NiSource Q2 2025 Earnings Report

NiSource EPS Results

• Actual EPS: $0.22
• Consensus EPS: $0.21
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.21

NiSource Revenue Results

• Actual Revenue: $1.16 billion
• Expected Revenue: $1.16 billion
• Beat/Miss: Beat by +$5.90 million
• YoY Revenue Growth: N/A

NiSource Announcement Details

• Quarter: Q2 2025
• Date: 8/6/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 6, 2025
• Conference Call Time: 11:00AM ET

NiSource (NYSE:NI) Inc., an energy holding company, operates as a regulated natural gas and electric utility company in the United States. It operates in two segments, Gas Distribution Operations and Electric Operations. The company distributes natural gas to approximately 3.3 million customers through approximately 55,000 miles of distribution main pipeline and the associated individual customer service lines; and 1,000 miles of transmission main pipeline in northern Indiana, Ohio, Pennsylvania, Virginia, Kentucky, and Maryland. It also generates, transmits, and distributes electricity to approximately 0.5 million customers in various counties in the northern part of Indiana, as well as engages in wholesale electric and transmission transactions. It owns and operates coal-fired electric generating stations in Wheatfield and Michigan City; combined cycle gas turbine in West Terre Haute; natural gas generating units in Wheatfield; hydro generating plants in Carroll County and White County; wind generating units in White County, Indiana; and solar generating units in Jasper County and White County. The company was formerly known as NIPSCO Industries, Inc. and changed its name to NiSource Inc. in April 1999. NiSource Inc. was founded in 1847 and is headquartered in Merrillville, Indiana.

NiSource Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: NiSource reported Q2 adjusted EPS of $0.22 (YTD $1.19) and narrowed its 2025 guidance to the upper half of the prior range at $1.85–$1.89, reaffirming its full-year targets.
• Positive Sentiment: The company secured final rate case orders in Virginia and Indiana, delivering ~$40.7 million and ~$257 million in annual revenue increases, respectively, with a 9.75% ROE in Virginia.
• Neutral Sentiment: NiSource’s AI and digital transformation efforts drove up to a 24% improvement in field productivity and completed nearly 10,000 miles of leak surveys in Q2, exceeding its mid-year targets.
• Positive Sentiment: With the Genco declination filing pending and an order expected in Q3, NiSource is advancing data center engagement to potentially secure significant new large-load customers in Northern Indiana.
• Positive Sentiment: NiSource issued $1.65 billion of senior notes, maintained stable credit ratings and eliminated near-term refinancing risk, supporting its $19.4 billion five-year capital investment plan.

Presentation

[Operator]

Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to Q2 twenty five NISORE's Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

[Operator]

I would now like to turn the conference over to Mr. Durgesh Chopra, Head of Investor Relations. You may begin.

[Durgesh Chopra, VP - IR at NiSource]

Thank you, Vela. Good morning, and welcome to NiSource's second quarter twenty twenty five investor call. Joining me today are President and Chief Executive Officer, Lloyd Yates Executive Vice President and Chief Financial Officer, Shawn Anderson Executive Vice President of Technology, Customers and Chief Commercial Officer, Michael Lueers and Executive Vice President and Group President of NiSource Utilities, Melody Birmingham. Today, we'll review NiSource's financial performance for the second quarter and share updates on operations, strategy and growth drivers. We'll open the call for your questions after our prepared remarks.

[Durgesh Chopra, VP - IR at NiSource]

Slides for today's call are available in the Investor Relations section of our website. Some statements made during this presentation will be forward looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. Information concerning such risks and uncertainties is included in the Risk Factors and MD and sections of our periodic SEC filings. Additionally, some statements made on this call relate to non GAAP earnings measures.

[Durgesh Chopra, VP - IR at NiSource]

Please refer to supplemental slides, segment information and full financial schedules for information on the most directly comparable GAAP measure and a reconciliation of these measures. With that, I'll turn the call over to Lloyd.

