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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NiSource Inc.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
EXECUTIVE SUMMARY
This Management's Discussion and Analysis of Financial Condition and Results of Operations ("Management’s Discussion") includes management’s analysis of past financial results and certain potential factors that may affect future results, potential future risks and approaches that may be used to manage those risks. See "Note regarding forward-looking statements" at the beginning of this report for a list of factors that may cause results to differ materially.
Management's Discussion is designed to provide an understanding of our operations and financial performance and should be read in conjunction with our Condensed Consolidated Financial Statements (unaudited) included in this report and our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
We are an energy holding company under the Public Utility Holding Company Act of 2005 whose primary subsidiaries are fully regulated natural gas and electric utility companies serving customers in six states. We generate substantially all of our operating income through these rate-regulated businesses, which are summarized for financial reporting purposes into two primary reportable segments: Columbia Operations and NIPSCO Operations. Refer to ''Note 15, "Business Segment Information," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for further discussion of our business segments.
Our vision is to be a premier, innovative and trusted energy partner. We exist to deliver safe, reliable and competitive energy that drives value to our customers. In order to achieve this goal, we seek to develop strategies that benefit all stakeholders as we (i) support long-term infrastructure investment and safety programs to better serve our customers, (ii) align our tariff structures and regulatory programs with our cost structure, and (iii) create value and enable growth in an evolving energy ecosystem. These strategies focus on improving safety and reliability, enhancing customer experience, pursuing regulatory and legislative initiatives to increase accessibility for customers currently not on our gas and electric service, ensuring customer value and reducing emissions while generating sustainable returns. The safety of our customers, communities and employees remains our focus. Serving as a guiding practice for our SMS, NiSource is certified in conformance to the American Petroleum Institute Recommended Practice 1173, which is the foundation to our journey towards operational excellence.
Data Center Contracts and Strategy: NIPSCO recently entered into a data center contract with a new customer and entered into amendments to its ADS Contract. Set forth below is a discussion of recent developments relating to our data center contracts and strategy. This discussion is supplemental to, and should be read in conjunction with, our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, in particular Part I, Item 1A, "Risk Factors—Data Center Operations and Strategy Risk" and Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Summary—ADS Contract and Data Center Strategy."
Alphabet Contract
In March 2026, NIPSCO entered into an agreement with a wholly owned subsidiary of Alphabet, under which NIPSCO will provide electricity to the subsidiary’s data center(the “Alphabet Contract”). Under the Alphabet Contract, which is pending IURC approval, NIPSCO will provide service to Alphabet’s subsidiary pursuant to a capacity commitment beginning in summer 2026 and increasing to 300 MW commencing in 2030. The initial term of the Alphabet Contract is 15 years. Prior to receipt of applicable regulatory approvals from the IURC and FERC, NIPSCO will bill the customer for electric service under its base tariff. Following receipt of regulatory approvals, the customer will pay monthly capacity charges that are based on negotiated rates and actual consumption (subject to certain minimums), together with certain pass-through charges and an existing system charge which will be used to pass savings back to existing customers. The amounts we are entitled to receive from the customer are subject to adjustments including but not limited to resulting from tariff events or MISO accreditation changes. The customer's parent will provide credit support for the customer's payment obligations. Either party may terminate the Alphabet Contract upon certain defaults or failure to obtain necessary related approvals from the IURC and FERC. The Alphabet Contract contains other termination provisions which may be exercised following certain notice periods. If the customer terminates the Alphabet Contract, it is required to make certain termination payments that we believe will be sufficient to reimburse us for our investment costs and NIPSCO has certain obligations to mitigate.
The customer's electricity supply under the Alphabet Contract will be provided through a portfolio of electric generation assets and related assets owned or contracted for by NIPSCO and/or its affiliates (primarily including GenCo) and designed to serve the needs of the customer under the Alphabet Contract and other data center customers (the "Pool Resource Assets"). See “Data Center Strategy & Pool Resource Assets” below for additional information on the Pool Resource Assets. NIPSCO has entered into a PPA with GenCo in connection with the Alphabet Contract, which is pending IURC approval.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Amendments to ADS Contract
In March 2026, NIPSCO entered into an amendment to its ADS Contract to accelerate the delivery of capacity to ADS, resulting in increased committed capacity in the years 2027 through 2031. The amendment does not increase NIPSCO’s 2,400 MW maximum capacity commitment to ADS under the original ADS Contract but increases the amounts of power to be delivered before the maximum commitment is reached. The amendment is pending IURC approval. Pursuant to the amendment, ADS will regularly pay NIPSCO a fixed capacity charge (not subject to adjustment) from 2027 through 2031, regardless of any termination of the ADS Contract or reduction of capacity. The payment structure under this amendment is distinct from and does not alter the payment structure or the payments NIPSCO will receive under the original ADS Contract. Demand under this amendment is expected to be served through Pool Resource Assets (rather than Contract Assets under the ADS Contract).
In addition, in March and May of 2026, NIPSCO entered into amendments to the ADS Contract, subject to IURC and FERC approval, to increase the committed capacity that NIPSCO will provide beginning in 2029 and increasing to a total capacity commitment of 2,800 MW by the end of 2032 and through the end of the initial term of the ADS Contract. ADS will pay NIPSCO both a fixed capacity charge and an existing system charge designed to pass savings back to existing customers, for the increased capacity. Demand under these amendments is expected to be served through Pool Resource Assets (rather than Contract Assets under the ADS Contract).
Construction Update
GenCo continues to advance development of its new combined‑cycle natural gas‑fired generation facility to support the ADS Contract. During the period, the EPC contractor progressed engineering, procurement, and planning activities in support of construction mobilization currently anticipated in mid‑2026. The equipment supply contract for the CCGT units is progressing in accordance with planned delivery schedules.
GenCo is also advancing the development of a combined 400 MW and 100MW BESS installation. The battery equipment supply contract was awarded in February 2026, and the EPC contractor continues engineering, procurement, and planning activities to support the anticipated start of on-site construction in mid‑2026.
