NISOURCE INC.

NiSource Inc. is an energy holding company operating fully regulated natural gas and electric utility companies, serving approximately 3.8 million customers across six states ¹. The company's business model is centered on generating substantially all of its revenues and earnings from these rate-regulated businesses, with a strategic focus on safety, infrastructure, and environmental investments. NiSource aims to support long-term infrastructure investment, align tariff structures with cost structures, and drive value and growth within an evolving energy ecosystem, emphasizing safety, reliability, customer experience, and emissions reduction ².

The company operates through two primary reportable segments: Columbia Operations and NIPSCO Operations. Columbia Operations provides natural gas to approximately 2.4 million residential, commercial, and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, and Maryland, managing about 37,300 miles of distribution main pipeline and 310 miles of transmission main pipeline ³. NIPSCO Operations includes fully regulated gas and electric operations in northern Indiana, serving approximately 0.9 million gas customers and 0.5 million electric customers across 20 counties ⁴.

For the fiscal year ended December 31, 2025, NiSource reported total operating revenues of $6,642.2 million ⁵, an increase from $5,455.1 million in 2024 ⁶. Gross profit, calculated as operating revenues less cost of energy, was $5,057.8 million ⁷, representing a gross margin of 76.1% ⁸. Operating income stood at $1,835.3 million ⁹, yielding an operating margin of 27.6% ¹⁰. Net income for the period was $1,012.6 million ¹¹, with net income attributable to NiSource at $929.5 million ¹². Diluted earnings per share (EPS) were $1.95 ¹³, up from $1.62 in 2024 ¹⁴. Free cash flow, calculated as net cash from operating activities less capital expenditures, was negative $420.0 million ¹⁵. Cash and cash equivalents totaled $110.1 million ¹⁶, while total consolidated indebtedness was $16,213.5 million ¹⁷, resulting in net debt of $16,103.4 million ¹⁸.

Year-over-year, total operating revenues increased by $1,187.1 million ¹⁹ from 2024 to 2025. This was primarily driven by higher revenues, net of cost of energy, resulting from continued investment in safety, reliability, and low- or zero-emission generation, coupled with successful regulatory outcomes ²⁰. Operating income increased by $379.8 million ²¹. Net income available to common shareholders increased by $189.8 million ²². The increase in net income was partially offset by higher operation and maintenance expense, increased depreciation expense due to planned capital expenditures, and higher interest expense ²³.

Significant operational developments in 2025 included the placement of two solar projects and one solar and battery project into service as part of the electric generation transition ²⁴. The company also significantly advanced its Data Center strategy by creating GenCo, an affiliate focused on building capacity for large load customers, and executing the ADS Contract ²⁵. Under the ADS Contract, NIPSCO will provide electric service to ADS' data centers, with capacity increasing to 2,400 MW by the end of 2032 ²⁶. GenCo plans to construct 400 MW of new battery storage and two 1,300 MW Combined Cycle Gas Turbines (CCGTs) to meet this demand, with an estimated aggregate cost of approximately $7 billion for these Contract Assets and related transmission infrastructure ²⁷. NiSource also received orders for four rate cases: Columbia of Maryland, Columbia of Pennsylvania, Columbia of Virginia, and NIPSCO Electric ²⁸. The company invested $1.6 billion in infrastructure modernization, including replacing 256 miles of distribution main and service lines, 45 miles of underground cable, and 1,656 electric poles ²⁹. The second and third phases of a Work and Asset Management (WAM) Enterprise Resource Planning (ERP) program were concluded, covering all gas distribution operations and generation assets ³⁰. In October 2025, NiSource issued a 19.9% equity interest in Generation Holdings II (sole owner of GenCo) to affiliates of Blackstone for $35.2 million in cash contributions ³¹.

Management anticipates capital investments totaling approximately $21.0 billion during the 2026-2030 period to support its base business, exclusive of investments related to the ADS Contract ³². Additionally, the company expects to invest approximately $7.0 billion during the same period to develop the Contract Assets in connection with the ADS Contract ³³. For 2026, estimated total capital investments are projected to be between $5.1 billion and $5.5 billion ³⁴, increasing to $5.2 billion to $5.6 billion in 2027 ³⁵, $5.5 billion to $5.9 billion in 2028 ³⁶, $5.9 billion to $6.3 billion in 2029 ³⁷, and $4.7 billion to $5.1 billion in 2030 ³⁸.

