false--12-31Q120200001111711P10YP5Y00.010.016000000003821356800.007500102000000.01200000004400000.02400.02030.00000.03250.02020.0213 0001111711 2020-01-01 2020-03-31 0001111711 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001111711 us-gaap:PreferredStockMember 2020-01-01 2020-03-31 0001111711 2020-04-29 0001111711 2019-01-01 2019-03-31 0001111711 2020-03-31 0001111711 2019-12-31 0001111711 2019-03-31 0001111711 2018-12-31 0001111711 us-gaap:TreasuryStockMember 2019-01-01 2019-03-31 0001111711 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0001111711 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0001111711 us-gaap:PreferredStockMember 2019-01-01 2019-03-31 0001111711 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001111711 us-gaap:TreasuryStockMember 2020-01-01 2020-03-31 0001111711 us-gaap:PreferredStockMember 2019-12-31 0001111711 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001111711 us-gaap:TreasuryStockMember 2019-03-31 0001111711 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0001111711 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001111711 us-gaap:RetainedEarningsMember 2020-03-31 0001111711 us-gaap:RetainedEarningsMember 2019-03-31 0001111711 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001111711 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001111711 us-gaap:PreferredStockMember 2020-03-31 0001111711 us-gaap:RetainedEarningsMember 2019-12-31 0001111711 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001111711 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001111711 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001111711 us-gaap:CommonStockMember 2020-03-31 0001111711 us-gaap:PreferredStockMember 2018-12-31 0001111711 us-gaap:PreferredStockMember 2019-03-31 0001111711 us-gaap:CommonStockMember 2018-12-31 0001111711 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0001111711 us-gaap:CommonStockMember 2019-12-31 0001111711 us-gaap:TreasuryStockMember 2018-12-31 0001111711 us-gaap:RetainedEarningsMember 2018-12-31 0001111711 us-gaap:TreasuryStockMember 2019-12-31 0001111711 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001111711 us-gaap:TreasuryStockMember 2020-03-31 0001111711 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001111711 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001111711 us-gaap:CommonStockMember 2019-03-31 0001111711 us-gaap:SeriesBPreferredStockMember 2020-03-31 0001111711 us-gaap:SeriesAPreferredStockMember 2020-03-31 0001111711 nix:Misc.Member us-gaap:CorporateAndOtherMember 2020-01-01 2020-03-31 0001111711 nix:Misc.Member nix:ElectricOperationsMember 2020-01-01 2020-03-31 0001111711 nix:ResidentialMember nix:ElectricOperationsMember 2020-01-01 2020-03-31 0001111711 nix:IndustrialMember us-gaap:CorporateAndOtherMember 2020-01-01 2020-03-31 0001111711 nix:ElectricOperationsMember 2020-01-01 2020-03-31 0001111711 nix:Misc.Member 2020-01-01 2020-03-31 0001111711 us-gaap:CorporateAndOtherMember 2020-01-01 2020-03-31 0001111711 nix:CommercialMember nix:GasDistributionOperationsMember 2020-01-01 2020-03-31 0001111711 nix:IndustrialMember nix:ElectricOperationsMember 2020-01-01 2020-03-31 0001111711 nix:IndustrialMember 2020-01-01 2020-03-31 0001111711 nix:CommercialMember 2020-01-01 2020-03-31 0001111711 nix:CommercialMember nix:ElectricOperationsMember 2020-01-01 2020-03-31 0001111711 nix:ResidentialMember us-gaap:CorporateAndOtherMember 2020-01-01 2020-03-31 0001111711 nix:GasDistributionOperationsMember 2020-01-01 2020-03-31 0001111711 nix:ResidentialMember 2020-01-01 2020-03-31 0001111711 nix:OffsystemMember 2020-01-01 2020-03-31 0001111711 nix:OffsystemMember nix:ElectricOperationsMember 2020-01-01 2020-03-31 0001111711 nix:ResidentialMember nix:GasDistributionOperationsMember 2020-01-01 2020-03-31 0001111711 nix:OffsystemMember nix:GasDistributionOperationsMember 2020-01-01 2020-03-31 0001111711 nix:CommercialMember us-gaap:CorporateAndOtherMember 2020-01-01 2020-03-31 0001111711 nix:IndustrialMember nix:GasDistributionOperationsMember 2020-01-01 2020-03-31 0001111711 nix:Misc.Member nix:GasDistributionOperationsMember 2020-01-01 2020-03-31 0001111711 nix:OffsystemMember us-gaap:CorporateAndOtherMember 2020-01-01 2020-03-31 0001111711 nix:ElectricOperationsMember 2020-03-31 0001111711 nix:ElectricOperationsMember 2019-12-31 0001111711 us-gaap:CorporateAndOtherMember 2019-12-31 0001111711 us-gaap:CorporateAndOtherMember 2020-03-31 0001111711 nix:GasDistributionOperationsMember 2020-03-31 0001111711 nix:GasDistributionOperationsMember 2019-12-31 0001111711 us-gaap:CorporateAndOtherMember 2019-01-01 2019-03-31 0001111711 nix:GasDistributionOperationsMember 2019-01-01 2019-03-31 0001111711 nix:CommercialMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-03-31 0001111711 nix:ElectricOperationsMember 2019-01-01 2019-03-31 0001111711 nix:ResidentialMember nix:ElectricOperationsMember 2019-01-01 2019-03-31 0001111711 nix:IndustrialMember nix:GasDistributionOperationsMember 2019-01-01 2019-03-31 0001111711 nix:ResidentialMember nix:GasDistributionOperationsMember 2019-01-01 2019-03-31 0001111711 nix:Misc.Member us-gaap:CorporateAndOtherMember 2019-01-01 2019-03-31 0001111711 nix:IndustrialMember 2019-01-01 2019-03-31 0001111711 nix:CommercialMember 2019-01-01 2019-03-31 0001111711 nix:OffsystemMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-03-31 0001111711 nix:OffsystemMember nix:GasDistributionOperationsMember 2019-01-01 2019-03-31 0001111711 nix:CommercialMember nix:ElectricOperationsMember 2019-01-01 2019-03-31 0001111711 nix:Misc.Member 2019-01-01 2019-03-31 0001111711 nix:Misc.Member nix:GasDistributionOperationsMember 2019-01-01 2019-03-31 0001111711 nix:OffsystemMember nix:ElectricOperationsMember 2019-01-01 2019-03-31 0001111711 nix:IndustrialMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-03-31 0001111711 nix:ResidentialMember 2019-01-01 2019-03-31 0001111711 nix:ResidentialMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-03-31 0001111711 nix:IndustrialMember nix:ElectricOperationsMember 2019-01-01 2019-03-31 0001111711 nix:Misc.Member nix:ElectricOperationsMember 2019-01-01 2019-03-31 0001111711 nix:CommercialMember nix:GasDistributionOperationsMember 2019-01-01 2019-03-31 0001111711 nix:OffsystemMember 2019-01-01 2019-03-31 0001111711 us-gaap:SeriesAPreferredStockMember 2019-01-01 2019-03-31 0001111711 us-gaap:SeriesBPreferredStockMember us-gaap:PreferredStockMember 2019-12-31 0001111711 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2018-06-11 2018-06-11 0001111711 us-gaap:SeriesBPreferredStockMember 2020-01-01 2020-03-31 0001111711 us-gaap:SeriesAPreferredStockMember 2020-01-01 2020-03-31 0001111711 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2019-12-31 0001111711 us-gaap:SeriesBPreferredStockMember 2019-01-01 2019-03-31 0001111711 nix:NetProceedsMember us-gaap:SeriesBPreferredStockMember us-gaap:PreferredStockMember 2018-12-05 2018-12-31 0001111711 nix:AtTheMarketProgramMember 2020-01-01 2020-03-31 0001111711 nix:ForwardAgreementMember 2020-03-31 0001111711 us-gaap:SeriesBPreferredStockMember 2019-01-01 2019-12-31 0001111711 nix:SeriesB1PreferredStockMember 2020-03-31 0001111711 nix:ForwardAgreementMember 2020-01-01 2020-03-31 0001111711 nix:MassachusettsBusinessDomain 2020-03-31 0001111711 nix:MassachusettsBusinessDomain 2020-01-01 2020-03-31 0001111711 2020-02-26 0001111711 nix:ColumbiaOfPennsylvaniaMember us-gaap:SubsequentEventMember 2020-04-24 2020-04-24 0001111711 nix:NIPSCOElectricMember 2018-10-31 2018-10-31 0001111711 nix:ColumbiaOfKentuckyMember nix:A2020SMRPMember 2019-10-15 0001111711 nix:NIPSCOElectricMember nix:FMCA13Member us-gaap:SubsequentEventMember 2020-04-15 2020-04-15 0001111711 nix:ColumbiaOfOhioMember nix:A2020IRPMember 2020-02-28 0001111711 nix:NIPSCOGasMember nix:TDSIC10Member 2019-06-25 2019-06-25 0001111711 nix:NIPSCOGasMember nix:FMCA3Member 2019-11-26 2019-11-26 0001111711 nix:NIPSCOElectricMember nix:FMCA12Member 2019-10-18 0001111711 nix:ColumbiaOfOhioMember nix:A2020CEPMember 2020-02-28 2020-02-28 0001111711 nix:NIPSCOGasMember nix:TDSIC10Member 2019-06-25 0001111711 nix:ColumbiaOfOhioMember nix:A2020CEPMember 2020-02-28 0001111711 nix:ColumbiaOfOhioMember nix:A2019CEPMember 2019-02-28 0001111711 nix:NIPSCOGasMember nix:FMCA3Member 2019-11-26 0001111711 nix:ColumbiaOfPennsylvaniaMember nix:DSICMember us-gaap:SubsequentEventMember 2020-04-27 2020-04-27 0001111711 nix:NIPSCOGasMember nix:TDSIC11Member 2020-02-25 0001111711 nix:NIPSCOElectricMember nix:TDSIC6Member 2019-08-21 2019-08-21 0001111711 nix:ColumbiaOfVirginiaMember nix:A2020SAVEMember 2019-08-15 0001111711 nix:NIPSCOGasMember nix:TDSIC11Member 2020-02-25 2020-02-25 0001111711 nix:ColumbiaOfVirginiaMember nix:A2020SAVEMember 2019-08-15 2019-08-15 0001111711 nix:ColumbiaOfMassachusettsMember