Data Center Strategy & Pool Resource Assets
We continue to experience strong demand from potential data center customers in our northern Indiana service territory and are engaged in negotiations with potential additional counterparties. Agreements we enter into with additional counterparties will be served by means of customized, dedicated generation assets, Pool Resource Assets, or a combination.
With respect to customers to be served by Pool Resource Assets, NIPSCO will retain discretion to select and dispatch Pool Resource Assets to meet committed customer demand in a way that maintains reliability and efficiency without direct involvement or approval from specific customers. We believe this model will enable us to allocate generation resources more efficiently and provide us with greater flexibility to serve a broader range of potential customers.
We evaluate potential transactions with Pool Resource Asset customers in the context of existing demand and resources within the pool in order to promote a sustainable alignment between committed customer demand within the pool and capacity available from Pool Resource Assets. We will add capacity resources to the Pool Resource Assets to maintain resource adequacy requirements and promote efficient resource utilization based on contracts with customers (subject to IURC approval). We anticipate that the total accredited capacity from the pool will be large enough to support the total load requirements of our data center customers taking into consideration MISO requirements. Pool Resource Assets may include generation assets that we develop or contract for (for example, via a BTA), as well as capacity agreements, ESAs, market capacity purchases or other similar agreements. In order to provide initial Pool Resource Assets to serve contracted demand, GenCo plans to construct new battery storage with 100MW nameplate capacity, which is expected to be completed in 2028, and has entered into a number of ESA contracts (including with respect to the Tipton BESS Project, which we intend to convert into a BTA) and other capacity purchase agreements. For more information on these agreements, see Note 13, "Other Commitments and Contingencies - D. Other Matters" – Pool Resource Asset Agreements.” We expect that the capacity provided by these initial Pool Resource Assets will suffice to meet substantially all contracted demand from the second half of 2028 through the expiration of the initial terms of our existing data center contracts.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Our ability to recover our investments and earn a return under our contracts with customers served by Pool Resource Assets will be driven by, among other factors, the terms of our contracts with these customers (including the charges we receive from customers and any potential adjustments to such charges), our ability to construct or procure sufficient Pool Resource Assets in a timely and cost-effective manner, and the performance by us and our customers under the contracts, rather than a traditional rate-making process.
Through certain of our subsidiaries, we have entered into certain construction and equipment supply contracts in relation to additional generation and transmission assets that may be used to serve potential future data center customers. As we continue to evaluate our potential data center opportunities, we will continue to focus on the community, financial, operational and regulatory factors that must be managed effectively in order to succeed with our data center strategy. We believe data center development can enhance our local tax base, diversify the employment base across the state of Indiana, and provide greater value to existing customers and shareholders. We continually evaluate ways to effectively manage the potential power demand, generation sources, and transmission capabilities to meet potential further load growth from additional data center customers, while at the same time focusing on our environmental goals.
In order to perform under any further data center contracts, we expect that we would need to develop additional generation and transmission assets, which may be significant, and obtain additional financing in connection with such development. For these and other reasons, our ability to successfully execute our data center strategy is subject to a number of risks and uncertainties. Refer to Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Energy Transition: We continue to advance our energy transition strategy, primarily through the continuation and enhancement of existing programs, such as implementing our plan to retire and replace remaining coal-fired electric generation by 2028 with a balanced mix of low- or zero-emission electric generation, ongoing pipe replacement and modernization programs, and deployment of advanced leak detection and repair. We continue to make progress on our electric generation transition, initiated through our 2018 Plan, and we are continually adjusting to the dynamic energy landscape. Before the planned retirement of the R.M. Schahfer coal facility at the end of December 2025, NIPSCO received the first of successive emergency orders under section 202(c) of the Federal Power Act, to continue operating in 90-day increments, currently through June 21, 2026. The orders stated that continued operation of R.M. Schahfer is required to meet an energy emergency across MISO’s North and Central regions. Consistent with the Federal Power Act and the U.S. Department of Energy regulations, the order authorizes NIPSCO to obtain cost recovery pursuant to 16 U.S.C. § 824a(c). For additional information, see Note 8, "Regulatory Matters," and see Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
NIPSCO's 2021 Plan calls for a new natural gas peaking facility to replace existing vintage gas peaking facilities at the R.M. Schahfer Generating Station to support system reliability and resiliency, and upgrades to the electric transmission system. Following approval by the IURC in October 2024, the construction of a new 400 MW natural gas peaking generation facility is underway, which is expected to support the planned retirement of the existing vintage gas peaking facilities by the end of 2028. The 2021 Plan affirms the retirement of the Michigan City Generating Station by 2028 and calls for new natural gas peaking facilities. Final retirement dates for these units will be subject to MISO approval.
NIPSCO's 2024 Plan was submitted to the IURC on December 9, 2024. The 2024 Plan maintains the retirement decisions and capacity additions identified in the 2018 and 2021 Integrated Resource Plans and calls for additional generation resources through 2029 to support capacity requirements. The 2024 Plan informs future generation investments required to ensure reliability for NIPSCO’s customers and incorporates factors such as anticipated load growth from data centers and other economic development opportunities, EPA emissions rules, and evolving MISO resource accreditation rules. Given that the 90-day 202(c) order could continue to be issued every 90 days to keep R.M. Schahfer open for the foreseeable future, and given that MISO's resource accreditations for renewables and storage remain uncertain, it may be necessary to evaluate changes to our previously communicated resource timelines and alternative resource decisions. We plan to move as efficiently as possible while maintaining the integrity of our commercial, planning, regulatory, procurement and operational execution processes.