A major growth area is the data center strategy, particularly in northern Indiana. The ADS Contract, pending IURC approval, commits NIPSCO to provide electric service to ADS' data centers, with capacity increasing to 2,400 MW by the end of 2032 ³⁹. GenCo plans to construct 400 MW of new battery storage and two 1,300 MW CCGTs, expected to reach commercial operation between 2028 and 2032, with an estimated aggregate cost of approximately $7 billion for these Contract Assets and related transmission infrastructure ⁴⁰. NIPSCO has a proceeding before the IURC to approve these generation facilities ⁴¹. The ADS Contract is structured to provide a return of invested capital over its 15-year initial term, with charges designed to yield an unlevered internal rate of return within a defined range, expected to be greater than NIPSCO's current electric operations ⁴². NIPSCO will also propose a mechanism to pass savings back to retail customers for use of the existing system, starting in 2027 ⁴³. The company is experiencing strong demand from potential data center customers in northern Indiana and is engaged in negotiations for additional contracts ⁴⁴.

Another significant growth area is the energy transition strategy, which involves retiring and replacing remaining coal-fired electric generation by 2028 with a balanced mix of low- or zero-emission electric generation ⁴⁵. As of December 31, 2025, NiSource has placed in service owned renewable and storage projects with combined nameplate capacities of 1,950 MW and 101 MW, respectively, and renewable PPA projects with a combined nameplate capacity of 1,200 MW ⁴⁶. The Templeton wind BTA project, with a nameplate capacity of 200 MW, is expected to be placed in service in 2027 ⁴⁷. The 2024 Integrated Resource Plan (2024 Plan) calls for additional generation resources through 2029 to support capacity requirements, including new gas-fired resources and other capacity resources for new data center load ⁴⁸. Construction of a new 400 MW natural gas peaking generation facility is underway, expected to support the planned retirement of existing vintage gas peaking facilities by the end of 2028 ⁴⁹.

Operationally, the company is focused on modernizing and unlocking efficiencies through its transformation roadmap, which includes investments in proven technologies and standardized processes for planning, scheduling, and executing field work, and customer service ⁵⁰. The WAM ERP program has been implemented across electric and transmission operations, all gas distribution operations, and generation assets ⁵¹. These programs are expected to modernize systems and reduce enterprise risk related to end-of-life systems ⁵². The company continues to enhance safety and reduce methane emissions on its gas systems through modernization programs and advanced leak detection and repair ⁵³.

Planned capital allocation includes the aforementioned capital investments of approximately $21.0 billion for base business and $7.0 billion for data center contracts during 2026-2030 ⁵⁴. In 2025, the company invested $70.5 million in cloud computing costs ⁵⁵ and made $373.8 million in advanced deposits for long lead equipment related to data center generation assets ⁵⁶. For 2026, the company expects to make contributions of approximately $2.7 million to its pension plans and approximately $18.3 million to its postretirement medical and life plans ⁵⁷. The 2025 ATM program, with approximately $1.35 billion of equity capacity available as of December 31, 2025, expires in December 2028 ⁵⁸.

Management explicitly flagged several structural headwinds and execution risks. The 90-day emergency order from the U.S. Secretary of Energy requiring the R.M. Schahfer coal facility to continue operating through March 23, 2026, and the uncertainty of MISO's resource accreditations for renewables and storage, may necessitate changes to previously communicated resource timelines and alternative resource decisions ⁵⁹. Data center growth, while an opportunity, presents significant financial, operational, and regulatory risks, including accurately predicting future power needs, managing demand, generation sources, and transmission capabilities, financing capital investment, obtaining permits, and managing environmental impact while adhering to the Net Zero Goal ⁶⁰. Construction delays, cost overruns, or performance issues with Contract Assets could reduce returns under the ADS Contract, and liquidated damages may be owed if assets are delivered late or fail performance milestones ⁶¹. The ADS Contract does not guarantee a specific overall rate of return, and its return structure and risk profile differ from NIPSCO's traditionally regulated utility operations ⁶². The partnership with ADS also exposes NiSource to significant customer concentration risk, as ADS has the right to terminate the contract for convenience or halve committed capacity ⁶³.

Geographic, regulatory, and macro factors identified as constraints include evolving regulatory landscape at state and federal levels, impacting operations and financial results ⁶⁴. The EPA's proposed repeal of GHG emissions standards for fossil fuel-fired power plants could remove regulatory constraints impacting NIPSCO's planned gas generation, potentially saving customers approximately $675 million in additional costs ⁶⁵. However, Maryland's Climate Solutions Now Act of 2022 requires a 60% GHG reduction by 2031 and net zero by 2045, with proposed regulations to eliminate "subsidies" for gas main extensions and investigate long-term natural gas company planning practices ⁶⁶. These policies could impact Columbia of Maryland's business ⁶⁷.

