Q4 2019 Earnings Call

February 27, 2020

Operator: Good afternoon, ladies and gentlemen, and welcome to the Q4 2019 NiSource Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Randy Hulen, Vice President of Investor Relations and Treasurer. Please go ahead.

At this time, all participants are in listen only mode.

Later, we'll conduct a question and answer session and instructions will follow at that time.

If anyone to requires to during the conference. Please press star zero on your Touchtone telephone.

[music] as a reminder, this conference call is being recorded.

I would now like to turn the conference all but to your host Mr. ready Hsulin, Vice President of Investor Relations and Treasurer. Please go ahead.

Thank you Damrow and good morning, everyone and welcome to the night source fourth quarter 2019 Investor call.

Randy Hulen: Thank you, operator, and good morning, everyone, and welcome to the NiSource fourth quarter 2019 investor call. Joining me today are Joe Hamrock, Chief Executive Officer, and Donald Brown, Chief Financial Officer. The purpose of this presentation is to review NiSource's financial performance for the fourth quarter and full year of 2019, as well as provide an update on our operations, growth drivers, and financing plans. Following our prepared remarks, we'll open the call to your questions. Slides for today's call are available on nisource.com. Before turning the call over to Joe and Donald, just a quick reminder, some of the 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.

Joining me today, our Joe Hamrock, Chief Executive Officer, and Donald Brown, Chief Financial Officer.

The purpose of this presentation is to review nice sources financial performance for the fourth quarter and full year of 2019.

As well as to provide an update on our operations.

Growth drivers and financing plan.

Following our prepared remarks, well open the call to your question.

Slides for today's call are available on nights or stock comp.

Before turning the call over the Joe and Donald just a quick reminder, some of the 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 statement.

Randy Hulen: Information concerning such risks and uncertainties is included in the MD&A and Risk Factors sections of our periodic SEC filings. Additionally, some of the statements made on this recording relate to non-GAAP measures. For additional information on the most directly comparable GAAP measure and a reconciliation of these measures, please refer to the supplemental slides and segment information, including our full financial schedules available at nisource.com. With all that out of the way, I'd like to turn the call over to Joe.

Information concerning such risks and uncertainties is included in the M. DNA and risk factors sections of our periodic SEC filings.

Additionally, some of the statements made on this recording relate to non-GAAP measure.

For additional information on the most directly comparable GAAP measure in a reconciliation of these measures. Please refer to the supplemental slides and segment information.

Polluting our full financial schedules are available at night source Dot com.

With all that all the way I'd like to turn the call over to Joe.

Joe Hamrock: Thanks, Randy, and good morning, everyone, and thank you for joining us. Before I discuss our Q4 and full year results, I would like to take a few minutes to speak to the announcements made yesterday that we have reached a plea agreement with the United States Attorney for the District of Massachusetts, intended to resolve the criminal investigation, and entered into a definitive agreement to sell our Columbia Gas of Massachusetts business to Eversource. In addition to agreeing to pursue the sale of the Columbia Gas of Massachusetts assets, we have also agreed to pay a $53 million criminal fine. Following a thorough evaluation by the board and management team, we believe this sale to Eversource is in the best interests of all of our stakeholders, including shareholders.

Thanks, Randy and good morning, everyone. Thank you for joining us.

Before I discuss our fourth quarter and full year results I'd like to take a few minutes to speak to the announcements made yesterday. So we have reached a plea agreement with the United States Attorney for the district of Massachusetts intended to resolve the criminal investigation.

And entered into a definitive agreement to sell our Columbia gas of Massachusetts business the Eversource.

In addition to agreeing to pursue the sale of the Columbia gas of Massachusetts assets.

We've also agreed to pay a 53 million dollar criminal fine.

Following a thorough evaluation by the board and management team. We believe this sale to Eversource isn't the best interests of all of our stakeholders, including shareholders.

Through this process it was paramount to us that we find a partner for Columbia gas of Massachusetts, who will create the right next chapter for not only Columbia gas of Massachusetts business, but for the customers and communities that serves as well as its dedicated employees.

Joe Hamrock: Through this process, it was paramount to us that we find a partner for Columbia Gas of Massachusetts, who will create the right next chapter for not only Columbia Gas of Massachusetts business, but for the customers and communities it serves, as well as its dedicated employees. We believe Eversource is that right partner. As New England's largest energy delivery company, serving approximately 4 million electricity, natural gas, and water customers in Connecticut, Massachusetts, and New Hampshire, they have tremendous familiarity with the region. In addition, they have a proven track record of investing in infrastructure, employees, and operations to enhance system reliability and safety. Correspondingly, our focus across NiSource is on enhancing safety, service, and system reliability through implementation of our Safety Management System, infrastructure modernization, and advanced workforce training programs. The transaction is supportive of those priorities for all of our stakeholders.

We believe Eversource is that right partner.

As new England's largest energy delivery company, serving approximately 4 million electricity natural gas and water customers in Connecticut, Massachusetts, and New Hampshire, they have tremendous familiarity with the region.

In addition, they have a proven track record of investing in infrastructure employees and operations to enhance system reliability and safety.

Correspondingly our focus across nice worse is on enhancing safety service and system reliability through implementation of our safety management system infrastructure modernization and advanced workforce training programs.

The transaction is supportive of those priorities for all of our stakeholders.

Yesterday's announcement, it's just the first up for this transaction and we look forward to working closely with Eversource to ensure a smooth transition.

Joe Hamrock: Yesterday's announcement is just the first step for this transaction, and we look forward to working closely with Eversource to ensure a smooth transition. Throughout the approval and transition process, we will remain focused on customer service and enhancements in all areas of operations. Now turning to our results for the quarter and the year. As we look back at 2019, it was a year in which our team's performance demonstrated the resiliency of the NiSource business plan. Our employees remained relentlessly focused on safety and customer satisfaction, starting with the accelerated implementation of our safety management system, as well as advancing our electric generation strategy in Indiana, and executing on nearly $1.9 billion in capital investments centered on infrastructure and safety in our gas and electric systems.

Throughout the approval in transition process, we will remain focused on customer service and enhancements in all areas of operations.

Now turning to our results for the quarter in the year as we look back at 2019, it was a year in which our team's performance demonstrated the resiliency of the nice source business plan.

Our employees remain drugs relentlessly focused on safety and customer satisfaction, starting with the accelerated implementation of our safety management system as well as advancing or electric generation strategy in Indiana and executing on nearly $1.9 billion in capital investments centered.

Rupture and safety and our gas and electric systems.

We also delivered non-GAAP net operating earnings per share of $1.32 near the top of our guidance range for the year, while maintaining our current investment grade credit ratings and executing on our regulatory plans.

Joe Hamrock: We also delivered non-GAAP net operating earnings per share of $1.32, near the top of our guidance range for the year, while maintaining our current investment-grade credit ratings and executing on our regulatory plan. Turning now to slide 3, you can see some of our key accomplishments in 2019. Our SMS implementation and other system safety enhancements were and remain our top priority. In 2019, we stood up an independent quality review board to oversee our progress and named a chief safety officer reporting directly to me. In addition, we integrated the functions of safety, compliance, and risk, and increased staffing and capabilities across our gas segment. We introduced the Corrective Action Program, or CAP, to identify, track, and prioritize risk. We installed more than 1,000 automatic shutoff devices on low-pressure gas systems across our footprint.

Turning now to slide three you can see some of our key accomplishments in 2019.

Our SMS implementation and other system safety enhancements were in remain our top priority in 2019, we stood up and independent quality review board to oversee our progress and named a cheap safety officer reporting directly to me.

In addition, we integrated the functions of safety compliance and risk and increased staffing and capabilities across our gas segment.

We introduced the corrective action program or cap to identify track and prioritize risk and we installed more than 1000 automatic shut off devices on low pressure gathering systems across our footprint.

As I mentioned earlier, we delivered non-GAAP net operating earnings per share of $1.32 near the top of EUR 2019 guidance range.

