The paragraph is an introduction to the NiSource First Quarter 2025 Earnings Conference Call. The operator welcomes attendees and states that the lines are muted to prevent noise, with a Q&A session after the presentation. Dave Rau from Communications introduces the call, mentioning the presence of key executives, including CEO Lloyd Yates and others. The call will cover NiSource's financial performance, operations, and growth strategies. Forward-looking statements and non-GAAP measures will be discussed, with relevant risks outlined in SEC filings. Slides and further details are accessible on the company's website. Then, Lloyd Yates begins by discussing the company's commitment to providing safe, reliable, and affordable energy.

The paragraph outlines NiSource's business strategy, which involves efficient capital deployment, safe operations, and constructive regulatory practices, resulting in solid returns, improved balance sheets, and dependable dividends. Their plan is built on regulated utility operations across diverse jurisdictions and fuel types with disciplined capital allocation. NiSource prioritizes collaborative regulatory and stakeholder relationships to ensure investments in safety, reliability, and economic growth. An example is Ohio's Senate Bill 103, which modernizes natural gas rate-making, reducing regulatory lag and promoting economic development. The company also leverages AI to enhance efficiency and reliability. Recently, they reported a 15% increase in first-quarter 2025 adjusted EPS compared to the previous year.

NiSource is reaffirming its 2025 adjusted EPS guidance and projecting annual adjusted EPS growth of 6% to 8% from 2025 to 2029, with a focus on a robust regulatory foundation and strategic capital deployment. The company is in negotiations to support data center development in Northern Indiana and has filed an application with the IURC to establish NIPSCO Genco, which aims to protect existing customers from costs while supporting new capacity investments. This strategy also ensures NIPSCO's financial stability and flexibility to meet customer needs. NiSource is seeking a limited declination of jurisdiction from the commission concerning Genco-related activities and is engaged in settlement negotiations.

The paragraph highlights the company's efforts to drive development and improve operational efficiency through initiatives like the Work Management Intelligence Program, which was successfully launched in various regions, resulting in significant productivity gains. Emphasizing a commitment to operational excellence, the company employs AI and real-time analytical dashboards to optimize schedules and track performance. Part of their Project Apollo strategy, these efforts aim for sustainable cost savings by reducing inefficiencies. The paragraph also mentions ongoing regulatory initiatives to support their development strategy.

The paragraph discusses various regulatory and investment developments for energy companies in Maryland, Virginia, Pennsylvania, and Indiana. Maryland approved an $11 million investment for 2024 to enhance safety and reliability. In Virginia, a rate case decision is expected in the second quarter. Pennsylvania's new rate case seeks to recover over $400 million for investments to maintain service quality, with a final decision anticipated in the fourth quarter. In Indiana, NIPSCO has agreed on a settlement for $2.5 million of incremental investments. The focus is on collaborating with stakeholders for stable service delivery. Additionally, Shawn Anderson updates on capital expenditures, highlighting the commercial operation of Dunns Bridge II, marking it as one of the largest solar facilities in the U.S. Projects like Fairbanks and Gibson are on schedule, and NIPSCO has installed 2,100 megawatts of renewable capacity as part of its energy transition strategy.

The paragraph discusses the company's strategic approach to capital investments in renewable energy and infrastructure over the next five years, totaling over $19 billion with additional opportunities for growth. It highlights the diversification of investments across electric generation, gas, and infrastructure, minimizing risks related to concentration and construction timelines. The company is evaluating further investment opportunities, such as data center generation and electric transmission, including potential projects under FERC and MISO initiatives. Although these potential projects are not yet included in the base plan, the company is well-positioned to develop them further as they reach key milestones.

NiSource's strengthened financial profile allows for strategic capital allocation and positions them well to meet their financial commitments. For Q1, they reported an adjusted EPS of $0.98, a 15% increase from last year, driven largely by regulated revenues and capital recovery. The company is ahead on its financial plans, with more than half of its 2025 equity issuances secured and a $750 million long-term debt issuance. Despite tariff challenges, NiSource mitigates risks through productivity enhancements like AI and domestic procurement, with 85% of costs being labor-related and not subject to tariffs. Their regulated framework also helps minimize rising product cost impacts, while tariffs could encourage U.S. manufacturing growth.

The paragraph discusses the attractiveness of their service territory for facilities due to a favorable business climate, low-cost energy, and skilled labor. It highlights the company's commitment to long-term financial goals, ensuring growth and transparency in capital returns through effective regulatory frameworks. The forecasts are based on realistic assumptions and include necessary capital investments for safe energy delivery. There are potential upside opportunities, like data center development, and plans are flexible to address challenges. The company has strengthened its balance sheet, ensuring efficient investment-to-earnings conversion. They reaffirm financial plans, including maintaining a 14% to 16% FFO-to-debt ratio and annual equity needs up to 2029.