[Lloyd Yates, President & CEO at NiSource]

Good morning, everyone. Let's begin on Slide three. At NiSource, our mission remains clear and consistent, deliver safe, reliable energy that drives value to our customers. We do this through disciplined capital deployment, operational excellence and fostering constructive regulatory relationships. We believe these fundamentals will continue to drive strong results, balance sheet strength and a dependable dividend.

[Lloyd Yates, President & CEO at NiSource]

These principles form the cornerstone of NiSource's business strategy, consistently providing excellent value to shareholders. By focusing on regulated utility operations in high quality regions, maintaining diversity across areas and energy types and disciplined capital investment, NYSERDA continues to excel. Turning to our key priorities on Slide four, our constructive regulatory foundation is further evidenced having received final orders in Virginia and Indiana this quarter. Our ongoing focus to refine our operations through AI efficiency and continuous improvement initiatives is transforming the way we work. We're pleased to report second quarter adjusted EPS of $0.22 bringing our year to date total to 1.19 This performance keeps us firmly on track to deliver on our full year commitment.

[Lloyd Yates, President & CEO at NiSource]

As a result, we are narrowing our 2025 adjusted EPS guidance to the upper half of the previously stated range of $1.85 to $1.89 Let's move to Slide five. Our operational excellence differentiates us. We are rapidly advancing our internal AI capabilities to transform how we operate and create a sustainable competitive edge in NiSource. Our work management intelligence solution is now fully deployed across all NIPSCO and Columbia operating companies, delivering up to 24 improvement in field productivity equivalent to more than 83,000 incremental work hours through smarter analytics driven scheduling and greater efficiency and dispatch time. Building on this success, we are expanding AI into other critical areas of the business.

[Lloyd Yates, President & CEO at NiSource]

In supply chain, we have launched a generative AI powered analyst initiative to transform procurement processes, unlocking greater efficiency and deeper insights by leveraging the full scale of the NiSource platform. We are also exploring how AI can support system reliability and improve storm response during severe weather events. AI and analytics are becoming foundational to how we deliver value. We remain committed to scaling these capabilities to optimize performance, elevate service and support our long term strategic goals. Using our advanced mobile leak detection capabilities to address large volume leaks across our territory, we completed 9,966 miles of leak survey in the second quarter, bringing our total miles driven to 18,665 year to date, exceeding our goal.

[Lloyd Yates, President & CEO at NiSource]

We also launched the final phase of our work in asset management or WAM. This marks a major milestone in our digital transformation. The WAM program delivers enterprise impact reaching nearly 5,000 end users. It has converted over 500,000,000 records and integrated data from 23 host systems, thus underscoring the scale and complexity of this initiative. We have now successfully standardized how we manage field work and assets across the enterprise, improving asset visibility, streamlining scheduling and enabling real time decision making.

[Lloyd Yates, President & CEO at NiSource]

On Slide six, we continue to make strong progress on our regulatory agenda. Since our last call, our Virginia rate case was approved. The final order authorized a $40,700,000 revenue increase and a 9.75% ROE with rates already in effect. This outcome supports $442,000,000 in investments from 2023 through 2025, including critical safety, compliance and reliability capital additions. It also reflects our continued ability to work constructively with stakeholders to deliver timely and balanced outcomes.

[Lloyd Yates, President & CEO at NiSource]

In Indiana, our NIPSCO electric rate case was approved in June, providing $257,000,000 in revenue uplift. This marks our seventh settlement in the last ten years across both electric and gas businesses in the state. These outcomes reinforce the strength of our stakeholder relationships and the predictability of our regulatory environment. Our work in Pennsylvania continues to demonstrate the value of our risk reduction strategy in alignment with stakeholders. We continue our track record of constructive regulation working through our rate case, expecting a final order in the fourth quarter.

[Lloyd Yates, President & CEO at NiSource]

Building on our regulatory momentum, we are also advancing initiatives that support broader economic development. These efforts strengthen our existing communities by expanding the customer base and helping to distribute fixed costs more efficiently. For example, our team strategically revitalized a dormant point of delivery station in Skippers, Virginia, unlocking the capacity to support two new industrial customers. Both companies are leaders in sustainable innovation. One, transforming municipal waste into renewable energy and the other repurposing coal ash through advanced recycling processes.