nix:A2020GSEPMember 2019-10-31 0001111711 nix:ColumbiaOfKentuckyMember nix:A2020SMRPMember 2019-10-15 2019-10-15 0001111711 nix:NIPSCOElectricMember nix:FMCA13Member us-gaap:SubsequentEventMember 2020-04-15 0001111711 nix:ColumbiaOfPennsylvaniaMember nix:DSICMember us-gaap:SubsequentEventMember 2020-04-27 0001111711 nix:ColumbiaOfOhioMember nix:A2020IRPMember 2020-02-28 2020-02-28 0001111711 nix:ColumbiaOfMassachusettsMember nix:A2020GSEPMember 2019-10-31 2019-10-31 0001111711 nix:ColumbiaOfOhioMember nix:A2019CEPMember 2019-02-28 2019-02-28 0001111711 nix:NIPSCOElectricMember nix:FMCA12Member 2019-10-18 2019-10-18 0001111711 nix:NIPSCOElectricMember nix:TDSIC6Member 2019-08-21 0001111711 nix:ColumbiaOfMarylandMember nix:A2020STRIDEMember 2020-01-29 2020-01-29 0001111711 nix:ColumbiaOfMarylandMember nix:A2020STRIDEMember 2020-01-29 0001111711 us-gaap:InterestRateSwapMember 2020-03-31 0001111711 nix:RiskManagementLiabilitiesNoncurrentMember nix:CommodityPriceRiskProgramsMember 2020-03-31 0001111711 nix:RiskManagementLiabilitiesCurrentMember us-gaap:InterestRateRiskMember 2020-03-31 0001111711 nix:RiskManagementLiabilitiesNoncurrentMember 2019-12-31 0001111711 nix:RiskManagementLiabilitiesNoncurrentMember us-gaap:InterestRateRiskMember 2020-03-31 0001111711 nix:RiskManagementLiabilitiesCurrentMember us-gaap:InterestRateRiskMember 2019-12-31 0001111711 nix:RiskManagementAssetsCurrentMember 2019-12-31 0001111711 nix:RiskManagementLiabilitiesNoncurrentMember nix:CommodityPriceRiskProgramsMember 2019-12-31 0001111711 nix:RiskManagementAssetsNoncurrentMember 2019-12-31 0001111711 nix:RiskManagementAssetsNoncurrentMember 2020-03-31 0001111711 nix:RiskManagementLiabilitiesCurrentMember 2019-12-31 0001111711 nix:RiskManagementLiabilitiesCurrentMember nix:CommodityPriceRiskProgramsMember 2019-12-31 0001111711 nix:RiskManagementAssetsNoncurrentMember nix:CommodityPriceRiskProgramsMember 2019-12-31 0001111711 nix:RiskManagementLiabilitiesNoncurrentMember us-gaap:InterestRateRiskMember 2019-12-31 0001111711 nix:RiskManagementAssetsCurrentMember nix:CommodityPriceRiskProgramsMember 2020-03-31 0001111711 nix:RiskManagementAssetsNoncurrentMember us-gaap:InterestRateRiskMember 2020-03-31 0001111711 nix:RiskManagementLiabilitiesCurrentMember nix:CommodityPriceRiskProgramsMember 2020-03-31 0001111711 nix:RiskManagementAssetsCurrentMember us-gaap:InterestRateRiskMember 2020-03-31 0001111711 nix:RiskManagementLiabilitiesCurrentMember 2020-03-31 0001111711 nix:RiskManagementAssetsNoncurrentMember nix:CommodityPriceRiskProgramsMember 2020-03-31 0001111711 nix:RiskManagementLiabilitiesNoncurrentMember 2020-03-31 0001111711 nix:RiskManagementAssetsCurrentMember nix:CommodityPriceRiskProgramsMember 2019-12-31 0001111711 nix:RiskManagementAssetsCurrentMember us-gaap:InterestRateRiskMember 2019-12-31 0001111711 nix:RiskManagementAssetsCurrentMember 2020-03-31 0001111711 nix:RiskManagementAssetsNoncurrentMember us-gaap:InterestRateRiskMember 2019-12-31 0001111711 srt:MinimumMember 2020-01-01 2020-03-31 0001111711 srt:MaximumMember 2020-01-01 2020-03-31 0001111711 us-gaap:FairValueInputsLevel1Member 2020-03-31 0001111711 us-gaap:FairValueInputsLevel3Member 2020-03-31 0001111711 us-gaap:CashFlowHedgingMember 2020-03-31 0001111711 us-gaap:AvailableforsaleSecuritiesMember 2020-03-31 0001111711 us-gaap:FairValueInputsLevel2Member 2020-03-31 0001111711 us-gaap:FairValueInputsLevel3Member 2019-12-31 0001111711 us-gaap:FairValueInputsLevel1Member 2019-12-31 0001111711 us-gaap:FairValueInputsLevel2Member 2019-12-31 0001111711 us-gaap:CashFlowHedgingMember 2019-12-31 0001111711 us-gaap:AvailableforsaleSecuritiesMember 2019-12-31 0001111711 us-gaap:CorporateDebtSecuritiesMember 2020-03-31 0001111711 us-gaap:USTreasuryAndGovernmentMember 2020-03-31 0001111711 us-gaap:CorporateDebtSecuritiesMember 2019-12-31 0001111711 us-gaap:USTreasuryAndGovernmentMember 2019-12-31 0001111711 nix:AccountsReceivableProgramMember 2020-03-31 0001111711 nix:ColumbiaOfMassachusettsMember 2020-01-01 2020-03-31 0001111711 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2020-01-01 2020-03-31 0001111711 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-01-01 2019-03-31 0001111711 us-gaap:PensionPlansDefinedBenefitMember 2020-01-01 2020-03-31 0001111711 us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-03-31 0001111711 nix:A3.60NotesDue2030Member 2020-03-31 0001111711 nix:A3.60NotesDue2030Member us-gaap:SeniorNotesMember 2020-01-01 2020-03-31 0001111711 us-gaap:SeniorNotesMember us-gaap:SubsequentEventMember 2020-04-13 0001111711 us-gaap:RevolvingCreditFacilityMember 2020-03-31 0001111711 nix:TermLoanMember 2019-12-31 0001111711 us-gaap:RevolvingCreditFacilityMember 2019-12-31 0001111711 nix:TermLoanMember 2020-03-31 0001111711 us-gaap:CommercialPaperMember 2020-03-31 0001111711 srt:MaximumMember nix:TermLoanMember 2019-04-17 0001111711 srt:MaximumMember nix:TermLoanMember 2020-04-01 0001111711 nix:TermLoanMember 2020-04-01 2020-04-01 0001111711 us-gaap:CommercialPaperMember 2019-12-31 0001111711 2018-09-13 2019-12-31 0001111711 2018-09-13 2020-03-31 0001111711 nix:MgpSitesMember 2020-03-31 0001111711 nix:MgpSitesMember 2019-12-31 0001111711 2019-10-31 2019-10-31 0001111711 nix:BuildTransferAgreementMember 2019-10-31 0001111711 nix:ColumbiaOfMassachusettsMember srt:MinimumMember 2018-09-13 2020-03-31 0001111711 nix:BuildTransferAgreementMember 2019-01-01 0001111711 nix:ColumbiaOfMassachusettsMember srt:MaximumMember 2020-01-01 2020-03-31 0001111711 nix:ColumbiaOfMassachusettsMember srt:MaximumMember 2018-09-13 2020-03-31 0001111711 nix:ColumbiaOfMassachusettsMember 2018-09-13 2020-03-31 0001111711 2019-07-26 0001111711 nix:NIPSCOMember 2020-01-01 2020-03-31 0001111711 nix:PurchasePowerAgreementsJan2019Member 2020-01-01 2020-03-31 0001111711 us-gaap:StandbyLettersOfCreditMember 2020-03-31 0001111711 nix:ColumbiaOfMassachusettsMember 2020-03-31 0001111711 2018-09-13 2018-12-31 0001111711 2019-01-01 0001111711 us-gaap:StandbyLettersOfCreditMember 2019-12-31 0001111711 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 2019-03-31 0001111711 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-03-31 0001111711 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-12-31 0001111711 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-01-01 2019-03-31 0001111711 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-12-31 0001111711 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-03-31 0001111711 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-01-01 2019-03-31 0001111711 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-12-31 0001111711 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-03-31 0001111711 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-12-31 0001111711 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-01-01 2020-03-31 0001111711 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-01-01 2020-03-31 0001111711 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-03-31 0001111711 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-01-01 2020-03-31 0001111711 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-03-31 0001111711 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-03-31 0001111711 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-12-31 0001111711 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-12-31 0001111711 nix:GasDistributionOperationsMember nix:IntersegmentMember 2020-01-01 2020-03-31 0001111711 us-gaap:CorporateAndOtherMember nix:UnaffiliatedMember 2020-01-01 2020-03-31 0001111711 nix:GasDistributionOperationsMember nix:UnaffiliatedMember 2020-01-01 2020-03-31 0001111711 us-gaap:CorporateAndOtherMember nix:UnaffiliatedMember 2019-01-01 2019-03-31 0001111711 nix:GasDistributionOperationsMember nix:IntersegmentMember 2019-01-01 2019-03-31 0001111711 nix:ElectricOperationsMember nix:UnaffiliatedMember 2019-01-01 2019-03-31 0001111711 nix:ElectricOperationsMember nix:UnaffiliatedMember 2020-01-01 2020-03-31 0001111711 nix:ElectricOperationsMember nix:IntersegmentMember 2020-01-01 2020-03-31 0001111711 nix:ElectricOperationsMember nix:IntersegmentMember 2019-01-01 2019-03-31 0001111711 us-gaap:IntersegmentEliminationMember 2019-01-01 2019-03-31 0001111711 us-gaap:CorporateAndOtherMember nix:IntersegmentMember 2019-01-01 2019-03-31 0001111711 us-gaap:IntersegmentEliminationMember 2020-01-01 2020-03-31 0001111711 us-gaap:CorporateAndOtherMember nix:IntersegmentMember 2020-01-01 2020-03-31 0001111711 nix:GasDistributionOperationsMember nix:UnaffiliatedMember 2019-01-01 2019-03-31 iso4217:USD xbrli:shares xbrli:shares xbrli:pure iso4217:USD utreg:MW utreg:Rate
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
or
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 001-16189
NiSource Inc.
(Exact name of registrant as specified in its charter)
DE
 
