Slide 1: Investor Day
Investor Day September 29, 2020 | NYSE: NI | nisource.com
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains “forward-looking statements” within the meaning of federal securities laws. 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
Slide 3: Agenda
AGENDA 1 WELCOME Randy Hulen 5 FINANCIAL OVERVIEW Donald Brown 2 STRATEGIC OVERVIEW Joe Hamrock 6 CLOSING Joe Hamrock 3 OPERATIONS & SAFETY FOCUS Pablo Vegas 7 Q&A 4 GENERATION TRANSITION Shawn Anderson | NYSE: NI | nisource.com 3
Slide 4: Strategic Overview
Strategic Overview Joe Hamrock President, Chief Executive Officer & Director, NiSource | NYSE: NI | nisource.com
Slide 5: Premier Regulated Utility Business
PREMIER REGULATED UTILITY BUSINESS COLUMBIA GAS OF KENTUCKY COLUMBIA GAS OF MARYLAND Significant Scale NI across Six States LISTED NATURAL GAS COLUMBIA GAS OF OHIO NYSE COLUMBIA GAS OF PENNSYLVANIA COLUMBIA GAS OF VIRGINIA ~3.2M 10%–12% Gas Customers NIPSCO GAS Compelling expected annual total NIPSC
Slide 6: The U.S. Regulated Utility Investment of Choice
THE U.S. REGULATED UTILITY INVESTMENT OF CHOICE Safety and environmental leadership will continue to drive customer value and sustainable growth Strong Clear Path to Drive Benefiting Customers Committed to Foundation Incremental Growth and Communities Shareholder Value • Regulatory diversity • Enhan
Slide 7: Commitment to Safety and a Sustainable Strategy for All Stakeholders
COMMITMENT TO SAFETY AND A SUSTAINABLE STRATEGY FOR ALL STAKEHOLDERS Significant ongoing process • Realigned executive leadership and integrated key operations functions across the organization • Accelerated implementation of our Safety Management System (SMS) • Advancing renewable portfolio with fi
Slide 8: Focused Executive Leadership Team
FOCUSED EXECUTIVE LEADERSHIP TEAM Balanced senior roles and responsibilities support the execution of our long-term strategic priorities Joe Pablo Donald Violet Shawn Carrie Chuck Hamrock Vegas Brown Sistovaris Anderson Hightman Shafer President EVP/COO & EVP/CFO & EVP & Chief Chief Strategy & EVP/C
Slide 9: Skilled and Independent Board of Directors
SKILLED AND INDEPENDENT BOARD OF DIRECTORS* Diversity of Board experience and expertise is well-aligned with NiSource strategy Peter J. Altabef Theodore H. Bunting Jr. Eric I. Butler Aristides S. Candris Age: 61 Age: 61 Age: 60 Age: 69 Elected: 2017 Elected: 2018 Elected: 2017 Elected: 2012 Occupati
Slide 10: Capital Plan Resulting in Expected Lasting Value Creation
CAPITAL PLAN RESULTING IN EXPECTED LASTING VALUE CREATION ~$9.9B – $10.5B of Identified Investment Opportunities ~20% Renewables Investment 10% to 12% Expected rate base CAGR 2021–2024 2021–2024 ~60% Gas Infrastructure & ~20% Asset Modernization 7% to 9% Electric Infrastructure Expected NOEPS1 & Ass
Slide 11: Accelerating Our Path Forward
ACCELERATING OUR PATH FORWARD Leveraging our platform through a dedicated investment approach and relentless commitment to safety Asset Modernization Enhanced System Safety SMS Implementation Customer Affordability and Increased Customer Satisfaction Generation Transition Improved Earnings Power Cos
Slide 12: Operations & Safety Focus
Operations & Safety Focus Pablo Vegas EVP/COO & President, NiSource Utilities | NYSE: NI | nisource.com
Slide 13: NiSource Operations Overview
NISOURCE OPERATIONS OVERVIEW Energizing the lives of nearly four million customers • Investments supported by favorable energy policies and regulatory ~3.2MM ~$9.0B frameworks Gas Customers1 Gas Rate Base1 • SMS enhancing safety culture • NiSource Next driving business transformation ~500K ~$5.0B •
Slide 14: Continued Investment Supported by Regulatory Framework
CONTINUED INVESTMENT SUPPORTED BY REGULATORY FRAMEWORK A significant part of our investment portfolio is preplanned, repeatable and tracked for recovery annually Total Expected Investments of ~$9.9 - $10.5B Expected Investment Recovery Period ~$1.8 - $2.0B Renewables (Rate Case Effective 2H/2023) ~$
Slide 15: SMS Enhancing Safety Culture (Video)