The paragraph discusses the financial strategy of NiSource, which includes a balanced mix of funding sources such as cash from operations, new long-term debt, and annual equity injections of $200 to $300 million to maintain a strong capital structure. The company also considers hybrid securities and senior unsecured debt for added financial flexibility and diversification, aiming for growth without compromising credit quality. NiSource is confident in meeting its 2025 financial goals and maintaining stability into 2026, leveraging its position as a diversified, fully regulated utility investing in gas infrastructure and energy transition opportunities. The paragraph concludes as the call is handed over to the Operator for the Q&A session, beginning with a question from Shar Pourreza from Guggenheim Partners regarding the NIPSCO Genco filing and its proceedings.

The paragraph discusses the flexibility and benefits of the Genco structure, which allows for the execution of special contracts without completing the Genco itself. This structure addresses multiple stakeholder needs by providing flexibility, speed, and resource adequacy to accommodate large load customers. The process includes filing a PPA (Power Purchase Agreement) between Genco and NIPSCO, which would need commission approval. Shar Pourreza inquires about the possibility of accelerating a $2.2 billion investment currently outside the base plan if a signed agreement is reached, questioning if there are potential large load customers that could contribute to this or if it would be an addition to the existing assumption.

In the paragraph, Lloyd Yates addresses questions about potential financial upsides related to their utility projects, excluding any data center developments. Shar Pourreza expresses gratitude for the clarity. Julien Dumoulin-Smith then asks about the impact of discussions on co-retirement and asset life extensions on their capital expenditure plans, especially in light of potential data center load increases. Yates responds by stating they are currently evaluating executive orders and plan to retire certain plants in the coming years but are assessing the feasibility and implications of extending their operations while collaborating with federal and state regulators to make optimal decisions for stakeholders.

In the paragraph, Julien Dumoulin-Smith and Lloyd Yates discuss legislative updates, specifically Senate Bill 1007, which introduces new CPCN procedures and timeline requirements. Yates explains that while their declination filing is separate from the provisions of Bill 1007, the bill offers an additional pathway for addressing large load customers. The conversation touches on the potential for an expedited process and the possibility of settling issues with Genco, though Yates notes that settlement discussions are ongoing and not yet finalized.

The paragraph discusses the ongoing strategies and legislative options available to a company for managing large load customers. They are optimistic about their current approach involving a path with Genco, which aligns with their priorities such as customer benefits and financial integrity. They are also considering Senate Bill 1007 as an alternative if Genco doesn't materialize, although it doesn't change existing options but adds expedited processes. Melody Birmingham notes that their strategy remains unchanged. Richard Sunderland from JPMorgan inquires about engagements with large load customers, especially concerning hyperscalers, and Lloyd Yates confirms that significant focus on large load growth is anticipated for 2025.

The paragraph discusses the progress and complexities involved in certain business transactions that NiSource is undertaking, emphasizing the importance of getting these right for customers, financial integrity, and business protection. The speaker mentions the positive implications for stakeholders and notes that updates will be communicated promptly. They highlight ongoing investments in data centers by other firms as a sign of interest in this area. The conversation then shifts to regulatory considerations for a separate entity, Genco, without disclosing details about its financing structure.

The paragraph is a transcript of a conversation during a conference call involving Lloyd Yates, Nick Campanella, and Michael Luhrs. Nick Campanella from Barclays asks about the timeline and impact of settlement discussions on commercial agreements with customers, which Lloyd Yates confirms are not explicitly tied to the proceedings' timeline. Nick also inquires about long-term procurement strategies in light of NIPSCO's Integrated Resource Plan (IRP) and potential coal usage. Michael Luhrs responds, acknowledging the need for additional resources to align with the IRP while considering various alternatives and executive orders.

The paragraph discusses the importance of the declination filing in meeting the needs of stakeholders, such as protecting the existing customer base and providing resource alternatives. Lloyd Yates emphasizes that while there are multiple ways to achieve these goals, the declination filing is seen as the most effective method. Bill Appicelli from UBS inquires whether visibility on the declination filing is necessary before proceeding with a special contract. Yates suggests that the declination filing strengthens their ability to meet stakeholders' needs and large load customer requirements.