We continue to enhance safety and reduce methane emissions on our gas systems through modernization programs and utilization of advanced leak detection and repair. In addition, we plan to advance other low- or zero-emission energy resources and technologies, such as hydrogen and renewable natural gas.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Transformation: We are modernizing and unlocking efficiencies within our systems and processes on operational excellence, safety, operation and maintenance management. These efforts include investments in proven technologies backed with standardized processes that are changing the way we plan, schedule, and execute work in the field and how we engage and provide service to our customers. We continue to focus on our customer technology platforms. In addition to transforming technology to enhance our employee and customer experiences, we believe these programs will modernize systems and further reduce our enterprise risk related to end-of-life systems. During the first quarter, we also initiated a multi-year program, Value Captured, aimed at accelerating certain transformation activities in response to growing customer affordability concerns. This program is focused on operational efficiencies, evaluating target operating models and improving long-term scalability.
NIPSCO Union Contract Negotiations: On April 2, 2026, NIPSCO initiated a lockout of employees represented by the United Steelworkers following months of extensive negotiations to produce successor collective bargaining agreements by the contract expiration date of March 31, 2026. Agreements were reached and subsequently ratified by the physical and clerical bargaining units on April 24, 2026, and May 1, 2026, respectively, ending the lockout. During the lockout period, we incurred incremental costs to support our work continuity plans.
Economic Environment: We continue to monitor risks related to order and delivery lead times for construction and other materials, potential unavailability of materials due to global shortages in raw materials, and decreased construction labor productivity in the event of disruptions in the availability of materials. We continue to experience elevated material and supply costs in certain product sourcing categories driven by increased demand and tariffs. To the extent that work plan delays occur or our costs increase, our business operations, results of operations, cash flows, and financial condition could be materially adversely affected.
Summary of Consolidated Financial Results
A summary of our consolidated financial results for the three months ended March 31, 2026 and 2025 are presented below:
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| (in millions, except per share amounts) | 2026 | 2025 | Favorable (Unfavorable) | ||||||||||||||||||||||||||||||||
| Operating Revenues | $ | 2,363.1 | $ | 2,183.2 | $ | 179.9 | |||||||||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||
| Cost of energy | 669.2 | 647.5 | (21.7) | ||||||||||||||||||||||||||||||||
| Other Operating Expenses | 874.7 | 776.3 | (98.4) | ||||||||||||||||||||||||||||||||
| Total Operating Expenses | 1,543.9 | 1,423.8 | (120.1) | ||||||||||||||||||||||||||||||||
| Operating Income | 819.2 | 759.4 | 59.8 | ||||||||||||||||||||||||||||||||
| Total Other Deductions, Net | (177.2) | (127.0) | (50.2) | ||||||||||||||||||||||||||||||||
| Income Taxes | 85.8 | 105.7 | 19.9 | ||||||||||||||||||||||||||||||||
| Net Income | 556.2 | 526.7 | 29.5 | ||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interest | 49.1 | 51.9 | 2.8 | ||||||||||||||||||||||||||||||||
| Net Income Attributable to NiSource | 507.1 | 474.8 | 32.3 | ||||||||||||||||||||||||||||||||
| Preferred dividends redemption premium | 3.6 | — | 3.6 | ||||||||||||||||||||||||||||||||
| Net Income Available to Common Shareholders | 510.7 | 474.8 | 35.9 | ||||||||||||||||||||||||||||||||
| Earnings Per Share | |||||||||||||||||||||||||||||||||||
| Basic Earnings Per Share | $ | 1.06 | $ | 1.01 | $ | 0.05 | |||||||||||||||||||||||||||||
| Diluted Earnings Per Share | $ | 1.06 | $ | 1.00 | $ | 0.06 | |||||||||||||||||||||||||||||
The majority of the costs of energy in both segments are tracked costs that are passed through directly to the customer, resulting in an equal and offsetting amount reflected in operating revenues.
The increase in net income available to common shareholders for the three months ended March 31, 2026 was primarily due to higher revenues associated with our capital investments, partially offset by higher operating expenses, including increased operation and maintenance expense and depreciation expense attributed to our net plant balances, as well as increased interest expense.
For additional information on operating income variance drivers see "Results and Discussion of Segment Operations" for Columbia Operations and NIPSCO Operations in this Management's Discussion.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Income Taxes
Refer to Note 11, "Income Taxes," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for information on income taxes and the change in the effective tax rates for the periods presented.
RESULTS AND DISCUSSION OF SEGMENT OPERATIONS
Presentation of Segment Information
Columbia Operations aggregates the results of the fully regulated and wholly owned subsidiaries of NiSource Gas Distribution Group, Inc. Each Columbia distribution company is an operating segment which we aggregate to form the Columbia Operations reportable segment. NIPSCO Operations aggregates the results of NIPSCO Holdings I and its majority-owned subsidiaries, including NIPSCO, which has both fully regulated gas and electric operations in northern Indiana. The remainder of our operations, which are not significant enough on a stand-alone basis to warrant treatment as a reportable segment, are presented as "Corporate and Other" within the Notes to the Condensed Consolidated Financial Statements (unaudited) and primarily are comprised of interest expense on holding company debt, unallocated corporate costs and activities and new business development costs associated with GenCo.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Columbia Operations
Financial and operational data for the Columbia Operations segment for the three months ended March 31, 2026 and 2025 are presented below.