Joe Hamrock: As I mentioned earlier, we delivered non-GAAP net operating earnings per share of $1.32, near the top of our 2019 guidance range. Due to the expectation of closing the Columbia Gas of Massachusetts transaction this year, we are withdrawing our 2020 net operating earnings per share guidance of $1.36 to $1.40. However, we continue to expect to make capital investments of $1.8 to $1.9 billion in 2020. We also expect the transaction will enable NiSource to eliminate its previously planned 2020 block equity issuance. The long-term growth opportunity for the remaining operating companies is unchanged.

Due to the expectation of closing the Columbia gas of Massachusetts transaction. This year, we're with drawing our 2020 that operating earnings per share guidance of $1.36 to $1.40.

However, we continue to expect to make capital investments of $1.8 billion to $1.9 billion in 2020.

We also expect the transaction will enable nice work to eliminate its previously planned 2020 block equity issuance.

The long term growth opportunity for the remaining operating companies is unchanged as a result, following the completion of the transactions the company expects to initiate 2021 net operating earnings per share guidance.

Joe Hamrock: As a result, following the completion of the transaction, the company expects to initiate 2021 net operating earnings per share guidance and establish a 5 to 7% long-term growth rate for both net operating earnings per share and dividends, with 2021 as the base year. This new long-term guidance is expected to be extended beyond 2022 to include significant investments related to the company's electric generation strategy. Reflecting on 2019, NiSource achieved a number of key milestones. In our electric business, we reached commercial agreements on multiple wind projects, completed a second round of requests for proposals for replacement generation capacity for our retiring coal plants, and completed our coal combustion residuals capital investments. We made approximately $1.9 billion of capital investments in our gas and electric utilities, primarily focused on safety improvements and infrastructure modernization.

And establish a 5% to 7% long term growth rate for both net operating earnings per share and dividends with 2021 as the base year.

This new long term guidance is expected to be extended beyond 2022 to include significant investments related to the company's electric generation strategy.

Reflecting on 2019, nice worst achieved a number of key milestones in our electric business, we reached commercial agreements on multiple wind projects.

We did a second round of request for proposals for replacement generation capacity for our retiring coal plants.

And completed our coal combustion residuals capital investments.

We made approximately $1.9 billion of capital investments in our gas and electric utilities, primarily focused on safety improvements and infrastructure modernization.

We executed on our regulatory initiatives, including approvals of our electric base rate cases in Indiana and their gas base rate case in Maryland and Virginia.

Joe Hamrock: We executed on our regulatory initiatives, including approvals of our electric-based rate cases in Indiana and our gas-based rate case in Maryland, and Virginia. In the Merrimack Valley, we substantially completed the restoration following the September 2018 event, including the settlement of all the major customer claims, and finishing substantially all service line verifications. We added about 28,000 net new gas customers across the company, driven by healthy new construction and conversion markets. Now I'd like to turn the call over to Donald, who will discuss our financial performance in more detail.

In the Merrimack Valley, we substantially completed the restoration following the September 2018 event, including the settlement of all the major customer claims and finishing steps substantially all service line verification.

And we added about 28000 net new gas customers across the company driven by healthy new construction and conversion markets.

Now I'd like to turn the call over to Donald who will discuss our financial performance in more detail.

Thanks, Joe Good morning, everyone.

Donald Brown: Thanks, Joe, and good morning, everyone. Looking at our 2019 results on slide 4, we had a non-GAAP net operating earnings of about $495 million, or $1.32 per share, compared to net operating earnings about $463 million, or $1.30 per share in 2018. The biggest drivers of our 2019 non-GAAP financial performance compared to 2018 were higher net revenues due to the impact of our long-term infrastructure modernization investments, which were offset by increased safety-related spending and higher financing costs, due largely to the Greater Lawrence incident. Now, turning to slide 5, I'd like to briefly touch on our debt and credit profile.

Looking at our 2019 results on slide four we had a non-GAAP net operating earnings of about $495 million or $1.32 per share compared to net operating earning about $463 million were dollars 30 per share in 2018.

[music] the biggest drivers of our 2019 non-GAAP financial performance compared to 2018 were higher net revenue due to the impact of our long term infrastructure modernization investments.

Which were offset by increased safety related spending and higher financing costs due largely to the greater Lawrence incident.

Now turning to slide five I'd like to briefly touch on our debt in credit profile.

Our debt level as of December 31st was about $9.6 billion of which about $7.7 billion with long term debt.

Donald Brown: Our debt level as of December 31 was about $9.6 billion, of which about $7.7 billion was long-term debt. The weighted average maturity on our long-term debt was approximately 17 years, and the weighted average interest rate was approximately 4.4%. At the end of Q4, we maintained net available liquidity of about $1.4 billion, consisting of cash and available capacity under our credit facility and our accounts receivable securitization programs. Our credit ratings from all three major rating agencies are investment-grade, and we're committed to maintaining our current investment-grade ratings. I'd now like to turn to slide 6, which covers our financing plan for our long-term growth investment.

The weighted average maturity on our long term debt was approximately 17 years and weighted average interest rate approximately 4.4%.

At the end of fourth quarter, we maintain net available liquidity of about $1.4 billion, consisting of cash and available capacity under our credit facility and our accounts receivable securitization program.

Our credit ratings from all three major rating agencies are investment grade and we're committed to maintaining our current investment grade ratings.

I'd now like to turn to slide six which covers our financing plan for a long term growth investment.

The agreement for purchase price of $1.1 billion in cash.

Donald Brown: The agreement for a purchase price of $1.1 billion in cash, subject to adjustment based on Columbia Gas of Massachusetts' net working capital as of the closing. The purchase price represents a loss compared to the book value of Columbia Gas of Massachusetts. As a result of the asset sale transaction, we no longer expect to pursue our previously planned 2020 block equity issuance. Our current plan, which is focused on providing funding for our ongoing safety and infrastructure investment programs, has approximately $500 million of long-term debt in 2020, and continues to include annual equity in the range of $200 to 300 million from our at-the-market, or ATM, equity issuance program, as well as $35 to 60 million from our employee stock purchase and other programs.

Subject to adjustment based on Columbia gas, Massachusetts, net working capital.

As of the closing.

Purchase price represents a lot compare to the book value of Columbia gas of Massachusetts.

As a result, the asset sale transaction, we no longer expect to pursue our previously planned 2020 block equity issuance.

Our current plan, which is focused on providing funding for ongoing safety in infrastructure investment program has approximately $500 million of long term debt in 2020 and continues to include annual equity in the range of $200 million to $300 million from our aftermarket or ATM equity.

Once program.

As well as $35 million to $60 million from our employee stock purchase another programs.

As Joe mentioned due to the timing of this transaction we are withdrawing our 2020 non-GAAP net operating earnings per share guidance of $1.36 to $1.40.

Donald Brown: As Joe mentioned, due to the timing of this transaction, we are withdrawing our 2020 non-GAAP net operating earnings per share guidance of $1.36 to $1.40. However, we continue to expect to make capital investments of $1.8 to $1.9 billion in 2020. Following the completion of the transaction, we expect to initiate 2021 net operating earnings per share guidance and establish a 5% to 7% long-term growth rate for both net operating earnings per share and dividends, with 2021 as the base year. This new long-term growth rate is also expected to be extended beyond 2022 to include significant investments related to the company's electric generation strategy.

However, we continue to expect to make capital investments of $1.8 billion to $1.9 billion in 2020.

Following the completion of the transaction, we expect to initiate 2021 net operating earnings per share guidance and establish a 5% to 7% long term growth rate for both net operating earnings per share and dividends with 2021 as the base year.

This new long term growth rate is also expected to be extended beyond 2022 to include significant investments related to the company's electric generation strategy.

As we worked through the impact of the sale.

Donald Brown: As we work through the impact of the sale, by factoring in the elimination of the block equity dilution, the loss of CMA earnings, and the expected dissynergies, we believe that, at a minimum, the 2021 baseline is expected to be at or above our withdrawn 2020 guidance. Now, I'll turn the call back to Joe for a few infrastructure investment and regulatory highlights.

Like factoring in the elimination of the block equity dilution the loss of Cama, earning.

And the expected dis synergies.

We believe that at a minimum.