35-2108964
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
 
801 East 86th Avenue
 
 
Merrillville,
IN
 
46410
(Address of principal executive offices)
 
(Zip Code)
(877) 647-5990
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading
Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share
NI
NYSE
Depositary Shares, each representing a 1/1,000th ownership interest in a share of 6.50% Series B
NI PR B
NYSE
Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share, liquidation preference $25,000 per share and a 1/1,000th ownership interest in a share of Series B-1 Preferred Stock, par value $0.01 per share, liquidation preference $0.01 per share
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ    No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.)
Yes þ    No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ     Accelerated filer ¨     Emerging growth company      Non-accelerated filer ¨    Smaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes     No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Stock, $0.01 Par Value: 382,799,472 shares outstanding at April 29, 2020.



NISOURCE INC.
FORM 10-Q QUARTERLY REPORT
FOR THE QUARTER ENDED MARCH 31, 2020
Table of Contents
 
 
 
 
Page
 
 
 
 
 
 
 
PART I
FINANCIAL INFORMATION
 
 
 
 
 
 
Item 1.
Financial Statements - unaudited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
PART II
OTHER INFORMATION
 
 
 
 
 
 
Item 1.
 
 
 
 
 
Item 1A.
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
 
 
Item 5.
 
 
 
 
 
Item 6.
 
 
 
 

2


DEFINED TERMS

The following is a list of frequently used abbreviations or acronyms that are found in this report:

 
NiSource Subsidiaries, Affiliates and Former Subsidiaries
Columbia of Kentucky
Columbia Gas of Kentucky, Inc.
Columbia of Maryland
Columbia Gas of Maryland, Inc.
Columbia of Massachusetts
Bay State Gas Company
Columbia of Ohio
Columbia Gas of Ohio, Inc.
Columbia of Pennsylvania
Columbia Gas of Pennsylvania, Inc.
Columbia of Virginia
Columbia Gas of Virginia, Inc.
NIPSCO
Northern Indiana Public Service Company LLC
NiSource ("we," "us" or “our”)
NiSource Inc.
 
 
Abbreviations and Other
 
ACE
Affordable Clean Energy
AFUDC
Allowance for funds used during construction
AOCI
Accumulated Other Comprehensive Income (Loss)
ASC
Accounting Standards Codification
ASU
Accounting Standards Update
ATM
At-the-market
BTA
Build-transfer agreement
CARES Act
The Coronavirus Aid, Relief and Economic Security Act provides more than $2 trillion to battle COVID-19 and its economic effects, including various types of economic relief for impacted business and industries.
CCRs
Coal Combustion Residuals
CEP
Capital Expenditure Program
CERCLA
Comprehensive Environmental Response Compensation and Liability Act (also known as Superfund)
COVID-19
Novel Coronavirus 2019
DSIC
Distribution System Improvement Charge

DPU
Department of Public Utilities
ELG
Effluent limitations guidelines
EPA
United States Environmental Protection Agency
EPS
Earnings per share
FAC
Fuel adjustment clause
FASB
Financial Accounting Standards Board
FERC
Federal Energy Regulatory Commission
FMCA
Federally Mandated Cost Adjustment
GAAP
Generally Accepted Accounting Principles
GCA
Gas cost adjustment
GCR
Gas cost recovery
GHG
Greenhouse gases
GSEP
Gas System Enhancement Program
GWh
Gigawatt hours
IRP
Infrastructure Replacement Program
IURC
Indiana Utility Regulatory Commission
LIBOR
London InterBank Offered Rate

3


DEFINED TERMS

MA DOR
Massachusetts Department of Revenue
Massachusetts Business
All of the assets being sold to, and liabilities being assumed by, Eversource pursuant to the Asset Purchase Agreement
MGP
Manufactured Gas Plant
MISO
Midcontinent Independent System Operator
MMDth
Million dekatherms
MW
Megawatts
NTSB
National Transportation Safety Board
NYMEX
New York Mercantile Exchange
OPEB
Other Postretirement Benefits
PHMSA
Pipeline and Hazardous Materials Safety Administration
PPA
Power Purchase Agreement
PTC
Production tax credit
RCRA
Resource Conservation and Recovery Act
RFP
Request for proposals
SAVE
Steps to Advance Virginia's Energy Plan
SEC
Securities and Exchange Commission
SMRP
Safety Modification and Replacement Program
STRIDE
Strategic Infrastructure Development Enhancement
TCJA
An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018 (commonly known as the Tax Cuts and Jobs Act of 2017)
TDSIC
Transmission, Distribution and Storage System Improvement Charge
Note regarding forward-looking statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Investors and prospective investors should understand that many factors govern whether any forward-looking statement contained herein will be or can be realized. Any one of those factors could cause actual results to differ materially from those projected. These forward-looking statements include, but are not limited to, statements concerning our plans, strategies, objectives, expected performance, expenditures, recovery of expenditures through rates, stated on either a consolidated or segment basis, and any and all underlying assumptions and other statements that are other than statements of historical fact. All forward-looking statements are based on assumptions that management believes to be reasonable; however, there can be no assurance that actual results will not differ materially.
Factors that could cause actual results to differ materially from the projections, forecasts, estimates and expectations discussed in this Quarterly Report on Form 10-Q include among other things, our debt obligations; any changes to our credit rating or the credit rating of certain of our subsidiaries; our ability to execute our growth strategy; changes in general economic, capital and commodity market conditions; pension funding obligations; economic regulation and the impact of regulatory rate reviews; our ability to obtain expected financial or regulatory outcomes; our ability to adapt to, and manage costs related to, advances in technology; any changes in our assumptions regarding the financial implications of the Greater Lawrence Incident; compliance with the agreements entered into with the U.S. Attorney’s Office to settle the U.S. Attorney’s Office’s investigation relating to the Greater Lawrence Incident; the pending sale of the Massachusetts Business, including the terms and closing conditions under the Asset Purchase Agreement; potential incidents and other operating risks associated with our business; continuing and potential future impacts from the COVID-19 pandemic; our ability to obtain sufficient insurance coverage and whether such coverage will protect us against significant losses; the outcome of legal and regulatory proceedings, investigations, incidents, claims and litigation; any damage to our reputation, including in connection with the Greater Lawrence Incident; compliance with applicable laws, regulations and tariffs; compliance with environmental laws and the costs of associated liabilities; fluctuations in demand from residential commercial and industrial customers; economic conditions of certain industries; the success of NIPSCO's electric generation strategy; the price of energy commodities and related transportation costs; the reliability of customers and suppliers to fulfill their payment and contractual obligations; potential impairment of goodwill; changes in taxation and accounting principles; the impact of an aging infrastructure; the impact of climate change; potential cyber-attacks; construction risks and natural gas costs and supply risks; extreme weather conditions; the attraction and retention of a qualified workforce; the ability of our subsidiaries to generate

4


cash; our ability to manage new initiatives and organizational changes; the performance of third-party suppliers and service providers; changes in the method for determining LIBOR and the potential replacement of the LIBOR benchmark interest rate; and other matters in the “Risk Factors” section of this report and our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as supplemented by the risk factor set forth herein in Part II, Item 1A. Risk Factors, many of which risks are beyond our control. In addition, the relative contributions to profitability by each business segment, and the assumptions underlying the forward-looking statements relating thereto, may change over time.
All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to, and expressly disclaim any such obligation to, update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events or changes to the future results over time or otherwise, except as required by law.

5


Index
Page


6


PART I

ITEM 1. FINANCIAL STATEMENTS
NiSource Inc.
Condensed Statements of Consolidated Income (unaudited)
  
Three Months Ended
March 31,
(in millions, except per share amounts)
2020
 
2019
Operating Revenues
 
 
Customer revenues
$
1,525.9

 
$
1,834.5

Other revenues
79.6

 
35.3

Total Operating Revenues
1,605.5

 
1,869.8

Operating Expenses
 
 
 
Cost of sales (excluding depreciation and amortization)
462.4

 
680.3

Operation and maintenance
444.6

 
552.4

Depreciation and amortization
184.3

 
175.1

Loss on classification as held for sale
280.2

 

Loss (gain) on sale of fixed assets and impairments, net
(0.1
)
 
0.2

Other taxes
85.9

 
87.6

Total Operating Expenses
1,457.3

 
1,495.6

Operating Income
148.2

 
374.2

Other Income (Deductions)
 
 
 
Interest expense, net
(92.9
)
 
(95.6
)
Other, net
5.4

 
(0.7
)
Total Other Deductions, Net
(87.5
)
 
(96.3
)
Income before Income Taxes
60.7


277.9

Income Taxes
(14.9
)
 
59.0

Net Income
75.6

 
218.9

Preferred dividends
(13.8
)
 
(13.8
)
Net Income Available to Common Shareholders
61.8

 
205.1

Earnings Per Share
 
 
 
Basic Earnings Per Share
$
0.16


$
0.55

Diluted Earnings Per Share
$
0.16

 
$
0.55

Basic Average Common Shares Outstanding
383.1

 
373.4

Diluted Average Common Shares
384.1

 
374.7


The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

7

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)


NiSource Inc.
Condensed Statements of Consolidated Comprehensive Income (Loss) (unaudited)

 
Three Months Ended
March 31,
(in millions, net of taxes)
2020
 
2019
Net Income
$
75.6

 
$
218.9

Other comprehensive income (loss):
 
 
 
 Net unrealized gain (loss) on available-for-sale debt securities(1)
(5.4
)
 
2.8

Net unrealized gain (loss) on cash flow hedges(2)
(133.3
)
 
(19.3
)
Unrecognized pension and OPEB benefit(3)
0.7

 
0.9

Total other comprehensive income (loss)
(138.0
)
 
(15.6
)
Comprehensive Income (Loss)
$
(62.4
)
 
$
203.3


(1) Net unrealized gain (loss) on available-for-sale debt securities, net of $1.4 million tax benefit and $0.7 million tax expense in the first quarter of 2020 and 2019, respectively.
(2) Net unrealized gain (loss) on cash flow hedges, net of $44.1 million and $6.5 million tax benefit in the first quarter of 2020 and 2019, respectively.
(3) Unrecognized pension and OPEB benefit, net of $0.3 million tax benefit and $0.4 million tax expense in the first quarter of 2020 and 2019, respectively.
The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

8

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in millions)
March 31,
2020
 
December 31,
2019
ASSETS
 
 
 
Property, Plant and Equipment
 
 
 
Utility plant
$
22,862.3

 
$
24,502.6

Accumulated depreciation and amortization
(7,293.7
)
 
(7,609.3
)
Net utility plant
15,568.6

 
16,893.3

Other property, at cost, less accumulated depreciation
18.6

 
18.9

Net Property, Plant and Equipment
15,587.2

 
16,912.2

Investments and Other Assets
 
 
 
Unconsolidated affiliates
1.3

 
1.3

Available-for-sale debt securities (amortized cost of $148.4 and $150.1, allowance for credit losses of $1.2 and $0, respectively)
144.6

 
154.2

Other investments
66.1

 
74.7

Total Investments and Other Assets
212.0

 
230.2

Current Assets
 
 
 
Cash and cash equivalents
203.8

 
139.3

Restricted cash
9.2

 
9.1

Accounts receivable
736.8

 
876.1

Allowance for credit losses
(20.3
)
 
(19.2
)
Accounts receivable, net
716.5

 
856.9

Gas inventory
59.9

 
250.9

Materials and supplies, at average cost
130.9

 
120.2

Electric production fuel, at average cost
63.2

 
53.6

Exchange gas receivable
39.0

 
48.5

Assets held for sale
1,655.8

 

Regulatory assets
164.3

 
225.7

Prepayments and other
182.8

 
149.7

Total Current Assets
3,225.4

 
1,853.9

Other Assets
 
 
 
Regulatory assets
1,922.0

 
2,013.9

Goodwill
1,485.9

 
1,485.9

Deferred charges and other
160.2

 
163.7

Total Other Assets
3,568.1

 
3,663.5

Total Assets
$
22,592.7

 
$
22,659.8

 
The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.
 