SMS ENHANCING SAFETY CULTURE (VIDEO) | NYSE: NI | nisource.com
Slide 16: NiSource Next Transformation
NISOURCE NEXT TRANSFORMATION Unwavering Commitment to Safety Leadership Achievable Annualized Run Rate Savings Targets NISOURCE NEXT enhancing our ability to achieve consistent, Flatter Organization, Stronger Teams, Empowered Leaders & Upskilled Employees stable growth, while fostering a culture of
Slide 17: Natural Gas Operational Highlights
NATURAL GAS OPERATIONAL HIGHLIGHTS Safely and sustainably operating in the communities we serve continues to be our highest priority • Significant annual capital investment in natural gas safety and asset modernization programs planned through 2024 – SMS continues to prioritize investment opportunit
Slide 18: Electric Business Operational Highlights
ELECTRIC BUSINESS OPERATIONAL HIGHLIGHTS Delivering customer benefits, improving system reliability and embracing the need for affordable clean energy are driving growth in our electric business • $400-$600 million of planned annual capital investment in base electric system infrastructure and asset
Slide 19: Improving Customer Experience, Satisfaction and Affordability
IMPROVING CUSTOMER EXPERIENCE, SATISFACTION AND AFFORDABILITY • Operational safety and risk management systems driving “Our customers are at the center technology investments to improve the customer of our business …” experience • “Know Your Home” campaign launched to better educate customers on the
Slide 20: Generation Transition Strategy
Generation Transition Strategy Shawn Anderson Chief Strategy & Risk Officer, NiSource | NYSE: NI | nisource.com
Slide 21: Generation Transition Strategy Foundations
GENERATION TRANSITION STRATEGY FOUNDATIONS Charting the long-term course for transitioning our generation portfolio The IRP Process Key IRP Planning Considerations • The Integrated Resource Plan (IRP) outlines NIPSCO long-term plans to supply electricity to Reliable customers • IRP is required of al
Slide 22: Generation Transition Outcomes
GENERATION TRANSITION OUTCOMES Replacing 80% of coal capacity by 2023 with primarily renewable resources; retiring all coal generation by 2028 Estimated Impact from Generation Transition Plan ~$4B in customer 11K jobs during savings over 30 construction and years $2B in economic activity $1.8B–$2B o
Slide 23: Driving Customer and Community Benefits
DRIVING CUSTOMER AND COMMUNITY BENEFITS $ Million Illustrative Annual Cost to Customer1 1,800 $105 in average annual savings per household2 1,500 1,200 $4 billion in savings over 30 years 900 Renewable investments expected to benefit 600 Indiana’s economy • Renewable generation infrastructure 300 es
Slide 24: Driving Environmental Benefits
DRIVING ENVIRONMENTAL BENEFITS Reduction Reduction Greenhouse Gas 2005 to 2019 2005 to 2030E Reductions from Cleaner generation 2005 Levels Nitrogen Oxides (tons) 84% ~100% mix significantly reducing GHG emissions Sulfur Dioxide (tons) 97% ~100% 48% By 2019 Mercury (pounds) 94% 99% Driving down othe
Slide 25: $1.8 - $2.0 Billion in Planned Investments Through 2023
$1.8 - $2.0 BILLION IN PLANNED INVESTMENTS THROUGH 2023 Tax equity partnerships allow for significant reduction in cost to customers and efficient timing of capital deployment Expected NiSource (NIPSCO) JV Ownership JVs Submitted to IURC: ~$2.8 -$3.0B • Rosewater (EDPR) ~50% • Indiana Crossroads (ED
Slide 26: Robust Renewable Investments in Indiana
ROBUST RENEWABLE INVESTMENTS IN INDIANA Renewable Projects in Execution NIPSCO Project Structure Investment In Service Status ($M) Executed Projects: Rosewater Wind JV ~$100 ’20 Under Construction (EDPR) Rosewater Wind JV: 100 Jordan Creek Wind PPA N/A ’20 Under Construction IN Crossroads Wind JV: 3
Slide 27: Announced Renewable Project Updates
ANNOUNCED RENEWABLE PROJECT UPDATES All renewable projects are on time and on budget Build Transfer Agreement (JV) Purchase Power Agreement Milestone Achieved Rosewater Executed Regulatory Under In Service In Rate Base Initial Wind Projects Capacity: 100 MW Agreement Approval Construction 2020E 2023