[Lloyd Yates, President & CEO at NiSource]

This initiative not only reactivates critical infrastructure, but also drives forward environmentally responsible industrial growth. NIPSCO continues to drive strategic growth across its service territory, supporting a diverse range of new developments in advanced manufacturing, logistics and technology. Notable projects include GI Tech's first U. S. Manufacturing facility in Merrillville, Slate's automotive 1,400,000 square foot electric truck plant in Warsaw, and FedEx's $60,000,000 investment in new distribution center in Gary, collectively projected to generate over 2,600 jobs.

[Lloyd Yates, President & CEO at NiSource]

These investments underscore the state's emergence as a hub for innovation, sustainability and workforce development. Now, before I hand it off to Sean, I want to give you an update on our strategy to support data center development in Northern Indiana. Our application to the IURC to support the Genco operating model remains under review and the settlement modification on July 18 was further evidence of our ongoing efforts to address stakeholder concerns. We continue to believe Genco offers a compelling option to meet data center needs while also driving differentiated value to the region, including our existing customers. We still expect an order in the third quarter.

[Lloyd Yates, President & CEO at NiSource]

Regarding our data center engagement, we continue to have constructive dialogue with a range of counterparties interested in the compelling fundamentals, which our service territory can provide for data center investment. We know well the state of Indiana is great for energy development. We are excited about the prospects our strategy can provide to new customers and the growth it could bring to the state and our local communities. Our team is very focused on maximizing this opportunity for the many stakeholders involved, our existing customers, our communities, our policymakers and of course our shareholders. We remain hard at work to convert this opportunity into a reality and continue to believe we are on track. Sean, I'll now turn it over to you.

[Shawn Anderson, EVP & CFO at NiSource]

Thanks, Lloyd. I'd like to start on Slide seven. Our generation transition began in 2019 with a launch of a multiyear strategy to enhance energy capacity and improve our energy footprint in Indiana. As part of this initiative, we executed a series of strategic projects that have significantly expanded our renewable energy portfolio. This includes short term contracted capacity resources, expanded demand side management programs, solar facilities, battery storage and new natural gas peaking resources.

[Shawn Anderson, EVP & CFO at NiSource]

Today, the portfolio is nearly complete with Gibson approaching finalization and Templeton Wind progressing according to schedule, on track for commercial operation in 2027. We are proud to report we've been able to deliver these investments on time and within budget, a testament to our disciplined planning and execution. Our ability to successfully execute this large scale multi phase initiative not only demonstrates our operational excellence, but also reinforces our confidence in tackling complex endeavors, particularly when called upon to enhance the safe and reliable energy delivery to our communities. With the same strategic rigor and commitment to execution, we are well positioned to deliver resilient infrastructure, which supports increasing energy demands while managing stakeholder needs. With this in mind, I'd like to briefly address two policy related items, which relate to our financial strategy and our infrastructure development plans.

[Shawn Anderson, EVP & CFO at NiSource]

First, the recently enacted One Big Beautiful Bill does not impact our renewable development project plans. The remaining project scheduled to come online after 2025 is Templeton, with a commercial operation date in 2027. And importantly, it still qualifies for tax credits under IRC Section 45. Second, as we discussed in our Q1 earnings call, we remain on track to retire Schaeffer by the 2025 and Michigan City by the 2028. We are continuing to work with policymakers to evaluate alternatives to this plan, including the potential to utilize these facilities on an extended timeline.

[Shawn Anderson, EVP & CFO at NiSource]

We'll work closely with federal and state regulators to ensure we make decisions that are in the best interest of our customers and all stakeholders. Our capital investment outlook shown on Slide eight emphasizes the flexibility across our portfolio as we assess the best bid plans for our stakeholders. Our $19,400,000,000 five year capital plan remains diversified and executable. We are not reliant on any single project or technology. Our growth across six states demonstrates the strength and diversification of investment driving our best in class development plans.

