Q1 2025 NiSource Inc Earnings Call
Music
Speaker Change: Good morning, ladies and gentlemen. Thank you for standing by and welcome to the NiSource first quarter, 2025 earnings conference call. Please note that all lines have been placed on you to prevent any background noise. After today's presentation, there will be an opportunity to ask questions.
Speaker Change: To ask questions, you may press a star, follow by the number one on your telephone keypad. If you would like to raise our question, please press star, follow by the number one again. I will now turn the conference over to Dave Brown Communications, please go ahead.
Speaker Change: Good morning, and welcome to the NiSource first quarter 2025 investor call.
Speaker Change: Joining me today are President and Chief Executive Officer Lloyd Yates [inaudible]
Shawn Anderson: 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 NiSource Utilities, Melody Birmingham.
Shawn Anderson: Today we will review NiSource's financial performance for the first quarter and provide an update on operations and growth drivers
We'll open the call to your questions following prepared remarks.
Shawn Anderson: 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
Shawn Anderson: These statements are subject to risks and uncertainties that could cause actual results to different materially from those expressed in the statements.
Shawn Anderson: Information concerning such risks and uncertainties is included in the risk factors and MDNA sections of our periodic SEC filings.
Shawn Anderson: Additionally, some statements made on this call relate to non-GAAP earnings measures.
Shawn Anderson: Please refer to the supplemental slides, segment information, and full financial schedules for information on the most directly comparable gap measure and a reconciliation of these measures.
Now I'll turn the call over to Lloyd. Lloyd.
Thank you. Thank you. Thank you.
Thank you, Dave. Good morning, everyone.
I'll begin on slide three
NiSource Strategy is simple.
Shawn Anderson: We are committed to delivering safe, reliable, and the formal energy to our customers.
Shawn Anderson: We execute this strategy through efficient deployment of capital, safe asset operations and constructive regulatory mechanisms.
Shawn Anderson: These are converted into a reasonable return on an invested capital and handsen to our balance position and offer a dependable and growing dividend.
Shawn Anderson: These are the foundation of the NiSource business plan which continues to offer compelling value to stakeholders.
Shawn Anderson: driven by regulated utility operations across premium jurisdictions, with diversification across geography and your type in discipline capital allocation.
Shawn Anderson: Advancing the slide four, we will step through our key priorities.
Speaker Change: Collaborative regulatory and stakeholder relationships and operating with excellence paves the way for NiSource to execute on its financial commitments.
Speaker Change: NiSource continues to work alongside stakeholders through regulatory processes to ensure resources are available for critical investments in safety, reliability, and economic development.
Speaker Change: One example was a recent Ohio Legislative Proposal to modernize natural gas racemaking.
Speaker Change: It passed. Senate Bill 103 was shortened the time between Capitol Outlay and Recovery.
Speaker Change: This minimizes regulatory lag and maximizes the value of the investments for our communities.
Speaker Change: It also creates a special contract approval process to facilitate attracting new large load customers.
Speaker Change: This promotes economic development, greater job creation to enhance local tax space, and would make Ohio more competitive with its surrounding states.
Speaker Change: Our dedication to operational excellence continues to advance as we leverage AI in our operations to revolutionize our company and how we deliver service to our communities while driving greater efficiency and enhance the reliability of our business for our customers.
Speaker Change: Today, we reported first quarter, 2025, adjusted EPS of 98 cents, which is 15% above the same quarter of 85 cents reported one year ago.
Speaker Change: We are reaffirming 2025 adjusted EPS guidance of $1.85 to $1.89, as well as reaffirming annual 2025 to 2029 guidance.
Speaker Change: for adjusted EPS of 6 to 8% rate, rate pace of 8 to 10% and targeting 14 to 16% FFO to debt in all years of the plan.
Speaker Change: Our plan remains resilient and executable in the current macroeconomic environment.
Speaker Change: The stability of our regulatory foundation and intentional capital deployment is fundamental to the NiSource business plan.
Speaker Change: Additionally, we are continuing commercial negotiations to support data center build-out in Northern Indiana.
Speaker Change: While these negotiations continue, we have also advanced our pending application to the IURC to establish Nipsco
Our testimony in this process supports four key goals.
First, it protects existing cut system customers by separating calls [inaudible]
Speaker Change: Janko Strategy Shields, Existing Customers from the Financial Impact of New Capacity Investments.
Speaker Change: Second, it allows us to construct the generation resources necessary to serve this customer
Thank you.
Third, it maintains this goes financial integrity.
Speaker Change: As with all investments, we give thoughtful consideration to the risk profile of new investments and how those drive value and ensure a long-term cash flow quality for our business.
Speaker Change: Last, we're preserving flexibility in our business model by creating another tool within our portfolio to meet the evolving needs of our customers.
Speaker Change: The defamation file and request the commission to decline jurisdiction on a limited scope of activity related to GenCo to support a data center development strategy.
