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About Nisource Inc.

Energy holding company NiSource manages rate-regulated natural gas and electric utility companies serving nearly 4 million customers in seven US states, making it one the nation’s largest natural gas distributors. Its principal subsidiaries include NiSource Gas Distribution Group and NIPSCO. It owns 60,000 miles of natural gas pipelines reaching Indiana, Ohio, Pennsylvania, Virginia, Kentucky, Maryland and Massachusetts. NiSource assets also include power plants that generate close to 3,300 MW of electricity annually, serving some 479,000 customers in northern Indiana. 

Operations

NiSource reports two business segments.

Its Natural Gas Distribution operation is the company’s primary business segment that include 60,000 miles of pipelines in seven states. NiSource Gas Distribution Group owns six distribution subsidiaries, while NIPSCO owns one. More than 40% of NiSource’s sales comes from gas distribution revenue, and an additional 20% comes from transportation revenue.  

Electricity Distribution business (36% of sales) is solely managed by NIPSCO. It generates 3,300 MW of electricity per year through coal-fired, gas-fired and hydroelectric generated plants. Additionally, NIPSCO participates in the MISO transmission service and wholesale energy market. MISO, which controls functional control of NIPSCO’s transmission assets, is a FERC-compliant nonprofit organization created to improve power reliability of the region.

Geographic Reach

NiSource serves almost 4 million customers in Indiana, Ohio, Pennsylvania, Virginia, Kentucky, Maryland and Massachusetts. The company also provides electricity in the northern region of Indiana.

Financial Performance

Annual sales at NiSource has slightly declined from a five-year peak of $5.3 billion in 2014 to $4.9 billion in 2017 due to falling revenue from gas distribution and transportation segments. Net income has fallen more dramatically from $530 million in 2014 to just below $130 million three years later. 

Year-over-year revenue increased 7% in 2017, from $4.5 billion posted in 2016, primarily due to increases from new base-rate proceedings, as well as additional sales from infrastructure replacement programs. Customer growth added some $10 million more to the coffers. 

Net income plummeted more than half, from $328 million in 2016 to $129 million in 2017, due to a year-over-year increase of $132 million in income taxes, as well as $112 million in losses from early extinguishment of long-term debt. 

Net cash holdings nudged up slightly to $38 million. Operations generated $742 million, and a further inflow of $1 billion from financial activities (mostly from issuance of long-term debt). This was offset by $1.8 billion used in investment activities. CAPEX for 2017 was $1.7 billion, the highest in three years.

Strategy

NiSource believes that its long-term success lies in developing a portfolio that balances creating more efficiencies in its regulated utility operations while expanding its higher-growth gas transmission and storage businesses.

The regulatory frameworks in which NiSource operates has evolved significantly at both the state and federal levels in the last several years, creating uncertainties. This is because growth at rate-regulated businesses of NiSource relies heavily on approvals of capital rider programs and deferrals from regulators in Indiana, Ohio, and Pennsylvania. In April 2018, the company successfully settled its rate cases with Indiana regulators, while the outcome of the other two was delayed till late 2018.  

Another challenge for NiSource is its negative cash flow. In 2017, the company reported net working capital deficit of $1.4 billion, compared to a deficit of $1.7 billion the year prior. To prevent short term disruptions, the company issued equity and implemented operational and maintenance cuts. 

Aiming for an annual growth rate of 8%, NiSource has earmarked up to $1.8 billion per year for CAPEX till 2020. Its gas distribution businesses are trying to expand the sale of products and services into the upstream market, and introduce cost incentive mechanisms for its core markets. Additionally, the company is trying to seek regulatory changes that will allow it to expand its services to residential customers beyond its current service area. 

Its subsidiary NIPSCO is also amidst a seven-year, $850 million gas and electric infrastructure modernization program. In September 2018, the company went further by announcing its goal of retiring majority of its coal-fired plants, and replacing them with low-cost wind, solar and battery storage technologies. Separately, the company also committed to replace the 48-mile gas distribution line in Merrimack Valley. 

However, a lawsuit filed against the company in September 2018 may put further pressure on its already dwindling coffers. Pipelines of Columbia Gas of Massachusetts, a subsidiary, were linked to a series of explosions and fires that rocked the Massachusetts towns of Lawrence, Andover and North Andover. A complaint, filed on behalf of 8,600 residents directly affected, blames over-pressurization of the company’s antiquated gas lines for the fatal accident. The explosions killed one person and injured two dozen others. NiSource made $10 million donation to a disaster fun, but future damanges remain uncertain.

Nisource Inc.

801 E 86TH AVE
Merrillville, IN 46410-6272
Phone: 1 (877) 647-5990

Stats

Employer Type: Publicly Owned
Stock Symbol: NI
Stock Exchange: , NYSE
EVP and CFO: Donald E. Brown
President and CEO: Joseph Hamrock
Chairman: Richard L. Thompson
Employees (This Location): 170
Employees (All Locations): 8,087

Major Office Locations

Merrillville, IN

Other Locations

Angola, IN
Chesterton, IN
Crown Point, IN
Gary, IN
Hammond, IN
Kokomo, IN
La Porte, IN
Michigan City, IN
Monticello, IN
Peru, IN
Plymouth, IN
Portage, IN
Rolling Prairie, IN
Royal Center, IN
South Bend, IN
Valparaiso, IN
West Terre Haute, IN
Wheatfield, IN
Prestonsburg, KY
Brockton, MA
Buzzards Bay, MA
Lawrence, MA
Ludlow, MA
South Easton, MA
Hagerstown, MD
Corning, NY
Long Eddy, NY
Bucyrus, OH
Cambridge, OH
Cleveland, OH
Columbus, OH
Findlay, OH
Fremont, OH
New Middletown, OH
Steubenville, OH
Toledo, OH
Zanesville, OH
Charleroi, PA
Emlenton, PA
Monaca, PA
New Bethlehem, PA
New Castle, PA
Smithfield, PA
Uniontown, PA
Warren, PA
Washington, PA
York, PA
Hartsville, TN
College Station, TX
Broadway, VA
Fredericksburg, VA
Petersburg, VA
South Hill, VA
Suffolk, VA
Warrenton, VA
Charleston, WV