2021 baseline is expected to be at or above our withdrawn 2020 guidance.

Now I'll turn the call back to Joe for a few infrastructure investment and regulatory highlights.

Thank you Donald now, let's turn to some specific highlights for the fourth quarter and early first quarter of 2020 from our gas operations on slide seven.

Joe Hamrock: Thank you, Donald. Now let's turn to some specific highlights for the Q4 and early Q1 of 2020 from our gas operations on slide 7. In Maryland, our base rate case request was approved by the Public Service Commission, and new rates went into effect in December. The order supports continued replacement of aging pipelines and adoption of pipeline safety upgrades. Columbia Gas of Kentucky received an order in December from the Public Service Commission in its annual Accelerated Main Replacement Program rider adjustment case. The commission approved a modification to the AMRP to expand its scope to cover capital investments, including safety enhancements to low-pressure systems, and other risk-based investments identified under our SMS program. As part of the order, the program was renamed to the Safety Modification and Replacement Program, or SMRP.

In Maryland, our base rate case request was approved by the public Service Commission and new rates went into effect in December.

The order supports continued replacement of aging pipelines and adoption of pipeline safety upgrades.

Columbia gas of Kentucky received an order in December from the public Service Commission in its annual accelerated main replacement program rider adjustments case.

The commission approved a modification to the A.M. RP to expanded scope to cover capital investments, including safety enhancements to low pressure systems and other risk based investments identified under our SMS program.

As part of the order the program was renamed the safety modification and replacement program or S. M RP.

We filed an application in December with the Indiana utility regulatory Commission for a six year extension of our long term gas infrastructure modernization program.

Joe Hamrock: We filed an application in December with the Indiana Utility Regulatory Commission for a six-year extension of our long-term gas infrastructure modernization program. The proposal includes nearly $950 million in capital investments through 2025, to be recovered through semiannual adjustments to the existing Transmission, Distribution, and Storage Improvement Charge, or TDSIC, tracker. The existing gas TDSIC program has been in place since 2014. An IURC order is expected in July 2020. Now, let's turn to our electric operations on slide 8. Our team is reviewing the results of our latest request for proposals to consider potential resources to meet the future electric needs of our customers.

The proposal includes nearly $950 million in capital investments through 2025 to be recovered through semiannual adjustments to the existing transmission distribution and storage improvement charge Ortigas tracker.

The existing gas tedious program has been in place since 2014.

And I you RC order is expected in July 2020.

Now, let's turn to our electric operations on slide eight.

Our team is reviewing the results of our latest request for proposals to consider potential resources to meet the future electric needs of our customers.

Consistent with Nipscos 2018 integrated resource plan, the RFP sought to identify replacement sources for our coal capacity.

Joe Hamrock: Consistent with NIPSCO's 2018 integrated resource plan, the RFP sought to identify replacement sources for our coal capacity, which will be 100% retired by 2028, to be replaced by lower-cost, reliable, and cleaner options. The plan is expected to drive a 90% reduction in our greenhouse gas emissions by 2030, and to save our electric customers more than $4 billion over the long term. We considered all sources in the RFP process, which closed in November, and we're currently in early discussions with a number of commercial bidders who responded to the RFP. Progress continues on the active wind projects we proposed in 2019. On 19 December, the Federal Energy Regulatory Commission approved our Section 203 and Section 205 applications for Rosewater, a 100-megawatt joint venture between NIPSCO and EDP Renewables.

Which will be 100% retired by 2028 to be replaced by lower cost reliable and cleaner options.

The plan is expected to drive and 90% reduction in our greenhouse gas emissions by 2030.

And to save our electric customers more than $4 billion over the long term.

We considered all sources in the RFP process, which closed in November and we're currently in early discussions with a number of commercial bidders who responded to the RFP.

Progress continues on the active wind projects, we proposed in 2019.

On December 19th the Federal Energy Energy Regulatory Commission approved or section two or three and section to five applications for rose water, a 100 megawatt joint venture between NIPSCO and E. D. P renewables.

The you RC had previously approved the joint venture and ownership agreement for rose water as well as a power purchase agreement application for Jordan Creek.

Joe Hamrock: The IURC had previously approved the joint venture and ownership agreement for Rosewater, as well as a power purchase agreement application for Jordan Creek. Construction is underway on both Rosewater and Jordan Creek, which are expected to be in service by the end of this year. NIPSCO has notified the IURC of its intention to not move forward with the Roaming Bison project due to local zoning restrictions. Last week, the IURC approved our application for an additional wind project, Indiana Crossroads, another joint venture with EDP Renewables. Indiana Crossroads will have an aggregate nameplate capacity of 302 MW and is expected to be in operation in Q4 2021. In December, we received an order from the IURC in our electric base rate case, with new rates effective in January 2020.

Construction is underway on both rose water in Jordan Creek, which are expected to be in service by the end of this year.

NIPSCO has notified the value RC of its intention to not move forward with the roaming bison project due to local zoning restrictions.

Last week the value RC approved our application for an additional wind project, Indiana Crossroads, another joint venture with GDP renewables.

Indiana Crossroads will have an aggregate nameplate capacity of 302 megawatts and is expected to be an operation in the fourth quarter of 2021.

In December we received an order from the value RC and our electric base rate case with new rates effective in January 2020.

The order approved a partial settlement agreement filed in April 2019 that addresses the revenue requirement federal tax reform and changes to our depreciation schedules related to the early retirements of coal fire generation submitted in the IR Pete.

Joe Hamrock: The order approved a partial settlement agreement filed in April 2019, that addresses the revenue requirement, federal tax reform, and changes to our depreciation schedules related to the early retirements of coal-fired generation, as submitted in the IRP. The order established a return on equity of 9.75%, reflecting a reduced business risk profile, and positions NIPSCO to successfully execute on its generation strategy, which benefits its customers. We continue to execute on our 7-year electric infrastructure modernization program, which includes enhancements to our electric transmission and distribution system, designed to further improve system safety and reliability. The program, originally approved by the IURC in 2016, includes approximately $1.2 billion of electric infrastructure investments expected to be made through 2022.

The order established a return on equity of 9.75%, reflecting a reduced business risk profile.

Positions NIPSCO to successfully execute on its generation strategy, which benefits its customers.

We continue to execute on or seven year electric infrastructure modernization program, which includes enhancements to our electric transit transmission and distribution system designed to further improve system safety and reliability.

The program originally approved by the value RC in 2016 includes approximately $1.2 billion of electric infrastructure investments expected to be made through 2022.

Our latest tracker update request covering $131.1 million, an incremental capital investments made from December 2018 through June 2019.

Joe Hamrock: Our latest tracker update request, covering $131.1 million in incremental capital investments made from December 2018 through June 2019, was approved by the IURC on 18 December 2019, with rates effective in January 2020. Turning now to slide nine, I'll focus on our system-wide safety enhancements. Safety is and will remain the foundation of everything we do across our business. We are resolved to lead in safety and exceed industry standards, anchored by three pillars: a culture where everyone is empowered to identify and report risk, process safety that adds layers of protection, and enhanced asset risk and analytics. A safety management system, or SMS, is a comprehensive approach to managing safety, emphasizing continual assessment and improvement, as well as proactively identifying and mitigating potential risks.

Was approved by the value RC on December 18th 2019 with rates effective in January 2020.

Turning now to slide nine I'll focus on our system wide safety enhancements.

Safety is and will remain the foundation of everything we do across our business. We are resolved to lead in safety and exceed industry standards anchored by three pillars, a culture, where everyone is empowered to identify and report risk.

Process safety that adds layers of protection.

And enhanced asset risk and analytics.

A safety management system or SMS is a comprehensive approach to managing safety, emphasizing continual assessment and improvements as well as proactively identifying and mitigating potential risks.

We made great progress on our SMS implementation in 2019, and it remains our top priority in 2020.

Joe Hamrock: We made great progress on our SMS implementation in 2019, and it remains our top priority in 2020. Nearly 90% of our gas segment employees were trained in SMS in 2019, and the remainder will be trained this year. Gas segment employees and contractors have embraced the CAP tool, which offers a simple way for employees and contractors to report safety concerns, and supports our systematic process to review, prioritize, and track progress to reduce risk.