Speaker Change: We are an active settlement negotiation and while we cannot provide an update on this call, if there's any movement on this topic,
Speaker Change: This is an exciting opportunity to advance unprecedented development in Indiana which provides significant resources to communities and drive meaningful value to all stakeholders.
Speaker Change: We're very pleased with the progress we've made and continue to work with potential customers to make this development strategy a reality.
Speaker Change: Moving on to slide five, our commitment to deliver operational excellence is evident from key initiatives to standardize work and enhance risk management.
Thank you.
Speaker Change: Last July , we launched our Work Management and Intelligence program at Columbia Gasable Highell.
Speaker Change: Since then, productivity gains exceeded 40,000 hours across the service territory.
Speaker Change: We have expanded our work management intelligence programs to Pennsylvania, Maryland, Kentucky, and Virginia.
Speaker Change: In these regions, we have observed consistent productivity gains hours and sixteen and a half percent.
Speaker Change: We are leveraging AI to revolutionize our company and its operations [inaudible]
Speaker Change: Today, more than 17 operation centers use AI-generated optimized schedules, resolving in over 60,000 hours of productivity improvement compared to the same period in 2023.
Speaker Change: and we have introduced real-time and political dashboards in able in tracking and performance evaluation at every level from field operations to executive leadership.
Speaker Change: Continuous improvement is at the heart of the Project Apollo strategy, which targets sustainable cost savings by reducing inefficiency across our operations.
Speaker Change: In addition to leveraging AI, we further improve service and reduce waste through other key projects launched in 2025 .
Speaker Change: Meanwhile, 75% of initiatives launched in 2024 continue to provide efficiency in 2025.
Speaker Change: Moving to slide six, we will highlight progress made on our regulatory agenda.
Speaker Change: We are proactive on the regulatory front through general race case and rider filings.
Speaker Change: A Maryland final order approved in April continues to take instructive paths approval for critical safety, compliance, and reliability capital additions in the state, including nearly $11 million in investments in 2024.
Speaker Change: The Virginia Rakees remains on track with an order expected in the second quarter.
Speaker Change: Our Pennsylvania team filed a new rate case to recover over $400 million of anticipated investments necessary to deliver safe and reliable service to our customers.
Speaker Change: Pennsylvania has a track record of constructive regulation and our team has achieved a settlement with stakeholders in 11 of the last 12 race cases.
The final order is anticipated in the fourth quarter.
Thank you.
Speaker Change: The Nitt School Electric break case has $2.5 billion of incremental investments for our customers and communities in Northern Indiana.
Speaker Change: In February , we reached a settlement agreement making our seventh settlement in the last ten years across both the electric and gas businesses.
We expect a final order in third quarter.
Speaker Change: Our teams are continuously engaged with key stakeholders to deliver stable and predictable outcomes for our customers while ensuring safe and reliable service in our communities.
I'll now turn things over to Shawn.
Shawn Anderson: Thank you, Lloyd. I'd like to start on slide seven by highlighting the progress made in our Capital Expenditures program over the last quarter. In January , Dunn's Bridge 2 launched commercial operations, making the Dunn's Bridge complex one of the largest SOAR generation facilities in the country.
Shawn Anderson: Fairbanks and Gibson construction remains on track within service expected this year.
Shawn Anderson: All panels were purchased in advance and are on-site reducing any inflationary risk associated with tariffs on renewable assets in our planning horizon.
Shawn Anderson: Across Nipsco, we continue to advance our energy transition strategy. To date, we've installed renewable nameplate capacity of 2,100 megawatts to support base load generation for the region.
Shawn Anderson: The majority of these assets were negotiated at prices, now approximately 50% lower than in today's renewable marketplace.
Shawn Anderson: This locks in the cost of our capital investments and positions our customers to access a low-cost energy option for the life of these assets.
Shawn Anderson: Continuing onto capital investments on slide 8, there is no change to our capital guidance for our current plan horizon.
Shawn Anderson: The outlook projects over 19 billion dollars of investment over the next five years with over two billion dollars of identified upside opportunities for safety and reliability of our infrastructure and customer service offerings.
Shawn Anderson: Our capital plan is not susceptible to concentration risk or extended construction timelines.
Investments are diversified, across electric generation projects [inaudible]
Shawn Anderson: Gas and Electric Customer Growth, and Transmission and Distribution Modernization and System Hardening.
Shawn Anderson: We continue to assess and actively develop our base plan to include only those investments that meet our standards.
Shawn Anderson: We continue to assess the incremental investment opportunities shared on slide 9, which include data center generation, electric transmission and gas system investments to support incremental demand.
Shawn Anderson: including distribution, transmission, and other infrastructure to support growing communities, the ensuring of manufacturing and new technology across the region.
Shawn Anderson: Finally, FERC regulated electric transmission projects in MISO's multi-year long-range transmission planning initiative, our opportunities to further develop across and beyond our planning
Shawn Anderson: These investments are unquantified and sit outside the base and upside plans which are guidance supports today.