9

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.
Condensed Consolidated Balance Sheets (unaudited) (continued)
(in millions, except share amounts)
March 31,
2020
 
December 31,
2019
CAPITALIZATION AND LIABILITIES
 
 
 
Capitalization
 
 
 
Stockholders’ Equity
 
 
 
Common stock - $0.01 par value, 600,000,000 shares authorized; 382,694,308 and 382,135,680 shares outstanding, respectively
$
3.8

 
$
3.8

Preferred stock - $0.01 par value, 20,000,000 shares authorized; 440,000 shares outstanding
880.0

 
880.0

Treasury stock
(99.9
)
 
(99.9
)
Additional paid-in capital
6,671.5

 
6,666.2

Retained deficit
(1,483.4
)
 
(1,370.8
)
Accumulated other comprehensive loss
(230.6
)
 
(92.6
)
Total Stockholders’ Equity
5,741.4

 
5,986.7

Long-term debt, excluding amounts due within one year
7,817.9

 
7,856.2

Total Capitalization
13,559.3


13,842.9

Current Liabilities
 
 
 
Current portion of long-term debt
7.9

 
13.4

Short-term borrowings
2,046.4

 
1,773.2

Accounts payable
505.6

 
666.0

Dividends payable - common stock
80.4

 

Dividends payable - preferred stock
19.4

 

Customer deposits and credits
163.2

 
256.4

Taxes accrued
223.8

 
231.6

Interest accrued
95.1

 
99.4

Exchange gas payable
18.5

 
59.7

Regulatory liabilities
177.9

 
160.2

Liabilities held for sale
470.9

 

Legal and environmental
17.5

 
20.1

Accrued compensation and employee benefits
129.4

 
156.3

Claims accrued
24.9

 
165.4

Other accruals
180.9

 
144.1

Total Current Liabilities
4,161.8

 
3,745.8

Other Liabilities
 
 
 
Risk management liabilities
312.1

 
134.0

Deferred income taxes
1,451.3

 
1,485.3

Deferred investment tax credits
9.4

 
9.7

Accrued insurance liabilities
82.4

 
81.5

Accrued liability for postretirement and postemployment benefits
359.4

 
373.2

Regulatory liabilities
2,033.8

 
2,352.0

Asset retirement obligations
435.9

 
416.9

Other noncurrent liabilities
187.3

 
218.5

Total Other Liabilities
4,871.6

 
5,071.1

Commitments and Contingencies (Refer to Note 18, "Other Commitments and Contingencies")

 

Total Capitalization and Liabilities
$
22,592.7

 
$
22,659.8

The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

10

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.
Condensed Statements of Consolidated Cash Flows (unaudited)

Three Months Ended March 31, (in millions)
2020
 
2019
Operating Activities
 
 
 
Net Income
$
75.6

 
$
218.9

Adjustments to Reconcile Net Income to Net Cash from Operating Activities:
 
 
 
Depreciation and amortization
184.3

 
175.1

Deferred income taxes and investment tax credits
(19.9
)
 
51.6

Loss on classification as held for sale

280.2

 

Other adjustments
7.9

 
6.5

Changes in Assets and Liabilities:
 
 
 
Components of working capital
(147.1
)
 
(27.2
)
Regulatory assets/liabilities
12.9

 
0.4

Deferred charges and other noncurrent assets
(12.1
)
 
(58.3
)
Other noncurrent liabilities
(11.9
)
 
32.1

Net Cash Flows from Operating Activities
369.9

 
399.1

Investing Activities
 
 
 
Capital expenditures
(452.1
)
 
(353.7
)
Cost of removal
(34.5
)
 
(25.3
)
Purchases of available-for-sale securities
(43.5
)
 
(25.7
)
Sales of available-for-sale securities
45.4

 
29.3

Other investing activities
0.1

 

Net Cash Flows used for Investing Activities
(484.6
)
 
(375.4
)
Financing Activities
 
 
 
Repayments of long-term debt and finance lease obligations
(4.1
)
 
(2.3
)
Issuance of short-term debt (maturity > 90 days)
500.0

 

Repayment of short-term debt (maturity > 90 days)

 
(350.0
)
Change in short-term borrowings, net (maturity ≤ 90 days)
(226.8
)
 
452.8

Issuance of common stock, net of issuance costs
3.7

 
3.1

Equity costs, premiums and other debt related costs

(5.1
)
 
(4.0
)
Dividends paid - common stock
(80.3
)
 
(74.5
)
Dividends paid - preferred stock
(8.1
)
 
(9.1
)
Net Cash Flows from Financing Activities
179.3

 
16.0

Change in cash, cash equivalents and restricted cash
64.6

 
39.7

Cash, cash equivalents and restricted cash at beginning of period
148.4

 
121.1

Cash, Cash Equivalents and Restricted Cash at End of Period
$
213.0

 
$
160.8


Supplemental Disclosures of Cash Flow Information
Three Months Ended March 31, (in millions)
2020
 
2019
Non-cash transactions:
 
 
 
Capital expenditures included in current liabilities
$
150.5

 
$
123.7

Dividends declared but not paid
99.8

 
94.0

Assets recorded for asset retirement obligations
$
69.8

 
$
4.8



The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

11

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.
Condensed Statements of Consolidated Equity (unaudited)
(in millions)
Common
Stock
 
Preferred Stock(1)
 
Treasury
Stock
 
Additional
Paid-In
Capital
 
Retained
Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Total
Balance as of January 1, 2020
$
3.8

 
$
880.0

 
$
(99.9
)
 
$
6,666.2

 
$
(1,370.8
)
 
$
(92.6
)
 
$
5,986.7

Comprehensive Income:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 

 
75.6

 

 
75.6

Other comprehensive loss, net of tax

 

 

 

 

 
(138.0
)
 
(138.0
)
Dividends:
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock ($0.42 per share)

 

 

 

 
(160.7
)
 

 
(160.7
)
Preferred stock (See Note 5)

 

 

 

 
(27.5
)
 

 
(27.5
)
Stock issuances:
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee stock purchase plan

 

 

 
1.3

 

 

 
1.3

Long-term incentive plan

 

 

 
(0.5
)
 

 

 
(0.5
)
401(k) and profit sharing

 

 

 
4.5

 

 

 
4.5

Balance as of March 31, 2020
$
3.8

 
$
880.0

 
$
(99.9
)
 
$
6,671.5

 
$
(1,483.4
)
 
$
(230.6
)
 
$
5,741.4

(1)Series A and Series B shares have an aggregate liquidation preference of $400M and $500M, respectively. See Note 5, "Equity" for additional information.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Common
Stock
 
Preferred Stock(1)
 
Treasury
Stock
 
Additional
Paid-In
Capital
 
Retained
Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Total
Balance as of January 1, 2019
$
3.8

 
$
880.0

 
$
(99.9
)
 
$
6,403.5

 
$
(1,399.3
)
 
$
(37.2
)
 
$
5,750.9

Comprehensive Income:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 

 
218.9

 

 
218.9

Other comprehensive loss, net of tax

 

 

 

 

 
(15.6
)
 
(15.6
)
Dividends:
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock ($0.40 per share)

 

 

 

 
(149.1
)
 

 
(149.1
)
Preferred stock (See Note 5)

 

 

 

 
(28.5
)
 

 
(28.5
)
Stock issuances:
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee stock purchase plan

 

 

 
1.3

 

 

 
1.3

Long-term incentive plan

 

 

 
(2.7
)
 

 

 
(2.7
)
401(k) and profit sharing

 

 

 
4.4

 

 

 
4.4

Balance as of March 31, 2019
$
3.8

 
$
880.0

 
$
(99.9
)
 
$
6,406.5

 
$
(1,358.0
)
 
$
(52.8
)
 
$
5,779.6


(1)Series A and Series B shares have an aggregate liquidation preference of $400M and $500M, respectively. See Note 5, "Equity" for additional information.

12

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.
Condensed Statements of Consolidated Equity (unaudited) (continued)
 
Preferred
 
Common
Shares (in thousands)
Shares
 
Shares
 
Treasury
 
Outstanding
Balance as of January 1, 2020
440

 
386,099

 
(3,963
)
 
382,136

Issued:
 
 
 
 
 
 
 
Employee stock purchase plan

 
46

 

 
46

Long-term incentive plan

 
347

 

 
347

401(k) and profit sharing

 
165

 

 
165

Balance as of March 31, 2020
440

 
386,657

 
(3,963
)
 
382,694

 
 
 
 
 
 
 
 
 
Preferred
 
Common
Shares (in thousands)
Shares
 
Shares
 
Treasury
 
Outstanding
Balance as of January 1, 2019
420

 
376,326

 
(3,963
)
 
372,363

Issued:
 
 
 
 
 
 
 
Preferred stock
20

 

 

 

Employee stock purchase plan

 
50

 

 
50

Long-term incentive plan

 
426

 

 
426

401(k) and profit sharing

 
164

 

 
164

Balance as of March 31, 2019
440

 
376,966

 
(3,963
)
 
373,003






13

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

 
1.    Basis of Accounting Presentation
Our accompanying Condensed Consolidated Financial Statements (unaudited) reflect all normal recurring adjustments that are necessary, in the opinion of management, to present fairly the results of operations in accordance with GAAP in the United States of America. The accompanying financial statements contain our accounts and that of our majority-owned or controlled subsidiaries.
The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Income for interim periods may not be indicative of results for the calendar year due to weather variations and other factors.
The Condensed Consolidated Financial Statements (unaudited) have been prepared pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made in this Quarterly Report on Form 10-Q are adequate to make the information herein not misleading.

14

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)


2.    Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements

We are currently evaluating the impact of certain ASUs on our Condensed Consolidated Financial Statements (unaudited) and Notes to Condensed Consolidated Financial Statements (unaudited), which are described below:
Standard
Description
Effective Date
Effect on the financial statements or other significant matters
ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans
This pronouncement modifies the disclosure requirements for defined benefit pension or other postretirement benefit plans. The guidance removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. The modifications affect annual period disclosures and must be applied on a retrospective basis to all periods presented.
Annual periods ending after December 15, 2020. Early adoption is permitted.
We are currently in discussions with our third-party specialist to evaluate the effects of this pronouncement on our Notes to Condensed Consolidated Financial Statements (unaudited). We expect to adopt this ASU on its effective date.

ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
This pronouncement simplifies the accounting for income taxes by eliminating certain exceptions to the general principles in ASC 740, income taxes. It also improves consistency of application for other areas of the guidance by clarifying and amending existing guidance.
Annual periods beginning after December 15, 2020 Early adoption is permitted.
We are currently evaluating the effects of this pronouncement on our Condensed Consolidated Financial Statements (unaudited) and Notes to Condensed Consolidated Financial Statements (unaudited). The most relevant amendment requires that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax. For NiSource, these taxes may include franchise taxes based on gross receipts, commercial activity taxes and utilities receipts taxes. We expect to adopt this ASU on its effective date.
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Statements
This pronouncement provides temporary optional expedients and exceptions for applying GAAP principles to contract modifications and hedging relationships to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates.
Upon issuance on March 12, 2020, and will apply though December 31, 2022.
We are currently evaluating the temporary expedients and options available under this guidance, and the effects of this pronouncement on our Condensed Consolidated Financial Statements (unaudited) and Notes to Condensed Consolidated Financial Statements (unaudited). As of March 31, 2020, we have not applied any expedients and options available under this ASU.


15

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)


Recently Adopted Accounting Pronouncements
Standard
Adoption
ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (ASC 326). ASC 326 revised the GAAP guidance on the impairment of most financial assets and certain other instruments that are not measured at fair value through net income. ASC 326 introduces the current expected credit loss (CECL) model that is based on expected losses for instruments measured at amortized cost rather than incurred losses. It also requires entities to record an allowance for available-for-sale debt securities rather than impair the carrying amount of the securities. Subsequent improvements to the estimated credit losses of available-for-sale debt securities will be recognized immediately in earnings, instead of over-time as they would under historic guidance. In 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivative and Hedging, and Topic 825, Financial Instruments. This pronouncement clarified and improved certain areas of guidance related to the recently issued standards on credit losses, hedging, and recognition and measurement.
We adopted ASC 326 effective January 1, 2020, using a modified retrospective method. Adoption of this standard did not have material impact on our Condensed Consolidated Financial Statements (unaudited). No adjustments were made to the January 1, 2020 opening balances as a result of this adoption. As required under the modified retrospective method of adoption, results for the reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts are not adjusted.
See Note 3, "Revenue Recognition," and Note 11, "Fair Value," for our discussion of the implementing these standards.
ASU 2016-13,  Financial Instruments-Credit Losses (Topic 326)


3.    Revenue Recognition
Revenue Disaggregation and Reconciliation. We disaggregate revenue from contracts with customers based upon reportable segment as well as by customer class. As our revenues are primarily earned over a period of time and we do not earn a material amount of revenues at a point in time, revenues are not disaggregated as such below. The Gas Distribution Operations segment provides natural gas service and transportation for residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana and Massachusetts. The Electric Operations segment provides electric service in 20 counties in the northern part of Indiana.
The tables below reconcile revenue disaggregation by customer class to segment revenue as well as to revenues reflected on the Condensed Statements of Consolidated Income (unaudited) for the three months ended March 31, 2020 and March 31, 2019:
Three Months Ended March 31, 2020 (in millions)
Gas Distribution Operations
 
Electric Operations
 
Corporate and Other
 
Total
Customer Revenues(1)
 
 
 
 
 
 
 
Residential
$
796.5

 
$
119.2

 
$

 
$
915.7

Commercial
269.4

 
120.2

 

 
389.6

Industrial
74.2

 
109.1

 

 
183.3

Off-system
18.7

 

 

 
18.7

Miscellaneous
12.5

 
5.9

 
0.2

 
18.6

Total Customer Revenues
$
1,171.3

 
$
354.4

 
$
0.2

 
$
1,525.9

Other Revenues
56.7

 
22.9

 

 
79.6

Total Operating Revenues
$
1,228.0

 
$
377.3

 
$
0.2

 
$
1,605.5

(1) Customer revenue amounts exclude intersegment revenues. See Note 21, "Business Segment Information," for discussion of intersegment revenues.


16

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Three Months Ended March 31, 2019 (in millions)
Gas Distribution Operations
 
Electric Operations
 
Corporate and Other
 
Total
Customer Revenues(1)
 
 
 
 
 
 
 
Residential
$
975.3

 
$
118.8

 
$

 
$
1,094.1

Commercial
330.5

 
119.3

 

 
449.8

Industrial
82.9

 
163.3

 

 
246.2

Off-system
20.1

 

 

 
20.1

Miscellaneous
17.2

 
6.9

 
0.2

 
24.3

Total Customer Revenues
$
1,426.0

 
$
408.3

 
$
0.2

 
$
1,834.5

Other Revenues
12.8

 
22.5

 

 
35.3

Total Operating Revenues
$
1,438.8

 
$
430.8

 
$
0.2

 
$
1,869.8

(1) Customer revenue amounts exclude intersegment revenues. See Note 21, "Business Segment Information," for discussion of intersegment revenues.

Customer Accounts Receivable. Accounts receivable on our Condensed Consolidated Balance Sheets (unaudited) includes both billed and unbilled amounts, as well as certain amounts that are not related to customer revenues. Unbilled amounts of accounts receivable relate to a portion of a customer’s consumption of gas or electricity from the date of the last cycle billing through the last day of the month (balance sheet date). Factors taken into consideration when estimating unbilled revenue include historical usage, customer rates and weather. The opening and closing balances of customer receivables for the three months ended March 31, 2020 are presented in the table below. We had no significant contract assets or liabilities during the period. Additionally, we have not incurred any significant costs to obtain or fulfill contracts.
(in millions)
Customer Accounts Receivable, Billed (less reserve)
 
Customer Accounts Receivable, Unbilled (less reserve)
Balance as of December 31, 2019
$
466.6

 
$
346.6

Balance as of March 31, 2020
449.9

 
233.5

Decrease
$
(16.7
)
 
$
(113.1
)

Utility revenues are billed to customers monthly on a cycle basis. We generally expect that substantially all customer accounts receivable will be collected within the month following customer billing, as this revenue consists primarily of monthly, tariff-based billings for service and usage. We maintain common utility credit risk mitigation practices, including requiring deposits and actively pursuing collection of past due amounts. In addition, our regulated operations utilize certain regulatory mechanisms that facilitate recovery of bad debt costs within tariff-based rates, which provides further evidence of collectibility. It is probable that substantially all of the consideration to which we are entitled from customers will be collected upon satisfaction of performance obligations.
Allowance for Credit Losses. We adopted ASC 326 effective January 1, 2020. See "Recently Adopted Accounting Pronouncements" in Note 2, "Recent Accounting Pronouncements," for more information about ASC 326.
Each of our business segments pool their customer accounts receivables based on similar risk characteristics, such as customer type, geography, payment terms, and related macro-economic risks. Expected credit loss exposure is evaluated separately for each of our accounts receivable pools. Expected credit losses are established using a model that considers historical collections experience, current information, and reasonable and supportable forecasts. Relevant and reliable internal and external inputs used in the model include, but are not limited to, gas consumption trends, revenue projections, actual charge-offs data, recoveries data, shut-off orders executed data, and final bill data. We continuously evaluate available reasonable and supportable information relevant to assessing collectability of current and future receivables. We evaluate creditworthiness of specific customers periodically or when required by changes in facts and circumstances. When we become aware of a specific customer's inability to pay, an allowance for expected credit losses is recorded for the relevant amount. We also monitor other circumstances that could affect our overall expected credit losses; these include, but are not limited to, creditworthiness of overall population in service territories, adverse conditions impacting an industry sector, and general economic conditions. At each reporting period, we record expected credit losses using an allowance for credit losses account. When deemed to be uncollectible, customer accounts are written-off.

17

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

A rollforward of our allowance for credit losses for the three months ended March 31, 2020 are presented in the table below:

Three Months Ended March 31, 2020 (in millions)

Gas Distribution Operations
 
Electric Operations
 
Corporate and Other
 
Total
Beginning balance(1)
$
9.1

 
$
3.1

 
$
0.8

 
$
13.0

Current period provisions
9.1

 
1.5

 

 
10.6

Write-offs charged against allowance
(6.9
)
 
(1.0
)
 

 
(7.9
)
Recoveries of amounts previously written off
4.6

 

 

 
4.6

Ending balance of the allowance for credit losses
$
15.9

 
$
3.6

 
$
0.8

 
$
20.3

(1)Total beginning balance differs from that presented in the Condensed Statements of Consolidated Balance Sheet (unaudited) as it excludes Columbia of Massachusetts. Columbia of Massachusetts' customer receivables and related allowance for credit losses are classified as held for sale at March 31, 2020.

In response to the COVID-19 pandemic, we have suspended shut-offs for nonpayment. This suspension applies to residential, commercial and industrial customers and will remain in effect until further notice. In addition, we are offering flexible payment plans to customers impacted or experiencing hardship as a result of COVID-19. For the three months ended March 31, 2020, we did not experience a material increase in our allowance for credit losses as a result of COVID-19. The adverse impact that COVID-19 will have on our customers' ability to pay is unknown and difficult to predict; however, we are monitoring changing circumstances and will adjust our allowance for credit losses as additional information becomes available.
4.    Earnings Per Share
Basic EPS is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding for the period. The weighted-average shares outstanding for diluted EPS includes the incremental effects of the various long-term incentive compensation plans and forward agreements when the impact would be dilutive (See Note 5 "Equity"). The computation of diluted average common shares is as follows:
 
Three Months Ended
 
March 31,
(in thousands)
2020
 
2019
Denominator
 
 
 
Basic average common shares outstanding
383,062

 
373,356

Dilutive potential common shares:
 
 
 
Shares contingently issuable under employee stock plans
845

 
1,062

Shares restricted under employee stock plans
207

 
133

Forward Agreements

 
105

Diluted Average Common Shares
384,114

 
374,656



5.    Equity
Common Stock. As of March 31, 2020, we had 600,000,000 shares of common stock authorized for issuance, of which 382,694,308 shares were outstanding.
ATM Program and Forward Sale Agreements. On November 1, 2018, we entered into five separate equity distribution agreements pursuant to which we were able to sell up to an aggregate of $500.0 million of our common stock. Four of these agreements were then amended on August 1, 2019, and one was terminated. Pursuant to the four agreements, as amended, we may sell, from time to time, up to an aggregate of $434.4 million of our common stock.
As of March 31, 2020, the ATM program had approximately $200.7 million of equity available for issuance. The program expires on December 31, 2020. We did not have any activity under the ATM program for the three months ended March 31, 2020.