Nearly 90% of our gas segment employees were trained in SMS in 2019, and the remainder will be trained this year.

Gas segment employees and contractors have embraced the cap tool, which offers a simple way for employees and contractors to report safety concerns and supports our systematic process to review prioritize and track progress to reduce risk.

In 2019, we worked closely with the National Transportation Safety Board, which concluded its investigation into the greater Lawrence event.

Donald Brown: ...In 2019, we worked closely with the National Transportation Safety Board, which concluded its investigation into the Greater Lawrence event. We finished implementing the board's urgent safety recommendations, and NTSB deemed our responses as acceptable. In conjunction with its final report, NTSB issued a recommendation around enhancing our emergency preparedness and response capabilities. We have implemented an incident command structure, or ICS, aligned with Federal Emergency Management Agency standards and provided ICS training to nearly all NiSource employees. Before we turn to the Q&A portion of the call, I'll share and reiterate a few key takeaways. As noted, with the expected closing of the Columbia Gas of Massachusetts transaction this year, we are withdrawing our 2020 net operating earnings per share guidance of $1.36 to $1.40.

Joe Hamrock: ...In 2019, we worked closely with the National Transportation Safety Board, which concluded its investigation into the Greater Lawrence event. We finished implementing the board's urgent safety recommendations, and NTSB deemed our responses as acceptable. In conjunction with its final report, NTSB issued a recommendation around enhancing our emergency preparedness and response capabilities. We have implemented an incident command structure, or ICS, aligned with Federal Emergency Management Agency standards and provided ICS training to nearly all NiSource employees. Before we turn to the Q&A portion of the call, I'll share and reiterate a few key takeaways. As noted, with the expected closing of the Columbia Gas of Massachusetts transaction this year, we are withdrawing our 2020 net operating earnings per share guidance of $1.36 to $1.40.

We finished implementing the board's urgent safety recommendations and NTSB deemed our responses as acceptable.

Conjunction with its final report NTSB issued a recommendation around enhancing our emergency preparedness and response capabilities.

We have implemented an incident command structure or I guess aligned with federal or emergency management agency standards and provided I see us training to nearly all nice source employees.

Before we turn to the Q and a portion of the call I'll share and reiterate a few key takeaways.

As noted with the expected closing of the Columbia gas of Massachusetts transaction. This year, we're with drawing our 2020 net operating earnings per share guidance of $1.36 to $1.40.

We continue to expect to make capital investments of $1.8 billion to $1.9 billion in 2020, and we remain committed to our current investment grade credit ratings.

Donald Brown: We continue to expect to make capital investments of $1.8 to 1.9 billion in 2020, and we remain committed to our current investment-grade credit ratings. We expect the transaction will enable NiSource to eliminate its previously planned 2020 block equity issuance. Following the completion of the transaction, we expect to initiate 2021 net operating earnings per share guidance and establish a 5 to 7% long-term growth rate for both net operating earnings per share and dividend, with 2021 as the base year. As Donald mentioned, we believe that at a minimum, the 2021 baseline is expected to be at or above our withdrawn 2020 guidance. Our electric generation strategy is advancing with our base rate case approved, wind project construction underway, and the second RFP completed to identify additional sources to replace our coal capacity.

Joe Hamrock: We continue to expect to make capital investments of $1.8 to 1.9 billion in 2020, and we remain committed to our current investment-grade credit ratings. We expect the transaction will enable NiSource to eliminate its previously planned 2020 block equity issuance. Following the completion of the transaction, we expect to initiate 2021 net operating earnings per share guidance and establish a 5 to 7% long-term growth rate for both net operating earnings per share and dividend, with 2021 as the base year. As Donald mentioned, we believe that at a minimum, the 2021 baseline is expected to be at or above our withdrawn 2020 guidance. Our electric generation strategy is advancing with our base rate case approved, wind project construction underway, and the second RFP completed to identify additional sources to replace our coal capacity.

We expect the transaction will enable nisource to eliminate its previously planned 2020 block equity issuance.

As Donald mentioned, we believe that at a minimum the 2021 baseline is expected to be at or above our withdrawn 2020 guidance.

Our electric generation strategy. It is advancing with our base rate case approved wind project construction underway and the second RFP completed to identify additional sources to replace our coal capacity.

We have to substantially completed our service line verification work in the Merrimack Valley, and we're cooperating fully with the Massachusetts Department of public utilities as it reviews. The cause of December September 2018, Merrimack Valley event, and our emergency response.

Donald Brown: We have substantially completed our service line verification work in the Merrimack Valley, and we're cooperating fully with the Massachusetts Department of Public Utilities as it reviews the cause of September 2018 Merrimack Valley event and our emergency response. Through the close of the transaction, NiSource will remain focused on customer service and enhancements in all areas of operations. Thank you all for participating today and for your ongoing interest in and support of NiSource. We are now ready to take your questions. Detamera?

Joe Hamrock: We have substantially completed our service line verification work in the Merrimack Valley, and we're cooperating fully with the Massachusetts Department of Public Utilities as it reviews the cause of September 2018 Merrimack Valley event and our emergency response. Through the close of the transaction, NiSource will remain focused on customer service and enhancements in all areas of operations. Thank you all for participating today and for your ongoing interest in and support of NiSource. We are now ready to take your questions. Detamera?

Through the close of the transaction nice source will remain focused on customer service and enhancements in all areas of operations.

Thank you all for participating today and for your ongoing interest in support of nice stores. We're now ready to take your questions did tomorrow.

Ladies and gentlemen, if you have a question at this time. Please press Star then the number one.

Operator: Ladies and gentlemen, if you have a question at this time, please press star and the number one on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Your first response is from Shar Pourreza of Guggenheim Partners. Please go ahead.

On your Touchtone telephone.

If your question has been answered or you wish to we move you itself from the Q. Please press the pound key.

Your first responses from shore Luisa Guggenheim Partners. Please go ahead.

Hey, good morning, guys. Good morning sharp good morning.

Shar Pourreza: Hey, good morning, guys.

Donald Brown: Good morning, Char.

Joe Hamrock: Good morning, Char.

Greg Gordon: Good morning.

Donald Brown: Good morning.

Shar Pourreza: Just a couple of questions here. Could we just talk directionally about the earnings impact from the sale of Columbia Gas of Massachusetts? So, like, are you expecting any kind of dilution versus your prior 2020 guide? Is there any opportunities to mitigate? I mean, obviously, you've eliminated a very large equity slug in 2020.

So we just a couple of questions here.

Just talk Directionally about the earnings impact from the sale of Columbia gas of Massachusetts, So like.

You are expecting any kind of dilution versus your prior 2020 guide is there any opportunities to mitigate I mean, obviously, we've eliminated a very large equity slug in 2020.

I think sharp.

Donald Brown: Thanks, Char. Yeah, we think there are opportunities to mitigate that. We are starting to work on that plan. But as I stated, when you look at the loss of the earnings, although, you know, Massachusetts CMA was not earning its allowed return on its rate base, but you-- we do lose that impact of those earnings. We will have some dyssynergies, and we'll start working on a plan there to offset and mitigate some of those dyssynergies. But, you know, as we've stated, and you have as well, we will not need to issue that equity, which helps minimize dilution. We've-- we'll go out to the rating agencies this spring and show them our plan and talk about the financing plan going forward.

Joe Hamrock: Thanks, Char. Yeah, we think there are opportunities to mitigate that. We are starting to work on that plan. But as I stated, when you look at the loss of the earnings, although, you know, Massachusetts CMA was not earning its allowed return on its rate base, but you-- we do lose that impact of those earnings. We will have some dyssynergies, and we'll start working on a plan there to offset and mitigate some of those dyssynergies. But, you know, as we've stated, and you have as well, we will not need to issue that equity, which helps minimize dilution. We've-- we'll go out to the rating agencies this spring and show them our plan and talk about the financing plan going forward.

We think there are opportunities to mitigate that we are starting to work on that plan, but as I stated.