Shawn Anderson: Additional development of these strategies is required to meet our threshold to include in either the base or upside capital investment plans.
Shawn Anderson: However, we are strongly positioned to advance these strategies, and once we take key milestones, new projects will flow through our plans [inaudible]
Shawn Anderson: NiSource is able to be opportunistic in capital allocation decisions due to the strengthened financial profile of the company and enhance balance sheet positioning.
Shawn Anderson: Now, let's cover the first quarter financial results on slides 10 and 11 [inaudible]
as Lloyd highlighted.
Shawn Anderson: Adjusted EPS was 98 cents per share, a 13 cents per share increased versus the 85 cents reported
Shawn Anderson: in the same period last year, and represents a 15% year-over-year growth.
Shawn Anderson: Primarily driven by regulated revenues, recovering capital investments from 2024's regulatory activity.
Shawn Anderson: These results strongly position NiSource to achieve our full-year financial commitments.
Shawn Anderson: We have achieved over 52% of our projected midpoint earnings, which is an increase of 8% compared to the same period last year.
Shawn Anderson: All planned regulated revenue increases necessary to achieve our 2025 guidance have been put into rates or pending approval.
Shawn Anderson: We're ahead of schedule on our financing plan and have secured at least half of our forecasted 2025 equity issuances and issued 750 million of long-term debt.
Speaker Change: Lloyd mentioned the resiliency of our business plans relative to the changing tariff landscape. I'll offer a few additional thoughts on this.
Speaker Change: Productivity enhancements like AI efficiency and Project Apollo reduce time and reliance on materials subject to terrorist implications.
Speaker Change: Approximately 85% of our O&M and capital costs are labor and not subject to tariffs.
Speaker Change: In addition, approximately 97% of our procurement is through domestic tier 1 suppliers and our teams have already secured a significant portion of critical equipment to support our operations and capital plans for the 5-year horizon.
Speaker Change: Finally, we operated in a regulated framework that reduces the impact of rising product costs on our business.
Speaker Change: is important to note that tariffs have the potential to drive on-shoring and manufacturing expansion in the US.
Speaker Change: We believe our service territory is attractive for location of facilities due to the constructive business climate, the proximity to and availability of low-cost energy for manufacturing services, and a skilled labor force across our region.
Speaker Change: These fundamentals underpin a detractive opportunity for economic development, providing investment, and increased margin into our base plan.
Speaker Change: Moving to slide 12, we are reaffirming our long-term financial commitments [inaudible]
Speaker Change: We are confident we will achieve 2025 guidance and sustain long-term growth throughout the plan horizon.
Greater Transparency in Capitol Returns [inaudible] David
Speaker Change: supported by constructive regulatory frameworks and effective recovery mechanisms provides clearer insight into the financial projections for 2026 and beyond.
Speaker Change: Our internal forecasts reflect the use of established capital trackers across nearly all jurisdictions and are built on realistic assumptions for load growth, financing costs, regulatory outcomes, commodity prices, and other external factors.
Speaker Change: The forecasts also include a highly visible inventory of required capital investments necessary to ensure safe and reliable energy delivery for our customers.
Speaker Change: Beyond that, we maintained upside and incremental investment opportunities not captured in our existing financial commitments, including the potential for data center development.
Speaker Change: We have built flexibility into our plans, an advance of potential headwinds and de-risk execution through a balanced and diversified business plan across six constructive operating companies.
Speaker Change: We've significantly strengthened our balance sheet and have enhanced our visibility into how the investments we make convert into earnings through reduced regulatory lag and efficient financing plans.
Slide 13 highlights those five year funding plans. [inaudible]
Speaker Change: A balanced mix of cash from operations, new long-term debt, and $200 to $300 million of equity each year, enables us to maintain our capital structure and strong balance you position [inaudible]
Speaker Change: In addition to traditional sources of funding, the potential use of hybrid securities and senior unsecured debt, enhanced flexibility and diversification, enabling us to grow without sacrificing credit quality.
Thank you. Thank you. Thank you.
Speaker Change: And finally, on Slide 14, you can see we are on track to meet our 2025 Financial Commitments.
and Bill's Stability into 2026.
Speaker Change: We are confident in our ability to achieve near-term and long-term guidance given our strong business fundamentals.
Speaker Change: NiSource offers investors a diversified and fully regulated utility with the opportunity to invest in programmatic gas infrastructure and long-term energy transition for a fully integrated electric business.
Speaker Change: This emerging opportunity to support unprecedented energy development and power demand, resulting from robust economic development, ensuring as well as new data center development truly differentiates the value proposition relative to many alternatives in the marketplace today.
Speaker Change: I'd now like to turn the call over to the operator for Q&A. [inaudible]
Speaker Change: Thank you. At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone t-pad. If you would like to read through your question, please press star one again.