Slide 28: Case Study: Rosewater Wind Joint Venture
CASE STUDY: ROSEWATER WIND JOINT VENTURE 2018 • Engineering/Design Completed • Board Approval Project Profile 2019 • Commercial Agreement Reached January 2019 • 100 MW wind project in White County • Filed CPCN February 2019 • 20 Vestas V136 3.6 MW wind turbines • Regulatory Approval Received August
Slide 29: Well-Positioned 2023 Rate Case
WELL-POSITIONED 2023 RATE CASE Rate Case planned to add renewable assets to NIPSCO rate base and immediately start passing savings to customers and returns to investors Illustrative Future Revenue Requirement* • 2018 Rate Case set the foundation for execution of the replacement transition 1 – Resolv
Slide 30: NIPSCO's Renewable-Focused Future Supply Mix
NIPSCO’S RENEWABLE-FOCUSED FUTURE SUPPLY MIX The 2018 NIPSCO IRP outlines the path to retire 100% of coal assets by 2028 …with replacement capacity pointing primarily to solar resources 4% 7% 12% 1% 15% $1.8-$2.0B Incremental 24% 25% Investment Replacement Opportunity Opportunity 2020 2023E1 2028E2
Slide 31: Renewable Project (Video)
RENEWABLE PROJECT (VIDEO) | NYSE: NI | nisource.com
Slide 32: Financial Overview
Financial Overview Donald Brown EVP/CFO & President, NiSource Corporate Services | NYSE: NI | nisource.com
Slide 33: Strong Financial Foundation for Value Creation
STRONG FINANCIAL FOUNDATION FOR VALUE CREATION Strong Financial Foundation Expected Value Creation • 100% Regulated and Stable Revenue Stream • Utility Rate Base CAGR of 10%–12% over 2021– 2024 • Diversified Footprint with Utility Businesses across Six Jurisdictions1 • NOEPS2 CAGR of 7%–9% over 2021
Slide 34: Diversified Business Mix
DIVERSIFIED BUSINESS MIX1 Balanced Business Mix Diversified Revenue Mix Stable Revenue Profile Operating Retail Margins by Rate Design Earnings Customer Class (Margin) ~25% ~50% Commercial Non- Volumetric ~40% Electric ~60% Gas ~60% ~15% Residential Industrial ~50% Volumetric Financial strength driv
Slide 35: NiSource Next Cost and Capability Enhancements
NISOURCE NEXT COST AND CAPABILITY ENHANCEMENTS • NiSource Next initiatives and CMA sale projected to drive an ~8% reduction in O&M costs in 2021E from 2020E Cost Initiatives Under Way • Voluntary Separation Program savings Offset to future inflationary pressure • Improvements identified − Streamline
Slide 36: 2021-2024 Capital Forecast
2021-2024 CAPITAL FORECAST Investment opportunities expected to enhance system safety and reliability while driving shareholder value $3.3 - $3.6B Expected Investment Recovery Period Expected Renewable $2.4 - $2.7B Generation Renewables (Rate Case Effective 2H/2023) Investments of $1.8 - $2.0B $2.0
Slide 37: Capital Investment Driving Robust Rate Base Growth
CAPITAL INVESTMENT DRIVING ROBUST RATE BASE GROWTH Planned Growth, Safety & Modernization and Renewable investments expected to drive robust rate base growth NiSource Projected YE Rate Base ($ in Billions) $21.2 $19.8 $17.0 $15.2 $13.91 2020E 2021E 2022E 2023E 2024E Rate base growth balanced across
Slide 38: Robust Capital Investment Driving NOEPS Growth
ROBUST CAPITAL INVESTMENT DRIVING NOEPS GROWTH 7% – 9% Annual NOEPS1 expected CAGR ($/share) 2021-2024 Dividend $1.28 Dividend growth to to maintain targeted 60%– $1.36 70% long-term payout ratio2 2020 2021E 2022E 2023E 2024E Long-term ~$40B investment opportunity expected to drive continued NOEPS g
Slide 39: 2021E-2024E Financing Strategy
2021E – 2024E FINANCING STRATEGY1 ($ millions) 2021E 2022E 2023E 2024E Current Financing Plan … Planned Annual Safety & Modernization Investments • All financing is included on our long-term growth Equity commitments ATM (At-the-Market) $200 - $300 Annually • Reflects our focus on ESPP/401K/Other $3
Slide 40: Key Balance Sheet Metrics
KEY BALANCE SHEET METRICS Well positioned to maintain current investment grade credit ratings September 30, 2020 (Estimated) Total Long-Term Debt (LTD) $9.1B Weighted Average Rate (LTD) 3.68% Weighted Average Maturity (LTD) 15.5 Years Credit Ratings Baa2 / BBB+ / BBB Available Liquidity1 $1.5B - $1.