When you look at the loss of the earnings all though.

Massachusetts, Cama was not earning it allowed return on.

Its rate base.

We do move that impacted those earning.

We will have some dis synergies and we'll start working on a plan there to offset and mitigate some of those synergies.

But.

As we've stated you have as well, we will not need to issue that equity, which what's helped minimize.

Dilution.

We will go out to the rating agencies. This spring and show them, our plan and talk about financing plan going forward.

So I think we'll need a few.

Donald Brown: And so I think we'll need a few quarters or so to really develop this plan, get closer to a transaction close and understanding the timing of that, as well as just the transition, you know, you know, looking at a close by the end of Q3. But we also expect that expect that there's gonna be a transition of up to a couple of years to transition the business over to Eversource. And so we need to take all of those items into account. Having said that, we're confident that at a minimum, we'll be at or above this year's guidance, but certainly see the opportunity to do better.

Joe Hamrock: And so I think we'll need a few quarters or so to really develop this plan, get closer to a transaction close and understanding the timing of that, as well as just the transition, you know, you know, looking at a close by the end of Q3. But we also expect that expect that there's gonna be a transition of up to a couple of years to transition the business over to Eversource. And so we need to take all of those items into account. Having said that, we're confident that at a minimum, we'll be at or above this year's guidance, but certainly see the opportunity to do better.

Quarters, or so really to develop this plan get closer to a transaction close.

And understanding the timing of that as well as just the transition.

Yes.

Looking at a close by the end of the third quarter, but we also expect but expect that theres going to be a transition of up to a couple of years.

Two transitioning business over to Eversource, and so we need to take all of those items into account.

Having said that.

We're confident that at a minimum will be at or above this year's guidance, but certainly see the opportunity to do better.

And then it's in our interest to do better.

Shar Pourreza: Got it.

Donald Brown: And it's in our interest to do better, as you'd expect.

Joe Hamrock: And it's in our interest to do better, as you'd expect.

As you'd expect.

Right and then how should we sort of think about sort of the ongoing equity beyond 20, especially these were lingering capex around Indiana generation et cetera. So like do you see any scenarios, mainly but I'm trying to get at as if theres any scenarios, where that could be future block equity below.

Shar Pourreza: Right. Then, how should we sort of think about sort of the ongoing equity beyond 20, especially as we're layering CapEx around, Indiana generation, et cetera? So, like, do you see any scenarios, mainly what I'm trying to get at is if there's any scenarios where there could be future block equity beyond sort of the ATMs and internal programs, maybe to fund, you know, the quote-unquote, significant investments you kind of mentioned in your prepared remarks. Or do you sort of think your ongoing internal programs, ATMs, is sufficient to fund what appears to be a pretty healthy CapEx program?

On sort of the ATM to an internal programs maybe to fund the quote unquote significant investments you kind of mentioned in your prepared remarks or do you sort of think your ongoing internal programs ATM is sufficient to fund.

Appears to be a pretty healthy Capex program.

Yes, I'd say, it's too early to.

Donald Brown: Yeah, I'd say it's too early to say exactly what that financing program will be. That will be part of our discussions with the rating agency as well as the board this spring to talk about how to finance the size of those investments are and how we finance that. Certainly the ATM program has been a very good program for us, but depending on the timing and size of those investments, it will, the financing program will have to match up, and we expect that we will provide more details later in the year around that plan.

Say exactly what that financing program will be that will be part of our discussions with the rating agency as well as the board.

Spring to talk about how to finance what.

The size of those investments are and how we finance that.

Certainly the ATM program, it's been a very good program for us, but depending on the timing and size of those investments it will.

Financing program will have to match up and we expect that we will provide more details later in the year round that plan.

Got it thanks, guys I'll jump back in the queue appreciate it.

Shar Pourreza: Got it. Thanks, guys. I'll jump back in the queue. Appreciate it.

Thanks sharp.

Donald Brown: Thanks, Shore.

Thank you you initiate sponsors from Michael Weinstein of credit Suisse.

Operator: Thank you, your next response is from Michael Weinstein of Credit Suisse.

Hi, good morning.

Michael Weinstein: Hi, good morning.

Good morning, Mike warning.

Donald Brown: Good morning, Michael.

Joe Hamrock: Good morning, Michael.

Shar Pourreza: Morning.

Donald Brown: Morning.

Hey, so when you guys. When you say that you have an estimate that loss on the sale is there any goodwill recovery factored into the year over year expected retention of proceeds.

Michael Weinstein: Hey. So when you guys, when you say that, you have an estimate of the loss on the sale, is there any goodwill recovery factored into the-- your, your expected retention of proceeds?

So.

Donald Brown: So, we did write off. We had goodwill on the books that we wrote off as of December 31, as well as there was an intangible asset on our books related to the Bay State Gas purchase by NiSource back in 1999 or 1998. Both of those amounts are written off. It's about $415 million dollar write-off that we did take at December 31 this year.

Joe Hamrock: So, we did write off. We had goodwill on the books that we wrote off as of December 31, as well as there was an intangible asset on our books related to the Bay State Gas purchase by NiSource back in 1999 or 1998. Both of those amounts are written off. It's about $415 million dollar write-off that we did take at December 31 this year.

We did write off we have goodwill on the book that we wrote off as a 12.

31, as well as there was an intangible asset on our books related to the see state gas purchase by nice source back in 1999 or 1998, both of those amounts were written off its about $415 million.

Right off that we did take at 12 31.

This year.

Gotcha and just a follow up on shores question is there any corporate overhead retained.

Michael Weinstein: Got you. And just to follow up on Shar's question, is there any corporate overhead retained? You know, I mean, you're talking about dissynergies going forward. Is there any quantification you can put on the corporate overhead?

I mean, I know you're talking about the synergies going forward as Ernie.

Quantification you can put on the corporate overhead.

Not at this point I think what we're trying to do with develop a plan to help mitigate.

Donald Brown: Not at this point. I think, you know, what we're trying to do is develop a plan to help mitigate those dissynergies. Obviously, you can't eliminate them all because we have lost-- we will lose scale in our business. But what we're attempting to do is build a plan that offsets and mitigates that.

Joe Hamrock: Not at this point. I think, you know, what we're trying to do is develop a plan to help mitigate those dissynergies. Obviously, you can't eliminate them all because we have lost-- we will lose scale in our business. But what we're attempting to do is build a plan that offsets and mitigates that.

Those dissynergies, obviously, you can't eliminate them all because we have lost we will move scale in our business.

What we're attempting to do build a plan that.

Offsets and mitigates that.

Gotcha and can you just briefly review the additional I guess investigations that are still pending.

Michael Weinstein: Got you. And can you just briefly review the additional, I guess, investigations that are still pending, seeing that you're still liable for any liabilities that are in connection with the incident, right?

But you're still liable for.

For any liability center in connection with the answer right.

That's right so.

Donald Brown: That's right. So if you look at the, there's still ongoing investigations in Massachusetts with the DPU that we are working with the DPU. You know, our hope and goal is to help have those investigations resolved by the close of the transaction with Eversource.

Joe Hamrock: That's right. So if you look at the, there's still ongoing investigations in Massachusetts with the DPU that we are working with the DPU. You know, our hope and goal is to help have those investigations resolved by the close of the transaction with Eversource.

We look at the there is still ongoing investigations in Massachusetts with the GPU.

That we are working with the GPU.

Our hope and goal is to help.

Have those investigations resolved by the close of the transaction with Eversource.

Got you okay. Thank you very much.

Michael Weinstein: Got you. Okay. Thank you very much.

Thank you next responses from Julien Dumoulin Smith of Bank of America. Please go ahead.

Operator: Thank you. Your next response is from Julien Dumoulin-Smith of Bank of America. Please go ahead. Julien, are you there?

Yeah. Good morning, Jeremy Yeah, we can area now drilling activity sorry about that.

Julien Dumoulin-Smith: Good morning. Can you hear me?

Donald Brown: Yeah, we can hear you now, Julien.

Joe Hamrock: Yeah, we can hear you now, Julien.