Speaker Change: Our first question comes from the line of Shah, Marisa from Guggenheim Partners, please go ahead.
Morning, sir. You there? Yes, sir.
Thank you.
There you go. Gotta love the mute function. By Lloyd Dumoulin.
Speaker Change: Good morning, dojo, morning, morning. Just on the Nipsco Janko filing, I mean obviously understanding it's still ongoing. Do you need to receive?
Speaker Change: A outcome in the proceeding before you announce a signed agreement or could it be announced prior? I guess in other words, do you have a customer you could announce with the approval of the new structure? [inaudible]
Michael, you want to handle that one?
completed.
Speaker Change: The key of the GenCo is that it provides the flexibility that Lloyd mentioned, really providing the significant protection of the existing customer base.
Speaker Change: and allowing for the speed and flexibility that we know the large load customer needs.
Speaker Change: while enabling the protections that would facilitate a special contract execution.
Speaker Change: Got to just just remind us on the PPAs obviously the structure is still you're still working for the structure but understood if the pricing of the PPAs are above what you're you're afforded from a regulatory perspective just remind us how we think about that.
Speaker Change: So one of the nice components of the Genco structure is it really allows the flexibility to respond to multiple stakeholder needs.
Speaker Change: and those stakeholder needs, including if there are specific resources that would enable the speed to market, the ramp that would be needed, and or the resource mix that would be needed in order to meet their goals.
Speaker Change: So, the point of that is that we would do that and then Nipsco will still be the resource adequacy provider to the market.
Speaker Change: The IRP and the flow through of the resource adequacy would go through Nipsco, and at which time we would file a PPA between Genco
Speaker Change: and Nipsco, which would be approved by the Commission and follow through. So in other words, it's not a matter of if the PPA is pricing relative to our existing system, it's relative to the special contract which we involve for execution.
Speaker Change: Got it. Okay, that's helpful. And then just lastly, the 2.2 billion that's currently outside of the base plan.
Speaker Change: Should you get assigned agreement, do you see an opportunity to accelerate the 2.2 seconds? In other words, is there other large load customers embedded in that assumption or would that be incremental to the 2.2? Thanks.
Speaker Change: So, the 2.2 upside does not include any data center development or economic development capital, the 2.2 upside.
Speaker Change: or other projects in the regulated utility that could be potential upslide.
Speaker Change: AMI, Pipeline Integrity, and Transmission. There's no data center capital there. Any data center capital would be incremental to the plan.
Speaker Change: Perfect. Thank you guys. Fantastic execution. I appreciate it. See you soon. All right. Thank you.
Speaker Change: Our next question comes from the line of Jameson Ward from Jefferies. Please go ahead.
Speaker Change: Hey, guys, it's actually Julien here. Thank you guys very much. Appreciate it. Maybe to perform on a couple good morning, guys, pleasure. If I could perform on a couple nuances here, there's been a lot of talk in the state around co-retirement and federally for that matter. I'd love to hear how you guys are thinking about that, juxtaposed against your plan, and specifically how you think about potentially extending the lives of your assets and what extent that that would or could impact your catback.
Yeah, so.
Speaker Change: So, Julien, we are currently in the middle of assessing the impact of those executive orders, you know, today on our plan, you know, we are still on track to retire Schaeffer at the end of 2025 in Michigan City at the end of 2028.
Speaker Change: I understand that and take a look at the executive orders. We're a session. What would it would take to spin those?
Speaker Change: and we'll work with various federal and state regulators to do what's best for our customers and various stakeholders and other stakeholders. But we're now an important point is we're in the middle of a deep assessment on those.
Speaker Change: Got it. Okay, so I'm not ready to say yet about what that net impact would be. And then maybe just if
Speaker Change: Excellent, thank you, and then keeping it in the same realm here legislatively, I understand the state recently to have some updated CPCN procedures and procedural timeline requirements at that [inaudible]
Speaker Change: Can you speak to how that might provide a further avenue for your data center filings, especially the extent to which that your novel declination effort may or may not go through, does it provide you a further expedited effort to get a timely outcome? If you will, it seems like a third way. Bye.
Speaker Change: I think you're talking about Senate Bill 1-007. So the deck when they hit value is separate from 1-007.
Speaker Change: 1047 just gives you another path to a large load customer. So we're pursuing the declination following. Remember we said in the past, that's only one of the mechanisms we have to deal with the discounted part of these load opportunities.
Speaker Change: 10-010-07, just give us a second. We're even a third pass.
Right, indeed, and just-
Speaker Change: Does that make it more likely? I mean, when you think about the pathways here and what you're seeing? In fact, let me just ask it directly here. I mean, with respect to Genco
Speaker Change: Is your expectation here that you would, you know, given that you've now seen very clearly where party stands that have a pathway to potentially settle this out or or at what point do you kind of elect to pursue this expedited CTC and process, especially given how timely some of this generation may need to be moving forward? [inaudible]
Speaker Change: So, let me say a couple things. One is we're in the midst of settlement discussions, so I can't talk in detail about those because they have not been concluded.