NiSource faces material risks including the inability to execute its business plan or growth strategy, particularly utility infrastructure investments and data center opportunities, which could be hampered by operational, financial, or regulatory conditions ⁶⁸. The company's distribution, transmission, and generation activities involve inherent hazards like gas leaks, downed power lines, and environmental contamination, posing public safety and financial loss risks ⁶⁹. Joint venture arrangements, such as the NIPSCO Minority Interest Transaction and GenCo Minority Interest Transaction, may lead to operational impasses or litigation due to differing investor interests ⁷⁰. Failure to adapt to technological advances, including alternative energy sources, or manage related costs, could reduce competitiveness and demand for natural gas and electricity ⁷¹. Increased dependency on technology systems for critical functions exposes the company to operational disruptions and data loss if systems fail ⁷². Aging infrastructure may lead to service disruptions, increased capital expenditures, and maintenance costs, with supply chain issues potentially delaying repairs ⁷³. Insurance coverage may be insufficient or unavailable for all significant losses, particularly for specific perils like wildfires or cyber liability ⁷⁴. Delays in the electric generation strategy, including coal unit retirements or new resource additions, could impact reliability and decarbonization goals, with potential MISO capacity accreditation changes requiring significant additional financing ⁷⁵. Capital projects are subject to construction and supply risks, regulatory oversight, and permitting delays, which could lead to cost overruns or unrecoverable investments ⁷⁶. Fluctuations in weather, commodity costs, and economic conditions impact customer demand and revenue ⁷⁷. Inability to attract, retain, or re-skill a qualified workforce, or maintain good labor relations, could adversely affect safety, service reliability, and customer satisfaction ⁷⁸. Cyber-attacks or security breaches on technology systems, including those of third-party vendors, pose risks of operational disruption, data loss, and significant liability ⁷⁹. Natural disasters, terrorism, or other catastrophic events could disrupt operations and reduce service capabilities ⁸⁰. Reputational risks from perceived service reliability, environmental practices, or climate change goals could lead to loss of cost recovery, increased litigation, and negative public perception ⁸¹. The physical impacts of climate change, such as extreme weather, increase costs and risks to infrastructure, which may not be fully recoverable ⁸². Achieving the Net Zero Goal by 2040 is subject to assumptions about regulatory support, technological advancements, and stakeholder environments, with potential for material deviation ⁸³. Substantial indebtedness of $16,213.5 million ⁸⁴ could limit borrowing capacity and financial flexibility, with a debt to capitalization ratio of 51.0% as of December 31, 2025 ⁸⁵. A credit rating downgrade could increase borrowing costs and collateral requirements, with a potential $150.2 million ⁸⁶ collateral requirement if ratings drop below investment grade ⁸⁷. Adverse economic conditions, including inflation or interest rates, could impact capital access and borrowing costs ⁸⁸. Most revenues are subject to regulatory rate reviews, with uncertain outcomes that could adversely affect earnings and liquidity ⁸⁹. Changes in tax laws or interpretations, such as the IRA's impact on tax credits, could negatively affect financial results ⁹⁰. Data center growth, while an opportunity, presents risks in predicting power needs, managing demand, financing infrastructure, obtaining permits, and managing environmental impact ⁹¹. The ADS Contract's return structure differs from traditional utility operations, with no guarantee of a specific rate of return, and exposes the company to significant customer concentration risk, as ADS can terminate or reduce committed capacity ⁹².

Management's message to shareholders emphasizes a vision to be a premier, innovative, and trusted energy partner, delivering safe, reliable energy and driving value to customers. The core strategy focuses on supporting long-term infrastructure investment and safety programs, aligning tariff structures with cost structures, and enabling growth in an evolving energy ecosystem, with priorities on improving safety and reliability, enhancing customer experience, pursuing regulatory and legislative initiatives for customer accessibility, ensuring customer affordability, and reducing emissions while generating sustainable returns ⁹³. Management highlighted significant progress in 2025, including advancing the electric generation transition with new solar and battery projects, and significantly progressing the Data Center strategy through the creation of GenCo and the execution of the ADS Contract ⁹⁴. The company expects to make capital investments totaling approximately $21.0 billion during the 2026-2030 period for its base business, and an additional $7.0 billion during that period for the Contract Assets related to the ADS Contract ⁹⁵.