to those charges such as, among other factors, those relating to certain liquidated damages that we may owe Customer in the event of construction delays or capacity shortfalls and the parties’ responsibility to share cost overruns, among other provisions. These terms do not guarantee a specific overall rate of return, and the overall return we earn under the Data Center Contract may ultimately be lower than that of NIPSCO’s traditional utility operations. The IURC will not regulate the commercial terms of the Data Center Contract and is not expected to regulate the commercial terms of any future data center contracts; however, the IURC is expected to maintain oversight under the Data Center Contract and any future data center contracts to ensure NIPSCO provides reliable service to Customer and any future data center customers at just and reasonable rates. In order to recover our investment costs and earn our return under the Data Center Contract and any future data center contracts, our subsidiaries must efficiently perform their own obligations and must look to the Customer or future customers (or, if applicable, any parent guarantor) to perform its obligations, rather than the IURC making use of its traditional rate-making process. In addition, under the Data Center Contract, NIPSCO has direct contractual obligations to the Customer to, among other things, construct the Contract Assets and deliver committed electric

Table of Contents

ITEM 1A. RISK FACTORS

NiSource Inc.

capacity in fixed amounts by certain dates. We expect our subsidiaries to have similar contractual obligations to customers in connection with any future data center contracts. If disputes arise with data center customers, including the Customer, regarding provisions of a data center contract, including the Data Center Contract, or payments to be made or actions to be taken thereunder, we may be significantly disadvantaged as a result of, among other factors, the significance of such contracts to us and the greater resources (financial and otherwise) available to the relevant customer. Any dispute or litigation with a data center customer, including the Customer, could create significant demands on the attention of management and result in significant costs to us.

In addition, the IURC, through its review and approval of the Data Center Contract and PPA between NIPSCO and GenCo, will have ultimate authority over the implementation of these agreements. In this context, we will need to continuously assess the applicability of ASC Topic 980 over the life of the Data Center Contract. It is possible that significant construction overruns, capacity shortfalls or other events that could result in NIPSCO or GenCo owing liquidated damages could either preclude ongoing application of ASC Topic 980 or result in an immediate disallowance and impairment of the Contract Assets. In addition, early termination of the Data Center Contract, could result in such impairment and discontinuation of application of ASC Topic 980, unless the Contract Assets can be used to support new or existing customers. If we incur significant costs that we are not able to recover from Customer (for example, greater than expected purchases of market capacity or operations and maintenance costs significantly exceeding those contemplated by the Data Center Contract), this also could discontinue the application of ASC Topic 980 to the Data Center Contract and the Contract Assets. We expect any future data center contracts will be subject to comparable risks.

Our partnership with Customer exposes us to significant customer concentration risk.

Customer will be a significant customer of our electric utility operations. For example, the generating capacity of the Contract Assets, when fully delivered into service, is expected to be approximately equivalent to the generating capacity of all NIPSCO’s existing generating assets. However, Customer has the right to terminate the Data Center Contract for convenience following certain notice periods. If Customer terminates or defaults under the Data Center Contract or elects not to renew the Data Center Contract after the initial term, we may not be able to replace Customer’s demand or otherwise fully utilize the assets constructed in connection with the Data Center Contract. We also may not receive the same level of return with respect to any alternative use.

In addition, Customer has a one-time option (exercisable no later than March 31, 2029) to halve committed capacity under the Data Center Contract to 1,200 MW commencing January 31, 2032. If Customer elects to reduce the committed capacity under the Data Center Contract or to terminate the Data Center Contract during its initial term, we will not receive the full earnings we expect to receive over the life of the Data Center Contract. Although the Data Center Contract provides for reimbursement for our investment in the Contract Assets and related expenses in the event of a reduction in the committed capacity or early termination, the amount of any reimbursement is capped under the Data Center Contract, with the amount of the caps being based on cost estimates determined as of signing. Furthermore, our ability to collect any reimbursable amounts will depend upon the willingness and ability of the Customer or its parent guarantor to satisfy their payment obligations under the Data Center Contract and related guarantee. Accordingly, we may not be able to recover our full investment, which may adversely affect our future results and financial condition.

Any of the above outcomes could adversely affect our future results, financial conditions and results of operations. Termination of the Data Center Contract during its initial term or exercise by Customer of its one-time option to reduce capacity also may cause us reputational harm, which could, among other things, negatively affect our ability to source and execute contracts with additional data center customers.

Many factors, including those outside our and Customer’s control, could cause Customer to exercise its one-time option to reduce the committee capacity under the Data Center Contract or terminate the Data Center Contract during the initial term. Such factors include, for example: (i) construction delays, cost overruns or capacity shortfalls that occur in connection with our construction of the Contract Assets, (ii) similar problems that Customer may encounter in connection with constructing its data centers, (iii) any decrease or lessening of current cloud-computing or artificial intelligence demand trends or a change in the current supportive legal and regulatory environment (in Northern Indiana or elsewhere) with respect to cloud-computing or artificial intelligence, as well as other factors, which could negatively impact the demand for data centers, (iv) technological or other advances impacting the design and operation of data centers, which could reduce the amount of electricity needed to power data centers and (v) competing energy technologies could become a preferred source of energy for powering data centers.

Any future data center contracts our subsidiaries enter into may contain termination and/or capacity reduction provisions and related reimbursement comparable to the Data Center Contract, exposing us to risks comparable to those described above (the significance of which will be affected by the relative size of any such contract and the costs we incur to develop resources supporting such contract).

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ITEM 1A. RISK FACTORS

NiSource Inc.

In addition, as a result of the Data Center Contract, and any further agreements we may sign with data center companies, our stock price may experience increased volatility as a result of factors outside our control. For example, our stock price may be negatively affected as a result of any actual or perceived slowdown in the adoption of artificial intelligence technology, the regulation or proposed regulation of such technology, or actual or perceived changes in the strategic or financial position of our data center customers.

The long-term MISO capacity accreditation of capacity resources is uncertain. If the capacity resources that we construct to serve Customer or any future data center customers lose accreditation, we would need to construct additional generation assets to fulfill our obligations to such customers.

In recent years, MISO has implemented new capacity accreditation rules and continues to put forth new plans and proposals relating to its accreditation requirements. Recent MISO accreditation changes have affected both natural gas and battery storage generation resources, but battery storage has been more significantly impacted. It is possible that, under future MISO rules, the capacity accreditation for the capacity resources we construct to serve Customer will be eliminated or reduced, in which case we would need to replace or supplement the accredited generation capacity we are planning to build in order to fulfill our obligations to Customer under the Data Center Contract. This additional investment would be funded initially by us. Although under the terms of the Data Center Contract the costs of this additional investment would be shared by us and Customer, our recovery from Customer would occur over an extended period of time. We expect that we would need to obtain significant additional debt and equity financing to fund these investments, which may not be available on favorable terms or at all. These costs, if incurred, could negatively impact our return under the Data Center Contract or adversely affect our future results and financial condition. In addition, these activities would be subject to the construction and financing-related risks described above. Any generation assets we develop to support future data center contracts will be subject to similar risks relating to MISO accreditation, which, depending on the terms of our future data center contracts, may expose us to risks similar to those described above or additional risks.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.