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| (in millions) | 2026 | 2025 | Favorable (Unfavorable) | ||||||||||||||||||||||||||||||||
| Operating Revenues | $ | 1,326.6 | $ | 1,243.8 | $ | 82.8 | |||||||||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||
| Cost of energy | 383.9 | 379.8 | (4.1) | ||||||||||||||||||||||||||||||||
| Operation and maintenance | 278.4 | 243.0 | (35.4) | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 120.9 | 108.2 | (12.7) | ||||||||||||||||||||||||||||||||
| Other taxes | 71.1 | 67.0 | (4.1) | ||||||||||||||||||||||||||||||||
| Total Operating Expenses | 854.3 | 798.0 | (56.3) | ||||||||||||||||||||||||||||||||
| Operating Income | $ | 472.3 | $ | 445.8 | $ | 26.5 | |||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||
| Residential | $ | 907.5 | $ | 858.0 | $ | 49.5 | |||||||||||||||||||||||||||||
| Commercial | 333.2 | 308.1 | 25.1 | ||||||||||||||||||||||||||||||||
| Industrial | 58.0 | 48.2 | 9.8 | ||||||||||||||||||||||||||||||||
| Off-System | 16.8 | 22.3 | (5.5) | ||||||||||||||||||||||||||||||||
| Wholesale and Other | 11.1 | 7.2 | 3.9 | ||||||||||||||||||||||||||||||||
| Total | $ | 1,326.6 | $ | 1,243.8 | $ | 82.8 | |||||||||||||||||||||||||||||
| Sales and Transportation (MMDth) | |||||||||||||||||||||||||||||||||||
| Residential | 88.5 | 90.8 | (2.3) | ||||||||||||||||||||||||||||||||
| Commercial | 60.8 | 61.9 | (1.1) | ||||||||||||||||||||||||||||||||
| Industrial | 77.0 | 72.1 | 4.9 | ||||||||||||||||||||||||||||||||
| Off-System | 4.4 | 5.9 | (1.5) | ||||||||||||||||||||||||||||||||
| Wholesale and Other | 0.2 | 0.2 | — | ||||||||||||||||||||||||||||||||
| Total | 230.9 | 230.9 | — | ||||||||||||||||||||||||||||||||
| Heating Degree Days**(1)** | 2,656 | 2,670 | (14) | ||||||||||||||||||||||||||||||||
| Normal Heating Degree Days**(1)** | 2,636 | 2,666 | (30) | ||||||||||||||||||||||||||||||||
| % Colder than Normal | 1 | % | — | % | |||||||||||||||||||||||||||||||
| % Warmer than prior year | (1) | % | |||||||||||||||||||||||||||||||||
| Columbia Operations Customers | |||||||||||||||||||||||||||||||||||
| Residential | 2,244,188 | 2,233,968 | 10,220 | ||||||||||||||||||||||||||||||||
| Commercial | 190,714 | 189,918 | 796 | ||||||||||||||||||||||||||||||||
| Industrial | 1,981 | 1,988 | (7) | ||||||||||||||||||||||||||||||||
| Other | 6 | 5 | 1 | ||||||||||||||||||||||||||||||||
| Total | 2,436,889 | 2,425,879 | 11,010 | ||||||||||||||||||||||||||||||||
(1) Heating degree figures represent averages of the five jurisdictions served by Columbia Operations.
Comparability of operation and maintenance expenses, depreciation and amortization, and other taxes may be impacted by regulatory, depreciation, and tax 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.
Columbia Operations
The underlying reasons for changes in our operating revenues for the three months ended March 31, 2026 compared to the same period in 2025 are presented below.
| Favorable (Unfavorable) | ||||||||||||||||||||||||||
| Changes in Operating Revenues (in millions) | Three Months Ended March 31, 2026 vs 2025 | |||||||||||||||||||||||||
| Rates from base rate proceedings and regulatory capital programs | $ | 56.6 | ||||||||||||||||||||||||
| The effects of customer growth | 1.2 | |||||||||||||||||||||||||
| The effects of weather in 2026 compared to 2025, net of weather and revenue normalization mechanisms | (14.2) | |||||||||||||||||||||||||
| Other | 4.5 | |||||||||||||||||||||||||
| Change in operating revenues (before cost of energy and other tracked items) | $ | 48.1 | ||||||||||||||||||||||||
| Operating revenues offset in operating expense | ||||||||||||||||||||||||||
| Higher tracker deferrals within operation and maintenance, depreciation, and tax | 30.6 | |||||||||||||||||||||||||
| Higher cost of energy billed to customers | 4.1 | |||||||||||||||||||||||||
| Total change in operating revenues | $ | 82.8 |
Weather
In general, we calculate the weather-related revenue variance based on changing customer demand driven by weather variance from normal heating degree days, net of weather and revenue normalization mechanisms. Normal weather is aligned with the definitions used in base rates for each jurisdiction, which typically reflect a 20-year average for all operating companies, other than Columbia of Virginia, which uses a 30-year average. In certain circumstances, normal weather as defined in base rates may differ from the assumptions used in normalization mechanisms. Our composite heating degree days reported do not directly correlate to the weather-related dollar impact on the results of Columbia Operations. 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 and where 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 heating degree day comparison.
Sales
The change in volumes for the three months ended March 31, 2026 compared to 2025 was a result of decreased usage from residential customers offset by increases in residential and commercial customer count.
Commodity Price Impact
Cost of energy for the Columbia Operations segment is principally comprised of the cost of natural gas procured and transported on behalf of and sold to customers while providing distribution services, as well as the transportation and storage costs of acquiring natural gas. All of our Columbia Operations companies have state-approved recovery mechanisms that provide a means for full recovery of prudently incurred gas costs. These are tracked costs that are passed through directly to the customer, and the gas costs included in revenues are matched with the gas cost 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 gas cost to be included in future customer billings. Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and have essentially no impact on net income. Certain Columbia Operations companies continue to offer choice opportunities, where customers can choose to purchase gas from a third-party supplier through regulatory initiatives in their respective jurisdictions.
The underlying reasons for changes in our operating expenses for the three months ended March 31, 2026 compared to the same period in 2025 are presented below.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Columbia Operations
| Favorable (Unfavorable) | ||||||||||||||||||||
| Changes in Operating Expenses (in millions) | Three Months Ended March 31, 2026 vs 2025 | |||||||||||||||||||
| Higher depreciation and amortization expense | $ | (12.7) | ||||||||||||||||||
| Higher outside services expenses | (4.9) | |||||||||||||||||||
| Higher property tax | (2.3) | |||||||||||||||||||
| Other | (1.7) | |||||||||||||||||||
| Change in operating expenses (before cost of energy and other tracked items) | $ | (21.6) | ||||||||||||||||||
| Operating expenses offset in operating revenue | ||||||||||||||||||||
| Higher tracker deferrals within operation and maintenance, depreciation, and tax | (30.6) | |||||||||||||||||||
| Higher cost of energy billed to customers | (4.1) | |||||||||||||||||||
| Total change in operating expense | $ | (56.3) |
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 months ended March 31, 2026 and 2025 are presented below.