[Shawn Anderson, EVP & CFO at NiSource]

In addition to the substantial electric generation investments I highlighted a moment ago, 48% of our base plan is attributed to gas system hardening, supporting the modernization of our gas infrastructure. Our ability to allocate capital across states and between gas and electric enables NiSource to optimize recovery and respond dynamically to evolving needs. Additionally, we continue active engagement to advance the commercial development of over $2,000,000,000 of identified upside projects and look forward to sharing a more comprehensive update during our third quarter plan refresh. Beyond these plans, Slide nine highlights our incremental investment opportunities, data center generation and T and D facilities, MISO transmission, PHMSA compliance and more. These are not included in our base or upside plans, but represent meaningful long term value creation opportunities.

[Shawn Anderson, EVP & CFO at NiSource]

We are working to commercialize these initiatives while building the investment thesis with stakeholders to optimize the value these opportunities can create. Turning to Slides ten and eleven. Our second quarter adjusted earnings per share was $0.22 and $01 above the same period last year. Year to date, adjusted EPS is 1.19 up $0.13 from the same period last year. This growth is driven by strong performance in both our NIPSCO and Columbia segments, which continue to outperform expectations.

[Shawn Anderson, EVP & CFO at NiSource]

Our commitment to operational excellence through initiatives like Project Apollo and WAM has enabled our businesses to deliver consistent and high quality results. We are reaffirming all long term financial commitments on Slide 6% to 8% annual adjusted EPS growth 8% to 10% rate base growth and 14% to 16% FFO to debt through 2029. Additionally, we are narrowing our 2025 adjusted EPS guidance to the upper half of the range. We've seen growth in our economies driving tailwinds into year to date results from increased customer count and usage as well as constructive financing success and regulatory execution. Our plan is built on a realistic foundation and modest demographic growth assumptions.

[Shawn Anderson, EVP & CFO at NiSource]

We are seeing strong tailwinds across our jurisdictions. For example, metro growth in Columbus, Ohio was 38% higher than the national average last year, and we're observing similar trends in other parts of our service territory. Over the trailing twelve month period ending in June, we observed customer growth at nearly 1% in our electric business and 0.6% in our gas business, both surpassing our forecast. Let's turn to Slide 13. In the second quarter, we advanced our financing plans with the issuance of $1,650,000,000 of senior notes.

[Shawn Anderson, EVP & CFO at NiSource]

This builds on our first quarter activity and positions us well to meet our 2025 funding needs while maintaining our 14% to 16% FFO to debt target. Over the summer, S and P, Moody's and Fitch each completed their annual credit reviews and reported no changes to ratings and maintaining stable outlooks, which reflect the strong credit profile of NiSource. We believe the successful refinancing of our $1,250,000,000 August maturity effectively eliminates any near term refinancing risk. This proactive step not only secures our capital structure, but also reinforces our financial flexibility and stability. With this transaction behind us, our forward looking debt profile is significantly derisked, and we now face minimal refinancing exposure in the foreseeable future.

[Shawn Anderson, EVP & CFO at NiSource]

This positions us to focus on strategic growth initiatives with confidence backed by a strong and resilient balance sheet. We use practical interest rate assumptions in our plan despite a persistent high rate environment, and the economic growth across our service territories continues to advance. These fundamentals give us confidence in our 2025 earnings outlook and leaves NiSource well positioned to deliver strong financial results as we narrow to the upper half of our 2025 adjusted EPS guidance range. We continue building a track record of execution and growth on Slide 14. Our commitment to investors, employees, customers and all our stakeholders is central to everything we do.

[Shawn Anderson, EVP & CFO at NiSource]

Our regulatory execution, year to date financing activity and thoughtful investment plans position us well for 2025 and we expect will continue across the plan horizon. Even with this upward trajectory and guidance for 2025, we continue to project an annual 6% to 8% growth rate, the value of which compounds through our plan horizon with continued outperformance. NiSource offers investors a diversified and fully regulated utility with the opportunity to invest in programmatic gas infrastructure and long term energy transition for a fully integrated electric business. The emerging opportunity to support unprecedented energy development and power demand resulting from robust economic development, onshoring, as well as new data center developments truly differentiates the value proposition relative to many alternatives in the marketplace today. And with that, we'll open the line for questions.

