NiSource Reports 2020 Results

(NiSource, 17.Feb.2021) — NiSource Inc. announced, on a GAAP basis, net income available to common shareholders for the three months ended 31 December 2020 of $70.7mn, or $0.18/share, compared to a net loss available to common shareholders of $153mn, or $0.41/share, for the same period of 2019. For the 12 months ended 31 December 2020, NiSource’s GAAP net loss available to common shareholders was $72.7mn, or $0.19/share, compared to net income available to common shareholders of $328mn, or $0.88/share, for the same period of 2019.

NiSource also reported non-GAAP net operating earnings available to common shareholders of $130.1mn, or $0.34/share, for the three months ended 31 December 2020, compared to non-GAAP net operating earnings available to common shareholders of $169.6mn, or $0.45/share, for the same period of 2019. For the 12 months ended 31 December 2020, NiSource’s non-GAAP net operating earnings available to common shareholders was $507.5mn, or $1.32/share, compared to $494.7mn, or $1.32/share, for the same period of 2019. Schedule 1 of this press release contains a complete reconciliation of GAAP measures to non-GAAP measures.

NiSource’s GAAP results for the 12 months ended 31 December 2020, includes a $243.5mn loss on early extinguishment of long-term debt and a $412.4mn loss due to the re-classification of Columbia Gas of Massachusetts’ assets as held for sale resulting from the February 2020 agreement to sell these assets to Eversource Energy. This sales transaction closed on 9 October 2020.

“2020 was a year like no other, but the NiSource team remained focused on our core mission of delivering safe, reliable energy service to our customers and the communities we serve throughout the COVID-19 pandemic, while at the same time completing steps to reposition the company to execute on significant long term growth opportunities,” said NiSource President and CEO Joe Hamrock. “Our 2020 financial and operational results reflect the resiliency of the business, and we continued to execute on our safety and asset modernization programs as well as our electric generation transition strategy. In Indiana, we completed two wind power projects in December, and we continue to expect that our infrastructure and generation investments will drive compound annual growth of 7% to 9% in net operating earnings per share from 2021 through 2024 while reducing greenhouse gas emissions 90% by 2030.”

NiSource achieved a number of key milestones in 2020:

— Maintained safe, reliable service while supporting customers with payment flexibility through the COVID pandemic

— Invested $1.7bn in its gas & electric utilities, including replacement of 274 miles of priority pipe, 37 miles of underground electric cable and 1,380 electric poles

Advanced and matured its Safety Management System (SMS) and safety enhancement initiatives

— Completed the sale of the Columbia Gas of Massachusetts business to Eversource

— Made significant progress on its electric generation transition with two wind projects completed, and regulatory approval received for three other renewable projects

— Lowered the weighted average interest rate on its long-term debt by more than 60 basis points and enhanced liquidity through the COVID-19 pandemic

— Launched the transformative NiSource Next initiative to build organizational capabilities, support safety investments and enhance efficiency

— Provided investors a new infrastructure investment-driven long-term growth plan through 2024, including $1.8bn to $2bn in renewable generation investments

— Made additional progress on its sustainability strategy, earning a spot on the Dow Jones Sustainability North America Index for the seventh straight year

— Continued its strong customer growth across its diverse six-state footprint, with over 30,000 net new gas customers added

2021 and Long-Term Financial Commitments Reaffirmed

NiSource is reaffirming its 2021 non-GAAP net operating earnings guidance in the range of $1.28/share to $1.36/share. The company expects to make capital investments of $1.9bn to $2.1bn in 2021.

As outlined at its 2020 Investor Day, NiSource continues to expect to grow its net operating earnings per share by 7% to 9% on a compound annual growth rate basis from 2021 through 2024, including near-term annual growth of 5% to 7% through 2023. NiSource expects to make growth, safety and modernization investments of $1.9bn to $2.2bn annually through 2024, as well as a total of $1.8bn to $2bn of investments in renewable generation assets. These investments are expected to drive compound annual rate base growth of 10 to 12% through 2024.

NiSource remains committed to maintaining its current investment-grade credit ratings. The company has investment-grade ratings with Fitch Ratings (BBB), Moody’s (Baa2) and Standard & Poor’s (BBB+). As of 31 December 2020, NiSource had approximately $1.7bn in net available liquidity, consisting of cash and available capacity under its credit facility and accounts receivable securitization programs.

NiSource reminds investors that it does not provide a GAAP equivalent of its earnings guidance due to the impact of unpredictable factors such as fluctuations in weather, asset sales and impairments, and other items included in GAAP results.

System-wide Safety Enhancements Update

The Safety Management System (SMS) transitioned in 2020 from an accelerated project launch to an established operating model within NiSource. With the continued support and advice from the independent Quality Review Board, the company is continuing to mature its SMS processes, capabilities and talent as it collaborates within and across industries to enhance safety and reduce operational risk. Safety milestones in 2020 include:

— Successfully deployed automatic shutoff device and remote monitoring, with 70% of low pressure systems now protected

— Began implementing and aligning SMS within the electric segment

— Launched mobile gas leak detection pilot projects and implemented a service line mapping strategy to enhance records quality across the footprint

— Added clearances and other layers of protection to critical field operating activities

— The final safety recommendation around emergency preparedness and response was closed by the National Transportation Safety Board

— Earned ISO 9001 certification for both the NiSource gas meter shops and the fabrication facility, a strong first step in a continuing quality effort

“SMS is built on our culture of empowering everyone to report and identify risk including the authority to stop work whenever necessary, enhancing process safety with layers of protection and building accountability for effective asset management to reduce risk,” Hamrock said.

Fourth Quarter 2020 and Recent Business Highlights

Electric Operations

Northern Indiana Public Service Company (NIPSCO) continues to execute on an electric generation transition consistent with the preferred pathway from its 2018 Integrated Resource Plan, which outlines plans to retire nearly 80% of its remaining coal-fired generation by 2023, and retire all coal generation by the end of 2028, to be replaced by lower-cost, reliable and cleaner options. The plan is expected to be a key element of a 90% reduction in NiSource’s greenhouse gas emissions by 2030 compared with 2005 levels, and to save NIPSCO electric customers more than $4bn over 30 years.

NIPSCO expects to make $1.8bn to $2bn of renewable generation investments and has executed agreements representing approximately $1.25bn of this anticipated investment. The remaining investments focused on additional solar capacity are in advanced commercial negotiations. Half of the capacity in the replacement plan is targeted to be owned by joint ventures that will include NIPSCO and tax-equity partners as the members. The remaining new capacity is expected to be primarily in the form of power purchase agreements (PPAs). The planned retirement of the Michigan City Generating Station could create additional NIPSCO capital investment opportunities.

Recent electric operations highlights include:

— NIPSCO completed its Rosewater joint venture and Jordan Creek PPA wind projects in December 2020. Construction continues on the Indiana Crossroads joint venture wind project, which is expected to go into service by the end of 2021.

— The Indiana Utility Regulatory Commission (IURC) in January 2021 approved two NIPSCO solar PPAs with NextEra Energy Resources (NextEra) as developer — Brickyard and Greensboro. These projects have a combined nameplate capacity of 300 megawatts and 30 megawatts of storage.

— In November 2020, NIPSCO filed applications with the IURC for approval of the Dunns Bridge I, Dunns Bridge II and Cavalry joint venture solar projects. In October 2020, NIPSCO finalized build transfer agreements with NextEra for these solar and storage facilities, which are expected to be operational in 2022 and 2023. NextEra will construct the projects, and NIPSCO will enter into joint ventures to own, operate and maintain some facets of these assets once construction is complete. An IURC order is expected in the second quarter of 2021.

— In December 2020, NIPSCO announced a long-term PPA with the clean energy infrastructure business of Capital Dynamics to develop Gibson Solar, a 280 megawatt solar project in Gibson County, Indiana. NIPSCO filed an application with the IURC for approval of this project in January 2021. Construction is expected to begin in 2022, with commercial operations to begin in 2023. Also in December 2020, NIPSCO filed an application with the IURC for approval of the Green River Solar PPA in Kentucky.

— NIPSCO continues to execute on its seven year electric infrastructure modernization program, which includes enhancements to its transmission and distribution system designed to enhance safety and reliability. The program, originally approved by the IURC in 2016, includes approximately $1.2bn in electric infrastructure improvements expected to be made through 2022. The company’s latest tracker update request, covering $122.3mn in incremental capital investments made from July 2019 through July 2020, was approved by the IURC on January 27, 2021, with rates effective in February 2021.

Gas Distribution Operations 

— The Maryland Public Service Commission in November 2020 approved a settlement in the Columbia Gas of Maryland base rate case request. The approved settlement supports further upgrading and replacement of the company’s underground natural gas pipelines and provides for an annual revenue increase of $3.3mn, including $1.3mn of current tracker revenue. New rates went into effect in December 2020.

— Columbia Gas of Pennsylvania’s base rate case remains pending before the Pennsylvania Public Utility Commission. The request, as modified on December 22, 2020, seeks an annual revenue increase of $76.8mn to invest in, modernize and upgrade the company’s existing natural gas distribution system as well as maintain the continued safety of the system. An order is expected in the first quarter of 2021, with new rates retroactive to 23 January 2021.

— NIPSCO continues to execute on its long-term gas modernization program, which includes nearly $950 million in capital investments to be made through 2025 and recovered through semi-annual adjustments to the gas Transmission, Distribution and Storage Improvement Charge (TDSIC) tracker. On 23 December 2020, the IURC approved NIPSCO’s latest tracker update request covering $26mn in incremental capital investments made between January 2020 and June 2020. New rates took effect in January 2021.

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