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| (in millions) | 2026 | 2025 | Favorable (Unfavorable) | ||||||||||||||||||||||||||||||||
| NIPSCO Operations | |||||||||||||||||||||||||||||||||||
| Operating Revenues | $ | 1,038.8 | $ | 941.7 | $ | 97.1 | |||||||||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||
| Cost of energy | 285.3 | 267.7 | (17.6) | ||||||||||||||||||||||||||||||||
| Operation and maintenance | 221.4 | 202.0 | (19.4) | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 162.7 | 141.3 | (21.4) | ||||||||||||||||||||||||||||||||
| Loss on impairment of assets | — | 0.3 | 0.3 | ||||||||||||||||||||||||||||||||
| Other taxes | 20.9 | 18.5 | (2.4) | ||||||||||||||||||||||||||||||||
| Total Operating Expenses | 690.3 | 629.8 | (60.5) | ||||||||||||||||||||||||||||||||
| Operating Income | $ | 348.5 | $ | 311.9 | $ | 36.6 | |||||||||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| (in millions) | 2026 | 2025 | Favorable (Unfavorable) | ||||||||||||||||||||||||||||||||
| NIPSCO Electric | |||||||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||
| Residential | $ | 178.4 | $ | 167.9 | $ | 10.5 | |||||||||||||||||||||||||||||
| Commercial | 173.6 | 160.1 | 13.5 | ||||||||||||||||||||||||||||||||
| Industrial | 156.9 | 142.8 | 14.1 | ||||||||||||||||||||||||||||||||
| Wholesale and Other | 43.2 | 30.4 | 12.8 | ||||||||||||||||||||||||||||||||
| Total | $ | 552.1 | $ | 501.2 | $ | 50.9 | |||||||||||||||||||||||||||||
| Sales (GWh) | |||||||||||||||||||||||||||||||||||
| Residential | 786.4 | 810.4 | (24.0) | ||||||||||||||||||||||||||||||||
| Commercial | 898.9 | 884.8 | 14.1 | ||||||||||||||||||||||||||||||||
| Industrial | 2,151.4 | 2,136.0 | 15.4 | ||||||||||||||||||||||||||||||||
| Wholesale and Other | 155.0 | 180.5 | (25.5) | ||||||||||||||||||||||||||||||||
| Total | 3,991.7 | 4,011.7 | (20.0) | ||||||||||||||||||||||||||||||||
| NIPSCO Electric Customers | |||||||||||||||||||||||||||||||||||
| Residential | 434,519 | 431,351 | 3,168 | ||||||||||||||||||||||||||||||||
| Commercial | 59,843 | 59,286 | 557 | ||||||||||||||||||||||||||||||||
| Industrial | 2,107 | 2,112 | (5) | ||||||||||||||||||||||||||||||||
| Wholesale and Other | 702 | 707 | (5) | ||||||||||||||||||||||||||||||||
| Total | 497,171 | 493,456 | 3,715 | ||||||||||||||||||||||||||||||||
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
NIPSCO Operations
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| (in millions) | 2026 | 2025 | Favorable (Unfavorable) | ||||||||||||||||||||||||||||||||
| NIPSCO Gas | |||||||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||
| Residential | $ | 330.0 | $ | 298.7 | $ | 31.3 | |||||||||||||||||||||||||||||
| Commercial | 118.7 | 105.1 | 13.6 | ||||||||||||||||||||||||||||||||
| Industrial | 34.1 | 31.4 | 2.7 | ||||||||||||||||||||||||||||||||
| Other | 3.9 | 5.3 | (1.4) | ||||||||||||||||||||||||||||||||
| Total | $ | 486.7 | $ | 440.5 | $ | 46.2 | |||||||||||||||||||||||||||||
| Sales and Transportation Volumes (MMDth) | |||||||||||||||||||||||||||||||||||
| Residential | 31.5 | 32.7 | (1.2) | ||||||||||||||||||||||||||||||||
| Commercial | 19.5 | 20.3 | (0.8) | ||||||||||||||||||||||||||||||||
| Industrial | 71.2 | 73.8 | (2.6) | ||||||||||||||||||||||||||||||||
| Total | 122.2 | 126.8 | (4.6) | ||||||||||||||||||||||||||||||||
| Heating Degree Days | 2,917 | 3,015 | (98) | ||||||||||||||||||||||||||||||||
| Normal Heating Degree Days | 3,049 | 3,079 | (30) | ||||||||||||||||||||||||||||||||
| % Warmer than Normal | (4) | % | (2) | % | |||||||||||||||||||||||||||||||
| % Warmer than prior year | (3) | % | |||||||||||||||||||||||||||||||||
| NIPSCO Gas Customers | |||||||||||||||||||||||||||||||||||
| Residential | 809,503 | 803,206 | 6,297 | ||||||||||||||||||||||||||||||||
| Commercial | 67,011 | 66,699 | 312 | ||||||||||||||||||||||||||||||||
| Industrial | 2,665 | 2,721 | (56) | ||||||||||||||||||||||||||||||||
| Total | 879,179 | 872,626 | 6,553 |
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.