Julien Dumoulin-Smith: Excellent. Sorry about that. So I appreciate it. So let me come back to this, if I can, just in brief. When you think about the timing related issues on 20 versus the full year run rate on 21, let's just focus on 21 here. How do you think about the puts and takes here? Because, I, without interjecting a specific earned ROE on the Massachusetts business directly, it would seem as if roughly excluding the dissynergies, the equity would seem to offset the loss of earnings from the core business. That's my words. I just want to see how that reconciles with you, just as we think about puts and takes off of the way the street and ourselves are already positioned on this.

I appreciate it so let me come back to this day, if I can just in brief.

When you think about the.

Timing related issues on 20 versus the full year run rate on 21, let's just focus on 21 here.

How do you think about the puts and takes here because.

Yes, without Interjecting, a specific earned or are we on the Massachusetts business directly it would seem as if roughly.

Excluding the dis synergies the equity would seem to offset the loss of earnings from the core business.

My words I, just want to see how that reconciles of you just as we think about puts and takes off the way the street and ourselves already positioned on this.

Thats a good number to think about it I don't know fix exact offset but I'd say, it's pretty close.

Donald Brown: Yeah, that's a good way to think about it. I don't know if it's exact offset, but I'd say it's pretty close.

Joe Hamrock: Yeah, that's a good way to think about it. I don't know if it's exact offset, but I'd say it's pretty close.

Got it so when you say limited so if I can put this back to you. So 40, Clos and I get that theres, some slight the synergies or something.

Julien Dumoulin-Smith: Got it. So when you say, let me, so if I can put this back to you. So if it's pretty close, and I get that there's some slight dissynergies or something, when you talk about 21 being similar to 20, was that to say that it was similar originally and that you're only now disclosing it for the first time? Do you get what I'm saying?

When you talk about 21 being.

Similar to 20 was that the say that it was similar originally and that you're only now disclosing them for the first time do you get what I'm, saying.

I'm, sorry could you I apologize I, let me let me try this again, so when you're talking about 21, now and you are saying that it'll be a similar or above 20.

Donald Brown: No, I'm sorry. Could you-

Joe Hamrock: No, I'm sorry. Could you-

Julien Dumoulin-Smith: I apologize. Let me, let me try this again. So when you're talking about 21 now, and you're saying that it'll be similar or above 20, was that originally the case under the prior plan? Or is this transaction somehow actually resulting in a net negative to your 21 estimates, if it roughly nets out on 21 to begin with?

Was that originally the case under the prior plan at or is this transaction somehow actually resulting in a net negative to your 21 estimates if it's if it roughly nets out on 21 to begin with yeah. So if you take that premise that you stated around the loss of the CMO.

Donald Brown: Yeah. So if you take the premise that you stated around the loss of the CMA earnings offset by the dilution, and then, so those offset, and then we've got some dissynergies from the loss to scale, there is a potential net negative from this transaction. And then that, as I said, is part of what we're working through to develop a plan, and it's really too early to give specific guidance around 2021. But otherwise, we would have expected to meet our 5 to 7% earnings per share and dividend per share growth guidance off of 2020.

Joe Hamrock: Yeah. So if you take the premise that you stated around the loss of the CMA earnings offset by the dilution, and then, so those offset, and then we've got some dissynergies from the loss to scale, there is a potential net negative from this transaction. And then that, as I said, is part of what we're working through to develop a plan, and it's really too early to give specific guidance around 2021. But otherwise, we would have expected to meet our 5 to 7% earnings per share and dividend per share growth guidance off of 2020.

Earnings offset by the dilution.

And then so folks offset and then we've got some dis synergies from the loss scale.

There is a potential net negative from this transaction.

And then that as I said is part of what we're working through to develop a plan and it's really too early to give specific guidance around 2021.

But otherwise we would have expected.

To meet our 5% to 7%, earning.

Per share and dividend per share growth guidance off of 2020.

Got it or say if I may one one more time.

Julien Dumoulin-Smith: Got it. If I may, one more time. 2020 into 2021 would have otherwise achieved the 5 to 7, and the only delta that we're at least publicly aware about today is the slight dis-synergy on the sale of the business, assuming there's a broadly netting of one versus the other.

20 into 21 would have otherwise achieved the five to seven and the only delta that we're at least publicly aware about today is the slight dis synergy.

On the sale of the business, assuming theres, a broadly netting of one versus the other that's correct.

Donald Brown: That's correct.

Joe Hamrock: That's correct.

Excellent. Thank you for clarifying I'll leave it there.

Julien Dumoulin-Smith: Excellent. Thank you for clarifying. I'll leave it there.

Thank you you actually sponsors from Greg Gordon of Evercore ISI.

Operator: Thank you. Your next response is from Greg Gordon of Evercore ISI.

Hey, guys good morning.

Greg Gordon: Hey, guys. Good morning.

Good morning, Greg.

Donald Brown: Good morning, Greg.

Joe Hamrock: Good morning, Greg.

I'm going to beat a dead horse here. So please humor me I apologize in advance.

Greg Gordon: I'm going to beat a dead horse here, so please humor me. I apologize in advance. If the, you know, you, you guys, based on the, the very articulate guidance your, your, your team has given the street, have been earning a very low equity return in Massachusetts. If we assume that the equity return was, you know, practically speaking, sort of 50% of the authorized, and that's the net income that you're shedding when you sell the asset, then it does make complete sense that foregoing the equity issuance would offset that dilution. But that just doesn't foot with you saying that your earnings in 2021 could potentially be at the guidance range for 2020.

If the.

You know you will you guys based on the very articulate guidance. Your your your team has given the street.

I've been earning.

A very low equity return in Massachusetts.

If we assume that the equity return.

Was practically speaking sort of 50% of the authorized and that's the net income that you're shutting when you sell the asset.

Than it does makes complete sense that.

Foregoing the equity issuance would offset that.

Solution.

But that just doesn't foot with you, saying that your earnings and 21 could potentially be at the guidance range for 20.

Because if you then grow at 5% to 7% off that it implies 22 is anywhere from seven to 10 cents below where it otherwise would have been based on the prior guidance when this.

Greg Gordon: Because if you then grow at 5 to 7% off that, it implies '22 is anywhere from $0.07 to $0.10 below where it otherwise would have been based on the prior guidance, when this, just based on basic algebra, should be $0.05 or less dilutive. So you're implying that the dis-synergy could be fairly meaningful. And, you know, you have to understand, pulling the guidance gives investors quite a bit of agita around what they're missing that may be problematic in the underlying business, away from just the puts and takes in this transaction. So if you can, could you please articulate in a little more detail how you're coming up with that, with that notional at 2020 levels in '21?

Just based on basic algebra should be a nickel or less dilutive, so you're implying that the dis synergy could be fairly meaningful and you have to understand pulling the guidance gives investors quite a bit of logic around what they're missing that may be problematic in the underlying business away from just the puts and takes in this transaction. So if.

You can't could you please articulating a little more detail.

How you're coming up with that would that with that notional at 2020 levels and 21.

Yes, Greg.

Donald Brown: Yeah, Greg, I don't know what other detail to give without giving you exact numbers that at this point, we don't have. We're working through those details. But again, if you look at where we were, where we had committed to for 2020, net guidance, our plan all along was 5 to 7% off of that. As you've stated, and Julien and I think others, we are under-earning in Massachusetts. We lose that. That was at full run rate, earning allowed return about 8 to 10% of our business. Not earning that, that dilution does offset most of the impact of losing those earnings, but there's certainly the impact of the synergies that we've got that will remain with the business, that for the amount that we can't mitigate or offset through other ways.

[music].

No I had.

What other detail to give without giving you exact numbers that.

At this point, we don't have we're working through the details, but again [noise].

If you look at where we where we've committed to for 2020, Matt Guide and our plan all along was 5% to 7% off of that.

As you stated in Julien I think others.

We are under earning in Massachusetts.

We lose that.

That was at full run rate, earning allowed return about 8% to 10% of our business.

Not earning that that dilution does offset.

Most the impact of losing those earnings, but there's certainly the impact of the synergies that we've got that will remain with the business.