18

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Preferred Stock. As of March 31, 2020, we had 20,000,000 shares of preferred stock authorized for issuance, of which 440,000 shares of preferred stock in the aggregate for all series were outstanding. The following table displays preferred dividends declared for the period by outstanding series of shares:
 
 
 
Quarter Ended
March 31, 2020
 
Quarter Ended
March 31, 2019
 
March 31, 2020
 
December 31, 2019
(in millions except shares and per share amounts)
Liquidation Preference Per Share
Shares
Dividends Declared Per Share
 
Outstanding
5.650% Series A
$
1,000.00

400,000

$
28.25

 
28.25

 
$
393.9

 
$
393.9

6.500% Series B
$
25,000.00

20,000

$
812.50

 
862.15

 
$
486.1

 
$
486.1


 
 
 
 
In addition, 20,000 shares of Series B–1 Preferred Stock, par value $0.01 per share, were outstanding as of March 31, 2020. Holders of Series B–1 Preferred Stock are not entitled to receive dividend payments and have no conversion rights. The Series B–1 Preferred Stock is paired with the Series B Preferred Stock and may not be transferred, redeemed or repurchased except in connection with the simultaneous transfer, redemption or repurchase of the underlying Series B Preferred Stock.
As of March 31, 2020, Series A Preferred Stock had $6.7 million of cumulative preferred dividends in arrears, or $16.63 per share, and Series B Preferred Stock had $1.4 million of cumulative preferred dividends in arrears, or $72.23 per share.
6.    Gas in Storage
We use both the LIFO inventory methodology and the weighted-average cost methodology to value natural gas in storage. Gas Distribution Operations prices natural gas storage injections at the average of the costs of natural gas supply purchased during the year. For interim periods, the difference between current projected replacement cost and the LIFO cost for quantities of gas temporarily withdrawn from storage is recorded as a temporary LIFO liquidation credit or debit within the Condensed Consolidated Balance Sheets (unaudited). Due to seasonality requirements, we expect interim variances in LIFO layers to be replenished by year end. We had a temporary LIFO liquidation debit of $29.9 million and zero as of March 31, 2020 and December 31, 2019, respectively, for certain gas distribution companies recorded within “Prepayments and other,” on the Condensed Consolidated Balance Sheets (unaudited).
7.    Assets and Liabilities Held For Sale

On February 26, 2020, NiSource and Columbia of Massachusetts entered into an Asset Purchase Agreement with Eversource. Upon the terms and subject to the conditions set forth in the Asset Purchase Agreement, NiSource and Columbia of Massachusetts agreed to sell to Eversource, with certain additions and exceptions: (1) substantially all of the assets of Columbia of Massachusetts and (2) all of the assets held by any of Columbia of Massachusetts’ affiliates that primarily relate to the Massachusetts Business, and Eversource agreed to assume certain liabilities of Columbia of Massachusetts and its affiliates. The liabilities assumed by Eversource under the Asset Purchase Agreement do not include, among others, any liabilities arising out of the Greater Lawrence Incident or liabilities of Columbia of Massachusetts or its affiliates pursuant to civil claims for injury of persons or damage to property to the extent such injury or damage occurs prior to the closing in connection with the Massachusetts Business. The Asset Purchase Agreement provides for a purchase price of $1,100 million in cash, subject to adjustment based on Columbia of Massachusetts’ net working capital as of the closing. The closing of the transactions contemplated by the Asset Purchase Agreement is subject to various conditions, including the receipt of the approval of the Massachusetts DPU and resolution of proceedings before certain governmental bodies. As of March 31, 2020, the Massachusetts Business met the requirements under GAAP to be classified as held for sale, and the assets and liabilities of the Massachusetts Business are measured at fair value, less costs to sell. Our estimated total pre-tax loss as of the quarter ended March 31, 2020 is $280.2 million, based on March 31, 2020 asset and liability balances, estimated net working capital and estimated transaction costs. This estimated pre-tax loss is presented as Loss on Classification as Held for Sale on the Condensed Statements of Consolidated Income (unaudited) and is subject to change based on estimated transaction costs, the net working capital adjustment, and asset and liability balances at each measurement date leading up to the closing date. The final pre-tax loss on the transaction will be determined as of the closing date. The sale is expected to close by September 30, 2020, subject to closing conditions.
The Massachusetts Business had a pretax loss of $236.2 million and $80.7 million for the three months ended March 31, 2020 and 2019, respectively. The pretax loss amounts exclude allocated executive compensation expense and interest expense for intercompany and external debt that will not be assumed by Eversource or required to be repaid at closing. The pretax loss amounts

19

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

for the three months ended March 31, 2020 and 2019 include costs directly related to the Greater Lawrence Incident. In addition, the pretax loss amount for March 31, 2020 includes the Loss on Classification as Held for Sale. The major classes of assets and liabilities classified as held for sale on the Condensed Consolidated Balance Sheets (unaudited) at March 31, 2020 were:
(in millions)
 
 
 
 
 
 
 
 
 
Assets Held for Sale
Net Property, Plant and Equipment
 
Total Current Assets
 
Total Other Assets
 
Loss on Classification as Held for Sale(1)
 
Total Assets Held for Sale
Gas Distribution Operations
1,641.2

 
200.4

 
88.7

 
(274.5
)
 
1,655.8

Liabilities Held for Sale
Long-term Debt, Excluding Amounts Due Within One Year
 
Total Current Liabilities
 
Total Other Liabilities
 
Total Liabilities Held for Sale
Gas Distribution Operations
42.4
 
 
78.9

 
349.6

 
470.9


(1) Amount differs from that presented in the Condensed Statements of Consolidated Income (unaudited) due to cash already paid for certain transaction costs.

8.    Asset Retirement Obligations
In the first quarter of 2020, we made revisions to the estimated costs associated with refining the CCR compliance plan. The CCR rule requires the continued collection of data over time to determine the specific compliance solution. The change in estimated costs resulted in an increase to the asset retirement obligation liability of $69.8 million that was recorded in March 2020. See Note 18-C, "Environmental Matters," for additional information on CCRs.
 
 
 
 
 

9.    Regulatory Matters
Cost Recovery and Trackers
Comparability of our line item operating results is impacted by regulatory trackers that allow for the recovery in rates of certain costs such as those described below. Increases in the expenses that are the subject of trackers generally result in a corresponding increase in operating revenues and, therefore, have essentially no impact on total operating income results.
Certain costs of our operating companies are significant, recurring in nature and generally outside the control of the operating companies. Some states allow the recovery of such costs through cost tracking mechanisms. Such tracking mechanisms allow for abbreviated regulatory proceedings in order for the operating companies to implement charges and recover appropriate costs. Tracking mechanisms allow for more timely recovery of such costs as compared with more traditional cost recovery mechanisms. Examples of such mechanisms include GCR adjustment mechanisms, tax riders, bad debt recovery mechanisms, electric energy efficiency programs, MISO non-fuel costs and revenues, resource capacity charges, federally mandated costs and environmental-related costs.
A portion of the Gas Distribution revenue is related to the recovery of gas costs, the review and recovery of which occurs through standard regulatory proceedings. All states in our operating area require periodic review of actual gas procurement activity to determine prudence and to permit the recovery of prudently incurred costs related to the supply of gas for customers. Our distribution companies have historically been found prudent in the procurement of gas supplies to serve customers.
A portion of the Electric Operations revenue is related to the recovery of fuel costs to generate power and the fuel costs related to purchased power. These costs are recovered through a FAC, a quarterly regulatory proceeding in Indiana.
Infrastructure Replacement and Federally-Mandated Compliance Programs
All of our operating utility companies have completed rate proceedings involving infrastructure replacement or enhancement, and have embarked upon initiatives to replace significant portions of their operating systems that are nearing the end of their useful lives. Each company's approach to cost recovery is unique, given the different laws, regulations and precedent that exist in each jurisdiction.

20

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

The following table describes the most recent vintage of our regulatory programs to recover infrastructure replacement and other federally-mandated compliance investments currently in rates and those pending commission approval:
(in millions)
 
 
 
 
 
Company
Program
Incremental Revenue
Incremental Capital Investment
Investment Period
Filed
Status
Rates
Effective
Columbia of Ohio
IRP - 2020
32.9

234.4

1/19-12/19
February 28, 2020
Approved
April 22, 2020
May 2020
Columbia of Ohio
CEP - 2019
15.0

121.7

1/18-12/18
February 28, 2019
Approved
August 28, 2019
September 2019
Columbia of Ohio
CEP - 2020
18.1

185.1

1/19-12/19
February 28, 2020
Order Expected August 2020
September 2020
NIPSCO - Gas
TDSIC 10(1)
1.6

12.4

7/18-4/19
June 25, 2019
Approved
October 16, 2019
November 2019
NIPSCO - Gas
TDSIC 11(2)
(1.7
)
38.7

5/19-12/19
February 25, 2020
Order Expected June 2020
July 2020
NIPSCO - Gas
FMCA 3(3)
0.3

43.0

4/19-9/19
November 26, 2019
Approved
March 31, 2020
April 2020
Columbia of Massachusetts
GSEP - 2020(3)(4)
0.9

37.5

1/20-12/20
October 31, 2019
Approved
April 30, 2020
May 2020
Columbia of Virginia
SAVE - 2020
3.8

50.0

1/20-12/20
August 15, 2019
Approved December 6, 2019
January 2020
Columbia of Kentucky
SMRP - 2020
4.2

40.4

1/20-12/20
October 15, 2019
Approved December 20, 2019
January 2020
Columbia of Maryland
STRIDE - 2020
1.3

15.0

1/20-12/20
January 29, 2020
Approved
February 19, 2020
February 2020
NIPSCO - Electric
TDSIC - 6
28.1

131.1

12/18-6/19
August 21, 2019
Approved December 18, 2019
January 2020
NIPSCO - Electric
FMCA - 12(3)
1.6

4.7

3/19-8/19
October 18, 2019
Approved
January 29, 2020
February 2020
NIPSCO - Electric
FMCA - 13(3)(5)
(1.2
)

9/19-2/20
April 15, 2020
Order Expected July 2020
August 2020
Columbia of Pennsylvania
DSIC 2020
0.9

28.2

12/19-2/20
April 27, 2020
Approved
May 4, 2020
May 2020

(1)Incremental capital and revenue are net of amounts included in the step 2 rates.
(2)Incremental revenue is net of amounts included in the step 2 rates and reflects a more typical 6-month filing period.
(3)Incremental revenue is inclusive of tracker eligible operations and maintenance expense.
(4)Incremental revenue reflects a 50% decrease in projected 2020 capital investments due to the October 3, 2019 order from the Massachusetts DPU that imposed work restrictions on Columbia of Massachusetts and the Massachusetts DPU's ongoing investigations.
(5)No eligible capital investments were made during the investment period.


Rate Case Actions
The following table describes current rate case actions as applicable in each of our jurisdictions net of tracker impacts:
(in millions)
 
 
 
 
Company
Requested Incremental Revenue
Approved or Settled Incremental Revenue
Filed
Status
Rates
Effective
NIPSCO - Electric(1)
$
21.4

$
(53.5
)
October 31, 2018
Approved
December 4, 2019
January 2020
Columbia of Pennsylvania
$
100.4

in process

April 24, 2020
Order Expected
January 2021
January 2021

(1)Rates were implemented in two steps, with implementation of step 1 rates effective on January 2, 2020 and step 2 rates effective on March 2, 2020.