The underlying reasons for changes in our operating revenues for the three months ended March 31, 2026 compared to the same period in 2025 are presented below.
| Favorable (Unfavorable) | ||||||||||||||||||||
| Changes in Operating Revenues (in millions) | Three Months Ended March 31, 2026 vs 2025 | |||||||||||||||||||
| Rates from base rate proceedings, regulatory capital and DSM programs | $ | 83.7 | ||||||||||||||||||
| The effects of customer growth | 4.0 | |||||||||||||||||||
| The effects of weather in 2026 compared to 2025, net of NIPSCO Gas' weather normalization mechanism | (7.9) | |||||||||||||||||||
| The effects of customer usage | (6.3) | |||||||||||||||||||
| Other | 1.9 | |||||||||||||||||||
| Change in operating revenues (before cost of energy and other tracked items) | $ | 75.4 | ||||||||||||||||||
| Operating revenues offset in operating expense | ||||||||||||||||||||
| Higher cost of energy billed to customers | 17.6 | |||||||||||||||||||
| Higher tracker deferrals within operation and maintenance, depreciation and tax | 4.1 | |||||||||||||||||||
| Total change in operating revenues | $ | 97.1 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
NIPSCO Operations
Weather
The results of operations for the NIPSCO Operations segment include income from both electric and gas services. 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 NIPSCO Gas' weather normalization mechanism. 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 decrease in total volumes sold to electric customers for the three months ended March 31, 2026 compared to the same period in 2025 was primarily attributable to decreased residential and wholesale usage, partially offset by increased industrial and commercial usage, as well as increased residential and commercial customer count.
The decrease in total volumes sold to gas customers for the three months ended March 31, 2026 compared to the same period in 2025 was primarily attributable to decreased usage by residential customers due to warmer weather, as well as decreased usage from industrial and commercial customers, partially offset by increases in residential and commercial customer count.
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 and transported on behalf of and sold to customers while providing distribution services, as well as the transportation and storage costs of acquiring natural gas. 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. 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 months ended March 31, 2026 compared to the same period in 2025 are presented below.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
NIPSCO Operations
| Favorable (Unfavorable) | ||||||||||||||||||||
| Changes in Operating Expenses (in millions) | Three Months Ended March 31, 2026 vs 2025 | |||||||||||||||||||
| Higher depreciation and amortization expense driven by new base rates | $ | (20.7) | ||||||||||||||||||
| Higher outside services expenses | (4.6) | |||||||||||||||||||
| Higher materials and supplies expenses | (3.2) | |||||||||||||||||||
| Higher bad debt expense | (2.7) | |||||||||||||||||||
| Higher property taxes | (2.6) | |||||||||||||||||||
| Other | (5.0) | |||||||||||||||||||
| Change in operating expenses (before cost of energy and other tracked items) | $ | (38.8) | ||||||||||||||||||
| Operating expenses offset in operating revenue | ||||||||||||||||||||
| Higher cost of energy billed to customers | (17.6) | |||||||||||||||||||
| Higher tracker deferrals within operation and maintenance, depreciation and tax | (4.1) | |||||||||||||||||||
| Total change in operating expense | $ | (60.5) |
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. Before the planned retirement of the R.M. Schahfer coal facility at the end of December 2025, NIPSCO received the first of successive emergency orders under section 202(c) of the Federal Power Act, to continue operating in 90-day increments, currently through June 21, 2026. The orders stated that continued operation of R.M. Schahfer is required to meet an energy emergency across MISO’s North and Central regions. Consistent with the Federal Power Act and the U.S. Department of Energy regulations, the order authorizes NIPSCO to obtain cost recovery pursuant to 16 U.S.C. § 824a(c). As directed, NIPSCO continued to make R.M. Schahfer available in the MISO market. We had forced outages on units 17 and 18 to support ongoing compliance with the 202(c) orders, during the period ended March 31, 2026. Following receipt of the emergency order, NIPSCO filed a complaint at FERC seeking a modification of the MISO tariff to establish a mechanism for recovery and allocation of the cost to comply with this order. NIPSCO made two filings with the IURC related to the emergency order. The first filing is to confirm accounting treatment of current electric rate order, and the second is a filing for recovery of federally mandated expenses related to the emergency order, which will be utilized in the event that any costs of complying with the emergency order fall outside of the MISO tariff recovery. For additional information, see Note 8, Regulatory Matters.
NIPSCO has one remaining project under the 2021 plan still under development. We expect the Templeton project, a wind BTA project with nameplate capacity of 200 MW, to be placed in service in 2027. See "Executive Summary - Energy Transition" in this Management's Discussion for additional information. NIPSCO has sold, and may in the future sell, renewable energy credits from its renewable generation to third parties to offset customer costs.
In March 2026, we experienced damage to our solar generation facilities at Dunn's Bridge I due to an extreme weather event. Based on preliminary estimates of the damages, we expect most, if not all, of the total loss will be covered by insurance proceeds less the applicable deductible.
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, the issuance of debt and/or equity, and minority interest investments. Equity issuances are primarily conducted through our ATM program. Additionally, we received proceeds from tax credit transfers related to previously and currently monetized credits, which are returned to customers over a ten‑year period for investment tax credits and a one-year period for production tax credits. External debt financing is provided primarily through the issuance of long-term debt, accounts receivable securitization programs and our commercial paper program, which is backstopped by our committed revolving credit facility. In March 2026, we increased our commercial paper program limit from $1.85 billion to $2.50 billion. We believe these sources provide adequate capital to fund operating activities and capital expenditures for our base business (i.e., excluding operations and capital expenditures related to serving data center customers) in 2026 and beyond.
The aggregate cost of Contract Assets and Pool Resource Assets supporting our existing data center customers is currently estimated to be between $9.25 to $9.75 billion. We expect to finance the construction and development of these assets and purchases of market capacity through a number of sources including but not limited to funds received under our data center contracts, debt, and equity financing raised by NiSource and 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. For additional information on these minority interest investments, refer to Note 4, "Noncontrolling Interests," and Note 19, "Other Commitments and Contingencies - E. Other Matters," in our Annual Report on Form 10-K for the year ended December 31, 2025. If we enter into additional data center contracts, we expect that we would need to develop additional generation assets to serve our new data center customers. In order to fund the development of these assets, which may be significant, we would be required to obtain significant additional financing, for which we may consider other funding sources, structures, or partnerships, which may include JVs, off-balance sheet arrangements in the form of BTAs, or other arrangements to support maintenance of our investment grade credit ratings.
