NiSource (NI) Q3 2026 Earnings Call Transcript

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DATE

Wednesday, Oct. 28, 2026

CALL PARTICIPANTS

• President and Chief Executive Officer - Lloyd Yates
• Executive Vice President and Chief Financial Officer - Shawn Anderson
• Executive Vice President, Technology, Customer, and Chief Commercial Officer - Michael Luhrs
• Executive Vice President and Group President of NiSource Utilities - Melody Birmingham
• Vice President of Investor Relations - Durgesh Chopra

TAKEAWAYS

• Consolidated Adjusted EPS -- $0.27 for the third quarter, compared to $0.19 in the same period last year, driven by disciplined cost management and demand for natural gas and electricity.
• Full Year 2026 Guidance -- Narrowed to the upper half of $2.02 to $2.07 per share, reflecting year-to-date performance.
• 2027 Adjusted EPS Guidance -- Initiated at $2.22 to $2.30 per share, which represents double-digit growth compared to the 2026 midpoint.
• Long-term Capital Plan -- Extended to a seven-year total of $40 billion through 2033, supporting critical infrastructure safety and reliability.
• Base Plan Investments -- Budgeted at $32 billion of the total capital plan to modernize gas systems and electric resiliency.
• GenCo Capital Expenditures -- Projected at $8 billion through 2033 to support infrastructure for large load data center customers.
• Earnings Growth Target -- Increased to a compound annual growth rate of 10% to 11% for consolidated adjusted EPS from 2027 to 2033.
• Base Plan EPS Growth -- Forecasted at 6% to 8% annually through 2033, supported by utility rate base growth of 8% to 10%.
• Customer Savings -- Increased to a projected $1.75 billion for NIPSCO electric customers from signed data center agreements, up from $1.4 billion previously.
• Microsoft Agreement -- Signed for a 20-year term starting in 2028, adding 1,100 megawatts of capacity including 600 megawatts of battery storage.
• Data Center Pipeline -- Signed capacity reached 5 gigawatts across five agreements, with an additional 4 gigawatts of potential load in the development pipeline.
• Residential Bill Impact -- Expected annual savings of $140 per average customer at the full ramp of current GenCo agreements.
• Investment Recovery -- Converting over 90% of capital investments into initial recovery within 12 months of the investment.
• Equity Funding -- Expected issuance of $400 million to $600 million in maintenance equity annually in the near term, with needs declining to minimal levels starting in 2032.
• FFO to Debt -- Commitment to maintain a ratio of 14% to 16% in all years of the planning horizon.
• GenCo EPS Contribution -- Forecasted to contribute $0.32 to $0.40 in 2030 and increasing to $0.52 to $0.68 by 2033.
• Cost Optimization -- Progressing on more than $40 million of identified initiatives to improve operational efficiency.
• Storm Response Resources -- Activated 1,700 external personnel following an August derecho with wind speeds reaching 110 mph.
• 2027 GenCo Earnings -- Anticipated contribution of $0.05 to $0.09 per share to the consolidated 2027 adjusted EPS.
• Customer Growth -- Usage and customer counts increased year over year at NIPSCO and Columbia Gas operations in Ohio, Virginia, and Kentucky.
• Blackstone Participation -- Maintains a 19.9% investment participation across both NIPSCO and GenCo capital programs.

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RISKS

• Yates stated, "On August 11, a derecho moved across Northern Indiana with wind speeds of up to 110 mph. 1 of the most severe weather events in NIPSCO's history," noting the storm severely tested the system and required extensive external resources for restoration.
• Management reported that NIPSCO received a fourth federal order requiring the continued operation of the Schahfer coal units, requiring the company to pursue recovery of compliance costs through the FERC-approved MISO tariff schedule.

SUMMARY

NiSource Inc. (NYSE:NI) reported third quarter results and extended its long-term financial plan through 2033, supported by a seven-year, $40 billion capital investment program. Management reported that the plan focuses on two primary platforms: a base business of regulated utilities serving 4 million customers and a growing generation company (GenCo) segment providing power to large-scale data center operations. The company stated that it has secured agreements with three of the world's largest technology companies, which are projected to generate approximately $1.75 billion in bill credits for existing utility customers in Northern Indiana. Management indicated that it is narrowing its full-year earnings guidance and increasing its long-term growth targets based on continued operational efficiency and demand for infrastructure.

• Luhrs stated, "Customers are choosing Northern Indiana and Genco because we can offer credible speed to power, transmission access, land, water, fiber, skilled labor and a supportive business and regulatory framework built for both speed and customer protection."
• The company has completed construction of transmission infrastructure for its Alphabet partnership ahead of schedule and began billing for service during the summer.
• Yates noted that Project Apollo and AI-enabled tools are strengthening efficiency and productivity across the business.
• Columbia Gas of Ohio filed its first three-year forward-looking rate case under the framework established by Senate Bill 103 to reduce regulatory lag.
• Management is hiring a third-party expert to conduct an independent review of its response to the August derecho over the next several months.
• Anderson stated that equity issuance needs are expected to reach minimal levels starting in 2032 as the business transitions to self-funding growth.
• The company is evaluating a potential extension of the Schahfer coal unit operations through its ongoing Integrated Resource Plan process.

INDUSTRY GLOSSARY

• GenCo: The NiSource business segment focused on providing power and capacity to large load customers, including data center operations.
• MISO: Midcontinent Independent System Operator, the regional transmission organization managing the power grid across several U.S. states.
• IRP: Integrated Resource Plan, a formal document describing a utility's long-term plan to meet forecasted energy demand.
• CAGR: Compound Annual Growth Rate, representing the geometric progression ratio that provides a constant rate of return over a time period.
• FFO to Debt: Funds From Operations divided by total debt, a financial measure used to assess credit strength and cash flow adequacy.
• Derecho: A widespread, long-lived, straight-line wind storm associated with a fast-moving group of severe thunderstorms.
• IURC: Indiana Utility Regulatory Commission, the governing body that regulates utility rates and services in Indiana.
• FERC: Federal Energy Regulatory Commission, the federal agency that regulates interstate transmission of electricity, natural gas, and oil.
• CCGT: Combined Cycle Gas Turbine, a power plant that uses both gas and steam turbines together to produce up to 50% more electricity from the same fuel than a traditional simple-cycle plant.
• EPC: Engineering, Procurement, and Construction, a standard form of contracting for large-scale infrastructure projects.