Speaker Change: I think in terms of following this Chancel, we think it's a really good path in terms of dealing with counter parties. It meets to four pillars I talked about in my preparation remarks, good for customers, good for our financial integrity, you know, gives us speed and flexibility we need.
Speaker Change: and we're optimistic about completing that process, but we're also looking at Senate Bill 1007 of another path, and we'll evaluate that if Genco doesn't pan out for us.
Speaker Change: Melody, why not comment on that? Sure. Julien, good morning and thanks for your question. So, to Lloyd's point, Council, 1-0-0-7, it really didn't change any currently available options for utilities to serve large-loop customers.
Speaker Change: and also to Lloyd's point, what it did do was add those additional options. So expediting the generation resource planning process as well as it provides for 150 day review of an application for utility to serve the load.
Speaker Change: So our strategy remains the same, so it really doesn't change any of the options that are available for us to serve large loan customers.
Thanks, one guy. Thank you so much. Appreciate it.
Speaker Change: Thank you. Our next question comes from the line of Richard Sunderland from JP Moreen. Please go ahead.
Hi, good morning. Thank you for the time today.
Ryan Richett
I appreciate the discussions are still ongoing but...
Speaker Change: Just offer any thoughts on sort of the pace and engagement with your large load, prospective large load counter parties.
Speaker Change: You may be relative to 4Q or last fall, it has certainly been a lot of attention to your broadly on sort of hyper-scaler, CapEx reaffirmations, what have you, are you seeing that falling to under your end and talks? [inaudible]
Speaker Change: Yeah, let me address that. If you go back to the end of 2024 and then in February 2025, you know what I said was that no.
Speaker Change: Hyperscaler, large little growth, would be a 2025 activity. We'd really be focused on 2025. What I'll say to you is we're making excellent progress.
Speaker Change: So what's really important to understand is these are complex and complicated transactions and they may require a lot of time and I'll say management attention.
Bye.
Speaker Change: You know, we want to make sure we get this right, you know, I'll go back to my four pillars and getting it right. It's good for customers . . .
Speaker Change: Good for financial integrity, meets the speed and flexibility of our counterparts and protects our business model. And I say we're walking down that path. We're excited about this opportunity.
Speaker Change: We think it's really good for NiSource and good for all of our stakeholders. And as soon as we have more information or more news, we will you know communicate that out to the streets as fast as possible. I think if you take a look at [inaudible]
Speaker Change: Network of People who are interested in that, if you look at what we talked about in terms of Indianity and a great place to invest, I will tell you that we have a lot of opportunity, but we want to make sure we get this right.
Speaker Change: Great, appreciate the color there, and then circling back on the GenCode discussion.
Speaker Change: for this type of activity. So would you pursue something separate versus what NISCO is authorized? Is that something we could see in the settlement? Or do you need a separate contract or rate case to decide? Any thought there would be helpful?
Michael.
Speaker Change: So we haven't discussed or disclosed anything associated with the financing structure with GenCo. We are continuing working through and focusing on completing the special contracts with customers and working through that development of those activities.
Understood, thank you for the time.
Thank you.
Speaker Change: Thank you. Our next question comes from the line of Nick Campanella from Barclays. Please go ahead.
David
Hey everyone, thanks for taking the questions.
Speaker Change: Good morning, Nick. So I just, hey, good morning. I just wanted to follow up quickly on the settlement discussions. Just do anticipate hearings to still kick off at the end of this week here. If the settlement is coming.
David
about
Speaker Change: Again, as has I mentioned, we are in a missus settlement discussion. When we have detail on those, we'll let you know as soon as possible but we can't comment on specific discussions or timing with respect to those right now.
Okay, no problem, and... [inaudible]
And I just wanted to confirm a-
Speaker Change: You know, as you think about getting to a commercial agreement with any customer, that is not explicitly tied to the timeline of the proceedings or the potential settlement.
That is correct [inaudible]
Speaker Change: Okay, great. And then, you know, just on the assessment on the call, just going back to Julien's question, you have this NISCO IRP out there calling for long-term resource solutions, that's...
Speaker Change: You know, I would say that's probably likely well beyond the current time plan for how long the coal could stay on line for. So just, you know, do you see that truly impacting your long term for experiments strategy at this point? Just to supplement the generation needs and the load growth that was detailed in its co-IRP? [inaudible]
Michael?
Speaker Change: So when we look at the IRP and we look at the extended plan with the IRP, we will need additional resources for the IRP.
Yeah, despite all alternatives and evaluating the executive orders
Speaker Change: As you look at my says direct loss of load rules and the changes associated with resources and the accreditation of resources, we know we're going to need additional capacity on the system in order to facilitate the reliability and resiliency of the system.
Thank you very much.
Speaker Change: Thank you. Our next question comes from the line of Bill at the celly from UBS. Please go ahead.
Christopher Turnure,
Hi, good morning. Just another question on the GenCo.
I guess...
Thank you.
Speaker Change: It's clear that you can make the special contract filing concurrently or separately from resolution of the declination filing, but you're given some of the complexities and, you know
Speaker Change: So we feel the declamation filing provides a very strong capability to meet the core pillars that we've discussed previously.
Speaker Change: Obviously we look forward to the declination filing moving forward, but when we think about protecting the existing customer base, providing the resource alternatives. Thank you very much.
Large-load customer needs and protect our existing customer base.
Speaker Change: So when we look at the alternatives with 1-0-0-7, or we look at other alternatives that are available to us, we have multiple paths by which to get to the solution. However, the declination filing is we feel like is the best alternative by which to meet all stakeholders needs. [inaudible]
Okay, all right, great. And then, um...
Speaker Change: Can you just speak to some of the federal level, some of the policy changes that have materialized here around tariffs and then maybe speak to exposure around any potential changes to the IRA as it relates to, you know, renewable tax credits and transfer ability? Okay.
Shawn, you want to take that one?
Thank you.
Speaker Change: Sure, thanks. On tax transfer ability in IRA, PTC and ITC, most of our renewable projects plan to be online by the end of this year. It leaves a limited window for direct PTC ITC challenges that are not retroactive. Really only templated is the only base plan asset that's beyond the horizon here in 2027. So the plan assumes an ongoing PTC transfer ability.
Speaker Change: 2026, 7 and 8 of about 40 to 60 basis points. So, you know, we're pro tax credits have benefiting customers and helping existing customers today realize those tax credits. That's helpful to keep energy costs down for customers today. But as we think about the financing plan implications and what the IRA brings to the existing plan itself,
Speaker Change: We believe our existing plan, the strengthening we've done in the balance sheet, the cushion of our downgrade threshold, I wouldn't suspect a change to our financing plan as a result of the potential appeal of tax transfer ability. And I think we noted this in my prepared remarks on the implications associated with tariffs.
Speaker Change: We're in a really strong position, both from a standpoint of labor activities, a high degree of domestic content, and our supply chains, continuous improvements such as Project Apollo, we think that those can help us [inaudible]
Speaker Change: Face the potential changes associated with tariffs. A fully regulated compact itself helps us get line of sight to where things could reset themselves. We built the track record of being thoughtful around long-term energy costs for our customers and evaluating those overall impacts.
Speaker Change: Delivering flat O&M, really for an expedited period of time amidst a range of economic conditions, we'll be able to right size our plans to ensure that we can path this forward and face whatever comes our way from tariffs without any changes to our existing financial commitments. Thank you very much.
Thank you.
Okay, great. All right. Thank you very much Thank you very much.
Speaker Change: Thank you. Our next question comes from the line of Travis Miller from Morningstar, please go ahead.
Good morning. Thank you
Morning, Travis.
Speaker Change: One more on Genco, if you don't mind. As you're talking through the settlement and official discussions or just outside of the official discussion, are there any parties that are strictly opposed?
Speaker Change: to this, or is it just a matter of levels in the details, getting all those aligned?
Speaker Change: Again, Travis, we can't comment since we're in the middle of active settlement discussions on the Janko, we can't comment on the position of any specific party right now.
And I'm going to tell you a story.
Okay, no, that's fair Um.
Speaker Change: and other topic transmission. I think it was Shawn mentioned milestones in terms of other projects. I wonder if you could characterize what some of those milestones are, what you're waiting to see or hear or transpire before you add some of those transmission projects. Thanks.
Speaker Change: Yes, everything Travis. So when we think about my so long range transmission projects both the executeability from an operational standpoint the construction and making sure that we understand what the costs are going to be to install those assets and operationalize those assets and then juxtapose that with the regulatory compact itself, making sure that we understand the mechanisms that will pick up those costs.
Speaker Change: Once we reach that degree of certainty around those two elements, you'll see those flow into our base plan. As a reminder, we do have an nominal amount of mysochronch-1 projects in our base plan, as well as some in our upside plan which Lloyd highlighted earlier. Thank you very much.
We do not have my so long range.
Lloyd Yates: Transmission Tranche 2 projects in either the base plan or really in the upside plan as it mostly persists outside or existing financial plan horizon, but we do expect the Tranche 2 projects to start to come into fruition towards the latter part of this plan horizon and we think that could be additive to the upside plan once we've gone through the work to commercialize and develop our plans to operationalize those assets. [inaudible]
Christopher Turnure,
Lloyd Yates: Okay, great. When you may plan your eyes on dog in 2029, and beyond our 2030. Yep, that's good. Yep. Okay, very good. Appreciate it. That's all I have.
Speaker Change: Thank you. Our next question comes from the line of Wall-Free Search. Please go ahead.
Speaker Change: Yeah, hi, it's Steve Fleishman's day. Just, I'm going to avoid asking about Indiana, but in your, in your kind of bullet about data centers, you said to support data center strategies across Indiana, Ohio and Virginia.
Speaker Change: Could you, I might have missed some of this but just could you talk a little more on what you're doing in Ohio, in Virginia? Related there an opportunity for you. [inaudible]
Speaker Change: Well, authors to Michael or Melody, you guys, which one?
Go ahead, Melody.
Melody: Hi, Steve. Thanks for asking the question. So, we do talk a lot about Indiana being right for data centers Northwest Indiana, but we're seeing activity and Ohio as well. And so our teams are working with the local and state entities to look at what these data center needs are
Melody: and how and if we can support them. And so I'll just say that we're staying engaged with the local and state economic development entities to look in how we can serve.
Melody: Those customers, those potential customers. To Melody's point, most of the investment for us is natural gas infrastructure pipeline. So, if you think about Virginia and Ohio, as the developers come, they're going to eat energy, so they'll help us to invest capital to put in gas pipeline to support data center activity. [inaudible]
Understood.
Speaker Change: A separate topic, just the the myso auction outcome that we just had, I know it's for kind of more of a near term year, but just any kind of broader thoughts from that because obviously a big uptick. Thank you very much.
In pricing, Michael Howard impacts your plans
Speaker Change: Yes, we've seen the misal auction and we are evaluating its results and we look through the IRP consistently to make sure that we have the...
Speaker Change: Resource Adequacy we need, but when we look at my selection right now, we're well positioned within the current plans we filed from the IRP.
Okay. Thank you.
Christopher Turnure, Steven Fleishman, David
Speaker Change: Thank you. Our next question comes from the line of the company, Leidenberg. Please go ahead.
Speaker Change: Thank you very much. I guess a procedural question. If you wanted to delay the start of hearings on Friday, you would have to file a notification either today or tomorrow. Is that correct?
That is correct
Speaker Change: Great. And then the other question I have is, beyond sort of what you're seeing with data sensors, are you seeing any activity with respect to ensuring or industrial announcing sort of major expansions in Ohio?
I mean in Indiana.
Speaker Change: Yeah, I think so. Again, we're seeing recently for battery manufacturers.
Speaker Change: We're seeing some expansion. One of the things we're seeing is the answer is yes. Like Indiana's, I'd say very well positioned for Orange Shore with one of the opportunities being a battery manufacturer. But in terms of economic development, our team up there is really busy. [inaudible]
with a manufacturing above and beyond data centers.
Speaker Change: Shawn, you're going to weigh in on that. Yeah, just a couple more. I mean, the cold storage sector continues to grow in Indiana. We've seen a couple of food organizations come in with food manufacturing and cold storage providing jobs as well as $70 million of capital investment into the region, $70 million for their facilities nine hours, but cold storage also in Crown Point also. So.
Speaker Change: continuing the development in that theme. So NiSource continues to see a general increase on manufacturing projects across the year. Several international companies are exploring opportunities to establish in Indiana. And I'm going to...
Speaker Change: Plastics Manufacturer, a biopharmaceutical firm, a recycling operation, each poised to deliver new job opportunities in Indiana and bring significant investments in the state and as well as EV battery manufacturers, which we've seen come up a couple of times. So Indiana continues to be robust, but we're also seeing it in Virginia. We're also seeing it in Ohio, you highlighted that one. So we're seeing it across our service territory. All of this really precedes any of the changes from the Terra France landscape, right? Most of this...
Speaker Change: was already in pipelines working and in our state to do a great job of trying to attract global companies to come into our region .
Great. Thank you very much.
Next on cutaway
What.
Thank you. Hello. Our next question is from the line of the
Speaker Change: Hello, our next question comes from the line of broads, Tyler, from Bank of America, please go ahead
Boy, Lloyd, money shot. How are you? Hey, Ross.
Speaker Change: So, I'll be brave and ask another one about Indiana, but I won't ask about the settlement process, but I guess I'm not going to make you answer that one. Just from like a 30,000 foot.
Speaker Change: You, right? It seems like, you know, Genko's sort of versus a straight large little terrifying has added a little bit of
You know, regulatory process and complexity at the beginning. [inaudible]
Speaker Change: Can you kind of just, in your mind, frame from a very high level, what you guys see is the advantage of the GenCo structure. I mean, you kind of touched on it with maybe it will do like pricing differences with large load customers, but other advantages as you see them.
Speaker Change: And then the corollary of that question is you look to Steve's question around Ohio and other segments.
Speaker Change: If you're successful with Gen Co. and Indiana, do you see like a pipe co-in Ohio or something like that to structure it stimulately? Thank you.
Speaker Change: So, let me go back to why we believe GenCo is our preferred path to success. And I think it's a really good question. I think the first one, maybe, I'll talk about our current.
Schmuck, Schmuck, Schmuck.
