Sign in

    NISOURCE (NI)

    Q1 2024 Earnings Summary

    Reported on Jan 10, 2025 (Before Market Open)
    Pre-Earnings Price$29.05Last close (May 7, 2024)
    Post-Earnings Price$28.68Open (May 8, 2024)
    Price Change
    $-0.37(-1.27%)

    What went well

    • Robust economic development in NiSource's service territories, including manufacturing reshoring and projects like Intel's investment in Columbus, is providing significant growth opportunities, especially in Ohio and Indiana.
    • NiSource has identified a $1.6 billion pipeline of upside capital investment opportunities, particularly in Ohio, Indiana, and Pennsylvania, driven by new regulatory requirements, which could enhance future growth.
    • The company is engaged in constructive regulatory processes, with rate cases progressing well, such as the Pennsylvania rate case, supporting future growth and investment plans.

    What went wrong

    • Regulatory uncertainties may impact projects and financials: NiSource acknowledges that "with all cases, they're uncertain", referring to ongoing rate cases like the Pennsylvania rate case, which may affect outcomes and timing.
    • Dependence on stakeholder alignment could delay capital investments: The company emphasizes that "stakeholder alignment is critical, and so the timing to implement the rules will matter as you think about our current CapEx plan", suggesting potential delays in executing capital projects.
    • Potential equity needs may dilute shareholder value: NiSource may need to raise additional equity capital through mechanisms like the ATM issuance to finance the $1.6 billion in upside capital projects, which could dilute existing shareholders' value.

    Q&A Summary

    1. Data Center Growth Potential
      Q: What's the impact of data centers on your plans?
      A: We see significant opportunity to grow our load with data centers in Northern Indiana due to our robust transmission system, plentiful land, available energy capacity, and favorable energy policies. We're in discussions with several data center developers and are optimistic about this growth, but we don't have specifics yet to include in our IRP and load growth projections.

    2. $1.6 Billion Upside Capital
      Q: What projects could shift into the base plan from the $1.6 billion upside, and how will you fund them?
      A: Potential projects include electric generation based on our 2021 IRP, gas infrastructure work around PIMS requirements, electric transmission and distribution like MISO Tranche 1 and Tranche 2, grid modernization, and economic development initiatives such as data centers. We'll evaluate financing as these projects arise, aiming for accretive investments that benefit our customers and shareholders, leveraging our efficient regulatory mechanisms.

    3. Data Centers and IRP Timing
      Q: Will data centers impact your plan before the 2024 IRP?
      A: Yes, data center opportunities could develop faster than the IRP process. Developers are looking for utilities that can move quickly, and we're positioning ourselves to meet that demand, potentially bringing benefits sooner than expected.

    4. Pennsylvania Rate Case and NIPSCO Deferral
      Q: What's the status of the Pennsylvania rate case and the NIPSCO deferral?
      A: The Pennsylvania rate case filed on March 15 is progressing well with ongoing stakeholder engagement to mitigate surprises. We expect an order on the NIPSCO gas rate case this summer, and the deferral mechanism should prevent any negative financial impact on our plan.

    5. Funding and ATM Issuance
      Q: How much ATM issuance have you completed year-to-date?
      A: We've completed approximately one-third of our ATM issuance to date.

    6. PHMSA Rules Impact on CapEx
      Q: What do you need from PHMSA's final rulemaking to trigger capital opportunities?
      A: We're actively involved in the PHMSA rulemaking process, which focuses on grading leaks, repair timelines, and leak detection methods. We expect the rules to be finalized by the end of 2024, leading to capital upside in the middle of our plan as we develop compliance plans within 18 months and integrate them into our capital plan within 36 months.

    7. Manufacturing vs. Data Centers
      Q: How does manufacturing compare to data centers in growth potential?
      A: Economic development beyond data centers is strong, particularly with reshoring of manufacturing like the Intel project in Ohio and battery plants in Indiana. We're strengthening our economic development efforts to capitalize on these opportunities, supported by significant incentives in our jurisdictions.

    8. Gas Jurisdictions with Most Upside
      Q: Which gas jurisdictions have the most upside potential?
      A: Ohio, Indiana, and Pennsylvania present the most significant capital investment opportunities from regulatory rules within our $1.6 billion upside, but we see opportunities across all our jurisdictions.

    9. Technology Capital Deferral Mechanism
      Q: How much capital could flow through the technology capital deferral mechanism?
      A: Approximately $250 million in project costs are forecasted across NiSource, with about $150 million flowing through NIPSCO on both electric and gas sides. This mechanism covers one-time O&M and some depreciation and amortization expenses.

    Analyst Coverage

    Research analysts covering NISOURCE.

    Related Publications