This article first appeared on GuruFocus.
Release Date: August 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
NiSource Inc (NYSE:NI) reaffirmed its 2026 adjusted EPS guidance of $2.2 to $2.7 per share and long-term growth rates of 6% to 8% through 2030, reflecting confidence in its financial plan.
The company secured regulatory approvals for its Amazon and Alphabet data center agreements in Indiana, which are expected to provide approximately $1.4 billion in bill relief for existing customers.
NiSource Inc (NYSE:NI) has a robust data center pipeline with 3 gigawatts in active negotiations and line of sight to 2 gigawatts of additional potential customers, supporting future growth.
The company is advancing cost optimization initiatives, including over $40 million in 2026, to reduce costs for customers and improve operational efficiency.
NiSource Inc (NYSE:NI) continues to see strong economic development momentum across its service territories, with major projects like aerospace and defense investments bringing new jobs and growth.
Negative Points
NiSource Inc (NYSE:NI) reported lower second quarter adjusted EPS of $0.16 compared to $0.22 in the prior year, impacted by higher O&M from severe weather and union negotiations.
The Indiana Utility Regulatory Commission (IURC) issued an order regarding gas modernization investments that requires the company to better demonstrate project benefits, potentially affecting recovery mechanisms.
The company faces ongoing affordability discussions in Indiana, which could lead to regulatory changes or increased scrutiny on rate recovery.
NiSource Inc (NYSE:NI) is navigating federal orders requiring continued operation of the Schafer coal plant, adding complexity and potential cost recovery challenges.
The company’s earnings growth is expected to be more weighted to the second half of 2026, with first-half results reflecting a shoulder quarter and higher storm-related expenses.
Q & A Highlights
Q: In light of the IURC order this morning regarding the gas modernization tracker (TDSIC), how are you thinking about tracker recovery and multi-year rate plan risk going forward?A: Lloyd Yates (President and CEO): We are still evaluating the order, but this decision is not a reflection of the broader regulatory environment in Indiana, which we believe remains constructive. The order does not preclude us from seeking recovery of that investment in future regulatory proceedings, including applying for other trackers or recovering costs in a rate case. The signal is that we need to continue to invest but do a better job of demonstrating the benefits of those investments. We are confident the commission wants us to invest in the natural gas system and will support recovery when benefits are clearly shown.
Q: Can you provide an update on the 3 gigawatts in active strategic negotiations and the broader data center pipeline, specifically regarding large developments in La Porte County?A: Lloyd Yates (President and CEO): We announced a joint announcement with Microsoft in 2024 and have been in discussions since, but I won’t comment on that specific opportunity. We have signed 4 gigawatts, have 3 gigawatts in active strategic negotiations, and another 2 gigawatts behind that. We are also looking at the system to see how we can expand beyond those 9 gigawatts. The data center business is a huge opportunity for NiSource, and the key to affordability is this GCO model, which is giving back $1.4 billion to customers. As we add more data centers, that number grows, not including the thousands of jobs created.
Q: What should we expect from the August 7th technical conference on the REs and trackers?A: Lloyd Yates (President and CEO): We expect the results to be balanced and collaborative. The affordability report focused heavily on bill transparency, and we expect a hard look at multi-year rate planning and the ROE risks that should be applied. Much of this was contemplated in House Bill 1002. We are optimistic it will be balanced and good for customers. Melody Birmingham (EVP of NiSource Utilities) added that we understand the importance of the hearing and will participate and cooperate fully with the IURC.
Q: With GenCo earnings starting this year, should we expect the segment to be broken out this year or next year?A: Sean Anderson (EVP and CFO): We continue to be on track to start reporting segment information by the end of the fiscal year.
Q: Regarding the TDSIC order, is this a capital tracker that would true you up in 2027, and how much capital is involved? Is there a way to think about the EPS impact?A: Sean Anderson (EVP and CFO): The thesis and need for this investment inventory remains unchanged. The commission is encouraging NIPSCO to invest in all reasonable and necessary projects, and we need to focus on demonstrating these projects as reasonable and necessary. We will look at options to include this capital in the TDSIC mechanism, the FMCA, or in rate case activity at NIPSCO Gas, which can include a forward look on investment. We are not reporting any change in CapEx plans or EPS outlook as of today.
Q: Given the political rhetoric out of Indiana, what is the governor’s ultimate objective and how does it align with what you are seeing across the state?A: Lloyd Yates (President and CEO): In spite of the activity around commission changes, we believe Indiana will continue to be a very constructive regulatory environment. Everyone is aligned on the importance of economic developmentgrowth is the key to affordability in Indiana. The data center opportunity and reshoring manufacturing not only deal with affordability through the $1.4 billion back to customers but also create thousands of jobs. There is significant alignment around that, and no one is deviating from that at all.
Q: As we think about the upside to the base plan, how should we think about the timing of the $2 billion upside and whether 2026 upside can be pushed to 2027?A: Sean Anderson (EVP and CFO): The $2 billion upside pertains only to the base business and does not include any GenCo CapEx. The inventory is largely attributed to generation, some gas AMI and FSA related work, economic development, and T&D. These don’t require disclosure and can be worked directly into our plan through tracker programs or regulatory recovery mechanisms. We still believe some of the 2026 CapEx will get executed, and it doesn’t change the outlook of the $21 billion inventory, current year guidance, or the up to $2 billion of upside that could still flow.
Q: How are you thinking about the schedule and timeline as you move through the affordability discussion, and how does it overlay with your potential rate case filing?A: Lloyd Yates (President and CEO): On August 7th we will learn more about the affordability conversations and the outcomes. Those are not connected to our rate cases yet. We are studying when to file rate cases and when we need recovery. The August 7th conference and outcomes will inform when we decide to file. We know we have to go for multi-year rate planning in the second half of 2028, and that hasn’t changed.
Q: Is the rate case filing the way you will return the cost savings from the data centers, or is there a separate mechanism?A: Lloyd Yates (President and CEO): Once we get the appropriate approvals and energize, those savings will start to flow immediately and will show up as a credit on the customer’s bill. It doesn’t require a rate case filing.
Q: You mentioned looking at the system to potentially extend beyond the 9 gigawattswhat would be required, and does that mean the 9 gigawatts is a constrained pipeline?A: Michael Lowers (EVP of Technology, Customer and Chief Commercial Officer): It’s part of our normal process to look beyond the 9 gigawatts and the opportunities there. We are consistently looking at the pipeline and facilitating growth, which means looking at all factorsland, zoning, transmission, fuel supply, equipment, etc. You should not interpret that we are looking at the ability to expand further as a constraint, but more as preplanning so we can focus on execution.
Q: From the TDSIC order, it looked clear they are indicating you should use the FMCA at a minimumhow much of the ask from a capital standpoint was federally mandated spending?<
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