That for the for the amount that we can mitigate or offset through other ways.

And so for me that is the simple math.

Donald Brown: So it—for me, that is the simple math, in terms of the growth and the opportunity to grow, going forward. Because otherwise, our operating companies are strong. They are earning their allowed returns. We're continuing to make the investments, and that's actually why we didn't change our capital investment guidance. We continued to invest, in our program about $1.9 billion, and that will continue going forward, and ultimately, that's what drives our earnings growth.

In terms of.

The growth and the opportunity to grow.

Going forward.

Because otherwise our operating companies are strong they are earning their allowed returns.

We're continuing to make the investments and that's actually why we didnt change.

Our capital investment guidance, we continue to invest.

In our program about $1.9 billion and that will continue going forward and ultimately that's what drives our earnings growth.

Okay. So so we don't have to worry about there being some significant change in your assumptions with regard to the financial or operating profile of the rest of the business. It's right. Yeah, Oh now I just wanted to be 100% clear on that it did really is about.

Greg Gordon: Okay. So, we don't have to worry about there being some significant change in your assumptions with regard to the financial or operating profile of the rest of the business?

Donald Brown: That's right. Yeah, O&M-

Greg Gordon: I just wanted to be 100% clear on that. It really is about what are you losing, the offsetting benefit of not issuing the equity and whatever we think you, the underlying dis-synergy will be, and we don't have to worry about anything else if we're trying to figure this out. Is that fair?

What are you, losing the offsetting benefit of not issuing the equity and whatever we think you the underlying dyssynergy will be and we don't have to worry about anything else. If we're trying to figure. This out is that fair that is very fair.

Donald Brown: That is very fair.

Okay. Thank you.

Greg Gordon: Okay, thank you.

Thank you your next responses from Steve Fleishman of Wolfe Research. Please go ahead.

Operator: Thank you. Your next response is from Steve Fleischmann of Wolfe Research. Please go ahead.

Yeah, Hi, I just wanted to.

Steve Fleischmann: Yeah, hi. I just wanted to clarify prior questions, because a few of the questions said that you stated similar 2021 versus 2020, but if I heard you correctly, I thought you said a minimum of at or above the prior 2020 guide for 2021. So, is that, just clarify, is that what you said? And then also... Yeah, is that correct?

Steve Fleishman: Yeah, hi. I just wanted to clarify prior questions, because a few of the questions said that you stated similar 2021 versus 2020, but if I heard you correctly, I thought you said a minimum of at or above the prior 2020 guide for 2021. So, is that, just clarify, is that what you said? And then also... Yeah, is that correct?

Clarify prior questions because a few other question said.

That you stated similar 21 versus 20, but if I heard you correctly I thought you said a minimum of at or above the prior 2020 Guy.

<unk> for 2021, so is that just clarify is that what you said and then also.

Yeah is that correct, Greg at a minimum.

Donald Brown: Correct. At a minimum, the 2020 guidance.

The 2020 guide.

At or above that at or above.

Steve Fleischmann: At or above that?

Steve Fleishman: At or above that?

Donald Brown: At or above.

Okay and would you say being added would be a very conservative assumption.

Steve Fleischmann: Okay. And would you say being at it would be a very conservative assumption?

Steve Fleishman: Okay. And would you say being at it would be a very conservative assumption?

Oh.

Donald Brown: Well, I don't want to, you know, start providing sensitivity around that. I'd say that we're comfortable at that range for 2021, which is why we've, we've given it. But at the same time, we think there's ability to be above that range and, and have growth off of that 2020 range.

I want to.

Start providing sensitivity around that.

Say that we're comfortable at that range for 2021, which is why we've given it but at the same time, we think there's ability.

To be above that range and had growth off of that.

2020 range Yeah, Okay, and then just in terms of Ah.

Steve Fleischmann: Yeah. Okay. And then just in terms of, you know, looking forward, so, you know, this transaction will close and you'll be kind of focused back to all the rest of the 93% of the company. And just, is there any kind of—if we kind of focus on that 93%, is there any kind of key things to watch this year outside of just really the big event I'm aware of is the IRP, the RFP outcomes. But is there any other kind of key things to watch in your states?

Steve Fleishman: Yeah. Okay. And then just in terms of, you know, looking forward, so, you know, this transaction will close and you'll be kind of focused back to all the rest of the 93% of the company. And just, is there any kind of—if we kind of focus on that 93%, is there any kind of key things to watch this year outside of just really the big event I'm aware of is the IRP, the RFP outcomes. But is there any other kind of key things to watch in your states?

In terms of Ah you know looking forward. So you know this this transaction will close.

And you will be kind of focus back to all the rest of the 93% of the company and just is there any kind of if we kind of focus on on that 93% is there any.

Kind of key things to watch this year outside of just really easy.

Probably the big the Big event I'm aware of is the IR Pete.

The RFP outcomes, but is there any other kind of key.

Things to watch understates.

Steve This is Joe I think you hit the big one the work we're doing with the generation replacement. The RFP that are well underway or is the key item that will drive or longer term guidance, particularly beyond 2021, and we do expect to see more clarity on that a quarter by quarter, probably as we step.

Donald Brown: Yeah, Steve, this is Joe. I think you hit the big one. The, the work we're doing with the generation replacement, the RFPs that are well underway, is, is the key item that'll drive our longer term guidance, particularly beyond 2021, and we do expect to see more clarity on that, quarter by quarter, probably as we step through this year. The other thing I'd say is the, the important point overarching and underpinning what Donald's been talking about is the resilience of the NiSource business plan.

Joe Hamrock: Yeah, Steve, this is Joe. I think you hit the big one. The, the work we're doing with the generation replacement, the RFPs that are well underway, is, is the key item that'll drive our longer term guidance, particularly beyond 2021, and we do expect to see more clarity on that, quarter by quarter, probably as we step through this year. The other thing I'd say is the, the important point overarching and underpinning what Donald's been talking about is the resilience of the NiSource business plan.

Through this year.

The other thing I'd say is.

An important point overarching and underpinning what Donald has been talking about is the resilience of the nice where its business plan. When you look at all the other states in the capital deployment, there and the strong regulatory mechanisms were in a we're in that sort of season of looking at the regulatory cycle rate cases, and that'd be the space the watches.

Donald Brown: When you look at all the other states and the capital deployment there and the strong regulatory mechanisms.... We're in that sort of season of looking at, the regulatory cycle rate cases, and that'd be the space to watch as we go through the remainder of 2020, just the regulatory actions that we would expect to see, that'll kind of set the stage for 2021 and beyond.

Joe Hamrock: When you look at all the other states and the capital deployment there and the strong regulatory mechanisms.... We're in that sort of season of looking at, the regulatory cycle rate cases, and that'd be the space to watch as we go through the remainder of 2020, just the regulatory actions that we would expect to see, that'll kind of set the stage for 2021 and beyond.

We go through the remainder of 2020, just the regulatory actions that we would expect to see.

That will kind of set the stage for 21 and beyond.

Great. Thank you.

Greg Gordon: Great. Thank you.

[laughter].

Your next responses from Charles Fishman of Morningstar. Please go ahead.

Operator: Your next response is from Charles Fishman of Morningstar. Please go ahead.

Hi, Good morning, if we could just moved a capex for a minute.

Charles Fishman: Hi. Good morning. If we could just move to CapEx for a minute. If I have the numbers right, you've actually moved up the CapEx range for 2020, $100 million. Is that correct? First of all, is that correct, that I got that right?

Yes, I have the numbers right, you've actually moved up the Capex range for 2020 100 million is that first of all that's correct.

Right.

Correct correct, Okay, and then you pulled 21 and 22 or at least you're going to wait a quarter and then you'll give us some our guidance, but I would think.

Donald Brown: That is correct. That is correct.

Charles Fishman: Okay, and then you pulled 2021 and 2022, or at least you're going to wait a quarter, and then you'll give us some guidance. But I would think with the kind of long-term programs you have with pipe replacements and things, and the frameworks you have in place, and actually, probably Massachusetts was your weakest, we should be confident that that $1.7 billion to 2 billion annually, that was the old guidance for 2021 and 2022, is, it's not going to be too different from that.