Speaker Change: Priorities, it protects our existing customers by allowing us to separate the calls, separate calls.
I think second.
Speaker Change: You know, the CPCN, which is typically a 240-day process, so that gives us a faster speed to market and deliver the generating resources for the world.
Speaker Change: The Counter-Parties, and if you listen to the Counter-Parties and look at their capital needs and how fast they want to move, speed to market matters a lot.
Dr. Prima, Dr. Prima,
I think that negotiating a special contract
Speaker Change: You know, with the counterparties, gives us a lot of opportunity in terms of flexibility as we look at risk versus return in this. I mean, this is one of the complicated parts of the process, but it could give us more opportunity, depending on the risk we're willing to take. And I think that matters for us.
Speaker Change: And let's us preserve the flexibility of our current business model. You know, if you look at the last three years, I think our EPS
Speaker Change: Kager has been eight and a half percent so we have a really strong financial plan and we want to protect the integrity of that plan and to make sure that this opportunity it was above and beyond our current business financial plan so we like it.
Speaker Change: We think it's a I mean, I'm biased, but we think it's a really good idea. We're excited about it. We're excited about the opportunity [inaudible]
Speaker Change: That's great, Lloyd. And then you touched on it. There's a different sort of risk dynamic, maybe connected with these large little cost alerts. Thank you for your time, and I'll see you soon.
Speaker Change: doing the Gen Coast structure last and you think about Return differently, and I know you have it kind of fully decided the capital structure yet but could you think about leverage differently as well. [inaudible]
Thank you. Thank you.
John
Thank you. Bye. Bye.
Speaker Change: This just goes back to Lloyd's comment on flexibility. We've got a lot of different avenues that we could go to make the sufficient for our customers and for our shareholders. We're motivated to bring the lowest cost of financing into the marketplace that we possibly can. I think everyone is in this particular case and it'll help us advance the strategy quickly. Thank you very much.
Shawn Anderson: Perfect shot. I'll see you guys out of fort as soon. Take care. Okay Bye.
Thank you.
Thank you. Thank you. Thank you.
Speaker Change: Thank you. Our next question comes from the line of Christopher Jeffrey from New
Thank you. Thank you. Thank you.
Speaker Change: Hi, thanks everyone. Just one from me regarding O&M. It's kind of ticked higher in the last couple of quarters.
Speaker Change: and I think Shawn, you discussed some of the successes at Apollo and the flat-own-M expectations but just to put a finer point on it as far as the run rate from here, are you expecting Apollo to kind of have deflationary impacts from here or are you thinking about it?
John
Speaker Change: Over the course of the year, we continue to expect O&M to be flat year over year at around that $1.4 billion level that we've been able to maintain since 2016. Project Apollo helps drive that through an array of different opportunities, both efficiency as well as just identifying waste that can be one time in nature and reduce the overall cost profile of the business.
Speaker Change: And our employees lead that each and every day. New ideas populate what fuels its mission and how we are able to obtain that flat O&M on a year over your basis. Again, really since 2016. That said, we also need to invest in our system. We make strategic investments to risk adjust the system on an ongoing basis.
Speaker Change: Things like vegetation management, leakage, they don't always track the same quarter over quarter, but they get to the right place at the end of each and every year. And we try and pick the opportunities that we have to ensure that we can always risk adjusting the system to ensure reliability of our system at all times.
Thank you.
Alright, appreciate it, thank you for me [inaudible]
Speaker Change: Thank you. Our last question comes from the line of Ryan Levine from City. Please go ahead.
Everybody and thanks for squeezing me in to more Ryan's [inaudible]
Speaker Change: In terms of your waiver contracts, can you remind us when those waiver agreements expire and what the process of renegotiating,
FaceDart, Mobile. I'll let Bill Jefferson answer this.
The Nipsco contract ends the end of March of 26th.
Speaker Change: The Pennsylvania contract ends at the end of August of 26, and I don't have the dates for the Ohio contracts top of mind, but those are two of the digits.
Yeah.
Speaker Change: Well, everything is renegotiated in 2026. Everything gets renegotiated in 2026.
Speaker Change: Okay, thank you. And in terms of the EV or electric vehicle supply chain, what portion of your load in Indiana and across your service territory is tied to to that industry both historically and on a perspective basis.
Extremely Minimal
Okay, for the EV battery, it is...
Ben
to the earlier column is extremely minimal to the outlook. [inaudible]
Speaker Change: Driver Forrest, it's really getting the infrastructure deployed, and then enabling us to potentially gain more customers with a lower cost fuel and a more reliable fuel at that.
Great, thanks for taking my questions [inaudible]
All right.
Thank you. They're all for the questions at this time.
I will turn the call back over to Mr. Light.
Yes.
So we thank you for your continued interest.
Speaker Change: NiSource and your questions, and we look forward to communicating with you in the future. Have a great day.
These concludes today's content call, you may now disconnect. Thank you very much.