Full Conference Call Transcript

Operator: Hello, everyone. Thank you for joining us and welcome to the Third Quarter 26 NiSource Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press 1 to raise your hand. To withdraw your question, press 1 again. I will now hand the conference over to Durgesh Chopra, VP of Investor Relations. Durgesh, please go ahead.

Durgesh Chopra: Thank you. Good morning, and welcome to NiSource's third quarter 26 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, customer, and chief commercial officer, Michael Luhrs, and executive vice president and group president of NiSource Utilities, Melody Birmingham. Today, we will review NiSource's financial performance for the third quarter, share updates on operations, strategy, and growth drivers, and walk through our extended long term plan. Following our prepared remarks, we will open the call for your questions. 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 MDA sections of our periodic SEC filings. Additionally, some statements made on this call relate to non GAAP financial measures. Please refer to the supplemental slides segment information, and full financial schedules for information on the most directly comparable GAAP measures and a reconciliation of these measures. With that, I will turn the call over to Lloyd.

Lloyd Yates: Thank you, Durgesh. And good morning, everyone. I will begin on slide 3. At NiSource, our strategy remains grounded in delivering safe, reliable, and affordable energy while creating long term value for our customers, communities, and shareholders. This quarter, we are extending our long term plan through 2033, providing a 7-year view of the investment opportunity we see across our footprint, and the growth it supports. We That plan rests on 2 complementary platforms. Our base business fixed regulated utilities situated across multiple states, delivering natural gas and electricity to 4 million customers, Our growing Genco business adds differentiated growth delivering power and capacity to large load customers supporting national security through data center operations.

The complementary nature of these segments provide stability, diversification, and long runway of needed investment that has supported a consistent record of delivering on our commitments. With our recently announced Microsoft agreement, Genco now serves 3 of the largest technology companies in the world, and brings our signed agreements to an expected $1.75 billion in savings to existing NIPSCO electric customers. Turning to slide 4, We continue to advance our regulatory priorities in support of the financial plan, while AI enabled tools and Project Apollo are strengthening efficiency and productivity across the business. Today, we report a third quarter consolidated adjusted EPS of $0.27, bringing our year to date consolidated adjusted EPS to $1.49.

This performance keeps us firmly on track to deliver on our full year growth commitment. As a result of our progress, we are narrowing our 2026 consolidated adjusted EPS guidance to the upper half of our previously stated range of $2.02 to $2.07 We are also initiating 2027 consolidated adjusted EPS guidance of 2022¢ to $2.30 and expanding our growth commitments through 2033 supported by an increased consolidated adjusted EPS compound annual growth rate of 10% to 11%. Sean will take you through our growth drivers, financing plan, the $40 billion capital plan, and the associated financial commitment later in the call. Moving to slide 5. Safety remains our top priority, and the foundation of how we serve our customers.

This quarter tested our system, our people, and our communities. On August 11, a derecho moved across Northern Indiana with wind speeds of up to 110 mph. 1 of the most severe weather events in NIPSCO's history. Additional rounds of severe weather in the following days brought even more significant damage to our system. The weather pattern evolved rapidly and while we were prepared for what was forecasted, the weather severely accelerated in the hours before the storm crossed into our system. Jared, We activated our incident command structure, suspended noncritical work, and placed contractor resources on standby.

Within 24 hours, more than 1.7 thousand external personnel had joined the internal teams including Columbia Gas employees, contractor partners, and mutual assistance crews from across the region. By August 25, we had completed our broad restoration effort without injury, reflecting our ongoing focus on strengthening our safety culture, disciplined execution, and consistent application of critical safety behaviors. I want to thank our employees, mutual assistant. Distance partners, and the local officials and first responders who worked alongside us. We have an improvement mindset. and are focused on learning from this event. We are completing a full internal after action review, which we expect to finish by late November.

We are hiring a third party expert to conduct an independent review of our response over the next several months. Meanwhile, we are participating fully in the reviews by the IURC underway in Indiana. NIPSCO will learn from this event and act on the lessons learned as we look to build a stronger and more resilient system for our community. Turning to slide 6 and our regulatory agenda. I will start with Ohio. Building on the tracker approvals we received this year, Columbia Gas of Ohio filed its first 3 year forward looking rate case under the framework which took effect earlier this year through Senate Bill 103.

This forward looking structure reduces regulatory lag and better aligns recovery with the continued safety and modernization investments for our communities. Our Kentucky and Virginia rate cases remain on schedule and continue to progress constructively with new rates in Virginia October 12, subject to refund, and decisions expected in both cases in the first half of 2027. In September, NIPSCO received a fourth federal order requiring continued operation of the Schahfer coal units. We continue to comply and we are pursuing recovery of compliance costs through the FERC approved MISO tariff schedule. Having submitted Section 205 filings for each order period. We are evaluating a potential extension of the unit's operations through our integrated resource plan.

NIPSCO's IRP will also evaluate near term needs evolving MISO accreditation rules, and changes in the federal tax credit eligibility. Later this month, we held our second public stakeholder meeting focused on the 20 year low forecast updated seasonal peak methodology, resource adequacy needs, existing unit assumptions, and stakeholder portfolio concepts. Our financial plan contains a point of view on the generation requirements to support expected load growth, maintaining flexibility as the IRP. Evaluates the appropriate resource mix and timing of those investments. We will continue to share further updates with you throughout ongoing stakeholder process. Affordability remains a key focus across our jurisdictions and we continue to engage constructively with regulators and policymakers.