The kind of long term programs you have with Piper placements.

Things and the frameworks you'd have in place and actually probably Massachusetts was your weakest.

We should be confident that at 1.7 billion. The 2 billion annually that was the old guidance for 21 and 22.

Welcome to be two different from that.

I agree I agree as we work through our safety management program and start to look at investment across our system and how to prioritize those investments were confident that that overall capex guidance range is not going to change.

Donald Brown: I agree. I agree. You know, as we work through our safety management program and start to look at investments, across our system, and how to prioritize those investments, we're confident that that overall CapEx guidance range is, is not gonna change. Again, you know, we'll provide, more clear guidance and direct guidance, probably around the Q3 of this year. But certainly, we have resiliency and strength in our remaining states to continue this growth.

Again.

We'll provide.

More clear guidance indirect guidance, probably around the third quarter of this year.

But certainly we have resiliency and strength and our remain remaining states to continue this growth.

Okay, and then one sort of related investment the question.

Charles Fishman: Okay. And then one sort of related investment question. You know, a year ago, I think, or after the first round of RFPs in Indiana, the big surprise was the cheap solar, and yet, obviously, you're moving forward with wind. Is solar still on the horizon here, getting out five years? Are you still seeing that as a viable option in Indiana?

You know a year ago I think our after the first round of viral peas in Indiana. The Big surprise was the cheap solar and yet obviously, you're moving forward with wind is sourced alarming arising here getting out five years, you still see them out as a viable option in Indiana.

Yeah, Charles definitely we see a if you look at the current RFP and the team just did a a public meeting.

Donald Brown: Yeah, Charles, definitely. We see, if you look at the current RFP, and the team just did a public meeting, a virtual meeting on that and shared some of the indicative bid ranges around that, and you can see from that that solar is very much in the hunt for the future portfolio here, solar and storage, both.

Virtual meeting on that and shared some of the indicative bid ranges around that and you can see from that that solar is very much in the hunt for the future portfolio here solar and storage both.

And then related to that the plan to I don't have it in front of me, but the the coal closings that you accelerated that's still on track.

Charles Fishman: And then related to that, the plan, I don't have it in front of me, but the coal closings that you accelerated, that's still on track?

Yes, that's still on track and we had from the value our see the the final approval of if you want to call. It out of the directors report in the IR Pea that that supports the overall plan as well as the a the rate case outcome that accelerated depreciation of the existing coal fleet consistent with the early retirement, so we've seen.

Donald Brown: Yeah, that's still on track, and we had, from the IURC, the final approval of, if you want to call it that, of the Director's report in the IRP, that supports the overall plan, as well as the rate case outcome that accelerated depreciation of the existing coal fleet, consistent with the early retirement. So we've seen all of the right regulatory support for the plan that we've put forward.

I mean, all of the right regulatory support for the plan that we've put forward.

Got it that's all I have thank you thanks Charles.

Charles Fishman: Got it. That's all I have. Thank you.

Donald Brown: Thanks, Charles.

Thank you if you have a question at this time, please press star one on your telephone keypad.

Operator: Thank you. If you have a question at this time, please press star one on your telephone keypad. Your next response is from Andrew Levi of ExodusPoint. Please go ahead.

Your next responses from Andrew Levi of Exodus point. Please go ahead.

Hey, guys. How are you good morning, Andy good Andy.

Andrew Levi: Hey, guys. How are you?

Donald Brown: Good morning, Andy. Good.

Greg Gordon: Hey, Andy.

Joe Hamrock: Hey, Andy.

Andrew Levi: Obviously, most of the questions have been asked and answered well. Just on the categories of things that you can mitigate to help 2021 and beyond, could you just give us, like, at a very high level, what categories you're talking about?

Obviously most of the questions have been asked and answered well.

Just on the categories of.

Things that you can mitigate to help.

21 and beyond.

Could you just give us like as a very high level what categories you're talking about.

Have you think about it and it's really are shared costs across our corporate services and customer services.

Donald Brown: Yeah, if you think about it, Andy, it's really our shared costs across our, our corporate services and, and customer services, that we need to develop a plan to help offset, those dyssynergies that we've got. You know, operating across seven states, both in the gas side, we've got some shared gas services, as well as just our, I'd say, our typical accounting, finance, IT, corporate services, that, we allocate the costs across to our seven operating companies.

Joe Hamrock: Yeah, if you think about it, Andy, it's really our shared costs across our, our corporate services and, and customer services, that we need to develop a plan to help offset, those dyssynergies that we've got. You know, operating across seven states, both in the gas side, we've got some shared gas services, as well as just our, I'd say, our typical accounting, finance, IT, corporate services, that, we allocate the costs across to our seven operating companies.

That we need to develop a plan to help offset.

Those dissynergies that we've got.

Operating across seven states both in the gas side, we've got some shared gas services as well as just are at their typical.

Accounting finance I T corporate services.

That.

Okay the costs across to our separate operating companies.

So it so I guess, it's more or whatever related and I guess reallocating a portion of that.

Andrew Levi: So I guess it's more O&M related and, I guess, reallocating a portion of that to the other operating companies and getting it to go flow through your trackers, I guess, for no better way to put it, and then at the same time, try to cut costs.

To the other operating companies and getting it to go to flow through your trackers, I guess for no better way to put it.

Yes, and time to try to cut costs.

I think thats all of the above both from a recovery from other states as well as continued to find opportunities to be.

Donald Brown: I think that's all of the above, both from a recovery from other states, as well as continuing to find opportunities to be lower cost and more efficient.

Joe Hamrock: I think that's all of the above, both from a recovery from other states, as well as continuing to find opportunities to be lower cost and more efficient.

Lower cost and more efficient.

At the same time, I guess be able to allocate.

Andrew Levi: And then at the same time, I guess, be able to allocate, the CapEx that you had at Bay State, or was Bay State years ago, that's how old I am, into your other businesses, which you kind of have really begun to do it anyway-

The Capex that you had at the state.

Was based eight years ago told by Oh.

And to your other businesses, which you kind of have really begun to do it anyway. That's right you released today, that's right yeah, we'll be looking at that as well.

Donald Brown: That's right.

Andrew Levi: From what you released today.

Kevin Laflamme: From what you released today.

Donald Brown: That's right. Yeah, we'll be looking at that as well as at the opportunities to do that and have that capital go into those other states, into their tracker programs.

Opportunities to do that and have that capital go into those other states into their tracker programs.

Got it okay I understand it thank you very much.

Andrew Levi: Got it. Okay, I understand it. Thank you very much.

Kevin Laflamme: Got it. Okay, I understand it. Thank you very much.

Thank you I'm showing no further questions at this time I would like to turn the conference back over to Joe had make our CEO.

Operator: Thank you. I'm showing no further questions at this time. I would like to turn the conference back over to Joe Hamrock, our CEO.

Thank you did tomorrow. Thank you all for joining us in closing I'd like to reiterate that our deep focus.

Donald Brown: Thank you, operator, and thank you all for joining us. In closing, I'd like to reiterate that our deep focus on providing value for our customers and our shareholders through comprehensive investments and programs that drive safety and risk mitigation remains at the center of our focus, and we appreciate your support and ongoing interest in NiSource, and we look forward to engaging with you in the weeks and months ahead. Have a safe day. Thank you.

Joe Hamrock: Thank you, operator, and thank you all for joining us. In closing, I'd like to reiterate that our deep focus on providing value for our customers and our shareholders through comprehensive investments and programs that drive safety and risk mitigation remains at the center of our focus, and we appreciate your support and ongoing interest in NiSource, and we look forward to engaging with you in the weeks and months ahead. Have a safe day. Thank you.

Providing value for our customers in our shareholders through comprehensive investments and programs that drive safety and risk mitigation remains at the center of our focus and we appreciate your support and ongoing interest in nice worsen we look forward to engaging with you in the weeks and months ahead have a safe day. Thank you.

Ladies and gentlemen. This concludes today's conference. Thank you for your participation have a wonderful day you may now disconnect.

Operator: Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.

[music].

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