[Operator]

Your first question comes from the line of Julien DUMOULIN Dumoulin Smith SMITH:] with Jefferies. Hey, [SPEAKER

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

good morning team. Thank you guys very much for the time. I appreciate it. Nicely done. Can you hear me okay?

[Lloyd Yates, President & CEO at NiSource]

Good morning, Julien. We hear you fine.

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

Hey, excellent. Wonderful. Thanks, Lloyd. Hey, look, if I can, I'm just trying to marry up some of the comments from your call here. Given how fast the data center market is evolving and given the comments you just made about the Columbus Metro Area, for instance, amongst other service territories here, how are you thinking about that opportunity, especially in the NISCO territory?

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

Your load forecast, your 24 IRP, could you potentially view that as stale at this point? And how do you think about the scale and scope of the opportunity, especially since it hasn't fully come together yet? Is it is there an upward bias to the numbers there, of the 2.6, for instance?

[Lloyd Yates, President & CEO at NiSource]

So let me wait, that was a lot of questions in that one question. Let me start there. I wouldn't characterize it as an upward bias in the numbers, first of all. I think the way to think about this is there's a huge demand for data centers in Northern Indiana, and that hasn't backed off at all. What I'll tell you is that we're taking the time to, really execute this opportunity in a thoughtful and disciplined manner. And we guided by four principles, and I've talked about these before, right? Protect the existing customer base, serve new customers with speed and agility, earn appropriate adjusted return for our shareholders and maintain NiSource's financial integrity.

[Lloyd Yates, President & CEO at NiSource]

I've talked about this being a 2025 event. I talked about that in the fourth quarter of last year. And as I said in my script, we're very focused on that. And I believe we're right on track. We're where we need to be with respect to this opportunity.

[Lloyd Yates, President & CEO at NiSource]

And when we have something to tell you, it'll be comprehensive, and we'll get that to the market as soon as possible. We'll be very transparent with that. So that's where we are right now.

[Shawn Anderson, EVP & CFO at NiSource]

Yes. And Julie, maybe I'll just add one bit, which is we have seen demand across the gas footprint in Ohio and Virginia specifically for pipeline expansions to serve on-site generation for data centers. Those inquiries continue to come in, and we continue to work collaboratively with our states and with our communities as there's a lot of excitement to expand the infrastructure development across all of our states.

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

Got it. And then if I can marry that up a little bit with the conversation on timing, right? Because I think you guys just said a second ago in the prepared comments about your confidence in the final order here, I suppose, on the Genco by the September. How do you think about potential to provide any kind of example transaction or something that is a little bit more tangible for the stakeholders to look at and understand what you're proposing here as well as just maybe commentary about the timeline itself on these larger loads?

[Lloyd Yates, President & CEO at NiSource]

So you just kind of marry two process together, which we look at as separate and distinct. One is the Django declination process. That process is moving down the path. We're confident that we'll get an order by the third quarter of this year. Independent of that, but related, is the process with the counterparties.

[Lloyd Yates, President & CEO at NiSource]

And as I said, those conversations are ongoing. I think they're complex. If you go back to the four pillars I just talked about, we're really focused on meeting those four pillars. And when we have something to announce with that process, we'll let you know. But two separate processes.

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

Okay. All right. No, fair enough. Hey Lloyd, I definitely didn't mean to open that can of worms on marrying those two together, all right?

[Lloyd Yates, President & CEO at NiSource]

I'm glad you're keeping the keeping the can open.

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

All the best, guys.

[Operator]

Question comes from the line of Nicholas Campaniello with Barclays.

[Nicholas Campanella, Director at Barclays]

I'll just ask one more follow-up, if I could. Just two separate processes. You have the counterparty contract process. You also have a third quarter update, where I think you're going to be refreshing the long term plan, it sounds like. How do those two juxtapose against each other?

[Lloyd Yates, President & CEO at NiSource]

Let me point that to Sean on the third quarter plan. Sean?