Sources of financing activities for the current year are as follows:
Details of our ATM program activity are summarized below:
-
In February 2026, 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 2,200,000 shares from third parties, which the forward purchaser sold, through its affiliated agent, at a weighted average price of $45.63 per share. We may settle the forward sale agreement in shares, cash or net shares by December 2026.
-
As of March 31, 2026, the ATM program inclusive of the outstanding forward sale agreements had approximately $1.25 billion of equity capacity available. The ATM program expires in December 2028.
See Note 6, "Equity," Note 7, "Short-Term Borrowings," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for more information on our financing activities.
Cash Flow Activities
The following table summarizes our cash flow activities:
| Three Months Ended March 31, | |||||||||||||||||
| (in millions) | 2026 | 2025 | Change in 2026 vs 2025 | ||||||||||||||
| Cash from (used for): | |||||||||||||||||
| Operating Activities | $ | 442.3 | $ | 686.4 | $ | (244.1) | |||||||||||
| Investing Activities | (872.6) | (1,352.7) | 480.1 | ||||||||||||||
| Financing Activities | $ | 391.7 | $ | 771.4 | $ | (379.7) |
Operating Activities
The year over year decrease in cash from operating activities was primarily attributable to changes in exchange gas receivables, accounts payable and prepayments as well as a change in inventory. These impacts were partially offset by higher net income, change in accounts receivable, and depreciation.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Investing Activities
The year over year decrease in investing activities was primarily driven by prior year milestone payments to renewable generation asset developers for certain of our BTA projects and prior year advanced deposits offset by current year capital expenditures.
We expect to make capital investments of approximately $600 million in connection with Pool Resource Assets initially being developed in connection with contracted demand from data center customers. These capital expenditures are incremental to the estimates of capital investments relating to data center contracts described in our Annual Report on Form 10-K for the year ended December 31, 2025 and are included in the forecasted capital investment table below.
| (in billions) | 2026 Estimated | 2027 Estimated | 2028 Estimated | 2029 Estimated | 2030 Estimated | |||||||||||||||
| Capital Investments (Base Business) | $3.9 - 4.1 | $3.7 - 3.9 | $3.7 - 3.9 | $4.9 - 5.1 | $4.3 - 4.5 | |||||||||||||||
| Capital Investments (GenCo) | 1.3 - 1.5 | 1.6 - 1.8 | 2.2- 2.4 | 1.0 - 1.2 | 0.4 - 0.6 | |||||||||||||||
| Capital Investments (Total) | $5.2 - 5.6 | $5.3 - 5.7 | $5.9 - 6.3 | $5.9 - 6.3 | $4.7 - 5.1 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Regulatory Capital Programs. We continue to upgrade and modernize 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 2026, we continue to move forward on core infrastructure investment programs supported by complementary regulatory and customer initiatives across five 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 | CEP - 2025 | $ | 1,027.8 | 4/21-12/24 | 2/27/2025 | Assets not included in the IRP or PHMSA IRP. | ||||||||||||||
| Columbia of Virginia | SAVE - 2026 | $ | 176.1 | 10/24-12/26 | 8/12/2025 | Replacement projects that (i) enhance system safety or reliability, or (ii) reduce, or potentially reduce, greenhouse gas emissions. Includes costs associated with Advanced Leak Detection and Repair. | ||||||||||||||
| Columbia of Kentucky | SMRP - 2026 | $ | 181.4 | 1/23-12/26 | 10/15/2025 | Replacement of mains and inclusion of system safety investments. | ||||||||||||||
| NIPSCO - Electric(2) | TDSIC - 7 | $ | 175.4 | 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(3) | GCT - 3 | $ | 385.6 | 9/23-10/26 | 12/16/2025 | New gas peaker generation project cost forecasted through October 2026. | ||||||||||||||
| NIPSCO - Gas | TDSIC - 10 | $ | 90.3 | 4/25-9/25 | 11/25/2025 | New or replacement projects undertaken for the purpose of safety, reliability, system modernization, or economic development. | ||||||||||||||
| NIPSCO - Gas | FMCA -5 | $ | 21.9 | 6/24-6/25 | 8/27/2025 | Project costs to comply with federal mandates. | ||||||||||||||
| Columbia of Ohio | IRP - 2026 | $ | 1,185.0 | 4/21-12/25 | 2/27/2026 | Replacement of hazardous service lines, cast iron, wrought iron, uncoated steel, and bare steel pipe. | ||||||||||||||
| Columbia of Ohio | PHMSA IRP - 2026 | $ | 180.2 | 1/23-12/25 | 2/27/2026 | Investments necessary to comply with the PHMSA Mega Rule. | ||||||||||||||
| Pending Commission Approval | ||||||||||||||||||||
| NIPSCO - Gas | FMCA - 1 | $ | 52.5 | 7/25-12/25 | 2/24/2026 | Project costs to comply with federal mandates. | ||||||||||||||
| Columbia of Ohio | CEP - 2026 | $ | 1,292.0 | 4/21-12/25 | 2/20/2026 | Assets not included in the IRP or PHMSA IRP. |
(1)Programs do not include any costs already included in base rates.
(2)TDSIC – 7 was originally filed in May 2025. TDSIC - 7 was refiled in February 2026, due to the electric rate case Step 2 Compliance Filing. The refiling adjusted the capital in the tracker from $315.6 million to $175.4 million.
(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.
Columbia of Ohio filed an application in December 2025 to seek continuation of its PHMSA IRP Rider for calendar year 2027. The request includes recovery of $404.3 million of capital to reconfirm maximum allowable operating pressure of transmission class pipe to meet federal rule requirements.