In Pennsylvania, the commission's rate making working group is evaluating ROE methodologies, rate case processes and the d-6 framework as part of the state's broader affordability dialogue. We are participating constructively in our financial plan retains flexibility to navigate these processes while continuing to invest for our customers. We are also engaged in Indiana through the IURC's broader affordability review including proceedings on authorized returns and tracker mechanisms. We will remain actively engaged as those proceedings advance, focused on maintaining affordability while enabling investment necessary to serve Indiana's growing economy. We are already seeing meaningful progress.

The IURC's 2026 residential bill survey shows our customers' bills declining year over year and our data center agreements are expected to deliver meaningful savings to NIPCO electric customers. Together, these reinforce our view that Indiana remains a great place to do business with significant investment potential. And more broadly, that economic development can be a driver of savings and affordability solutions across our footprint. Speaking of savings, our new partnership with Microsoft reflects our third Genco customer, the fifth agreement we have reached in just over 1 year. This also represents the latest agreement served through the pool strategy we introduced in May.

We are proud of the work we are doing to bring meaningful savings to our customers in Northern Indiana. We have brought ingenuity and commercial acumen to a problem many states and regions in this country have not been able to figure out. This has unlocked a truly unique win for existing retail customers and local communities New customers advance the imperative for The US to keep up with data center technology to protect our country and our shareholders. Shawn on slide 7, our signed agreements are now expected to deliver approximately $1.75 billion in savings to existing NIPSCO electric customers.

Up from $1.4 billion last quarter At full ramp, that equates to approximately $140 per year for an average residential customer. And we expect bill credits to begin as early as January pending IURC approval. Our data center customers pay the cost associated with their load, while their use of the existing system lowers bills for our residential customers. Consistent with the objectives set up for Genco, this partnership seeks to enable affordability for existing customers, support economic development in North. In Northern Indiana, enhances shareholder value and is structured with prudent risk management. I will now turn the call over to Michael to walk through this agreement in more detail.

Michael Luhrs: Thanks, Lloyd. I will begin on slide 8. Under the agreement, Microsoft is taking electric service under a 20 year term starting in 2028. The Genco owned pool portfolio will be increased by approximately 1.1 thousand megawatts including roughly 500 megawatts of combustion turbines and 600 megawatts of battery storage. Expect to file the special contract with the IURC by year end and are seeking an order in the first half of 2027, consistent with the expedited 90 to 120-day review framework established for our data center agreements. Like our other Genco agreements, it is structured to provide a return on and of our investment over the contract term.

Supported by minimum capacity charges pass through treatment of variable costs, and termination protections. Slide 9 highlights the significant momentum we have built in just over a year. We begin with the Genco declination order and our initial customer agreement in September 2025, has grown to 5 agreements across 3 signed customers. Supported by meaningful progress across contract approvals, regulatory filings, zoning, construction and initial energization. That commitment is already translating to results. Following the signing of Alphabet in April, we have completed construction of transmission infrastructure ahead of schedule and begin billing this summer.

Across these projects, we have been proactive in securing long lead equipment diversifying vendors and establishing EPC arrangements including our partnership with Quanta and Zachary to reduce execution risk. Our teams remain focused on delivering these projects safely, on schedule and alongside our ongoing operations. Construction continues on Amazon site, the largest infrastructure project in our company's history, including a 345 kV delivery substation and associated transmission infrastructure which is expected in service next year. As civil site work progresses and permitting and regulatory approvals advance, we remain on track for the expected energization and full ramp across our signed projects. Our progress to date demonstrates we are delivering on our signed agreements.

Advancing approximately 5 gigawatts of capacity and as slide 10 highlights, we are targeting up to 4 gigawatts of potential additional load which our model is well positioned to facilitate. Demand from large load customers remains robust. Customers are choosing Northern Indiana and Genco because we can offer credible speed to power, transmission access, land, water, fiber, skilled labor and a supportive business and regulatory framework built for both speed and customer protection. We continue to see market dynamics that could expand our opportunities beyond our 9 gigawatt pipeline and we will share updates to reflect those opportunities in the future as we evaluate execution pathways to integrate that growth. With that, I will turn the call over to Sean.

Shawn Anderson: Thank you, Michael, and good morning, everyone. I will begin on slides 11 and 12. Third quarter consolidated adjusted EPS was $0.27, compared with $0.19 in the same period last year, bringing our year to date consolidated adjusted EPS to $1.49. Our strong financial quarter was driven by disciplined cost management and continued outperformance of customer demand for natural gas and electricity across our operating companies. Usage and customer counts were up year over year at NIPSCO, Columbia Gas of Ohio, Virginia, and Kentucky, all creating tailwinds for our financial results. We reached a significant agreement on property tax savings in Ohio which will pass through lower property tax rates over time.

O&M was higher year over year due to the costs associated with responding to storm activity, Otherwise, all other activities were flat year over year. These drivers give us confidence as we step into the fourth quarter. We expect earnings to deliver the upper half of our guidance range and many of the principal drivers are already in place, including step 2 rates at NIPSCO Electric, our Virginia rate case, approved tracker updates, the ramp of alphabet load, and continued progress on more than $40 million of cost optimization initiatives we identified earlier this year. Turning to slide 13. We are excited to extend our capital plan through 2033.

Our new 7-year plan totals $40 billion, including $32 billion of base plan investments and approximately $8 billion of Genco investments, to support data center customers. The extended plan reflects the depth of investment required to support a safe and reliable system. Gas system modernization and safety programs, electric reliability and resiliency, generation to meet our customers' capacity needs, and infrastructure to support economic growth across our territories. The plan remains diversified across our gas and electric businesses, throughout 6 states and in our growing business segment Genco. Our new plan improves our cash efficiency by converting over 90% of our investments into initial recovery within 12 months of investment.

This disciplined approach to investment supports consolidated investment growth of 9-10% while delivering adjusted earnings per share returns of 10-11% through 2033. We also continue to see upside investment opportunity of $3 billion for our base business, up to 4 gigawatts of pipeline in Genco, which are not included in our guidance and we will move into the base plan when projects meet our threshold. Turning to slide 14, we are narrowing our 2026 consolidated adjusted EPS guidance to the upper half of our stated range.

Today, we initiated our 2027 adjusted EPS guidance at $2.22 to $2.30 per share which implies a double digit year over year growth next year at each midpoint, including $0.05 to $0.09 of contribution from our Genco business segment. The 2027 guidance becomes the new foundation for our long term earnings potential. Which we expect to grow 10-11% on a compounded annual growth rate basis off of our expected. Expectations for 2027 through 2030. Additionally, we expect multiple years of double digit growth through the planning horizon as the Genco segment strengthens from development to serving its customers.

We are also extending our base plan to achieve 6-8% annual EPS growth through 2033 we see continued stability in our core business operations which have benefited from diversification and demand for natural gas and electricity throughout the regions we serve. As we move toward year end reporting, Genco will be disclosed as a separate segment. Consistent with our current reporting, we will provide operating income for the segment. To further support transparency and for your modeling efforts, we are also providing indicative Genco EPS contribution targets for the present year, in 2037 and in 2033. We believe our plan remains highly executable. Incorporates modest customer growth, conservative financing assumptions, and a continued commitment to flat O&M.

We worked hard to focus on ways to drive customer bill impacts down. Our new plan has decreased our view on bill increases by over 100 basis points down to less than a 4% average annual residential customer bill increases. From 2027 through 2031 on the investment base of 9-10%. Finally, we continue our commitment to a strong balance sheet, by maintaining FFO to debt of 14-16% in all years of our plan. We expect our balance sheet strength to grow over time as Genco transitions from capital deployment to meaningful cash generation over the plan horizon. Moving to slide 15, we think it is important to view this opportunity through a longer term lens.

Our base business remains a strong foundation of the plan, expected to deliver durable 6-8% annual base plan adjusted EPS growth. Genco builds on top of that foundation. Contributing an incremental layer of earnings growth as these investments are placed into service, and customers ramp to full demand. Today, we are increasing Genco's expected EPS contribution reflecting continued efficiencies in our existing Amazon and Alphabet along with the addition of Microsoft. As a result, we now expect Genco to contribute $0.32 to $0.40 in 2030 and growing to $0.52 to $0.68 by 2033.

Together, our businesses support our consolidated 10-11% adjusted EPS CAGR guidance through 2033 and demonstrates the compounding value of executing across both the base plan and Genco over the full planning horizon. Factors such as the timing of regulatory approvals, construction, financing costs, and the pace of customer load ramps will determine where we land within that range. Our pipeline of strategic negotiations and developing opportunities provides the opportunity to exceed the top end. Slide 16 details our financing plan. In August, we issued $750 million of junior subordinated notes, further strengthening our balance sheet and supporting the capital plan.

Looking forward, we expect to issue $400 million to $600 million of maintenance equity annually in the near term with those needs stepping down as we move through the plan to minimal levels starting in 2032 as the business increasingly self funds its growth. We maintain flexibility to fund the plan efficiently through a balanced mix of debt, hybrid securities, and maintenance equity while preserving our investment grade credit profile and supporting our 14-16% FFO to debt commitment. We will also be opportunistic evolving all aspects of capital markets to fund our growth strategies. What will guide our decision is maximizing long term value for our shareholders while retaining the strategic flexibility to capture customer, community, and shareholder benefits.

And lastly, slide 17. This quarter, we extended our plan to a 7-year view. Narrowed our 2026 consolidated adjusted EPS outlook to the upper half of our range initiated 2027 consolidated adjusted EPS guidance and executed our fifth Genco agreement by adding a third Genco customer which increased customer savings to $1.75 billion. At the same time, responded to 1 of the most severe storms in NIPSCO's history and are applying what we learned to strengthen our system. Taken together, these milestones demonstrate the resiliency and the ingenuity of our teams. Making progress across all fronts of our business, and positioning for sustained growth and customer value over the long term.

We remain confident in our ability to deliver on our commitments. Regulatory execution provides visibility into earnings and cash flow Our capital plan is diversified. Across businesses and jurisdictions. Our operational initiatives continue support productivity and cost discipline. And Genco contracts deliver stable fixed charges for our services while adding a meaningful layer of growth and lower bills by approximately $140 per year at full ramp for existing electric customers. NiSource offers investors a diversified regulated utility with the opportunity to invest in programmatic gas infrastructure and long term energy infrastructure. For a fully integrated electric business.

The investment thesis extends to access the unprecedented energy development and power demand this country requires to support new data center operations, and robust economic development. The complementary nature of these business segments offers a value proposition differentiated in the marketplace today. And finally, we continue to build upon our track record of execution, and delivering on the commitments we make.

Lloyd Yates: Operator, please open the line for questions.

Operator: We will now begin the question and answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Shahriar Pourreza with Wells Fargo. Shar, your line is now open.

Shahriar Pourreza: Hey, guys. Good morning.

Lloyd Yates: Morning, Shawn.

Shahriar Pourreza: Can you hear me?

Lloyd Yates: Morning. Yes.

Shahriar Pourreza: Just firstly, the disclosures around Microsoft are meaningful addition to the quarter. Right? So can you just maybe comment on the size of the site and how we should think about the longer term opportunity with Microsoft from here? So does the agreement announced today, does that largely capture the opportunity you see with them, or should we view this as potentially the first phase of something larger? Thanks.

Michael Luhrs: I mean, what I will say to you, Shar, is that we cannot, you know, comment on any of our customer sites. Or the size of those sites. What I can tell you, though, is we are actively engaged with all 3 of our major customers and the customers that we have in the queue.

Lloyd Yates: And, we have a lot of demand, in that queue with those customers, and we are really confident in our ability to execute in the. On the pipeline that we have.

Shahriar Pourreza: Okay. Got it. And then just look, obviously, there is been a lot of progress on the Genco. it is turning to create value. I guess, as we move through the remaining proceedings in Indiana, I guess, how are you thinking about the key regulatory risks from here? Has anything changed in terms of the risk profile as we move further through the process?

Lloyd Yates: No. We are still optimistic and confident in Indiana. We think it is a great place to do business. It presents a significant long term growth opportunity for NiSource You think about the genco and economic development economic development and affordability are among the administrative administration's top priorities and the Genco checks all of those boxes. So, you know, we are in Indiana. We are actively engaged with all the stakeholders. Our goal is to enhance our value proposition to our customers, our large load customers, our shareholders. Got it. Perfect. Thanks, Lloyd. We will see you see you in a couple weeks.

Shahriar Pourreza: See you in a couple weeks.

Operator: Your next question comes from the line of Julien Dumoulin-Smith with Jefferies. Julien, your line is now open.

Julien Dumoulin-Smith: Hey. Good morning, team. Thank you guys very much. Appreciate it.

Lloyd Yates: Morning. Morning. Hey.

Julien Dumoulin-Smith: Just wanted to follow-up. I take another crack at this if I can. Without identifying customers, internal plans, right, I think important caveat, is the current infrastructure and resource plan being designed to preserve the ability to serve additional Microsoft load, how do you think about the physical requirements you know, whether that is generation or transmission to upsize from here? I am just trying zero in on the initial 7, 8 and what the underlying generation plan that underpins it could be and or if you are gonna plan ahead a little bit, if you will.

Lloyd Yates: On Yeah. Michael, take that 1.

Julien Dumoulin-Smith: And then maybe a maybe a sub question on that would be, have an initial toll on the battery. How do you think about ownership on that front? Over time as well?

Michael Luhrs: So what I would say is that sort of back up to more of the global perspective first, which is Indiana is a positive area of the country by which to facilitate both the generation growth and the serving of data, center customers. As mentioned in the you know, forward of it, like, relative to land, fiber, etcetera. When we plan our assets, we plan our assets for the ability to from that pool portfolio, serve the totality of our customers within it. We do not overbuild on that or overextend on that.

But at the same time, we do plan for the potentials, the risks, it is 1 of the ways we are able to mitigate overall challenges with the portfolio. And make sure that we meet our commitments in serving our customers. What I would say is you have seen us grow with Amazon. And you have seen us sign 2 additional agreements with Amazon. Which have both accelerated and incremented that capacity. We are focused on being able to continue to grow with our existing customer base And with those high, creditworthy counterparties, good strong counterparties, we will continue to add them to the portfolio as we go forward. Overall, we feel like we are in a really good position.

We feel we have the capability both from transmission and what we are looking at with generation capability to be able to both grow with our existing customers and expand our pipeline.

Lloyd Yates: As for the tolling agreement, go ahead and hit that.

Michael Luhrs: We look at the tolling agreement. We use a variety of mechanisms to balance everything across the portfolio, both from know, all the financial parameters, what we wanna do overall with our long term strategy, So as we have done with batteries, some of them we own, some of them we toll, some we have, you know, the. You know, when we continue to do these arrangements, we are not opposed to owning.

But at the same time, as we continue to grow this poor we are gonna try to make sure we take a balanced perspective that allows us to be able to step in the opportunity at the right time and also be able to adapt to technology changes as we go forward.

Lloyd Yates: Yep. Absolutely.

Julien Dumoulin-Smith: And then if you can just elaborate a little bit further as you think about the funding plan a little bit. It seems like the addition incremental payments here being made, whether it is Microsoft or otherwise, on the Genco is what is driving the additional CFO when it is the 55-60% that is on the plan. The subtlety of incremental cash in the near term?

Shawn Anderson: Yeah. You are starting from a low position on customer ramp rate, which strengthens through the period of the plan. If you recall, we will have customers fully ramped in 2 thousand and 31, 2032, which is strengthening cash from operations in the Genco segment. Additionally, the base business continues to produce strong cash flows. As a reminder, the starting point of 16.1 at the end of 2025 on an FFO to debt basis just demonstrates the strong cash flows and capitalization the base business was beginning at. And that just maintains itself through the plan horizon.

Julien Dumoulin-Smith: Alright. I will leave it there. Lots of further questions. Good luck, guys. Nice to done. Thank you.

Operator: Your next question comes from the line of Nicholas Campanella with Barclays. Nicholas, your line is now open.

Nicholas Campanella: Hey. Good morning. Thanks for the time.

Lloyd Yates: So Morning.

Nicholas Campanella: Yeah. Just wanted to ask, like, the used to talk about doing the strategic review of Genco just in terms of being able to execute beyond the 9 gigawatts and I can you give an update on how that is going? And just you have made pretty steady progress here. Does that review need to happen before you execute on the remaining 4 gigawatts? Could we see that a little sooner? And then I will ask a follow-up. Thanks.

Lloyd Yates: So I will answer the second question first. That review does not need to happen before we execute on the next 4 gigawatts. You know, we show on the chart, the slides you have, we have 2 gigawatts now in strategic negotiations. And then 2 more behind that. We are in the midst of studying to upsize that We know we have the ability to upsize those the size of the Genco. Mean, you will roll that out sometime in 2027. That study's ongoing, and we are optimistic. And you will see that sometime next year.

Nicholas Campanella: that is great. that is great. And then in your prepared remarks, Lloyd, on the Indiana storms, we have seen some legislative hearings. there is been some discussions about need to kind of increase resiliency, reliability. I am just wondering how that informs your capital plan if there can be kind of a wider resiliency package put forward to the state. And when and what that would look like? Thanks.

Lloyd Yates: So we are actively, and we will actively participate in the IURC's hearings. We understand that long outages are not good for our customers and investment to make. To harden the system to make it a lot more resilient. We are in the midst of studying that as we go through this process, we are gonna make it clear what kind of capital investment that takes, and, we will roll that out to the regulators and legislators as necessary. But I think that is ongoing, and I think you will have an understanding of what the investment opportunity looks like in the near future. Thanks a lot.

Nicholas Campanella: Mhmm.

Operator: Your next question comes from the line of Christopher Jeffrey with Bank of America. Ross, your line is now open.

Analyst: Morning. Morning, Sean. How are you?

Lloyd Yates: Morning. Just a real quick 1 first. I think if I have got it right, Amazon CCGT is shifting out to 2030, Kind of what drove that How will you serve Amazon kinda in the meantime before that enters service? And sort of does any. Who bears the incremental cost of that as we as we shift this out in time? Michael?

Michael Luhrs: What I would say on that is first of all, there. there is 2 CCGTs They are not both shifting out to 30. 1 has changed with what we are, you know, with what we are doing. But remember, we have signed incremental agreements, acceleration agreements, We have batteries that are coming online ahead of that. We have a pool portfolio. So this fits into the whole capability of really making sure that we are optimizing the assets to be able to serve the customers in the most beneficial and cost accretive way quite frankly, derisking the construction. And making sure that construction is done in a way that has the highest probability of execution.

The moves we made with the CCGTs do that for Amazon. They help to ensure higher confidence of execution and modifying those in a way. But it is not a delay in schedule. it is actually an optimization. And in fact, some of them are actually I would say, are accelerated with it. That help produce for that acceleration that we are doing. So when you look at it overall, think about it in what we are doing in the totality, not on an individual asset.

Shawn Anderson: Then just to add real quick, Ross, I would note that the capital requirements were not changed in our disclosures, so there is no change necessarily As Michael indicated, it is really streamlining the construction process for best execution. And, the pricing signals still are set off of the ramp rate for the customer. And then and then maybe following on Julien's question a little bit on the on the cash flow flywheel. Looks like if I sort of look at your funding slide and I look at the percentages against the old cap plan, the new capital plan, right?

And I know this is all backwardated, but if I just quickly, you know, annualize it in my head, CapEx really is not changing on a sort of annualized basis, but I think this is the important point maybe is that funding has. I mean, debt seems like it is on average $600 million less annually, equity is about $100 million lower. And I know that cash is gonna be front end loaded. Right? So. But as I as I think about the go-forward plan, Sean, as you add more to Genco, there is got to be capacity to just increase the backwardated edge of that CapEx in a plan as you go forward.

The more Genco should just mean more. Not only Genco CapEx, but ability to fund regulated CapEx with the same balance sheet and sort of, you know, maybe even slower funding requirements, which was kind of a perfect trifecta of how to do this. Am I thinking about that correctly? Yeah. You absolutely are. I mean, again, you start from about the position of 16.1 at the end of 25 with minimal capital expenditures associated with Genco. That really is producing intrinsic cash flow power of the base business.

Which is obviously above our guided range, So that business and the strength and the financial profile of the base business, we believe, has not changed. it is very consistent through the plan horizon. Therefore, it has the ability to operate with minimal to no equity as it grows throughout its rate based deployment. Strengthened by that 90% recovery inside 12 months. That helps intrinsically stabilize the operating cash flow and minimize the use of equity for the base business Then, meanwhile, 1 of the strengths of the Genco model is the ability to shape the cash flow design through its rate structure in a manner which also balances financing requirements.

That flexibility helps reduce the equivalent of regulatory lag and allows for optimization and balance of cash inflow with cash outflow based on the construction cycle. what is necessary to meet the customer needs. Again, also, additionally, achieving a greater than regulated rate of return enables that EPS to keep up with the rate of spend on the equivalent investment, and that is producing FFO. So, again, self sustaining itself from a funding mix. Point. Then finally, to Michael's point he just made, having the flexibility to procure the most efficient capacity attribute available while earning an appropriate risk adjusted return provides that flexibility to best serve customers.

Analyst: that is gonna matter based on the incremental in this case, 4 gigawatts that Lloyd just alluded to, and what technology solution will be necessary. For us to serve those customers. Yeah, raising CapEx and lowering equity is a good thing to do. Thanks, Sean.

Operator: Our next comes from the line of Elias Jossen with JPMorgan. Elias, your line is now open.

Elias Jossen: Hey. Good morning. Thanks for taking the questions. Maybe just starting with the customer savings. How should we think about the regulatory positioning and playbook in Indiana? Obviously, I have to think about this post election, but can you just kind of frame how we should think about your strategy going forward, you know, particularly with the savings in mind? Thanks.

Lloyd Yates: Well, again, as I mentioned earlier, you know, 1 of the largest benefits of the Genco is addresses the affordability issue. You know, with this last signing of Microsoft, you know, we start to roll back $1.7 billion to our customers. Now. And it will grow as the Genco grows. That customer credit should show up in the customer's bill. I think it will be called my data center credit. Pending IURC approval sometime either at the end of this fourth quarter or sometime early next year, the customers will see that number ramp up as the customers ramp up.

Michael Luhrs: And just to add to that real quick, we really wanted Genco, and we feel like those proof points exist now to demonstrate for both our communities and our stakeholders the value it can provide in growing the communities, as Lloyd said, providing 1.75 billion back to customers, also, remember, this is isolated. Like, what we are doing on for the for the electric e. Utility, it is isolated from the rate base. So they do not bear that risk. With us building these assets. So we feel like, you know, it is been a very positive evolution.

And it is proven out now and that we are able to demonstrate that with all the stakeholders and carry that messaging through, which is beneficial to our activities in Indiana.

Operator: Great. Your next question comes from the line of Steven Fleishman with Wolfe Research. Steven? Your line is now open.

Analyst: Thank you. So just looking at slide 27 on the it looks like you added the 2 new combustion turbines in there. And the $2.3 billion cost relative to the I guess, 408 megawatts seems like a pretty high number. Could you maybe just talk about you know, what excuse me, what is that more than just the generation? Is there other structural equipment? Transmission, other things in there?

Shawn Anderson: All the transmission and infrastructure is also included, Steven. So it is not just the 2 f frame CTs. But all the transmission and infrastructure and, well, some equipment associated with that transaction. Okay. Is there a way to get the number just for the generation? No. Yeah. Okay. We have not disclosed that. Yep. Second question is just the Genco CapEx is very I mean, it looks like the vast majority of the CapEx is pretty much the first 2 years. And is that is that kind of I mean, it fits the model of what you talk about, Sean and just.

Is that a any kind of front ending, though, of what you had done before, or is it consistent? No. there is no material change in the previous executed there is a few things that will move year by year, and, certainly, it will give us some tailwinds into the plan should we deploy CapEx a little later. There will be less financing cost. Like that could move us around within the range, but nothing material is different what we were previously planning to execute. Okay.

And then lastly, just on the base business, just any kind of high level messaging on where you are spending the capital both states and in terms of, like, what you know, what main areas and you know, you have taken that out to 33 now. Already. Just like how long term do you think that space CapEx plan could be? Well, it is fairly long dated as we have discussed a lot. 60 thousand miles of pipeline, with an annual replacement rate of call it, 400 annually. So there is a lot of pipeline to maintain. We are starting to enter into the first generation plastic replacement program. that is our largest vintage of pipeline.

So there will be a lot of pipeline modernization as a staple of our plan. Additionally, in this particular moment, we have a fair amount of PHMSA compliance CapEx that we will be executing in Ohio and, like, longer term in Indiana on those gas systems. Both will that maintenance by the middle of the next decade. To maintain compliance with rules and regulations there. We still maintain a generation short position. it is moved a little bit further into the early part of next decade, maybe the lap part.

Latter part of this decade. that is moved some CapEx a little bit further out, but it is unchanged in a 5-year horizon, which simply means that investment still needs to be made. It just matters when we make it per the IRP. But the total CapEx needs for this business, both the gas and electric side, will be long dated. Okay.

Lloyd Yates: And there is still and just to add to Sean's point, there is still a possibility of some. On the electric side of the business, some storm hardening and resiliency investment that we have not quantified yet. So and we believe we have a long tail of investment in the base business, and it is really strong.

Analyst: Thank you.

Operator: Your next question comes from the line of Gabe Moreen with Mizuho. Gabe? Your line is now open.

Analyst: Hi. Good morning, everyone.

Shawn Anderson: Can I ask about the $0.40 to $0.60 ultimately coming from Genco? Can you just talk about the drivers behind that range? Whether it is capital spend, customer demand? And then, I guess, a little presumptuous to ask, but expectations for what happens thereafter, does it just stay in that range based on the existing 3 contracts? Yeah. Just 1 quick edit, Gabe. The, the 40 to 60 is moved. To 52 to 68, so the new range for 2033 Sorry. is $0.52 to $0.68. that is indicative of the full ramp rate for all customers. That we serve at Genco. That would be the first year of full ramp rate.

The predominant driver for that then is the revenue collected off of, the capacity fees for each of the customers That is a period of time when we still have a fair amount of financing costs that we are absorbing. As we will still be paying down some of the construction and development costs I would expect the earnings per share contribution to get even more efficient. Or grow as you pay down that borrowing cost. I would expect a step change as you get closer to the middle of next decade outside our plan horizon. All else equal. Thanks, Sean.

And then maybe if I could stay on kind of financing assumptions and laying out a 7-year look for the base plan in Genco. Can you talk about, I guess, what your assumptions are behind rates, maybe O and M? Have those changed since the last update given I guess, the forward curve on interest rates? And were there any offsets? We have never really projected in our plan, material rate cuts in any respect. So while we prefer lower rates, that is better for our customers and certainly given a financing need that we have, it is better for the efficiency of our plan.

We are not surprised by the environment we are in, and our plan did not need to modify as a result of the dislocation we have seen over the last, call it, 2 months. We also have some opportunity across the curve to select different tenor and to be opportunistic, both on the debt and the equity side. So, we will manage through this. We have got a really great treasurer who can be adaptable. But we will we will wait for the environment to be right for us to lock in long term commitments. That can be accretive to our plan.

Analyst: Thanks, Sean.

Operator: Your next question comes from the line of Nicholas Amicucci with Evercore. Nick, your line is now open.

Nicholas Amicucci: Hey, guys. I think you may have touched upon it. I will try and reconcile the. I am 27, just the $9.9 billion versus the $8 billion within the within the plan for Genco. Just trying to frame that up and kinda rectify that.

Shawn Anderson: Yeah. That. that is a quick 1. The only difference is the time horizon. Preexisting 2025 and 2026 investment would be included in the $10 billion The $8 billion really referencing the 2027 through 2033 period.

Nicholas Amicucci: Got it. Alright. That makes sense. And then 2027 through 2031. Got it. Okay. And then, if we are staying on that. Just on that slide, if we are we are talking. Just if we could reconcile to just the 3.9 gigawatts of signed customer demand with the 4.9 of supply resources. Is that does that kind of consider the accreditation that. that is being given to the batteries and stuff? Or is there something else within that?

Michael Luhrs: No. You got it. I mean, when we look at it, difference between what we talk about a generation capacity and load accounts for all the factors related to accreditation, you know, the different generation types, you know, loss of load, all those different factors that are required, balance of plan, etcetera.

Nicholas Amicucci: Got it. Thanks, guys.

Operator: Your next comes from the line of Sophie Karp with KeyBanc. Sophie, your line is now open.

Analyst: Hi. Good morning. Thank you for taking my question.

Lloyd Yates: Good morning.

Analyst: So first, on the on the 9 gigawatts, so I guess just maybe a housekeeping question. You guys had 9 gigawatts of pipeline before you announced a recent deal, and it is still 9 gigawatts. It. Was this 9 gigawatts, like, backfilled? Or how should we think about this?

Michael Luhrs: Michael? Yeah. When we. When you look at the 9 gigawatts right now, you know, the 5 gigawatts is assigned capacity. The 2 gigawatts we have, you know, mentioned are in strategic negotiations now. And then we have got 2 in developing opportunities. And as Lloyd mentioned, you know, we continue to we assess additional opportunities and expansions, we would bring that back in 2027.

Lloyd Yates: I think another point there is the pipeline is much larger than 9 gigawatt. So we have a robust pipeline. Our study entail. Is trying to figure out how much more than 9 we can accommodate and over what time period. Okay. Okay. Got it. And then on the self initiated, I guess, study of the storm response, I am just curious. You guys expect to learn, and how do you think those learnings will interact with the ICC proceedings? I am sorry. Repeat that question.

The study that you initiated, on the storm response, the self study, what do you expect to learn from that, and how would you apply that, I guess, in conjunction with the commission investigation as well? Well, I mean, we are gonna submit that study to the commission. And we expect to learn a number of things. A, how we can do better. B, what investments we need to harden the system You know? So improve our. It should help improve our processes. It should give us a window of what, you know, prudent investment opportunity to harden the system.

I think a big 1 here is how we can improve our communication to our customers in the midst of significant storms.

Analyst: Alright. You. that is all for me.

Operator: Your next question comes from the line of Travis Miller with Morningstar. Travis, your line is now open.

Travis Miller: Well, I have not changed my name, so it is still Travis. But, anyway, good morning, everyone. What are we? Quick 1. The financing plan, does that also include a pro rata contribution from Blackstone? I see the little sliver on the pie chart, but just wanted to confirm.

Shawn Anderson: Blackstone still wants maintain its that is exactly right. To. It would be 19.9% of investments across the NNIPSCO and Genco, capital plans.

Travis Miller: Okay. And then. And they are comfortable as you guys add data centers Obviously, they would have to contribute more capital. So they are they are involved.

Shawn Anderson: Not at that speak directly for them, but I think they are extremely comfortable.

Travis Miller: Okay. Okay. And then higher level at the gas business, obviously, tons of affordability politics discussion, regulatory discussion, in the areas you serve? what is your stance? Where do you sit in that discussion? Are you kind of playing on the sidelines? Are you involved along with the electrics? what is your take kind of on the affordability, especially as it is become so politicized? In those other states.

Lloyd Yates: Melody, you wanna handle that 1?

Melody Birmingham: Certainly. No. We are not sitting on the sidelines. We are actively engaged in the discussion around customer affordability and the impact we have on the customer's wallet. As we recognize how important affordability is for our customers. And so we continue to look for ways to manage bill impacts We are working with our partners in the business to look at how and when we deploy capital. And then we are also working with our external stakeholders you know, just to make sure they understand the investments that we are making and being transparent and quantifying those investments that we need to make.

So we are actively engaged, and, we understand the importance affordability has to our customers as well as to our regulators as it has to us.

Travis Miller: Okay. Very good. I appreciate all the information this morning.

Operator: Our last question comes from the line of Steven with RBC Capital Markets. Steven, your line is now open.

Analyst: Lloyd, Shar, Thanks very much for all the information today.

Lloyd Yates: Just Morning. A quick 1. Morning.

Analyst: On slide 15, just want. You know, if I eyeball the Genco adjusted EPS growth, kind of from 2032 to 2033, it looks like it is you know, a pretty decent step up, maybe, like, 15¢ ish. Which seems like a steeper climb than kind of the update on 2Q. And so can you just talk you may have talked about it a little bit with the finance flowback or benefits, beyond 2033. But can you just talk about how this is being financed, if there is debt? Or just why once all of these projects are largely ramped in 2032, there is still, you know, continued significant step ups into 2033 and beyond. Thanks.

Shawn Anderson: Yeah. Appreciate it. I. I would caution against getting too precise on the bar charts just in the sense that we have not put adequate disclosure out for 32's guidance. And so I just would caution against getting too precise with that. But the fundamentals that are gonna the earnings contribution are gonna be what you just mentioned, the financing cost, and more importantly, the customer ramp rate. what is happening in our dynamic, we have customers fully ramping in 2030. 2031, and in 2032. So the combination of those 3 customer ramp rates at those points in time are gonna strengthen the capacity revenue that we are collecting from Genco. Or through this from our customers.

So that is what you are starting to see stabilize. To your point about financing, we started to finance things in 2025 and 2026. We do not have amortizing debt. We have we have done everything at the, enterprise level with investment grade bonds and equity. But inherently, the need for new debt is declining at the NiSource Enterprise because that cash is becoming more optimized across all of our systems. The strength of that cash flow coming off of fully ramped customers is helping us reduce borrowing in any case.

And as we go closer to a different financing strategy if we need 1, we would still be able to optimize the use of that cash at the enterprise level. So the base case is investment grade bonds and equity. Creating more efficiency in all of the net financing. As we get out of this decade, and then we will look for other ways to optimize on a risk adjusted basis or a strategic basis for our shareholders.

Analyst: Got it. Very clear. that is all I had. Thanks very much for the time. Appreciate it.

Operator: There are no further questions at this time. I will now turn the call back to Lloyd Yates, CEO, for closing remarks.

Lloyd Yates: So let me thank you for your questions. Your interest, and your investment in NiSource, and look forward to seeing a lot of you at the EEI Financial Conference in a couple of weeks. Have a great day.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

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