NiSource Inc. Q1 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. NiSource Inc. is an energy holding company operating two primary regulated segments: Columbia Operations (natural gas distribution in five states) and NIPSCO Operations (gas and electric service in northern Indiana). The company is currently executing a significant strategy to support data center growth, including contracts with Amazon Data Services (ADS) and a new agreement with an Alphabet subsidiary.
Key Financial Metrics
| Metric (in millions) | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Operating Revenues | $2,363.1 | $2,183.2 |
| Operating Income | $819.2 | $759.4 |
| Net Income Attributable to NiSource | $507.1 | $474.8 |
| Diluted EPS | $1.06 | $1.00 |
| Operating Cash Flow | $442.3 | $686.4 |
| Capital Expenditures | $(805.2) | $(637.3) |
| Long-Term Debt | $15,458.9 | $15,457.8 |
| Net Available Liquidity | $1,630.9 | $2,024.1 |
Margins: Operating margin for Q1 2026 was approximately 34.7% ($819.2M / $2,363.1M). The effective tax rate was 13.4%, down from 16.7% in the prior year, driven by federal tax credits and amortization of excess deferred taxes.
Material Changes vs. Prior Period
- Revenue Growth: Total operating revenues increased by $179.9 million (8.2%) year-over-year. This was driven by higher rates from base rate proceedings and regulatory capital programs, partially offset by weather impacts.
- Expense Increases: Operating expenses rose by $120.1 million. Key drivers included higher depreciation and amortization due to increased net plant balances, higher operation and maintenance costs, and increased interest expense ($191.6M vs $132.8M).
- Segment Performance:
- Columbia Operations: Operating income increased $26.5 million to $472.3 million, aided by rate increases and customer growth, despite slightly warmer weather.
- NIPSCO Operations: Operating income increased $36.6 million to $348.5 million, driven by rate increases and regulatory capital programs, offset by warmer weather reducing gas sales volumes.
- Cash Flow: Operating cash flow decreased by $244.1 million, primarily due to changes in working capital components (exchange gas receivables, accounts payable, and inventory).
Guidance, Outlook, and Risks
- Data Center Strategy: NiSource entered a new contract with an Alphabet subsidiary (pending IURC approval) for up to 300 MW by 2030. Amendments to the ADS contract accelerate capacity delivery and increase total committed capacity to 2,800 MW by 2032. Total estimated cost for Contract and Pool Resource Assets is $9.25 billion to $9.75 billion.
- Capital Investment Outlook: Estimated total capital investments for 2026 range from $5.2 billion to $5.6 billion, including $1.3 billion to $1.5 billion for GenCo (data center support).
- Regulatory Matters:
- R.M. Schahfer Coal Facility: Continued operation under a DOE 202(c) emergency order through June 21, 2026, due to regional energy emergencies. Cost recovery mechanisms are being pursued with FERC and IURC.
- Rate Cases: New rates for NIPSCO Electric (Step 2) and Columbia of Pennsylvania became effective in early 2026.
- Operational Risks:
- Union Negotiations: A lockout of NIPSCO employees occurred in April 2026; agreements were ratified in late April and early May 2026.
- Weather Events: Solar generation facilities at Dunn's Bridge I sustained damage in March 2026; insurance is expected to cover most losses.
- Construction & Supply Chain: Risks related to material shortages, tariffs, and labor productivity could impact project timelines and costs.
Key Investor Verification Points
- Regulatory Approvals: Monitor the status of IURC approvals for the Alphabet Contract and ADS Contract amendments, which are critical for revenue recognition and asset recovery.
- Cost Recovery for R.M. Schahfer: Verify the outcome of FERC and IURC proceedings regarding cost recovery for the extended operation of the coal facility under the 202(c) order.
- Capital Expenditure Execution: Track the ability to execute the $9.25B+ data center asset build-out within estimated cost ranges and timelines, given current supply chain constraints.
- Liquidity Management: Assess the impact of increased short-term borrowings (commercial paper rose to $1.29B) on net available liquidity and interest expense.
- Union Labor Stability: Confirm that the newly ratified union agreements do not result in significant long-term cost increases or operational disruptions.