NIPSCO filed a Gas TDSIC Plan (2026 - 2030) in December 2025. The petition is seeking recovery of new or replacement projects undertaken for the purpose of safety, reliability, system modernization, or economic development. The request includes $741.0 million of estimated capital, including indirect costs and AFUDC. There is a hearing scheduled for May 2026 with the final order expected in July 2026.
Financing Activities
Common Stock. Refer to Note 6, "Equity," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for information on common stock.
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.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Sources of Liquidity
The following table displays our liquidity position as of March 31, 2026 and December 31, 2025:
| (in millions) | March 31, 2026 | December 31, 2025 | ||||||
| Current Liquidity | ||||||||
| Revolving Credit Facility | $ | 2,500.0 | $ | 2,500.0 | ||||
| Accounts Receivable Programs(1) | 375.0 | 175.0 | ||||||
| Less: | ||||||||
| Commercial Paper | 1,291.0 | 736.0 | ||||||
| Letters of Credit Outstanding Under Credit Facility | 25.0 | 25.0 | ||||||
| Add: | ||||||||
| Cash and Cash Equivalents | 71.9 | 110.1 | ||||||
| Net Available Liquidity | $ | 1,630.9 | $ | 2,024.1 |
(1)Represents the lesser of the seasonal limit or maximum borrowings supportable by the underlying receivables.
Debt Covenants**.** We are subject to a financial covenant under our revolving credit facility, which requires us to maintain a debt to capitalization ratio that does not exceed 70.0%. As of March 31, 2026, the ratio was 51.5%.
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 March 31, 2026.
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 March 31, 2026, the collateral requirement of approximately $158.5 million would be required in the event of a downgrade below investment grade. 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 March 31, 2026, 479,364,801 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, 2025. Since December 31, 2025, NIPSCO and GenCo have executed several capacity agreements and other agreements to support data center contracts. In addition, GenCo has exercised an option and intends to convert its ESA relating to the Tipton BESS Project to a BTA. Except for these items there were no additional material changes from year-end during the three months ended March 31, 2026. Refer to Note 13, "Other Commitments and Contingencies," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information regarding the EPC Contracts and equipment supply contracts.
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 13, "Other Commitments and
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
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 operating results is impacted by regulatory trackers that allow for the recovery in rates of certain costs. 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 NIPSCO Operations' and Columbia Operations' gas distribution revenue is related to the recovery of gas costs through GCAs, the review 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 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 contribute 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 5%. Columbia of Kentucky incorporates a weather normalization adjustment for certain customer classes and also has a fixed customer charge. NIPSCO Gas has also received approval and implemented a weather normalization adjustment for certain of its customer classes. NIPSCO Gas and Electric include a fixed customer charge for residential and small commercial and industrial 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.
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 | 10.00 | % | $ | 110.4 | $ | 55.6 | March 20, 2025 | January 2026 | |||||||||
| 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(1) | 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(2) | 9.75 | % | $ | 161.9 | $ | 120.9 | October 25, 2023 | August 2024 | |||||||||
| NIPSCO - Electric(3) | 9.75 | % | $ | 368.7 | $ | 257.0 | September 12, 2024 | July 2025 | |||||||||
(1)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.
(2)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.
(3)New rates were implemented in multiple steps, with implementation of Step 1 rates in July 2025 and Step 2 rates in March 2026.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Regulatory, Environmental and Safety Matters
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 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, leak detection, methane emissions reduction, and enhanced safeguards for low-pressure distribution systems. Proposed revisions included requirements to detect and repair more leaks, increase survey frequency, and incorporate additional protections to prevent over-pressurization. A final leak detection and repair rule was withdrawn from publication in the Federal Register in January 2025, and no further progress has been made on the Safety of Gas Distribution Pipelines rulemaking.
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.
Environmental and Climate Change Issues
In March 2025, the EPA announced it will undertake 31 deregulatory actions to advance the current presidential 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 and CCR rules. In November 2025, the EPA proposed a rule to extend the compliance deadline for owners and operators to complete closure of their unlined CCR surface impoundments larger than 40 acres from October 2028 to October 2031. In February 2026, the EPA issued a final rule rescinding the 2009 Endangerment Finding, the scientific and legal foundation for federal GHG regulations under the Clean Air Act. Additionally, in February 2026, the EPA issued a final rule extending compliance deadlines for several provisions of the Legacy CCR Rule and subsequently, also in April 2026 proposed further revisions to the Legacy CCR Rule. 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.
In June 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 planned gas generation, allowing customers to avoid approximately $675 million in additional cost as contemplated 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 ("Act") 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 its 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 require net zero direct GHG emissions from large buildings by 2040 with interim targets, or payments of an alternative compliance fee. Under an executive order, Maryland is also developing a Clean Heat Standard and a Zero-Emission Heating Equipment Standard, among other programs, that are intended to transition gas furnaces to electric heat pumps. In December 2025, the Maryland Public Service Commission ("MD PSC") issued proposed regulations with the stated purpose of eliminating "subsidies" for the extension of gas mains and service lines to new residential and commercial customers. According to the MD PSC, these regulations, if finalized, would require persons who request new
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
Regulatory, Environmental and Safety Matters
service to pay the full cost of extending service in order to minimize the risk of future stranded costs for all ratepayers. In August 2025, the MD PSC instituted formal proceedings to investigate issues pertaining to long-term natural gas company planning practices. One purpose of these proceedings is to ensure that planning is consistent with Maryland's climate goals. Columbia of Maryland cannot predict the final impact of these policies and proceedings 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 the 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- or 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 2025, we had reduced Scope 1 GHG emissions by approximately 70% 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 committed to our Net Zero Goal by 2040 which 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, power and capacity. 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 9, "Risk Management Activities," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for further information on our commodity price risk assets and liabilities.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NiSource Inc.
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 $2.0 million for the three months ended March 31, 2026 and $2.5 million for the three months ended March 31, 2025, 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, 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, 2025. There were no material changes made as of March 31, 2026.
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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