In the paragraph, Shawn Anderson discusses federal policy changes affecting tariffs and renewable tax credits. He mentions that most renewable projects are expected to be online by the end of the year, minimizing challenges with Production Tax Credit (PTC) and Investment Tax Credit (ITC) transferability. The focus is on maintaining these credits to benefit customers by keeping energy costs low. Despite potential changes due to the Inflation Reduction Act (IRA), the existing financing plan remains robust with a strong balance sheet. Tariffs and their potential impacts are also discussed, emphasizing a solid domestic supply chain and strategic improvements in operations to manage costs effectively over time.

In the article paragraph, Lloyd Yates and Shawn Anderson discuss ongoing settlement discussions regarding Genco and the challenges of transmission projects in the MISO network. Travis Miller from Morningstar poses questions about opposition to the Genco settlement, to which Yates replies they cannot comment on specific parties due to ongoing discussions. Anderson explains that for MISO long-range transmission projects, they consider operational execution, construction costs, and regulatory mechanisms. Once there is certainty about these factors, projects will be added to their base plan, with some already included in both the base and upside plans.

The paragraph discusses the anticipation of MISO long-range transmission Tranche 2 projects, which are not included in the current base or upside plans, as they mostly lie beyond the existing financial plan horizon. However, these projects are expected to materialize towards the end of the plan horizon, potentially enhancing the upside plan once they are commercialized and operationalized. The conversation then shifts to data center strategies in Indiana, Ohio, and Virginia. While Indiana is a primary focus, there is also activity in Ohio, with teams staying engaged with local and state entities to assess the needs and support potential data center customers. Michael Luhrs notes that most investments in this area involve natural gas infrastructure pipelines.

The paragraph discusses various topics including the need for energy investment to support data centers in Virginia and Ohio through gas pipelines. Lloyd Yates and Michael Luhrs mention the MISO auction and their strategic positioning concerning resource adequacy. Paul Fremont asks procedural questions about delaying hearings and inquires about industrial expansion in Ohio and Indiana. Lloyd Yates and Shawn Anderson respond by noting that Indiana is seeing expansion in battery manufacturing and growth in other sectors like cold storage, indicating strong economic development beyond just data centers.

The paragraph discusses recent developments in food manufacturing and storage, highlighting a $70 million investment in the region by food organizations, which is expected to create jobs. It notes increased manufacturing projects, with international companies exploring establishment opportunities in Indiana, including a plastics manufacturer, biopharmaceutical firm, recycling operation, and EV battery manufacturers. The robust growth isn't limited to Indiana; Virginia and Ohio are also experiencing similar trends. This growth precedes changes in the tariff landscape and reflects successful efforts to attract global companies. The paragraph ends with a conversation transition during a call, indicating Ross Fowler from Bank of America intends to ask about regulatory processes in Indiana, acknowledging added complexity in these processes.

Lloyd Yates discusses the advantages of the Genco structure, highlighting its ability to protect existing customers by separating costs and offering faster speed to market, particularly by bypassing the typically lengthy CPCN process. He emphasizes the importance of this speed for meeting the capital and timing needs of counterparties. Yates also notes the flexibility and potential opportunities that come with negotiating special contracts, depending on the company's risk appetite. He mentions the company's strong financial performance and expresses confidence that the Genco structure will enhance their business model and financial plan. Overall, Yates believes Genco is a strategic and effective approach for their goals.

The paragraph is a conversation between several individuals discussing financial strategies related to large load customers and the associated risk dynamics. They mention exploring different ways to make financing efficient for both customers and shareholders, aiming for the lowest cost of financing to advance their strategy quickly. There's also a focus on maintaining flat operating and maintenance (O&M) costs, with a target of $1.4 billion annually, a level maintained since 2016. This consistency is supported by Project Apollo, which helps identify efficiency opportunities and reduce waste to maintain the cost profile.

The paragraph involves a dialogue during a discussion or earnings call. It addresses strategic investments in infrastructure, risk adjustments, and system reliability, mentioning vegetation management and leakage issues that are managed annually. Ryan Levine from Citi asks about labor contract expiration dates, which Bill Jefferson states end in 2026 for NIPSCO and Pennsylvania, with other Ohio contract dates not specified. When asked about the electric vehicle (EV) supply chain's influence on their load, Lloyd Yates notes it's minimal and mentions the irony that EV battery manufacturers rely on natural gas.

In the paragraph, Lloyd Yates discusses the expansion of NiSource's natural gas network through a high-capacity trunk line, which facilitates marketing to new communities and broadening the network. Although the gas system expansion is more significant compared to the electric system, the transport volume of gas isn't a major revenue source. Instead, the focus is on deploying infrastructure to potentially attract more customers with a cost-effective and reliable fuel. The paragraph ends with Ryan Levine thanking Yates and the operator concluding the call.

This summary was generated with AI and may contain some inaccuracies.