Slide 41: Closing
Closing Joe Hamrock President, Chief Executive Officer and Director, NiSource | NYSE: NI | nisource.com
Slide 42: Our Sustainable Approach to ESG
OUR SUSTAINABLE APPROACH TO ESG Environmental Social Governance • $1.8B-$2.0B of planned renewable • Transformation focused on customer • Leadership enhancements support investments through 2023 safety and reliability commitment to customer service and safety • Expected to retire 100% of coal assets
Slide 43: Accelerating Our Path Forward
ACCELERATING OUR PATH FORWARD Leveraging our platform through a dedicated investment approach and relentless commitment to safety Asset Modernization Enhanced System Safety SMS Implementation Customer Affordability and Increased Customer Satisfaction Generation Transition Improved Earnings Power Cos
Slide 44: | NYSE: NI | nisource.com
| NYSE: NI | nisource.com
Slide 45: Appendix
Appendix | NYSE: NI | nisource.com
Slide 46: Columbia Gas of Ohio
COLUMBIA GAS OF OHIO • Business Profile – Largest LDC in Ohio (~1.5M customers) – ~ 20,200 miles of pipe – ~ 2,000 miles of bare steel and cast iron – ~ $3.2B rate base • Customer Focus – Nationally recognized energy efficiency programs – Positive trending customer satisfaction • Rate Design – Strai
Slide 47: Columbia Gas of Pennsylvania
COLUMBIA GAS OF PENNSYLVANIA • Business Profile – Third-Largest LDC in PA (~437K customers) – ~ 7,600 miles of pipe – ~ 1,200 miles of bare steel and cast iron – ~ $1.9B rate base • Customer Focus – State leader in universal services, low-income initiatives, choice and energy efficiency programs • R
Slide 48: NIPSCO Gas (Indiana)
NIPSCO GAS (INDIANA) • Business Profile – Largest LDC in Indiana (~839K customers) – ~ 17,500 miles of pipe – ~ 23 miles of bare steel – ~ $1.7B rate base • Customer Focus – Lowest-cost gas provider in Indiana over the last 10 years – Fewest customer complaints in Indiana in the last five years – Co
Slide 49: Columbia Gas of Virginia
COLUMBIA GAS OF VIRGINIA • Business Profile – Third-Largest LDC in VA (~274K customers) – ~ 5,300 miles of pipe – ~ 140 miles of bare steel – ~ $850M rate base • Customer Focus – Broad residential, commercial and industrial portfolio – Industry-leading third-party damage rate – Top-tier J.D. Power c
Slide 50: Columbia Gas of Kentucky
COLUMBIA GAS OF KENTUCKY • Business Profile – Second-Largest Gas-Only LDC in KY (~137K customers) – ~ 2,600 miles of pipe – ~ 350 miles of bare steel and cast iron – ~ $327M rate base • Customer Focus – Top-tier customer satisfaction levels • Rate Design – ~ 52% of residential distribution rate fixe
Slide 51: Columbia Gas of Maryland
COLUMBIA GAS OF MARYLAND • Business Profile – Complementary to PA operations (~34K customers) – ~ 650 miles of pipe – ~ 51 miles of bare steel & cast iron – ~ $149M rate base • Customer Focus – Sustained industry-leading employee and system safety performance • Rate Design – Revenue normalization ad
Slide 52: Indiana Electric (NIPSCO)
INDIANA ELECTRIC (NIPSCO) • Business Profile – Third-largest electric utility in Indiana (~ 475K customers) – Fully integrated electric utility – ~ 3,000 MW of environmentally compliant generation Customer Mix (Net Revenue) – ~10,000 distribution line miles • Steel-related customers represent – ~ 3,