[Shawn Anderson, EVP & CFO at NiSource]

Yes, Nick. Appreciate the question. We've been pretty sure to update the plans whenever we have the information credibly in front of you, whether that's quarter by quarter or if we do a full blown refresh.

[Shawn Anderson, EVP & CFO at NiSource]

So on the first instance, what we know about our regulated utility business is that it continues to need infrastructure investments, and we're going through the process of refreshing the 19.4 base plan to better understand the timing of cash flows and how those would sequence forward. What's driving that is increased need for generation, transmission distribution and system maintenance across the gas and the electric side of the business, same fundamental drivers that we're seeing those in place. We're also seeing more economic development and strategic growth initiatives. So we're focused on refreshing that plan and plan to have an update on the third quarter call. That said, we've got $2,200,000,000 of identified upside CapEx.

[Shawn Anderson, EVP & CFO at NiSource]

And we'll see some of that upside CapEx flow whenever we see those projects become commercially viable and socialize with stakeholders. We don't have any of those to change place right now, but we do expect those to come to fruition here before the beginning before the end of this year. So the $2,200,000,000 of upside CapEx plan will be another piece that we're trying to refresh and flow into the base plan as identified over the next five years. And then beyond that, we've got the incremental investment opportunities and specific to the data center opportunity itself. Once we have those concrete answers, we'll start to flow that information through our plans.

[Shawn Anderson, EVP & CFO at NiSource]

And once we reach the same standard credibility with counterparties, stakeholders and surety of the cash inflow and outflow, we'll also roll those through our plan make and sure that we understand what the forward looking guidance would be around our financial commitments. So all three of those could work at any time. We're not going to wait just for the third quarter call to do that per se. But obviously, we see that as an opportunity to refresh thoughts on all three of those elements and plan to do so in Q3.

[Nicholas Campanella, Director at Barclays]

All right. That's very helpful. And then just a quick one, if I could. You're at the high end or you're above the midpoint, I guess, of 25%. And you have an annual EPS growth target.

[Nicholas Campanella, Director at Barclays]

So are we now kind of when we think about where you could be in that target on the base plan today, 26,000,000 and $27,000,000 should we be basing that off of 188,000,000 today? Is that the way to think about it?

[Shawn Anderson, EVP & CFO at NiSource]

Yes. The base would be how we achieve results at the end of this year and then 6% to 8% annual growth rate beyond those actual results. That's exactly right, Nick.

[Nicholas Campanella, Director at Barclays]

Thank you very much.

[Lloyd Yates, President & CEO at NiSource]

Thanks, Nick.

[Operator]

Your next question comes from the line of Richard Sunderland with JPMorgan. Please go ahead.

[Richard Sunderland, Equity Research - North American Utilities & Power at JP Morgan]

Hi, good morning. Thank you for the time today.

[Lloyd Yates, President & CEO at NiSource]

Good morning, Rich.

[Richard Sunderland, Equity Research - North American Utilities & Power at JP Morgan]

Thinking about the supply picture overall, could you speak to Turbine Que positions and just your confidence and ability to deliver new supply to meet any large load growth? And then I'm curious kind of related to that, you made some comments around the planned coal retirements and potential longer life to those assets. How does that fit into the supply picture as you add load?

[Lloyd Yates, President & CEO at NiSource]

So I'm going to throw this over to Michael Lures.

[Michael Luhrs, EVP - Technology, Customer & Chief Commercial Officer at NiSource]

So I appreciate the question. And I would just say Lloyd's highlighted and Sean have highlighted our disciplined approach associated with this. What I'll say and what we've provided is that we have put ourselves in a beneficial position associated with CUES in order to be able to have the equipment necessary to deliver on the opportunities. So we feel like we are in a good place and in a strong position to deliver on the fundamentals, including being able to serve new customers with that speed and flexibility.

[Lloyd Yates, President & CEO at NiSource]

He talked about extension of the coal plants. Melody, why you talk about where we are with respect to coal plant extensions?

[Melody Birmingham, EVP & Group President - NiSource Utilities at NiSource]

Sure. Good morning. So as you all know, the President passed an executive order earlier this year in April, and that order was shortly followed up by an executive order that was issued by Governor Braun in Indiana. And the order did call for the continued operation of all plants, all generation to meet the capacity needs. We've been working very closely with the state of Indiana.

[Melody Birmingham, EVP & Group President - NiSource Utilities at NiSource]

Our President, Vince Parisi, our team in Indiana has worked closely with the governor and his office to understand what that will look like in Indiana. Our plan is still the same to retire our Shaker plant by the end of this year. However, we will make sure that we work closely with the state so that we're aligned. And so no changes have been made as of this point, but we will ensure that we understand what the Governor's direction is and that we support that direction. But nonetheless, our plan is and remains the same per Shapr.

[Richard Sunderland, Equity Research - North American Utilities & Power at JP Morgan]

Understood. Thanks for the commentary there. And then turning to the financing strategy, how do you see the Genco playing into this in terms of potential impacts to near term or medium term earnings with the Genco structure before assets are in service or I guess abilities to structure around that and avoid any financing impacts until assets are in service? Do you see a path forward there without any earnings impacts? Are you thinking about that overall? Thank you.

[Shawn Anderson, EVP & CFO at NiSource]

Thanks, Rich. Yes, I'll take that. I think we see a lot of flexibility in the structure as well as in the negotiations with customers. And then on top of that, the flexibility that we've built by strengthening the balance sheet over time, being thoughtful around raising equity as needed and delivering on the commitments that we've committed in front of us. That includes the outperformance of the base business, which continues to strengthen funds from operation and cash flow quality derived just from the work that we do each and every day.

[Shawn Anderson, EVP & CFO at NiSource]

That's a critical element that continues to strengthen our financial flexibility. And we believe that, that can help support the operations that we need to as we move forward into the future flexibility needed. We've not disclosed exactly how we'll finance Genco. We'll retain the flexibility to evaluate that once we have the use of cash and the customer contracts that we will be delivering upon in front of us. That will be something we'll evaluate to optimize the overall value and minimize the financing cost and friction involved with bringing on the infrastructure that we talked about.

[Shawn Anderson, EVP & CFO at NiSource]

So we retain a lot of the flexibility and the outperformance both in terms of strengthening the balance sheet and the base business producing incremental cash flows has put us in a great position to capitalize on this opportunity fairly efficiently.

[Richard Sunderland, Equity Research - North American Utilities & Power at JP Morgan]

Great. I'll leave it there. Thank you.

[Operator]

Your next question comes from the line of Ryan Levine with Citigroup. Please go ahead.

[Ryan Levine, Equity Analyst at Citigroup]

Good morning, everybody.

[Lloyd Yates, President & CEO at NiSource]

Morning, Ryan.

[Ryan Levine, Equity Analyst at Citigroup]

Two questions. In terms of the practical dynamics, so if the Genco applications approved in September and at that point, is there a lot of the contract terms that have already been pre negotiated Or would that cascade a series of negotiations and legal discussions to be able to hit your targeted goal of achieving deals by the end of the year?

[Lloyd Yates, President & CEO at NiSource]

Yes. So thanks for the question. As I said earlier, those are two separate processes. And we continue to our discussions with the counterparties and there'll be a set of terms associated with that. The GEN codeclination process, we expect to get an order in the third quarter of this year.

[Lloyd Yates, President & CEO at NiSource]

Those are two separate processes. We would not go back and renegotiate. That's another way to think about it, yes.

[Ryan Levine, Equity Analyst at Citigroup]

Yes. But I mean if you don't get the declination filing, I mean that presumably stops that process and that and so you're saying that you're just working ahead regardless of the outcome?

[Lloyd Yates, President & CEO at NiSource]

Well, remember, the declination filing, the order is a tool for us to it gives us the opportunity for when I talked about our second pillar of speed and flexibility for our new customers. This is just a tool that facilitates that speed and flexibility. If there's a negative order, there are other tools, including House Bill 1,007 out of Indiana that allows us to implement these large load customers. So it is not the only tool to utilize this. Michael, you want add anything to that?

[Michael Luhrs, EVP - Technology, Customer & Chief Commercial Officer at NiSource]

The only thing

[Michael Luhrs, EVP - Technology, Customer & Chief Commercial Officer at NiSource]

I would add to it is saying, as we're working this, we're working multiple and parallel streams on many items. As we've mentioned earlier, there's items around equipment. We're working those streams. We're working the regulatory streams as well, contractual streams as well as many other parts of the processes. In doing that, and as mentioned before, we'd like to ensure that we consider all the alternatives that occur within those different processes so that in the end, we can deliver on the opportunities, both for our customers and for our stakeholders.

[Michael Luhrs, EVP - Technology, Customer & Chief Commercial Officer at NiSource]

So it's not one or the other or one and in spite of, we are working multiple components to be able to ensure that those paths can come to fruition.

[Ryan Levine, Equity Analyst at Citigroup]

Okay. And then an unrelated question on Schaeffer. Given HB-one thousand and seven and some of the recent state policies, can you speak to some of the cost recovery attributes of the recent initiatives in the state that are in place now to ensure primary recovery of any ongoing costs associated with keeping Shapron longer and how that could impact the review that's underway regarding potential life extension?

[Lloyd Yates, President & CEO at NiSource]

I think there's some things that got matched in there. Hospital one thousand and seven has nothing to do with keeping Schaefer operating. I think Melody mentioned earlier, we're in conversations with the state and at the federal level to understand that if we keep Schaeffer operating, what those costs recovery mechanisms look like. So those conversations are still ongoing.

[Ryan Levine, Equity Analyst at Citigroup]

Okay. Thank you.

[Operator]

Your last question comes from the line of Steve Fleishman with Wolfe Research. Your line is now open. Please go ahead.

[Steve Fleishman, MD & Senior Analyst at Wolfe Research LLC]

Great. Thanks. Good morning.

[Lloyd Yates, President & CEO at NiSource]

Good morning, Steve.

[Steve Fleishman, MD & Senior Analyst at Wolfe Research LLC]

So just one on the gen GENCODE declination case. Could you just remind us what process is left from here? I think there's filings from the parties, the non signing parties due Friday. And is that the last event till we get in order pretty much?

[Lloyd Yates, President & CEO at NiSource]

It's Friday the eighth, right? Yes. So that is the last step of the process. All the final filings are due and then we continue to inspect an order from the commission by the end of the by the third quarter.

[Steve Fleishman, MD & Senior Analyst at Wolfe Research LLC]

And then lastly, Lloyd, sorry, I'm going to ask you to repeat this. But just I heard in your prepared remarks that you're very focused on converting this into reality and on track, but I didn't hear 2025. And then I heard in a question earlier that you're committed and expecting to get this done during 2025. Could you just clarify that you think you can convert this into reality in 2025?

[Lloyd Yates, President & CEO at NiSource]

Absolutely. I said this is a 2025 event, and we are on track to execute that. And I said we're 2.5 quarters into the year, and we are on track to execute this opportunity. We're right where we need to be.

[Steve Fleishman, MD & Senior Analyst at Wolfe Research LLC]

Okay. That's super helpful. Thank you.

[Operator]

That concludes our Q and A session. I will now turn the call back over to Mr. Lloyd Yates, CEO, for closing remarks.

[Lloyd Yates, President & CEO at NiSource]

Yes. Again, we continue to thank you for the questions and your interest in NiSource and hope you have a great rest of the day.

[Operator]

That concludes today's call. Thank you all for joining. You may now disconnect. Everyone, have a great day.

Participants

Executives

• Durgesh Chopra, VP - IR
• Lloyd Yates, President & CEO
• Shawn Anderson, EVP & CFO
• Michael Luhrs, EVP - Technology, Customer & Chief Commercial Officer
• Melody Birmingham, EVP & Group President - NiSource Utilities

Analysts

• Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies
• Nicholas Campanella, Director at Barclays
• Richard Sunderland, Equity Research - North American Utilities & Power at JP Morgan
• Ryan Levine, Equity Analyst at Citigroup
• Steve Fleishman, MD & Senior Analyst at Wolfe Research LLC