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NiSource Inc. Q2 2026 10-Q Summary

Business Context and Reporting Period

This report covers the quarterly period ended June 30, 2026. NiSource Inc. is an energy holding company operating two primary reportable segments: Columbia Operations (regulated natural gas distribution in five states) and NIPSCO Operations (regulated gas and electric service in northern Indiana). The company is currently executing a significant strategy to support data center growth through new generation assets and transmission infrastructure, including contracts with Amazon (ADS) and Alphabet.

Key Financial Metrics (Six Months Ended June 30, 2026)

Material Changes vs. Prior Period

• Revenue Growth: Total operating revenues increased by $239.3 million year-over-year, driven primarily by rate increases from base rate proceedings and regulatory capital programs, as well as customer growth.
• Expense Increases: Operating expenses rose significantly due to higher depreciation and amortization (linked to new base rates and asset additions) and increased operation and maintenance costs. O&M expenses were elevated by outside services, labor costs, and incremental costs related to a temporary employee lockout in April 2026.
• Profitability Pressure: Despite higher operating income, Net Income Attributable to NiSource declined by $24.4 million. This was primarily due to higher interest expense (net interest expense increased to $390.8 million from $271.9 million) and higher O&M costs.
• Capital Deployment: Capital expenditures surged to $1.9 billion, reflecting heavy investment in infrastructure modernization and data center support assets (Contract Assets and Pool Resource Assets).
• Asset Impairment: The company recorded a $16.2 million impairment loss on solar generation assets at Dunn's Bridge I due to damage from an extreme weather event in March 2026, offset by an insurance receivable of $19.7 million.

Guidance, Outlook, and Risks

• Data Center Strategy: NiSource is advancing construction of combined-cycle gas turbine (CCGT) and battery energy storage systems (BESS) to support contracts with Amazon and Alphabet. The aggregate cost of assets supporting existing data center customers is estimated between $9.25 billion and $9.75 billion.
• Regulatory Developments:
  • R.M. Schahfer Coal Facility: The facility, planned for retirement in late 2025, is operating under successive 90-day emergency orders from the DOE/DOE through September 19, 2026, due to regional energy emergencies. Costs are being deferred for recovery.
  • Rate Cases: Several rate cases are pending or in process, including Columbia of Virginia and Kentucky, which could impact future revenue recovery.
• Financing: In May 2026, the company issued $1.25 billion in senior unsecured notes ($500M at 4.75% due 2031; $750M at 5.30% due 2036). The company maintains an At-The-Market (ATM) equity program with approximately $1.15 billion of capacity remaining.
• Risks: Key risks include the ability to execute the data center strategy on time and budget, regulatory approval of cost recovery mechanisms, credit rating maintenance, and potential impacts from extreme weather events on infrastructure.

Investor Verification Checklist

• Cost Recovery Mechanisms: Verify the status of regulatory filings for the R.M. Schahfer emergency order costs and the specific recovery mechanisms for data center infrastructure investments.
• Interest Rate Exposure: Assess the impact of rising interest rates on the company's significant debt load and future financing costs for the $9.5B+ data center capital plan.
• Construction Progress: Monitor the timeline and cost estimates for the CCGT and BESS projects supporting the ADS and Alphabet contracts to ensure they meet delivery schedules.
• Insurance Recovery: Confirm the collection status of the $19.7 million insurance receivable related to the Dunn's Bridge I solar facility damage.
• Union Relations: Review the long-term impact of the April 2026 lockout resolution on labor costs and operational continuity.