21

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

10.    Risk Management Activities
We are exposed to certain risks relating to our ongoing business operations, namely commodity price risk and interest rate risk. We recognize that the prudent and selective use of derivatives may help to lower our cost of debt capital, manage our interest rate exposure and limit volatility in the price of natural gas.
Risk management assets and liabilities on our derivatives are presented on the Condensed Consolidated Balance Sheets (unaudited) as shown below:
(in millions)
March 31, 2020
 
December 31, 2019
Risk Management Assets - Current(1)
 
 
 
Interest rate risk programs
$

 
$

Commodity price risk programs
17.3

 
0.6

Total
$
17.3

 
$
0.6

Risk Management Assets - Noncurrent(2)
 
 
 
Interest rate risk programs
$

 
$

Commodity price risk programs
10.9

 
3.8

Total
$
10.9

 
$
3.8

Risk Management Liabilities - Current(3)
 
 
 
Interest rate risk programs
$

 
$

Commodity price risk programs
14.5

 
12.6

Total
$
14.5

 
$
12.6

Risk Management Liabilities - Noncurrent
 
 
 
Interest rate risk programs
$
253.7

 
$
76.2

Commodity price risk programs
58.4

 
57.8

Total
$
312.1

 
$
134.0

(1)Presented in "Prepayments and other" on the Condensed Consolidated Balance Sheets (unaudited).
(2)Presented in "Deferred charges and other" on the Condensed Consolidated Balance Sheets (unaudited).
(3)Presented in "Other accruals" on the Condensed Consolidated Balance Sheets (unaudited).
Commodity Price Risk Management
We, along with our utility customers, are exposed to variability in cash flows associated with natural gas purchases and volatility in natural gas prices. We purchase natural gas for sale and delivery to our retail, commercial and industrial customers, and for most customers the variability in the market price of gas is passed through in their rates. Some of our utility subsidiaries offer programs whereby variability in the market price of gas is assumed by the respective utility. The objective of our commodity price risk programs is to mitigate the gas cost variability, for us or on behalf of our customers, associated with natural gas purchases or sales by economically hedging the various gas cost components using a combination of futures, options, forwards or other derivative contracts.
NIPSCO received IURC approval to lock in a fixed price for its natural gas customers using long-term forward purchase instruments. The term of these instruments may range from five to ten years and is limited to 20 percent of NIPSCO’s average annual GCA purchase volume. Gains and losses on these derivative contracts are deferred as regulatory liabilities or assets and are remitted to or collected from customers through NIPSCO’s quarterly GCA mechanism. These instruments are not designated as accounting hedges.
Interest Rate Risk Management
As of March 31, 2020, we have forward-starting interest rate swaps with an aggregate notional value totaling $500.0 million to hedge the variability in cash flows attributable to changes in the benchmark interest rate during the periods from the effective dates of the swaps to the anticipated dates of forecasted debt issuances, which are expected to take place by 2024. These interest rate swaps are designated as cash flow hedges. The gains and losses related to these swaps are recorded to AOCI and are recognized in "Interest expense, net" concurrently with the recognition of interest expense on the associated debt, once issued. If it becomes probable that a hedged forecasted transaction will no longer occur, the accumulated gains or losses on the derivative will be recognized currently in "Other, net" in the Condensed Statements of Consolidated Income (unaudited).

22

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

There were no amounts excluded from effectiveness testing for derivatives in cash flow hedging relationships at March 31, 2020 and December 31, 2019.
Our derivative instruments measured at fair value as of March 31, 2020 and December 31, 2019 do not contain any credit-risk-related contingent features.
11.    Fair Value
 
A.    Fair Value Measurements
Recurring Fair Value Measurements
The following tables present financial assets and liabilities measured and recorded at fair value on our Condensed Consolidated Balance Sheets (unaudited) on a recurring basis and their level within the fair value hierarchy as of March 31, 2020 and December 31, 2019:
 
Recurring Fair Value Measurements
March 31, 2020
(in millions)
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Balance as of March 31, 2020
Assets
 
 
 
 
 
 
 
Risk management assets
$

 
$
28.2

 
$

 
$
28.2

Available-for-sale debt securities

 
144.6

 

 
144.6

Total
$

 
$
172.8

 
$

 
$
172.8

Liabilities
 
 
 
 
 
 
 
Risk management liabilities
$

 
$
326.6

 
$

 
$
326.6

Total
$

 
$
326.6

 
$

 
$
326.6

Recurring Fair Value Measurements
December 31, 2019
(in millions)
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Balance as of
December 31, 2019
Assets
 
 
 
 
 
 
 
Risk management assets
$

 
$
4.4

 
$

 
$
4.4

Available-for-sale debt securities

 
154.2

 

 
154.2

Total
$

 
$
158.6

 
$

 
$
158.6

Liabilities
 
 
 
 
 
 
 
Risk management liabilities
$

 
$
146.6

 
$

 
$
146.6

Total
$

 
$
146.6

 
$

 
$
146.6



Risk Management Assets and Liabilities. Risk management assets and liabilities include interest rate swaps, exchange-traded NYMEX futures and NYMEX options and non-exchange-based forward purchase contracts. When utilized, exchange-traded derivative contracts are based on unadjusted quoted prices in active markets and are classified within Level 1. These financial assets and liabilities are secured with cash on deposit with the exchange; therefore, nonperformance risk has not been incorporated into these valuations. Certain non-exchange-traded derivatives are valued using broker or over-the-counter, on-line exchanges. In such cases, these non-exchange-traded derivatives are classified within Level 2. Non-exchange-based derivative instruments include swaps, forwards, and options. In certain instances, these instruments may utilize models to measure fair value. We use a similar model to value similar instruments. Valuation models utilize various inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability and market-corroborated inputs, (i.e., inputs derived principally from or corroborated by observable market data by correlation or other means). Where observable inputs are available for substantially the full term of the asset or liability, the instrument is categorized within Level 2. Certain derivatives trade in less active markets with a lower availability of

23

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

pricing information and models may be utilized in the valuation. When such inputs have a significant impact on the measurement of fair value, the instrument is categorized within Level 3. Credit risk is considered in the fair value calculation of derivative instruments that are not exchange-traded. Credit exposures are adjusted to reflect collateral agreements which reduce exposures. As of March 31, 2020 and December 31, 2019, there were no material transfers between fair value hierarchies. Additionally, there were no changes in the method or significant assumptions used to estimate the fair value of our financial instruments.
We have entered into forward-starting interest rate swaps to hedge the interest rate risk on coupon payments of forecasted issuances of long-term debt. These derivatives are designated as cash flow hedges. Credit risk is considered in the fair value calculation of each agreement. As they are based on observable data and valuations of similar instruments, the hedges are categorized within Level 2 of the fair value hierarchy. There was no exchange of premium at the initial date of the swaps, and we can settle the contracts at any time. For additional information, see Note 10, "Risk Management Activities."
NIPSCO has entered into long-term forward natural gas purchase instruments that range from five to ten years to lock in a fixed price for its natural gas customers. We value these contracts using a pricing model that incorporates market-based information when available, as these instruments trade less frequently and are classified within Level 2 of the fair value hierarchy. For additional information, see Note 10, “Risk Management Activities.”

Available-for-Sale Debt Securities. Available-for-sale debt securities are investments pledged as collateral for trust accounts related to our wholly-owned insurance company. We value U.S. Treasury, corporate debt and mortgage-backed securities using a matrix pricing model that incorporates market-based information. These securities trade less frequently and are classified within Level 2.

We adopted ASC 326 effective January 1, 2020. See "Recently Adopted Accounting Pronouncements" in Note 2, "Recent Accounting Pronouncements," for more information about ASC 326. Upon adoption of ASC 326, our available-for-sale debt securities impairments are recognized periodically using an allowance approach instead of an 'other than temporary' impairment model. At each reporting date, we utilize a quantitative and qualitative review process to assess the impairment of available-for-sale debt securities at the individual security level. For securities in a loss position, we evaluate our intent to sell or whether it is more-likely-than-not that we will be required to sell the security prior to the recovery of its amortized cost. If either criteria is met, the loss is recognized in earnings immediately, with the offsetting entry to the carrying value of the security. If both criteria are not met, we perform an analysis to determine whether the unrealized loss is related to credit factors. The analysis focuses on a variety of factors that include, but are not limited to, downgrade on ratings of the security, defaults in the current reporting period or projected defaults in the future, the security's yield spread over treasuries, and other relevant market data. If the unrealized loss is not related to credit factors, it is included in other comprehensive income. If the unrealized loss is related to credit factors, the loss is recognized as credit loss expense in earnings during the period, with an offsetting entry to the allowance for credit losses. The amount of the credit loss recorded to the allowance account is limited by the amount at which security's fair value is less than its amortized cost basis. If the credit losses in the allowance for credit losses are deemed uncollectible, the allowance on the uncollectible portion will be charged off, with an offsetting entry to the carrying value of the security. Subsequent improvements to the estimated credit losses of available-for-sale debt securities will be recognized immediately in earnings instead of over-time as they would under historic guidance. During the three months ended March 31, 2020, we recorded $1.2 million as an allowance for credit losses on available-for-sale debt securities as a result of the analysis described above. Continuous credit monitoring and portfolio credit balancing mitigates our risk of credit losses on our available-for-sale debt securities.

24

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)


The amortized cost, gross unrealized gains and losses, allowance for credit losses, and fair value of available-for-sale securities at March 31, 2020 and December 31, 2019 were: 
March 31, 2020 (in millions)
Amortized
Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses(1)
 
Allowance for Credit Losses
 
Fair
Value
Available-for-sale debt securities
 
 
 
 
 
 
 
 
 
U.S. Treasury debt securities
$
26.7

 
$
0.7

 
$

 
$

 
$
27.4

Corporate/Other debt securities
121.7

 
2.2

 
(5.5
)
 
(1.2
)
 
117.2

Total
$
148.4

 
$
2.9

 
$
(5.5
)
 
$
(1.2
)
 
$
144.6

 
 
 
 
 
 
 
 
 
 
December 31, 2019 (in millions)
Amortized
Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses(2)
 
Allowance for Credit Losses
 
Fair
Value
Available-for-sale debt securities
 
 
 
 
 
 
 
 
 
U.S. Treasury debt securities
$
31.4

 
$
0.1

 
$
(0.1
)
 
$

 
$
31.4

Corporate/Other debt securities
118.7

 
4.2

 
(0.1
)
 

 
122.8

Total
$
150.1

 
$
4.3

 
$
(0.2
)
 
$

 
$
154.2


(1)Fair value of U.S. Treasury debt securities and Corporate/Other debt securities in an unrealized loss position without an allowance for credit losses is $0 and $54 million, respectively, at March 31, 2020.
(2)Fair value of U.S. Treasury debt securities and Corporate/Other debt securities in an unrealized loss position without an allowance for credit losses is $17.2 million and $12.2 million, respectively, at December 31, 2019.

Realized gains and losses on available-for-sale securities were immaterial for the three months ended March 31, 2020 and 2019.
The cost of maturities sold is based upon specific identification. At March 31, 2020, approximately $4.7 million of U.S. Treasury debt securities and approximately $6.3 million of Corporate/Other debt securities have maturities of less than a year.

There are no material items in the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis for the three months ended March 31, 2020 and 2019.

Non-recurring Fair Value Measurements
We measure the fair value of certain assets on a non-recurring basis, typically annually or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. These assets include goodwill.
At March 31, 2020, we recorded a loss on classification as held for sale of $280.2 million in connection with measuring the assets and liabilities of the Massachusetts Business at fair value, less the costs to sell. For additional information, see Note 7, "Assets and Liabilities Held for Sale."
B.    Other Fair Value Disclosures for Financial Instruments. The carrying amount of cash and cash equivalents, restricted cash, customer deposits and short-term borrowings is a reasonable estimate of fair value due to their liquid or short-term nature. Our long-term borrowings are recorded at historical amounts.
The following method and assumptions were used to estimate the fair value of each class of financial instruments.
Long-term Debt. The fair value of outstanding long-term debt is estimated based on the quoted market prices for the same or similar securities. Certain premium costs associated with the early settlement of long-term debt are not taken into consideration in determining fair value. These fair value measurements are classified within Level 2 of the fair value hierarchy. For the three months ended March 31, 2020, there was no change in the method or significant assumptions used to estimate the fair value of long-term debt.

25

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

The carrying amount and estimated fair values of these financial instruments were as follows: 
(in millions)
Carrying
Amount as of
March 31, 2020
 
Estimated Fair
Value as of
March 31, 2020
 
Carrying
Amount as of
Dec. 31, 2019
 
Estimated Fair
Value as of
Dec. 31, 2019
Long-term debt (including current portion)
$
7,825.8

 
$
8,381.1

 
$
7,869.6

 
$
8,764.4



12.    Transfers of Financial Assets
Columbia of Ohio, NIPSCO and Columbia of Pennsylvania each maintain a receivables agreement whereby they transfer their customer accounts receivables to third-party financial institutions through wholly-owned and consolidated special purpose entities. The three agreements expire between August 2020 and May 2021 and may be further extended if mutually agreed to by the parties thereto.
All receivables transferred to third parties are valued at face value, which approximates fair value due to their short-term nature. The amount of the undivided percentage ownership interest in the accounts receivables transferred is determined in part by required loss reserves under the agreements.
Transfers of accounts receivable are accounted for as secured borrowings resulting in the recognition of short-term borrowings on the Condensed Consolidated Balance Sheets (unaudited). As of March 31, 2020, the maximum amount of debt that could be recognized related to our accounts receivable programs is $540.0 million.
The following table reflects the gross receivables balance and net receivables transferred, as well as short-term borrowings related to the securitization transactions as of March 31, 2020 and December 31, 2019:
 
(in millions)
March 31, 2020
 
December 31, 2019
Gross Receivables
$
593.2

 
$
569.1

Less: Receivables not transferred
133.8

 
215.9

Net receivables transferred
$
459.4

 
$
353.2

Short-term debt due to asset securitization
$
459.4

 
$
353.2


For the three months ended March 31, 2020 and 2019, $106.2 million and $100.8 million, respectively, was recorded as cash flows from financing activities related to the change in short-term borrowings due to securitization transactions. Fees associated with the securitization transactions were $0.7 million and $0.8 million for the three months ended March 31, 2020 and 2019, respectively. Columbia of Ohio, NIPSCO and Columbia of Pennsylvania remain responsible for collecting on the receivables securitized, and the receivables cannot be transferred to another party.

13.    Goodwill
 The following presents our goodwill balance allocated by segment as of March 31, 2020:
(in millions)
 
Gas Distribution Operations
 
Electric Operations
 
Corporate and Other
 
Total
Goodwill
 
$
1,485.9

 
$

 
$

 
$
1,485.9



For our annual goodwill impairment analysis most recently performed as of May 1, 2019, we completed a qualitative "step 0" analysis for all reporting units other than our Columbia of Massachusetts reporting unit. The results of the step 0 assessment indicated that it was not more likely than not that the fair values of these reporting units were less than their respective carrying values, accordingly, no "step 1" analysis was required. The results of our Columbia of Massachusetts reporting unit were negatively impacted by the Greater Lawrence Incident (see Note 18-B, "Legal Proceedings"). As a result, we completed a quantitative "step 1" analysis for the May 1, 2019 goodwill analysis for this reporting unit. The step 1 analysis performed indicated that the fair value of the Columbia of Massachusetts reporting unit substantially exceeds its carrying value. As a result, no impairment charge was recorded as of the May 1, 2019 test date.


26

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

During the fourth quarter of 2019, in connection with the preparation of the year-end financial statements, we assessed the matters related to Columbia of Massachusetts and determined a new impairment analysis was required for our Columbia of Massachusetts reporting unit. The December 31, 2019 impairment analysis indicated that the fair value of the Columbia of Massachusetts reporting unit was below its carrying value. As a result, we reduced the Columbia of Massachusetts reporting unit goodwill balance to zero and recognized a goodwill impairment charge totaling $204.8 million in 2019.

While our annual goodwill impairment test is performed during the second quarter, with a valuation date of May 1, we continuously monitor changes in circumstances that may indicate that it is more likely than not that the fair value of our reporting units is less than the reporting unit carrying value. During the first quarter of 2020, we assessed events and circumstances related to COVID-19, including, but not limited to, general economic conditions, access to capital, developments in the equity and credit markets, the impact on NiSource's share price, the availability and cost of materials and labor, the impact on revenue and cash flow, and regulatory and political activity. The result of this assessment indicated that it was not more likely than not that the fair values of our reporting units were less than their respective carrying values at March 31, 2020.

We have begun our May 1, 2020 annual goodwill impairment analysis. We are assessing various assumptions, events and circumstances that will affect the estimated fair value of our reporting units, including an on-going evaluation of the impact of COVID-19. Our annual goodwill analysis will be completed by the end of the second quarter.
14.    Income Taxes
Our interim effective tax rates reflect the estimated annual effective tax rates for 2020 and 2019, adjusted for tax expense associated with certain discrete items. The effective tax rates for the three months ended March 31, 2020 and 2019 were (24.5)% and 21.2%, respectively. These effective tax rates differ from the federal statutory tax rate of 21% primarily due to increased amortization of excess deferred federal income tax liabilities, as specified in the TCJA, tax credits, state income taxes and other permanent book-to-tax differences.
The decrease in the three month effective tax rate of 45.7% in 2020 compared to 2019 is primarily attributable to increased amortization of excess deferred federal income tax liabilities, as specified in the TCJA, and a discrete item related to the pre–tax book loss recorded for the classification as held for sale of the Massachusetts Business tax effected at statutory tax rates.

There were no material changes recorded in 2020 to our uncertain tax positions recorded as of December 31, 2019.
The CARES Act was enacted on March 27, 2020 in response to the COVID-19 pandemic. The CARES Act contains numerous income tax provisions, such as relaxing limitations on the deductibility of interest and the use of net operating losses arising in taxable years beginning after December 31, 2017. Future guidance to clarify provisions in the CARES Act (as well as under the TCJA) remains forthcoming, and such guidance could ultimately increase or lessen their impact on our business and financial condition. It is also possible that Congress and other agencies will enact additional legislation or policies in connection with COVID-19, and we will continue to assess the potential impacts of these developments on our financial position and results of operations. There are no material income tax impacts on our consolidated financial position, results of operations, and cash flows during the three months ended March 31, 2020.
15.    Pension and Other Postretirement Benefits
We provide defined contribution plans and noncontributory defined benefit retirement plans that cover certain of our employees. Benefits under the defined benefit retirement plans reflect the employees’ compensation, years of service and age at retirement. Additionally, we provide health care and life insurance benefits for certain retired employees. The majority of employees may become eligible for these benefits if they reach retirement age while working for us. The expected cost of such benefits is accrued during the employees’ years of service. For most plans, cash contributions are remitted to grantor trusts.
For the three months ended March 31, 2020, we contributed $0.8 million to our pension plans and $6.3 million to our other postretirement benefit plans.

27

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

The following table provides the components of the plans’ actuarially determined net periodic benefit cost for the three months ended March 31, 2020 and 2019:

Pension Benefits
 
Other Postretirement
Benefits
Three Months Ended March 31, (in millions)
2020
 
2019
 
2020
 
2019
Components of Net Periodic Benefit Cost(1)
 
 
 
 
 
 
 
Service cost
$
8.0

 
$
7.3

 
$
1.6

 
$
1.3

Interest cost
13.5

 
18.2

 
3.9

 
4.8

Expected return on assets
(28.4
)
 
(27.2
)
 
(3.6
)
 
(3.3
)
Amortization of prior service credit
0.2

 

 
(0.5
)
 
(0.8
)
Recognized actuarial loss
8.7

 
11.4

 
1.3

 
0.5

Total Net Periodic Benefit Cost
$
2.0

 
$
9.7

 
$
2.7

 
$
2.5

(1)The service cost component and all non-service cost components of net periodic benefit cost are presented in "Operation and maintenance" and "Other, net", respectively, on the Condensed Statements of Consolidated Income (unaudited).
16.    Long-Term Debt

On April 13, 2020, we completed our issuance and sale of $1.0 billion of 3.60% senior unsecured notes maturing in 2030 which resulted in approximately $987.8 million of net proceeds after deducting commissions and expenses.
17.    Short-Term Borrowings
We generate short-term borrowings from our revolving credit facility, commercial paper program, accounts receivable transfer programs and term loan borrowings. Each of these borrowing sources is described further below.
We maintain a revolving credit facility to fund ongoing working capital requirements, including the provision of liquidity support for our commercial paper program, provide for issuance of letters of credit and also for general corporate purposes. Our revolving credit facility has a program limit of $1.85 billion and is comprised of a syndicate of banks led by Barclays. We had $500.0 million of outstanding borrowings under this facility as of March 31, 2020 and no outstanding borrowings under this facility as of December 31, 2019.
Our commercial paper program has a program limit of up to $1.5 billion with a dealer group comprised of Barclays, Citigroup, Credit Suisse and Wells Fargo. We had $237.0 million and $570.0 million of commercial paper outstanding as of March 31, 2020 and December 31, 2019, respectively.
Transfers of accounts receivable are accounted for as secured borrowings resulting in the recognition of short-term borrowings on the Condensed Consolidated Balance Sheets (unaudited). We had $459.4 million in transfers as of March 31, 2020 and $353.2 million in transfers as of December 31, 2019. Refer to Note 12, "Transfers of Financial Assets," for additional information.
Short-term borrowings were as follows: