NISOURCE INC.

FORM 10-Q QUARTERLY REPORT

FOR THE QUARTER ENDED MARCH 31, ~~2020~~2021

Table of Contents


						Page

			Defined Terms			3

PART I			FINANCIAL INFORMATION

					~~Page~~

	~~Defined Terms~~		3

~~PART I~~	~~FINANCIAL INFORMATION~~

	Item 1.	Financial Statements - unaudited

				Condensed Statements of Consolidated Income (unaudited)		7

				Condensed Statements of Consolidated Comprehensive Income (Loss) (unaudited)		8

				Condensed Consolidated Balance Sheets (unaudited)		9

				Condensed Statements of Consolidated Cash Flows (unaudited)		11

				Condensed Statements of Consolidated Equity (unaudited)		12

				Notes to Condensed Consolidated Financial Statements (unaudited)		14

			Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3835

			Item 3.	Quantitative and Qualitative Disclosures About Market Risk		5452

			Item 4.	Controls and Procedures		5452

PART II			OTHER INFORMATION

			Item 1.	Legal Proceedings		5553

			Item 1A.	Risk Factors		5553

			Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		5554

			Item 3.	Defaults Upon Senior Securities		5554

	~~Item 4.~~	~~Mine Safety Disclosures~~	55

	~~Item 5.~~	~~Other Information~~	55

	~~Item 6.~~	~~Exhibits~~	56

	~~Signature~~		57


	Item 4.
~~DEFINED TERMS~~Mine Safety Disclosures	54

	Item 5.	Other Information	54

	Item 6.	Exhibits	55

	Signature		56


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”~~"our")		NiSource Inc.
Rosewater		Rosewater Wind Generation LLC and its wholly owned subsidiary, Rosewater Wind Farm LLC

Abbreviations and Other
ACE		Affordable Clean Energy
AFUDC		Allowance for funds used during construction
~~AOCI~~
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~~
CCRs		Coal Combustion Residuals
CEP		Capital Expenditure Program
CERCLA		Comprehensive Environmental Response Compensation and Liability Act (also known as Superfund)
COVID-19 ("the COVID-19 pandemic" or "the pandemic")		Novel Coronavirus 2019
~~DSIC~~
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~~



~~DEFINED TERMS~~ FMCA			Federally Mandated Cost Adjustment
GAAP			Generally Accepted Accounting Principles
GCA			Gas cost adjustment
GHG			Greenhouse gases
GWh			Gigawatt hours
HLBV			Hypothetical Liquidation at Book Value
IRP			Infrastructure Replacement Program

IURC			Indiana Utility Regulatory Commission
LIBOR			London InterBank Offered Rate
LIFO			Last In, First Out
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


DEFINED TERMS
MGP			Manufactured Gas Plant
MISO			Midcontinent Independent System Operator
MMDth			Million dekatherms
MW			Megawatts
~~NTSB~~MWh			Megawatt hours
NTSB			National Transportation Safety Board
NYMEX			New York Mercantile Exchange
OPEB			Other Postretirement Benefits
~~PHMSA~~

PHMSA			Pipeline and Hazardous Materials Safety Administration
PPA			Power Purchase Agreement
~~PTC~~PSC			~~Production tax credit~~Public Service Commission
~~RCRA~~PUC			Public Utilities Commission

RCRA			Resource Conservation and Recovery Act
RFP			Request for proposals
~~SAVE~~
SAVE			Steps to Advance Virginia's Energy Plan
SEC			Securities and Exchange Commission
SMRP			Safety Modification and Replacement Program
~~STRIDE~~SMS			Safety Management System
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

VIE			Variable Interest Entity

Note regarding forward-looking statements

This Quarterly Report on Form 10-Q contains ~~“forward-looking statements”~~"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. Expressions of future goals and expectations and similar expressions, including "may," "will," "should," "could," "would," "aims," "seeks," "expects," "plans," "anticipates," "intends," "believes," "estimates," "predicts," "potential," "targets," "forecast," and "continue," reflecting something other than historical fact are intended to identify forward-looking statements. 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 ability to execute our business plan or growth strategy, including utility infrastructure investments; potential incidents and other operating risks associated with our business; our ability to adapt to, and manage costs related to, advances in technology; impacts related to our aging infrastructure; our ability to obtain sufficient insurance coverage and whether such coverage will protect us against significant losses; the success of our electric generation strategy; construction risks and natural gas costs and supply risks; fluctuations in demand from residential and commercial customers; fluctuations in the price of energy commodities and related transportation costs or an inability to obtain an adequate, reliable and cost-effective fuel supply to meet customer demands; the attraction and retention of a qualified workforce and ability to maintain good labor relations; our ability to manage new initiatives and organizational changes; the performance of third-party suppliers and service providers; potential cyber-attacks; any damage to our reputation; any remaining liabilities or impact related to the sale of the Massachusetts Business; the impacts of natural disasters, potential terrorist attacks or other catastrophic events; the impacts of climate change and extreme weather conditions; 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~~adverse economic and capital

market conditions or increases in ~~general economic, capital and commodity market conditions; pension funding obligations;~~interest rates; economic regulation and the impact of regulatory rate reviews; our ability to obtain expected financial or regulatory outcomes; continuing and potential future impacts from the COVID-19 pandemic; economic conditions in certain industries; the reliability of customers and suppliers to fulfill their payment and contractual obligations; the ability of our ~~ability~~subsidiaries to ~~adapt to,~~generate cash; pension funding obligations; potential impairments of goodwill; changes in the method for determining LIBOR and ~~manage costs~~the potential replacement of the LIBOR benchmark interest rate; the outcome of legal and regulatory proceedings, investigations, incidents, claims and litigation; potential remaining liabilities 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

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; andtaxation; 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,~~2020; and matters related to our Equity Units as ~~supplemented by the risk factor~~ set forth ~~herein~~ in ~~Part II, Item 1A. Risk Factors,~~the "Risk Factors" section of this Quarterly Report on Form 10-Q, 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.



Index		Page
Condensed Statements of Consolidated Income (unaudited)		7
Condensed Statements of Consolidated Comprehensive Income (Loss) (unaudited)		8
Condensed Consolidated Balance Sheets (unaudited)		9
Condensed Statements of Consolidated Cash Flows (unaudited)		11
Condensed Statements of Consolidated Equity (unaudited)		12
Notes to Condensed Consolidated Financial Statements (unaudited)		14
1. Basis of Accounting Presentation		14
2. Recent Accounting Pronouncements		15
3. Revenue Recognition		1615
4. Earnings Per Share		18
5. Equity		18
6. Gas in Storage		19
7. ~~Assets~~Property, Plant and ~~Liabilities Held For Sale~~Equipment		19
8. ~~Asset Retirement Obligations~~Regulatory Matters		20
9. ~~Regulatory Matters~~Risk Management Activities		20
10. ~~Risk Management Activities~~Fair Value		22
11. ~~Fair Value~~		23
~~12.~~ Transfers of Financial Assets	2624
~~13.~~12. Goodwill		2625
~~14.~~13. Income Taxes		2725
~~15.~~14. Pension and Other Postretirement Benefits		2725
~~16. Long-Term Debt~~15. Variable Interest Entities		2826
~~17.~~16. Short-Term Borrowings		2827
~~18.~~17. Other Commitments and Contingencies		2928
~~19.~~18. Accumulated Other Comprehensive Loss		3632
~~20.~~19. Other, Net		3633
~~21.~~20. Business Segment Information		3633
21. Su bsequent Event		34

Table of Contents

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


	Three Months Ended March 31,
(in millions, except per share amounts)	2021		2020
Operating Revenues
Customer revenues	$	1,506.5	$	1,525.9
Other revenues	39.1		79.6
Total Operating Revenues	1,545.6		1,605.5
Operating Expenses
Cost of energy	476.8		462.4
Operation and maintenance	361.5		444.6
Depreciation and amortization	185.0		184.3
Loss on sale of assets, net	8.1		280.1
Other taxes	81.0		85.9
Total Operating Expenses	1,112.4		1,457.3

Operating Income	433.2		148.2
Other Income (Deductions)
Interest expense, net	(84.6)		(92.9)
Other, net	10.5		5.4

Total Other Deductions, Net	(74.1)		(87.5)






Income before Income Taxes	359.1		60.7
Income Taxes	62.6		(14.9)


Net Income	296.5		75.6
Net income attributable to noncontrolling interest	1.0		0
Net Income attributable to NiSource	295.5		75.6
Preferred dividends	(13.8)		(13.8)
Net Income Available to Common Shareholders	281.7		61.8
Earnings Per Share


Basic Earnings Per Share	$	0.72	$	0.16



Diluted Earnings Per Share	$	0.72	$	0.16

Basic Average Common Shares Outstanding	392.7		383.1
Diluted Average Common Shares	393.9		384.1

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

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


	Three Months Ended March 31,
(in millions, net of taxes)	2021		2020
Net Income	$	296.5	$	75.6
Other comprehensive income (loss):
Net unrealized loss on available-for-sale debt securities(1)	(2.5)		(5.4)
Net unrealized gain (loss) on cash flow hedges(2)	84.6		(133.3)
Unrecognized pension and OPEB benefit (costs)(3)	(0.9)		0.7
Total other comprehensive income (loss)	81.2		(138.0)
Comprehensive Income (Loss)	$	377.7	$	(62.4)

⁽¹⁾Net unrealized ~~gain (loss)~~loss on available-for-sale debt securities, net of $0.7 million and $1.4 million tax benefit ~~and $0.7 million tax expense~~ in the first quarter of ~~2020~~2021 and ~~2019,~~2020, respectively.

⁽²⁾Net unrealized gain (loss) on cash flow hedges, net of ~~$44.1~~$28.0 million tax expense and ~~$6.5~~$44.1 million tax benefit in the first quarter of ~~2020~~2021 and ~~2019,~~2020, respectively.

⁽³⁾Unrecognized pension and OPEB benefit (costs), net of $0.9 million tax expense and $0.3 million tax benefit ~~and $0.4 million tax expense~~ in the first quarter of ~~2020~~2021 and ~~2019,~~2020, respectively.

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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Condensed Consolidated Balance Sheets (unaudited)

NiSource Inc. Condensed Consolidated Balance Sheets (unaudited)

(in millions)	March 31, 2020			December 31, 2019			(in millions)	March 31, 2021			December 31, 2020
ASSETS							ASSETS
Property, Plant and Equipment							Property, Plant and Equipment
Utility plant	$	22,862.3		$	24,502.6
Plant							Plant	$	24,524.7		$	24,179.9
Accumulated depreciation and amortization	(7,293.7		)	(7,609.3		)	Accumulated depreciation and amortization	(7,688.0)			(7,560.4)
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

Net Property, Plant and Equipment(1)							Net Property, Plant and Equipment(1)	16,836.7			16,619.5
Investments and Other Assets							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

Available-for-sale debt securities (amortized cost of $163.8 and $163.9, allowance for credit losses of $0.3 and $0.5, respectively)							Available-for-sale debt securities (amortized cost of $163.8 and $163.9, allowance for credit losses of $0.3 and $0.5, respectively)	167.9			170.9
Other investments	66.1			74.7			Other investments	81.5			81.1
Total Investments and Other Assets	212.0			230.2			Total Investments and Other Assets	249.4			252.0
Current Assets							Current Assets
Cash and cash equivalents	203.8			139.3			Cash and cash equivalents	89.1			116.5
Restricted cash	9.2			9.1			Restricted cash	7.6			9.1
Accounts receivable	736.8			876.1			Accounts receivable	848.4			843.6
Allowance for credit losses	(20.3		)	(19.2		)	Allowance for credit losses	(53.9)			(52.3)
Accounts receivable, net	716.5			856.9			Accounts receivable, net	794.5			791.3
Gas inventory	59.9			250.9			Gas inventory	48.1			191.2
Materials and supplies, at average cost	130.9			120.2			Materials and supplies, at average cost	145.6			141.5
Electric production fuel, at average cost	63.2			53.6			Electric production fuel, at average cost	52.5			68.4
Exchange gas receivable	39.0			48.5			Exchange gas receivable	53.7			34.1
Assets held for sale	1,655.8			—

Regulatory assets	164.3			225.7			Regulatory assets	188.9			135.7
Deferred property taxes							Deferred property taxes	104.2			85.6
Prepayments and other	182.8			149.7			Prepayments and other	109.3			86.0
Total Current Assets(1)	3,225.4			1,853.9			1,593.5			1,659.4
Other Assets							Other Assets
Regulatory assets	1,922.0			2,013.9			Regulatory assets	1,791.3			1,794.8
Goodwill	1,485.9			1,485.9			Goodwill	1,485.9			1,485.9

Deferred charges and other	160.2			163.7			Deferred charges and other	237.7			228.9
Total Other Assets	3,568.1			3,663.5			Total Other Assets	3,514.9			3,509.6
Total Assets	$	22,592.7		$	22,659.8		Total Assets	$	22,194.5		$	22,040.5

In addition, 20,000 shares of Series B–1 Preferred Stock, par value $0.01 per share, were outstanding as of March 31, ~~2020.~~2021. 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, 2021 and 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.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

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~~$22.3 million and 0 as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, for certain gas distribution companies recorded within “Prepayments and other,” on the Condensed Consolidated Balance Sheets (unaudited).

7. ~~Assets~~Property, Plant and ~~Liabilities Held For Sale~~Equipment

~~On February 26,~~In 2020, ~~NiSource and Columbia of Massachusetts entered into an Asset Purchase Agreement with Eversource. Upon~~ the ~~terms and subject~~MISO approved NIPSCO's plan to retire the ~~conditions set forth~~R.M. Schahfer Generating Station in 2023. The December 2019 NIPSCO electric rate case order included approval to create a regulatory asset upon the ~~Asset Purchase Agreement, NiSource and Columbia of Massachusetts agreed to sell to Eversource, with certain additions and exceptions: (1) substantially all~~retirement of the ~~assets~~R.M. Schahfer Generating Station. The order allows for the recovery of ~~Columbia of Massachusetts~~ and ~~(2) all~~on the net book value of the ~~assets held~~station by ~~any~~the end 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 in2032.

In connection with the ~~Massachusetts Business. The Asset Purchase Agreement provides for a purchase price~~MISO's approval of ~~$1,100 million in cash, subject to adjustment based on Columbia of Massachusetts’ net working capital as~~NIPSCO's planned retirement of the ~~closing. The closing~~R.M. Schahfer Generating Station, we recorded plant retirement-related charges during 2020 comprised of write downs of certain capital projects that have been cancelled and materials and supplies inventory balances deemed obsolete due to the planned retirement. As more information becomes available, the retirement date of the ~~transactions contemplated by the Asset Purchase Agreement is subject to various conditions, including the receipt~~R.M. Schahfer Generating Station will be finalized, and additional plant retirement-related charges may be incurred. An immaterial amount of ~~the approval of the Massachusetts DPU~~plant retirement-related charges were included within "Operation 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 onmaintenance" in the Condensed ~~Statements~~Statement 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~~during the three months ended March 31, ~~2020 and 2019, respectively.~~2021. On March 11, 2021, NIPSCO submitted modified Attachment Y Notices to MISO requesting an updated retirement date for two of the four coal fired units at R.M. Schahfer Generating Station. 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~~two units are now expected to be ~~repaid~~retired by the end of 2021, with the remaining two units still scheduled to be retired in 2023. At retirement, the net book value of the retired units will be reclassified from "Net Property, Plant and Equipment", to current and long-term “Regulatory Assets.” The total net book value of R.M. Schahfer Generating Station's coal units and other associated plant was $861.6 million at ~~closing. The pretax loss amounts~~March 31, 2021.

On April 28, 2021, in response to a Motion filed by certain parties in NIPSCO's quarterly FAC proceeding, the IURC created a sub-docket proceeding in order to receive additional information related to the planned retirements of Units 14 and 15 by the end of 2021 and any resulting cost impacts to customers. NIPSCO does not anticipate that the sub-docket proceeding will impact the planned timing of end of year 2021 for the unit retirements.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

8. Regulatory Matters

~~for~~COVID-19 Regulatory Filings

In response to COVID-19, we received approvals or directives from 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~~regulatory commissions in the ~~Condensed Statements~~states in which we operate. The ongoing impacts of ~~Consolidated Income (unaudited) due to cash already paid for certain transaction costs.~~

~~8. Asset Retirement Obligations~~

Inthese approvals or directives are described 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.table below:



Jurisdiction	Moratorium in Place?	Regulatory Asset balance as of March 31, 2021 (in millions)		Deferred COVID-19 Costs
Columbia of Ohio	No	$	2.0	Incremental operation and maintenance expenses
NIPSCO	No	$	12.0	Incremental bad debt expense and the costs to implement the requirements of the COVID-19 related order
Columbia of Pennsylvania	No	$	7.1	Incremental bad debt expense incurred since March 13, 2020 above levels currently in rates
Columbia of Virginia	Yes	$	0.1	Incremental incurred costs, subject to an earnings test review
Columbia of Maryland	No	$	1.1	Incremental costs (including incremental bad debt expense) incurred to ensure that customers have essential utility service during the state of emergency in Maryland. Such incremental costs must be offset by any benefit received in connection with the pandemic

~~9. Regulatory Matters~~

~~Cost Recovery and Trackers~~

~~Comparability~~On March 11, 2021, the Pennsylvania PUC adopted an order, which lifted its prior pandemic-related moratorium on service terminations for non-payments of ~~our line item operating results is impacted by regulatory trackers~~utility bills beginning April 1, 2021. Pursuant to that ~~allow~~order, Pennsylvania utilities are required to offer payment plans on billing arrearages, with the length of such payment plans depending on customers' income levels. The longest such payment plan would be a minimum of five years 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~~residential customers with incomes below 250% of the ~~operating companies. Some states allow~~Federal Poverty Level.

For Columbia of Virginia, the ~~recovery of such costs through cost tracking mechanisms. Such tracking mechanisms allow for abbreviated~~currently effective legislative and 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~~directives related to the ~~recovery of gas costs, the review~~COVID-19 pandemic require utilities to offer payment plans between 6 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~~24 months, and ~~to permit the recovery of prudently incurred costs related to the supply of gas~~suspend service disconnections and late payment fees for customers. ~~Our distribution companies~~These directives will remain in place until the Governor determines that the economic and public health conditions have ~~historically been found prudent~~improved such that the prohibition does not need to be in ~~the procurement~~place, or until at least 60 days after such declared state of ~~gas supplies to serve customers.~~emergency ends, whichever is sooner.

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.

~~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.~~

~~Table of Contents~~

~~ITEM 1. FINANCIAL STATEMENTS (continued)~~

~~NiSource Inc.~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (continued)~~

~~10.~~9. 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.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

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		(in millions)	March 31, 2021		December 31, 2020
Risk Management Assets - Current⁽¹⁾					Risk Management Assets - Current(1)
Interest rate risk programs	$	—	$	—	Interest rate risk programs	$	0	$	0
Commodity price risk programs	17.3		0.6		Commodity price risk programs	1.0		10.4
Total	$	17.3	$	0.6	Total	$	1.0	$	10.4
Risk Management Assets - Noncurrent⁽²⁾					Risk Management Assets - Noncurrent(2)
Interest rate risk programs	$	—	$	—	Interest rate risk programs	$	0	$	0
Commodity price risk programs	10.9		3.8		Commodity price risk programs	3.2		2.8
Total	$	10.9	$	3.8	Total	$	3.2	$	2.8
Risk Management Liabilities - Current⁽³⁾					Risk Management Liabilities - Current(3)
Interest rate risk programs	$	—	$	—	Interest rate risk programs	$	17.1	$	70.9
Commodity price risk programs	14.5		12.6		Commodity price risk programs	5.0		7.3
Total	$	14.5	$	12.6	Total	$	22.1	$	78.2
Risk Management Liabilities - Noncurrent
Risk Management Liabilities - Noncurrent(4)					Risk Management Liabilities - Noncurrent(4)
Interest rate risk programs	$	253.7	$	76.2	Interest rate risk programs	$	40.6	$	99.5
Commodity price risk programs	58.4		57.8		Commodity price risk programs	38.3		45.1
Total	$	312.1	$	134.0	Total	$	78.9	$	144.6

~~Electric Operations' compliance estimates disclosed below are reflective~~Table of ~~NIPSCO's Integrated Resource Plan submitted~~Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Notes to ~~the IURC on October 31, 2018. See section~~ D~~, "Other Matters NIPSCO 2018 Integrated Resource Plan," below for additional information.~~Condensed Consolidated Financial Statements (unaudited) (continued)

~~Air~~

Future legislative and regulatory programs could significantly limit allowed GHG emissions or impose a cost or tax on GHG emissions. Additionally, rules that require further GHG reductions or impose additional requirements for natural gas facilities could impose additional costs. NiSource will carefully monitor all GHG reduction proposals and regulations.

~~ACE Rule.~~ On July 8, 2019, the EPA published the final ACE rule, which establishes emission guidelines for states to use when developing plans to limit carbon dioxide at coal-fired electric generating units based on heat rate improvement measures. The coal-fired units at NIPSCO’s R.M. Schahfer Generating Station and Michigan City Generating Station are potentially affected sources, and compliance requirements for these units which NIPSCO plans to retire by 2023 and 2028, respectively, will be determined by future Indiana rulemaking. The ACE rule notes that states have “broad flexibility in setting standards of performance for designated facilities” and that a state may set a “business as usual” standard for sources that have a remaining useful life “so short that imposing any costs on the electric generating unit is unreasonable.” State plans are due by 2022, and the EPA will have six months to determine completeness and then one additional year to determine whether to approve the submitted plan. States have the discretion to determine the compliance period for each source. As a result, NIPSCO will continue to monitor this matter and cannot estimate its impact at this time.

~~Waste~~

CERCLA. Our subsidiaries are potentially responsible parties at waste disposal sites under the CERCLA (commonly known as Superfund) and similar state laws. Under CERCLA, each potentially responsible party can be held jointly, severally and strictly liable for the remediation costs as the EPA, or state, can allow the parties to pay for remedial action or perform remedial action themselves and request reimbursement from the potentially responsible parties. Our affiliates have retained CERCLA environmental liabilities, including remediation liabilities, associated with certain current and former operations. These liabilities are not material to the Condensed Consolidated Financial Statements (~~unaudited~~)(unaudited).

MGP. AWe maintain a program ~~has been instituted~~ to identify and investigate former MGP sites where Gas Distribution Operations subsidiaries or predecessors may have liability. The program has identified 6354 such sites where liability is probable. Remedial actions at many

~~Table of Contents~~

~~ITEM 1. FINANCIAL STATEMENTS (continued)~~

~~NiSource Inc.~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (continued)~~

of these sites are being overseen by state or federal environmental agencies through consent agreements or voluntary remediation agreements.

We utilize a probabilistic model to estimate our future remediation costs related to MGP sites. The model was prepared with the assistance of a third party and incorporates our experience and general industry experience with remediating MGP sites. We complete an annual refresh of the model in the second quarter of each fiscal year. No material changes to the estimated future remediation costs were noted as a result of the refresh completed as of June 30, ~~2019.~~2020. Our total estimated liability related to the facilities subject to remediation was ~~$86.8~~$84.3 million and ~~$102.2~~$85.0 million at March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The liability represents our best estimate of the probable cost to remediate the ~~facilities.~~MGP sites. We believe that it is reasonably possible that remediation costs could vary by as much as $20 million in addition to the costs noted above. Remediation costs are estimated based on the best available information, applicable remediation standards at the balance sheet date and experience with similar facilities.

CCRs. On April 17, 2015, the EPA issued a final rule for regulation of CCRs. The rule regulates CCRs under the RCRA Subtitle D, which determines them to be nonhazardous. The rule is implemented in phases and requires increased groundwater monitoring, reporting, recordkeeping and posting of related information to the Internet. The rule also establishes requirements related to CCR management and disposal. The rule allows NIPSCO to continue its byproduct beneficial use program.

To comply with the rule, NIPSCO completed capital expenditures in 2019 to modify its infrastructure and manage ~~CCRs during 2019.~~CCRs. The CCR rule also resulted in revisions to previously recorded legal obligations associated with the retirement of certain NIPSCO facilities. The actual asset retirement costs related to the CCR rule may vary substantially from the estimates used to record the increased asset retirement obligation due to the uncertainty about the requirements that will be established by environmental authorities, compliance strategies that will be used and the preliminary nature of available data used to estimate costs. As allowed by the rule, NIPSCO will continue to collect data over time to determine the specific compliance solutions and associated costs and, as a result, the actual costs may vary. NIPSCO ~~has filed initial CCR closure plans for R.M. Schahfer Generating Station~~will also continue to work with EPA and ~~Michigan City Generating Station with~~ the Indiana Department of Environmental ~~Management.~~Management to obtain administrative approvals associated with the CCR rule. In the event that the approvals are not obtained, future operations could be impacted. We believe the possibility of such an outcome is remote.

~~Water~~D. Other Matters.

~~ELG.~~ On November 3, 2015, the EPA issued a final rule to amend the ELG and standards for the Steam Electric Power Generating category. Based upon a study performed in 2016 of the final rule, capital compliance costs were expected to be approximately $170 million. The EPA has proposed revisions to the final rule. NIPSCO does not anticipate material ELG compliance costs based on the preferred option announced as part of NIPSCO's 2018 Integrated Resource Plan (discussed below).

D~~. Other Matters.~~

~~NIPSCO 2018 Integrated Resource Plan.~~Generation Transition. Multiple factors, but primarily economic ones, including low natural gas prices, advancing cost effective renewable technology and increasing capital and operating costs associated with existing coal plants, have led NIPSCO to conclude in its October 2018 Integrated Resource Plan submission that NIPSCO’s current fleet of coal generation facilities will be retired earlier than previous Integrated Resource Plan’s had indicated.

The Integrated Resource Plan evaluated demand-side and supply-side resource alternatives to reliably and cost effectively meet NIPSCO customers' future energy requirements over the ensuing 20 years. The preferred option within the Integrated Resource Plan retires R.M. Schahfer Generating Station (Units 14, 15, 17, and 18) by 2023 and Michigan City Generating Station (Unit 12) by 2028. These units represent 2,080 MW of generating capacity, equal to 72% of NIPSCO’s remaining generating capacity and 100% of NIPSCO's remaining coal-fired generating capacity.

~~The current replacement plan includes lower-cost, reliable, cleaner energy resources to be obtained through a combination of NIPSCO ownership and PPAs.~~

~~In January 2019, NIPSCO~~has executed ~~a 20 year PPA, referred to as the Jordan Creek PPA,~~several PPAs to purchase 100% of the output from renewable generation facilities at a fixed price per MWh. ~~NIPSCO submitted~~Each facility supplying the ~~Jordan Creek PPA to the IURC for approval in February 2019~~energy will have an associated nameplate capacity, and ~~the IURC approved the Jordan Creek PPA on June 5, 2019. Payments~~payments under the ~~Jordan Creek PPA~~PPAs will not begin until the associated generation facility is constructed by the ~~owner / seller, which is currently scheduled to be complete by the end of 2020.~~owner/seller. NIPSCO ~~is monitoring any possible impact COVID-19 may have on the expected completion date of this project.~~

~~Also in January 2019, NIPSCO~~has also executed ~~a BTA, referred to as the Rosewater BTA,~~several BTAs with ~~a developer~~developers to construct a renewable generation facility with a nameplate capacity of approximately 100 MW. Once complete, ownership of the facility would be transferred to a joint venture whose members include NIPSCO, the developer and an unrelated tax equity partner. The aforementioned joint venture is expected to be fully owned by NIPSCO after the wind PTCs are monetized from the project

~~Table of Contents~~

~~ITEM 1. FINANCIAL STATEMENTS (continued)~~

~~NiSource Inc.~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (continued)~~

~~(approximately 10 years after the facility goes into service).~~facilities. NIPSCO's purchase requirement under the ~~Rosewater BTA~~BTAs is dependent on satisfactory approval of the ~~Rosewater~~ BTA by the IURC, successful execution of an agreement with a tax equity partner and timely completion of construction. NIPSCO ~~submitted the Rosewater BTA to the IURC for approval in February 2019~~ and the IURC approved the Rosewater BTA on August 7, 2019. The required FERC approvals for the project were received in December 2019. Construction of the facility is scheduled to be completed by the end of 2020; however, this project could experience a construction delay due to COVID-19. NIPSCO is continuing to monitor the impact of COVID-19.

On October 1, 2019, NIPSCO announced the opening of its next round of RFP to consider potential resources to meet the future electric needs of its customers. The RFP closed on November 20, 2019, and NIPSCO continues to evaluate the results. NIPSCO is considering all sources in the RFP process and is expecting to obtain adequate resources to facilitate the retirement of the R.M. Schahfer Generation Station in 2023. The planned replacement in 2023 of approximately 1,600 MW from this coal-fired generation station will provide incremental capital investment opportunities for 2022 and 2023. Currently, half of the capacity in the replacement plan is targeted to be owned by joint ventures that will include NIPSCO and unrelated financial investors as the members. The remaining new capacity is expected to be primarily in the form of PPAs. NIPSCO expects to begin the appropriate regulatory compliance filings related to the new capacity as agreements are finalized with counterparties in 2020 and 2021.

In October 2019, NIPSCO executed a BTA, referred to as the Indiana Crossroads BTA, with a developer to construct an additional renewable generation facility with a nameplate capacity of approximately 300 MW. Once complete, ownership of the facility would be transferred to a joint venture whose members include NIPSCO, the developer and an unrelated tax equity partner. The aforementioned joint venture is expected to be fully owned by NIPSCO after the wind PTCs are monetized from the project (approximately 10 years after the facility goes into service). NIPSCO's purchase requirement under the Indiana Crossroads BTA is dependent on satisfactory approval of the Indiana Crossroads BTA by the IURC, successful execution of an agreement with a tax equity partner ~~and timely completion of construction. NIPSCO submitted the Indiana Crossroads BTA~~are obligated to make cash contributions to the ~~IURC for approval on October 22, 2019,~~partnership at the date construction is substantially complete. Once the tax equity partner has earned their negotiated rate of return and we have reached the ~~IURC approved~~agreed upon contractual date, NIPSCO has the ~~Indiana Crossroads BTA on February 19, 2020. Required FERC filings are expected~~option to ~~be filed by~~purchase at fair market value from the ~~end of June 2020. Construction of~~tax equity partner the ~~facility is expected to be completed by the end of 2021.~~

On May 1, 2020, President Donald Trump issued an executive order (the “EO”) prohibiting any transaction initiated after that day that (i) involves bulk-power system equipment designed, developed, manufactured or supplied by persons owned by, controlled by or subject to the jurisdiction or direction of a foreign adversary and (ii) poses an unacceptable risk to national security. The EO directs the U.S. Secretary of Energy to issue implementing regulations by September 28, 2020. The EO also requires the U.S. Secretary of Energy to review the risk of existing bulk-power system equipment sourced from foreign adversaries and to establish a task force to review and recommend federal procurement policies and procedures consistent with the considerations identifiedremaining interest in the ~~EO. In the future certain bulk-power system equipment owned or operated by NiSource could possibly be considered to be sourced from a foreign adversary within the meaning of the EO.~~aforementioned joint venture.

Greater Lawrence Incident Restoration. In addition to the amounts estimated for third-party claims and fines, penalties and settlements associated with government investigations described above, ~~since the Greater Lawrence Incident,~~ we have recorded expenses ~~of approximately $429 million~~ for other incident-related costs. We estimate that total other incident-related costs will range from $450 million and $460 million, depending on the incurrence of costs associated with resolving outstanding inquiries and investigations discuss above in " - B. Legal Proceedings." Such costs include certain consulting costs, legal costs, vendor costs, claims center costs, labor and related expenses incurred in connection with the incident, and insurance-related loss surcharges. ~~The amounts set forth above do not include~~These costs were immaterial for the ~~capital cost of the pipeline replacement, which is set forth below, or any estimates for fines and penalties, which are discussed above in " - B. Legal Proceedings."~~three months ended March 31, 2021.

As discussed in "- B. Legal Proceedings," the aggregate amount of third-party liability insurance coverage available for losses arising from the Greater Lawrence Incident is $800 million. We have collected the entire $800 million. Expenses related to the incident have exceeded the total amount of insurance coverage available under our policies.

~~Table of Contents~~

~~ITEM 1. FINANCIAL STATEMENTS (continued)~~

~~NiSource Inc.~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (continued)~~

The following table summarizes expenses incurred and insurance recoveries recorded since the Greater Lawrence Incident. This activity is presented within "Operation and maintenance" and "Other, net' in our Condensed Statements of Consolidated Income (unaudited).

Total Costs Incurred through Costs Incurred during the Three Months Ended
(in millions) December 31, 2019 March 31, 2020 Incident to Date
Third-party claims $ 1,041
$ —
$ 1,041
Other incident-related costs 420
9
429
Total 1,461
9
1,470
Insurance recoveries recorded (800 ) —
(800 )
Total costs incurred $ 661
$ 9
$ 670

Greater Lawrence Pipeline Replacement. In connection with the Greater Lawrence Incident, Columbia of Massachusetts, in cooperation with the Massachusetts Governor’s office, replaced the entire affected ~~45-mile cast iron and bare steel~~ pipeline system that delivers gas to approximately 7,500 gas meters, the majority of which serve residences and approximately 700 of which serve businesses impacted in the Greater Lawrence Incident. This system was replaced with plastic distribution mains and service lines, as well as enhanced safety features such as pressure regulation and excess flow valves at each premise.

system. We ~~have~~ invested approximately $258 million of capital spend for the pipeline replacement; this work was completed in 2019. We maintain property insurance

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

for gas pipelines and other applicable property. Columbia of Massachusetts has filed a proof of loss with its property insurer for ~~the full cost of~~ the pipeline replacement. In January 2020, we filed a lawsuit against the property insurer, seeking payment of our property claim. We are currently unable to predict the timing or amount of any insurance recovery under the property policy. This pipeline replacement cost is part of the Massachusetts Business that is classified as held for sale at March 31, 2020. The assets and liabilities of the Massachusetts Business have been recorded at fair value, less costs to sell, which has resulted in a loss being recorded as of March 31, 2020. See Note 7, "Assets and Liabilities Held for Sale," for additional information.

State Income Taxes Related to Greater Lawrence Incident Expenses. As of December 31, 2018, expenses related to the Greater Lawrence Incident were $1,023 million. In the fourth quarter of 2019, we filed an application for Alternative Apportionment with the MA DOR to request an allocable approach to these expenses for purposes of Massachusetts state income taxes, which, if approved, would result in a state deferred tax asset of approximately $50 million, net. The MA DOR issued a denial during the first quarter of 2020. We ~~are filing~~filed an application for abatement in the second quarter of 2020, ~~and believe it is reasonably possible~~which resulted in a denial from the MA DOR in April 2021. We have 60 days to submit an appeal for this decision.

One-Time Employee Separation Benefits. On August 5, 2020, we commenced a voluntary separation program for certain employees. Expense for the voluntary separation program was predominantly recognized in the third quarter of 2020, when the employees accepted the offer, absent a retention period. In addition, we have continued to evaluate our organizational structure under the auspices of NiSource Next, which has resulted in additional separations under our existing severance policies. For employees that ~~the application~~have a retention period, expense will be ~~accepted, or an alternative method proposed.~~recognized over the remaining service period. The total estimated severance expense for employees is approximately $40 million, with $38.1 million incurred to date. A rollforward of the one-time employee separation benefits accrual for the three months ended March 31, 2021 is presented below:


(in millions)	Balance as of January 1, 2021	Changes Attributable to Costs Incurred(1)	Costs Paid	Adjustments	Balance as of March 31, 2021(2)
One-time Employee Separation Benefits	11.1	4.6	(8.4)	0	7.3

~~19.~~(1)This activity is presented within "Operation and maintenance" in our Condensed Statements of Consolidated Income (unaudited).

(2)This activity is presented within "Accrued compensation and employee benefits" in our Condensed Consolidated Balance Sheets (unaudited).

18. Accumulated Other Comprehensive Loss

The following tables display the components of Accumulated Other Comprehensive Loss:


(in millions)	Gains and Losses on Securities(1)		Gains and Losses on Cash Flow Hedges(1)		Pension and OPEB Items(1)		Accumulated Other Comprehensive Loss(1)
Balance as of January 1, 2021	$	6.0	$	(147.9)	$	(14.8)	$	(156.7)
Other comprehensive income (loss) before reclassifications	(2.2)		84.6		(1.4)		81.0
Amounts reclassified from accumulated other comprehensive income (loss)	(0.3)		0		0.5		0.2
Net current-period other comprehensive income (loss)	(2.5)		84.6		(0.9)		81.2

Balance as of March 31, 2021	$	3.5	$	(63.3)	$	(15.7)	$	(75.5)
(1)All amounts are net of tax. Amounts in parentheses indicate debits.


(in millions)	Gains and Losses on Securities(1)		Gains and Losses on Cash Flow Hedges(1)		Pension and OPEB Items(1)		Accumulated Other Comprehensive Loss(1)
Balance as of January 1, 2020	$	3.3	$	(77.2)	$	(18.7)	$	(92.6)
Other comprehensive income (loss) before reclassifications	(5.2)		(133.3)		0.4		(138.1)
Amounts reclassified from accumulated other comprehensive income (loss)	(0.2)		0		0.3		0.1
Net current-period other comprehensive income (loss)	(5.4)		(133.3)		0.7		(138.0)

Balance as of March 31, 2020	$	(2.1)	$	(210.5)	$	(18.0)	$	(230.6)
(1)All amounts are net of tax. Amounts in parentheses indicate debits.

(in millions)
Gains and Losses on Securities⁽¹⁾

Gains and Losses on Cash Flow Hedges⁽¹⁾

Pension and OPEB Items⁽¹⁾

Accumulated
Other
Comprehensive
Loss⁽¹⁾
Balance as of January 1, 2020 $ 3.3
$ (77.2 ) $ (18.7 ) $ (92.6 )
Other comprehensive income (loss) before reclassifications (5.2 ) (133.3 ) 0.4
(138.1 )
Amounts reclassified from accumulated other comprehensive income (loss) (0.2 ) —
0.3
0.1
Net current-period other comprehensive income (loss) (5.4 ) (133.3 ) 0.7
(138.0 )
Balance as of March 31, 2020 $ (2.1 ) $ (210.5 ) $ (18.0 ) $ (230.6 )

⁽¹⁾~~All amounts are net of tax. Amounts in parentheses indicate debits.~~

(in millions)
Gains and Losses on Securities⁽¹⁾

Gains and Losses on Cash Flow Hedges⁽¹⁾

Pension and OPEB Items⁽¹⁾

Accumulated
Other
Comprehensive
Loss⁽¹⁾
Balance as of January 1, 2019 $ (2.4 ) $ (13.0 ) $ (21.8 ) $ (37.2 )
Other comprehensive income (loss) before reclassifications 2.7
(19.3 ) 0.5
(16.1 )
Amounts reclassified from accumulated other comprehensive income 0.1
—
0.4
0.5
Net current-period other comprehensive income (loss) 2.8
(19.3 ) 0.9
(15.6 )
Balance as of March 31, 2019 $ 0.4
$ (32.3 ) $ (20.9 ) $ (52.8 )

⁽¹⁾~~All amounts are net of tax. Amounts in parentheses indicate debits.~~

~~20. Other, Net~~

Three Months Ended March 31, (in millions)
2020 2019
Interest income $ 1.7
$ 2.1
AFUDC equity 1.7
1.7
Pension and other postretirement non-service cost 2.7
(2.8 )
Miscellaneous (0.7 ) (1.7 )
Total Other, net $ 5.4
$ (0.7 )

~~21. Business Segment Information~~

At March 31, 2020, our operations are divided into 2 primary reportable segments. 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.~~

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

19. Other, Net



Three Months Ended March 31, (in millions)	2021		2020
Interest income	$	0.9	$	1.7
AFUDC equity	1.5		1.7

Pension and other postretirement non-service benefit	8.5		2.7

Miscellaneous	(0.4)		(0.7)
Total Other, net	$	10.5	$	5.4

20. Business Segment Information

At March 31, 2021, our operations are divided into 2 primary reportable segments, the Gas Distribution Operations and Electric Operations segments. Corporate costs and other activities that are not significant on a stand-alone basis to warrant treatment as an operating segment and that do not fit into one of our two segments are aggregated as "Corporate and Other" in the disclosures below. Refer to Note 3, "Revenue Recognition," for additional information on our segments and their sources of revenues.

The following table provides information about our business segments. We use operating income as our primary measurement for each of the reported segments and make decisions on finance, dividends and taxes at the corporate level on a consolidated basis. Segment revenues include intersegment sales to affiliated subsidiaries, which are eliminated in consolidation. Affiliated sales are recognized on the basis of prevailing market, regulated prices or at levels provided for under contractual agreements. Operating income is derived from revenues and expenses directly associated with each segment.

Three Months Ended
March 31,
(in millions) 2020 2019
Operating Revenues
Gas Distribution Operations
Unaffiliated $ 1,228.0
$ 1,438.8
Intersegment 3.0
3.3
Total 1,231.0
1,442.1
Electric Operations
Unaffiliated 377.3
430.8
Intersegment 0.2
0.2
Total 377.5
431.0
Corporate and Other
Unaffiliated 0.2
0.2
Intersegment 106.7
111.1
Total 106.9
111.3
Eliminations (109.9 ) (114.6 )
Consolidated Operating Revenues $ 1,605.5
$ 1,869.8
Operating Income (Loss)
Gas Distribution Operations $ 78.5
$ 275.4
Electric Operations 78.5
95.0
Corporate and Other (8.8 ) 3.8
Consolidated Operating Income $ 148.2
$ 374.2


	Three Months Ended March 31,
(in millions)	2021		2020
Operating Revenues
Gas Distribution Operations
Unaffiliated	$	1,135.8	$	1,228.0
Intersegment	3.1		3.0
Total	1,138.9		1,231.0
Electric Operations
Unaffiliated	402.5		377.3
Intersegment	0.2		0.2
Total	402.7		377.5
Corporate and Other
Unaffiliated	7.3		0.2
Intersegment	103.9		106.7
Total	111.2		106.9
Eliminations	(107.2)		(109.9)
Consolidated Operating Revenues	$	1,545.6	$	1,605.5
Operating Income (Loss)
Gas Distribution Operations	$	346.9	$	78.5
Electric Operations	87.9		78.5
Corporate and Other	(1.6)		(8.8)
Consolidated Operating Income	$	433.2	$	148.2

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

21. Subsequent Event

On April 19, 2021, we completed the sale of 8.625 million Series A Equity Units (“Equity Units”), initially consisting of Series A Corporate Units (“Corporate Units”), each with a stated amount of $100. The offering generated net proceeds of $835.5 million, after underwriting and estimated issuance expenses. Each Corporate Unit consists of a forward contract to purchase shares of our common stock in the future and a 1/10th, or 10%, undivided beneficial ownership interest in one share of Series C Mandatory Convertible Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share. The Mandatory Convertible Preferred Stock initially will not bear any dividends. Total annual distributions of the Corporate Units will be 7.75%, consisting of quarterly contract adjustment payments under the forward contract. We may pay the contract adjustment payments in cash, shares of common stock or a combination of cash and shares of common stock, at our election.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NiSource Inc.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

NiSource Inc.

EXECUTIVE SUMMARY

This Management’s Discussion and Analysis of Financial Condition and Results of Operations ~~(Management’s Discussion) analyzes our financial condition, results of operations and cash flows and those of our subsidiaries. It also~~("Management’s Discussion") includes management’s analysis of past financial results and certain potential factors that may affect future results, potential future risks and approaches that may be used to manage those risks. See "Note regarding forward-looking statements" at the beginning of this report for a list of factors that may cause results to differ materially.

Management’s Discussion is designed to provide an understanding of our operations and financial performance and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

We are an energy holding company under the Public Utility Holding Company Act of 2005 whose subsidiaries are fully regulated natural gas and electric utility companies serving customers in ~~seven~~six states. We generate substantially all of our operating income through these rate-regulated businesses, which are summarized for financial reporting purposes into two primary reportable segments: Gas Distribution Operations and Electric Operations.

Refer to the “Business” section of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020 for further discussion of our regulated utility business segments.

Our goal is to develop strategies that benefit all stakeholders as we (i) address changing customer conservation patterns, ~~develop more contemporary pricing structures~~(ii) align our price structure with our cost structure, and (iii) embark on long-term infrastructure investment ~~programs.~~and safety programs to better serve our customers. These strategies ~~are intended to improve~~focus on improving safety and reliability, ~~and safety, enhance~~enhancing customer service, lowering customer bills and ~~reduce~~reducing emissions while generating sustainable returns. The safety of our customers, communities and employees remains our top priority. The SMS is an established operating model within NiSource. With the continued support and advice from our Quality Review Board (a panel of third parties with safety operations expertise engaged by management to advise on safety matters), we are continuing to mature our SMS processes, capabilities and talent as we collaborate within and across industries to enhance safety and reduce operational risk. Additionally, we continue to pursue regulatory and legislative initiatives that will allow residential customers not currently on our system to obtain gas service in a cost effective manner. ~~Refer also~~

Your Energy, Your Future: Our plan to replace all of our coal generation capacity by the ~~discussion~~end of ~~Electric Supply~~ ~~within our Electric Operations discussion~~2028 with primarily renewable resources is well underway. In March 2021, we executed three BTAs for 650 MW solar nameplate capacity and a PPA for 200 MW of wind nameplate capacity. The four projects were selected following a comprehensive review of bids submitted through the RFP process that NIPSCO underwent in late 2019. The projects complement previously executed BTAs and PPAs with a combined nameplate capacity of 1,300 MW and 1,180 MW, respectively. NIPSCO will refresh its 2018 Integrated Resource Plan in 2021. For additional information, ~~on our long term electric generation strategy.~~see "Results and Discussion of Segment Operation - Electric Operations," in this Management's Discussion.

~~Novel Coronavirus:~~ NiSource Next:~~During~~ We have launched a comprehensive, multi-year program designed to deliver long-term safety, sustainable capability enhancements and cost optimization improvements. This program will advance the ~~first~~high priority we place on safety and risk mitigation, further enable our safety management system, and enhance the customer experience. NiSource Next is designed to (i) leverage our current scale, (ii) utilize technology, (iii) define clear roles and accountability with our leaders and employees, and (iv) standardize our processes to focus on operational rigor, quality management and continuous improvement. In the second quarter of 2020, the United States and countries around the globe were impacted by the outbreak of the novel coronavirus (COVID-19). On March 11, 2020, the World Health Organization (WHO) declared the outbreak of COVID-192021, we began to be a global pandemic. In response to this declaration and the rapid spread of COVID-19 within the United States, federal, state and local governments throughout the country have imposed varying degrees of restrictions on social and commercial activity to promote social distancing in an effort to slow the spread of the illness. These measures have begun to have a significant adverse impact upon many sectors of the economy.implement enhanced digital tools associated with our customer experience.

~~NiSource provides essential natural gas and electric services.~~ COVID-19: The safety of our employees and customers, while providing ~~these~~ essential services during the COVID-19 pandemic, is paramount. We ~~are taking~~continue to take a proactive, coordinated approach intended to prevent, mitigate and respond to COVID-19 by ~~activating~~utilizing our Incident Command System (ICS)~~, which~~. The ICS includes members of our executive council, a medical review professional, and members of functional teams from across our company. The ICS monitors state-by-state conditions and determines steps to conduct our operations safely for employees and customers. This includes, without limitation, assessing COVID-19 cases, conditions and mandates by location, implementing employee and customer health and mitigation plans, rolling out technology to maximize work-from-home capabilities, securing appropriate personal protective equipment and cleaning facilities, coordinating customer, employee and stakeholder messaging and monitoring impacts to supply chain and contractor networks. We are also monitoring guidance from the Centers for Disease Control (CDC), as well as local, state and federal agencies.

We have implemented procedures designed to protect our employees who work in the field and who continue to work in operational and corporate facilities, including social distancing, wearing face coverings, temperature checks and more frequent cleaning of equipment and ~~facilities, and sequestration of employees who support critical functions.~~facilities. We have also implemented ~~social distancing practices, including~~ work-from-home ~~policies.~~policies and practices. We ~~are temporarily suspending all~~continue to limit company vehicle occupancy to one person, where possible, and minimize non-essential work that requires an employee to enter a customer premise when infection rates spike in a county and ~~limiting company vehicle occupancy to one person.~~local agencies elevate risk levels. As local circumstances permit, we are beginning previously delayed work that requires customer interaction. We continue to employ physical and ~~cyber-security~~cybersecurity measures to ensure that our operational and support systems remain functional.

We Our actions to date have ~~suspended shutoffs for nonpayment in response to~~mitigated the COVID-19 pandemic. This suspension applies to residential, commercial and industrial customers and will remain in effect until further notice. In addition, we are offering more flexible payment plans to customers impacted or experiencing hardship as a resultspread of COVID-19 amongst our employees and ~~we have suspended late payment charges. The CARES Act was enacted on March 27, 2020 and provides monetary-relief and financial aid to individuals, business, nonprofits, states and municipalities.~~principal field contractors. We are ~~continuing to promote multiple resources available to customers including benefits~~also continuously evaluating changes

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

NiSource Inc.

to CDC guidance, and updating our safety measures accordingly, in order to ensure employee and customer safety during this pandemic. We are following all federal, state, and local guidelines related to the COVID-19 vaccinations and are encouraging employees to receive the vaccine when it is available to them.

~~from~~Since the ~~CARES Act,~~beginning of the COVID-19 pandemic, we have been helping our customers navigate this challenging time. We suspended disconnections soon after this outbreak began. While the suspension of disconnections has been lifted in most states, suspensions are likely to continue in others. We plan to continue our payment assistance programs and customer education and awareness of energy assistance programs such as ~~additional funding for both~~ the ~~Low-Income~~Low Income Home Energy Assistance Program ~~and the Community Services Block Grant to help support income-qualified customers. We are sharing energy efficiency tips~~(LIHEAP) to help customers ~~save energy at home and promoting our budget plan program, which allows customers to pay about the same amount each month.~~

~~We have had interactions~~deal with the utility regulators for each of our operating companies regarding COVID-19. Those interactions have primarily focused on steps we are taking to safely maintain essential services, including pursuing waivers of certain regulatory requirements, where needed, to allow for continued safe operations. We are also engaging regulators to address the short-term and long-term economic impact COVID-19 has, and may continue to have, on our customers and our operations. In April 2020, the Public Service Commission of Maryland and the Virginia State Corporation Commission issued orders allowing utilities in their jurisdictions to record a regulatory asset to capture and track COVID-19-related incremental costs, and we are currently evaluating the impact of these orders.

COVID-19 has resulted in new federal and state laws. We are considering relief under the provisions of the CARES Act for employer payroll tax credits and deferred payroll tax payments. We believe the deferral of payroll tax payments could provide a cash flow benefit by delaying about $30.0 million of 2020 payroll tax payments, of which 50% would be due at the end of 2021 and the remaining 50% would be due at the end of 2022. Given the recent enactment of the CARES Act, we are currently evaluating the impact of the ~~employer payroll tax credits and other potentially applicable provisions.~~pandemic. Regulatory deferrals for certain costs have been allowed by all of our state regulatory commissions. Costs approved for deferral vary by state. For information on the ~~impact~~state specific suspension of ~~the CARES Act on Income Taxes,~~disconnections and COVID-19 regulatory filings, see Note ~~14, "Income Taxes,~~8, "Regulatory Matters," in the Notes to Condensed Consolidated Financial Statements (unaudited).

~~COVID-19 did not materially impact our operating results in the first quarter of 2020.~~ We are actively managing the materials, supplies, and contract services for our generation, transmission, distribution, and customer services functions. There are currently no significant issues in the supply chain for our electric and gas operations. At this time, there are no significant delays in our capital construction programs or our renewable generation projects, except for the Rosewater renewable generation project, which could experience a delay due to COVID-19, and a $100 million reduction in expected 2020 capital investments to conserve cash. In addition, we have not experienced a material adverse change in liquidity as a result of COVID-19. With the refinancing of our $850 million term loan on April 1, the issuance of $1.0 billion notes on April 13, 2020, the anticipated cash proceeds from the sale of the Massachusetts Business that we expect to close by the end of the third quarter of 2020, the available capacity under our short-term revolving credit facility and accounts receivable securitization facilities and our ability to access capital markets, we believe we have sufficient liquidity for the next 12 to 24 months. However, we are continuously evaluating and monitoring the impact COVID-19 could have on our future operating results and liquidity. Such impact of COVID-19 includes, but is not limited to:

~~A potential reduction in labor availability and productivity due to the health impact COVID-19 could have on our employees and contractors.~~

A decline in revenue and cash flow that will result from a decrease in commercial and industrial gas and electric demand as businesses comply with shelter-in-place requirements and as businesses experience negative economic impact from COVID-19, potentially offset by higher residential demand. We have begun to see a decline in commercial and industrial gas and electric demand. A 1% annual decrease in gas and electric commercial and industrial sales volumes would decrease operating income by approximately $10.0 million in 2020.

An anticipated increase in bad debt and a decrease in cash flows resulting from the suspension of shutoffs and the potential inability of our customers to pay for their gas and electric service due to job loss or other factors, partially offset by any potential regulatory recovery.

~~An expected decline in revenue due to higher customer attrition rates, as well as lower revenue growth if customer additions slow due to a prolonged economic downturn.~~

~~An anticipated decline in revenue due to the suspension of late payment charges. The impact of suspending late payment charges was not material in the first quarter.~~

~~An anticipated delay in cash flows as customers utilize the more flexible payment plans.~~

A potential increase in cost of materials, supplies and contract services. The incremental costs related to the safety measures described above were not material in the first quarter. While we continue to incur costs for those safety measures, the impact of these costs is dependent upon the extent and duration of the pandemic.

~~An anticipated increase in internal labor costs from sequestrations and higher future overtime costs.~~

A potential increase in future pension expense and pension funding requirements due to the degradation of interest rates and capital market conditions. Any increase in pension expense would not be determined until the year-end remeasurement or at an interim remeasurement if triggered by higher than expected lump sum payments.

~~Table of Contents~~

~~ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)~~

~~NiSource Inc.~~

~~A sustained deterioration in market conditions that could reduce our reporting units' fair values below their carrying values, resulting in future goodwill impairment charges.~~

~~Potential delays in capital construction projects, including the impact on our renewable generation projects and the related federal tax credits.~~

~~A delay in cash flows in the event that the sale of the Massachusetts Business does not close by the end of the third quarter, which could impact our liquidity.~~

~~Future volatility in the capital and credit markets that could impact our liquidity by limiting our access to capital or increasing the cost of capital.~~

~~The potential for delayed state regulatory filings, regulatory approvals and recovery of invested capital.~~

The impact of the employer payroll tax credit and payroll tax payment deferral under the CARES Act. As discussed above, we believe the deferral of payroll tax payments could provide a cash flow benefit by delaying about $30.0 million of payroll tax payments. We are currently evaluating the impact of the employer payroll tax credits.

~~The impact of newly enacted and proposed state regulatory actions and federal laws.~~

This is a rapidly evolving situation, and we cannot predict the extent or duration of the outbreak, or the total effects on the global, national or local economy, or our operations or financial results. We will continue to monitor ~~developments~~how COVID-19 is affecting our workforce, customers, suppliers, operations, financial results and ~~operations~~cash flow. The extent of the impact in the future will vary and ~~take additional measures as needed in an effort to help mitigate~~depend on the duration and severity of the impact on the global, national and local economies. See Note 3, “Revenue Recognition” and Note 8, “Regulatory Matters” for impacts of ~~the~~ COVID-19 ~~pandemic on our company and in our communities.~~

~~Greater Lawrence Incident:~~ The Greater Lawrence Incident occurred on September 13, 2018. The following table summarizes expenses incurred and insurance recoveries recorded since the Greater Lawrence Incident. The amounts set forth in the table below do not include the estimated capital cost of the pipeline replacement described below and as set forth in Note 18- D, "Other Matters - Greater Lawrence Pipeline Replacement," in the Notes to Condensed Consolidated Financial Statements (unaudited).

Inclusive of the $1,041 million of third-party claims and fines, penalties and settlements associated with government investigations recorded incident to date, we estimate that total costs related to third-party claims and fines, penalties and settlements associated with government investigations as set forth in Note 18, "Other Commitments and Contingencies - B. Legal Proceedings," will range from $1,041 million to $1,055 million, depending on the number, nature, final outcome and value of third-party claims and the final outcome of government investigations. These costs do not include costs of certain third-party claims and fines, penalties or settlements with government investigations that we are not able to estimate. We expect to incur a total of $450 million to $460 million in other incident-related costs, inclusive of the $429 million recorded for the ~~incident to date, as set forth in Note 18, "Other Commitments and Contingencies - D. Other Matters - Greater Lawrence Incident Restoration."~~

The process for estimating costs associated with third-party claims and fines, penalties and settlements associated with government investigations relating to the Greater Lawrence Incident requires management to exercise significant judgment based on a number of assumptions and subjective factors. As more information becomes known, including additional information regarding ongoing investigations, management's estimates and assumptions regarding the financial impact of the Greater Lawrence Incident may change.

~~The aggregate amount of third-party liability insurance coverage available for losses arising from the Greater Lawrence Incident is $800 million. We have collected the entire $800 million.~~

~~Table of Contents~~

~~ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)~~

~~NiSource Inc.~~

We have invested approximately $258 million of capital spend for the pipeline replacement; this work was completed in 2019. We maintain property insurance for gas pipelines and other applicable property. Columbia of Massachusetts has filed a proof of loss with its property insurer for the full cost of the pipeline replacement. In January 2020, we filed a lawsuit against the property insurer, seeking payment of our property claim. We are currently unable to predict the timing or amount of any insurance recovery under the property policy. This pipeline replacement cost is part of the Massachusetts Business that is classified as held for sale atthree months ended March 31, 2020. The assets and liabilities of the Massachusetts Business have been recorded at fair value, less costs to sell, which has resulted in a loss being recorded as of March 31, 2020. See Note 7, "Assets and Liabilities Held for Sale," in the Notes to Condensed Consolidated Financial Statements (unaudited) for additional information.2021.

Refer to Note 18-B and D, "Legal Proceedings" and "Other Matters," in the Notes to Condensed Consolidated Financial Statements (unaudited), "Summary of Consolidated Financial Results," "Results and Discussion of Segment Operation - Gas Distribution Operations," and "Liquidity and Capital Resources" in this Management's Discussion for additional information related to the Greater Lawrence Incident.

~~Columbia of Massachusetts Asset 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, we have agreed to sell the Massachusetts Business to Eversource for a purchase price of ~~$1,100 million~~ ~~in cash, subject to adjustment. For additional information, see Note 7, "Assets and Liabilities Held for Sale," in the Notes to Condensed Consolidated Financial Statements (unaudited).~~

Summary of Consolidated Financial Results

A summary of our consolidated financial results for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 are presented below:


	Three Months Ended March 31,
(in millions, except per share amounts)	2021		2020		2021 vs. 2020
Operating Revenues	$	1,545.6	$	1,605.5	$	(59.9)
Operating Expenses
Cost of energy	476.8		462.4		14.4
Other Operating Expenses	635.6		994.9		(359.3)
Total Operating Expenses	1,112.4		1,457.3		(344.9)
Operating Income	433.2		148.2		285.0
Total Other Deductions, net	(74.1)		(87.5)		13.4
Income Taxes	62.6		(14.9)		77.5


Net Income	296.5		75.6		220.9
Net income attributable to noncontrolling interest	1.0		—		1.0
Net Income attributable to NiSource	295.5		75.6		219.9
Preferred dividends	(13.8)		(13.8)		—
Net Income Available to Common Shareholders	281.7		61.8		219.9
Earnings Per Share
Basic Earnings Per Share	$	0.72	$	0.16	$	0.56
Diluted Earnings Per Share	$	0.72	$	0.16	$	0.56
Basic Average Common Shares Outstanding	392.7		383.1		9.6
Diluted Average Common Shares	393.9		384.1		9.8

Three Months Ended March 31,
(in millions, except per share amounts) 2020 2019 2020 vs. 2019
Operating Revenues $ 1,605.5
$ 1,869.8
$ (264.3 )
Operating Expenses
Cost of sales (excluding depreciation and amortization) 462.4
680.3
(217.9 )
Other Operating Expenses 994.9
815.3
179.6
Total Operating Expenses 1,457.3
1,495.6
(38.3 )
Operating Income 148.2
374.2
(226.0 )
Total Other Deductions, net (87.5 ) (96.3 ) 8.8
Income Taxes (14.9 ) 59.0
(73.9 )
Net Income 75.6
218.9
(143.3 )
Preferred dividends (13.8 ) (13.8 ) —
Net Income Available to Common Shareholders 61.8
205.1
(143.3 )
Basic Earnings Per Share $ 0.16
$ 0.55
$ (0.39 )
Basic Average Common Shares Outstanding 383.1
373.4
9.7

Our operations are affected by the cost of sales. Cost of sales (excluding depreciation and amortization) for the Gas Distribution Operations segment is principally comprised of the cost of natural gas used while providing transportation and distribution services to customers. Cost of sales (excluding depreciation and amortization) for the Electric Operations segment is comprised of the cost of coal, related handling costs, natural gas purchased for the internal generation of electricity at NIPSCO and the cost of power purchased from third-party generators of electricity. The majority of the cost of ~~sales (excluding depreciation and amortization)~~energy in both segments are tracked costs that are passed through directly to the customer, resulting in an equal and offsetting amount reflected in operating revenues.

On a consolidated basis, we reported a net income available to common shareholders of $281.7 million, or $0.72 per diluted share for the three months ended March 31, 2021, compared to a net income available to common shareholders of $61.8 million, or $0.16 per ~~basic share for the three months ended March 31, 2020, compared to net income available to common shareholders of $205.1 million, or $0.55 per basic~~diluted share for the same period in ~~2019.~~2020. The ~~decrease~~increase in income ~~available to common shareholders during 2020~~ was primarily due to ~~a decrease~~the loss on sale of the Massachusetts business in 2020, as well as lower operating expenses offset by lower operating revenues ~~resulting~~due to the sale of the Massachusetts business. Additionally, the increase in income was driven by revenue increases from ~~lower industrial revenue~~new rates and the effects of ~~warmer~~colder weather in 2021 compared to 2020 partially offset by ~~new rates from base rate proceedings. In addition,~~higher income taxes in 2021 compared to 2020 (See "Income Taxes" below). For additional information on operating ~~expenses were higher~~income variance drivers see "Results and Discussion of Segment Operation" for Gas and Electric Operations in ~~the current period due to the loss recorded for the classification as held for sale of the Massachusetts Business (see Note 7, "Assets and Liabilities Held for Sale," in the Notes to the Cond~~this Management's Discussion.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

NiSource Inc.

ensed Consolidated Financial Statements (unaudited) for additional information), partially offset by lower expenses related to the Greater Lawrence Incident, net of insurance recoveries. Income taxes were also lower in the current period (see "Income Taxes" below).

~~Operating Income~~

For the three months ended March 31, 2020, we reported operating income of $148.2 million compared to operating income of $374.2 million for the same period in 2019. The decrease in operating income was primarily due to lower industrial revenue and the effects of warmer weather in 2020, as well as higher current period operating expenses related to the loss recorded for the classification as held for sale of the Massachusetts Business, partially offset by lower expenses related to the Greater Lawrence Incident, net of insurance recoveries, and new rates from base rate proceedings.

Other Deductions, net

Other deductions, net reduced income by ~~$87.5~~$74.1 million in the first quarter of ~~2020~~2021 compared to a reduction in income of ~~$96.3~~$87.5 million in the prior year. This change iswas primarily driven by lower short term debt interest due to lower ~~non-service pension costs driven by~~balances and a ~~decrease~~lower rate on commercial paper in 2021 compared to 2020. See Note 16, "Short-Term Borrowings," in the ~~pension benefit obligations.~~Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information.

Income Taxes

For the three months ended March 31, 2020, the decrease in income tax expense from 2019 to 2020 of $73.9 million 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.

Refer to Note ~~14,~~13, "Income Taxes," in the Notes to Condensed Consolidated Financial Statements (unaudited) for information on income taxes and the change in the effective tax rate.

~~Capital Investment~~

For the three months ended March 31, 2020, we invested $452.1 million in capital expenditures across our gas and electric utilities. These expenditures were primarily aimed at furthering the safety and reliability of our gas distribution system, system modernization projects and maintaining our existing electric generation fleet.

We continue to execute on an estimated $30 billion in total projected long-term regulated utility infrastructure investments and expect to invest a total of approximately $1.7 to $1.8 billion in capital during 2020 as we continue to focus on growth, safety and modernization projects across our operating area.

~~Liquidity~~

A primary focus of ours is to ensure the availability of adequate financing to fund our ongoing safety and infrastructure investment programs which typically involves the issuance of debt and/or equity. In addition, expenses related to the Greater Lawrence Incident have exceeded the total amount of insurance coverage available under our policies. During 2020, we took certain actions to enhance our liquidity. On April 1, 2020, we terminated and repaid in full our existing $850.0 million term loan agreement and entered into a new $850.0 million term loan agreement that matures March 31, 2021. Also, on April 13, 2020, we completed the issuance and sale of $1.0 billion of senior unsecured notes resulting in approximately $987.8 million of net proceeds.

Through income generated from operating activities, amounts available under our short-term revolving credit facility, commercial paper program, accounts receivable securitization facilities, term loan borrowings, long-term debt agreements, our ability to access the capital markets, and the expected proceeds from the potential sale of the Massachusetts Business (see Note 7, "Assets and Liabilities Held for Sale," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information), we believe we have adequate capital available to fund our operating activities, capital expenditures, the effects of the Greater Lawrence Incident and the effects of COVID-19 for the next 12 to 24 months. As of March 31, 2020 and December 31, 2019, we had $1,306.6 million and $1,409.1 million, respectively, of net liquidity available, consisting of cash and available capacity under credit facilities.

These factors and other impacts to the financial results are discussed in more detail within the following discussions of “Results and Discussion of Segment Operations” and “Liquidity and Capital Resources.” See the Novel Coronavirus discussion in the introduction to the "Executive Summary" for discussion regarding the liquidity impact from COVID-19.

~~Table of Contents~~

~~ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)~~

~~NiSource Inc.~~

~~Regulatory Developments~~

During the quarter ended March 31, 2020, we continued to move forward on core infrastructure and environmental investment programs supported by complementary regulatory and customer initiatives across all seven states of our operating area. Refer to Note 9, "Regulatory Matters" and Note 18-D "Other Matters," in the Notes to Condensed Consolidated Financial Statements (unaudited) for a complete discussion of key regulatory developments that have transpired during 2020.

RESULTS AND DISCUSSION OF SEGMENT OPERATIONS

Presentation of Segment Information

Our operations are divided into two primary reportable segments: Gas Distribution Operations and Electric Operations. We primarily evaluate segment results based on operating income. The remainder of our operations, which are not significant enough on a stand-alone basis to warrant treatment as an operating segment, are presented as "Corporate and Other" within the Notes to the Condensed Consolidated Financial Statements (unaudited) and primarily are comprised of interest expense on holding company debt, and unallocated corporate costs and activities.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

NiSource Inc.

Gas Distribution Operations

Financial and operational data for the Gas Distribution Operations segment for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 are presented below:


	Three Months Ended March 31,										Three Months Ended March 31,
(in millions)	2020			2019			2020 vs. 2019			(in millions)	2021			2020			2021 vs. 2020
Operating Revenues	$	1,231.0		$	1,442.1		$	(211.1	)	Operating Revenues	$	1,138.9		$	1,231.0		$	(92.1)
Operating Expenses										Operating Expenses
Cost of sales (excluding depreciation and amortization)	377.4			550.1			(172.7		)
Cost of energy										Cost of energy	379.0			377.4			1.6
Operation and maintenance	330.1			451.3			(121.2		)	Operation and maintenance	248.8			330.1			(81.3)
Depreciation and amortization	96.5			97.4			(0.9		)	Depreciation and amortization	92.9			96.5			(3.6)
Loss on classification as held for sale	280.2			—			280.2

Loss on sale of fixed assets and impairments, net										Loss on sale of fixed assets and impairments, net	8.1			280.2			(272.1)
Other taxes	68.3			67.9			0.4			Other taxes	63.2			68.3			(5.1)
Total Operating Expenses	1,152.5			1,166.7			(14.2		)	Total Operating Expenses	792.0			1,152.5			(360.5)
Operating Income	$	78.5		$	275.4		$	(196.9	)	Operating Income	$	346.9		$	78.5		$	268.4
Revenues										Revenues
Residential	$	823.3		$	976.0		$	(152.7	)	Residential	$	782.3		$	823.3		$	(41.0)
Commercial	274.0			331.6			(57.6		)	Commercial	272.9			274.0			(1.1)
Industrial	74.5			83.0			(8.5		)	Industrial	58.2			74.5			(16.3)
Off-System	18.7			20.1			(1.4		)	Off-System	14.4			18.7			(4.3)
Other	40.5			31.4			9.1			Other	11.1			40.5			(29.4)
Total	$	1,231.0		$	1,442.1		$	(211.1	)	Total	$	1,138.9		$	1,231.0		$	(92.1)
Sales and Transportation (MMDth)										Sales and Transportation (MMDth)
Residential	118.5			140.7			(22.2		)	Residential	118.4			118.5			(0.1)
Commercial	73.7			86.0			(12.3		)	Commercial	74.3			73.7			0.6
Industrial	146.8			148.1			(1.3		)	Industrial	136.4			146.8			(10.4)
Off-System	11.2			7.2			4.0			Off-System	5.4			11.2			(5.8)
Other	0.2			0.2			—			Other	0.2			0.2			—
Total	350.4			382.2			(31.8		)	Total	334.7			350.4			(15.7)
Heating Degree Days	2,440			2,897			(457		)	Heating Degree Days	2,703			2,440			263
Normal Heating Degree Days	2,897			2,864			33			Normal Heating Degree Days	2,854			2,897			(43)
% Colder (Warmer) than Normal	(16		)%	1		%				% Colder (Warmer) than Normal	(5)		%	(16)		%
Gas Distribution Customers										Gas Distribution Customers
Residential	3,233,222			3,206,016			27,206			Residential	2,965,004			3,233,222			(268,218)
Commercial	283,579			282,616			963			Commercial	254,188			283,579			(29,391)
Industrial	6,002			6,035			(33		)	Industrial	4,965			6,002			(1,037)
Other	3			3			—			Other	3			3			—
Total	3,522,806			3,494,670			28,136			Total	3,224,160			3,522,806			(298,646)

Cost of ~~sales (excluding depreciation and amortization)~~energy for the Gas Distribution Operations segment is principally comprised of the cost of natural gas used while providing transportation and distribution services to customers. ~~The cost of sales (excluding depreciation and amortization)~~These are tracked costs that are passed through directly to the customer, resulting in an equal and offsetting amount reflected in operating revenue. In addition, comparability of operation and maintenance expenses, depreciation and amortization, and other taxes may be impacted by regulatory, depreciation and tax trackers that allow for the recovery in rates of certain costs. Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and have essentially no impact on net income.

Table of Contents

NiSource Inc.

PART II

ITEM 1. LEGAL PROCEEDINGS

~~NiSource Inc.~~

For a description of our legal proceedings, see Note ~~18-B,~~17-B, "Legal Proceedings," in the Notes to Condensed Consolidated Financial Statements (unaudited).

ITEM 1A. RISK FACTORS

The risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 are supplemented with the following risk ~~factor,~~factors, which should be read in conjunction with the risk factors set forth in the Annual Report on Form 10-K.

Risk Factors Relating to our Equity Units

The ~~novel coronavirus (COVID-19) pandemic could materially adversely impact~~trading prices for our ~~business, results~~Equity Units, initially consisting of ~~operations, financial condition, liquidity~~Corporate Units, and ~~cash flows.~~

related treasury units and mandatory convertible preferred stock, are expected to be affected by, among other things, the trading prices of our common stock, the general level of interest rates and our credit quality.

The ~~continued spread~~trading prices of ~~COVID-19 has resulted in widespread impacts~~the Equity Units, initially consisting of Corporate Units, which are listed on the ~~global economy~~New York Stock Exchange, and ~~financial markets~~the related treasury units and ~~could lead~~mandatory convertible preferred stock in the secondary market, are expected to ~~a prolonged reduction in economic activity, extended disruptions to supply chains and capital markets, and reduced labor availability and productivity. We are currently evaluating and monitoring~~be affected by, among other things, the potential impacts the pandemic may have on our essential natural gas and electric businesses and on our future operating results and liquidity, including potential impacts related to the health, safety and availabilitytrading prices of our ~~employees~~common stock, the general level of interest rates and ~~contractors, suspended shutoffs~~our credit quality. It is impossible to predict whether the price of ~~natural gas and electric services for nonpayment, more flexible payment plans for customers, an anticipated increase in bad debt,~~our common stock or interest rates will rise or fall. The price of our common stock could be subject to wide fluctuations in demand for commercial, industrial and residential gas and electric services, counterparty credit, costs and availability of supplies, capital construction and infrastructure operations and maintenance programs, financing plans,the future in response to many events or factors, including the planned cash proceeds anticipated from the sale of the Massachusetts Business, pension valuations, market conditions that could result in future goodwill impairment charges, potential delays in capital construction projects, and legal and regulatory matters, including the potential for delayed state regulatory filings and recovery of invested capital, as well as newly enacted and proposed state regulatory actions and federal laws. For more information regarding the items above and additional items related to COVID-19 that we are evaluating and monitoring, please see our discussion of these topics in Part I., Item 2. "Management Discussion and Analysis of Financial Condition and Results of Operations - Executive Summary - Introduction - Novel Coronavirus" in this report and in our future filings with the Securities and Exchange Commission. To the extent the COVID-19 pandemic adversely affects our business, results of operations, financial condition, liquidity or cash flows, it may also have the effect of heightening many of the other risks describedthose discussed in the ~~‘‘Risk Factors’’ section of~~risk factors herein and in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~ 2020, as may be supplemented by subsequently filed Quarterly Reports on Form 10-Q, many of which events and factors are beyond our control. Fluctuations in interest rates may give rise to arbitrage opportunities based upon changes in the relative value of the common stock underlying the purchase contracts and of the other components of the Equity Units. Any such arbitrage could, in turn, affect the trading prices of the Corporate Units, treasury units, mandatory convertible preferred stock and our common stock.

The ~~degree~~fundamental change early settlement right triggered under certain circumstances by a fundamental change and the supermajority rights of the mandatory convertible preferred stock in connection with certain fundamental change transactions jointly could discourage a potential acquirer.

The fundamental change early settlement right with respect to the purchase contracts triggered under certain circumstances by a fundamental change and the supermajority voting rights of the mandatory convertible preferred stock in connection with certain fundamental change transactions jointly could discourage a potential acquirer, including potential acquirers that would otherwise seek a transaction with us that would be attractive to our investors.

Our Equity Units, initially consisting of Corporate Units, and related mandatory convertible preferred stock, and the issuance and sale of common stock in settlement of the purchase contracts and conversion of mandatory convertible preferred stock, may all adversely affect the market price of our common stock and will cause dilution to our stockholders.

The market price of our common stock is likely to be influenced by our Equity Units, initially consisting of Corporate Units, and related mandatory convertible preferred stock. For example, the market price of our common stock could become more volatile and could be depressed by:

•investors’ anticipation of the sale into the market of a substantial number of additional shares of our common stock issued upon settlement of the purchase contracts or conversion of our mandatory convertible preferred stock;

•possible sales of our common stock by investors who view our Equity Units, initially consisting of Corporate Units, or related mandatory convertible preferred stock as a more attractive means of equity participation in us than owning shares of our common stock; and

•hedging or arbitrage trading activity that we expect to develop involving our Equity Units, initially consisting of Corporate Units, or related mandatory convertible preferred stock and our common stock.

In addition, we cannot predict the effect that future issuances or sales of our common stock, if any, including those made upon the settlement of the purchase contracts or conversion of the mandatory convertible preferred stock, may have on the market price for our common stock.

Table of Contents

ITEM 1A. RISK FACTORS

NiSource Inc.

Our Equity Units, initially consisting of Corporate Units, and the issuance and sale of substantial amounts of common stock, including issuances and sales upon the settlement of the purchase contracts or conversion of the mandatory convertible preferred stock, could adversely affect the market price of our common stock and will cause dilution to our stockholders.

Operational Risk

A cyber-attack on any of our or certain third-party computer systems upon which ~~COVID-19 will impact us will depend in part~~we rely may adversely affect our ability to operate and could lead to a loss or misuse of confidential and proprietary information or potential liability.

We are reliant on ~~future developments,~~technology to run our business, which is dependent upon financial and operational computer systems to process critical information necessary to conduct various elements of our business, including the ~~ultimate geographic spread, severity~~generation, transmission and ~~duration~~distribution of electricity; operation of our gas pipeline facilities; and the recording and reporting of commercial and financial transactions to regulators, investors and other stakeholders. In addition to general information and cyber risks that all large corporations face (e.g., malware, unauthorized access attempts, phishing attacks, malicious intent by insiders, third-party software vulnerabilities and inadvertent disclosure of sensitive information), the utility industry faces evolving and increasingly complex cybersecurity risks associated with protecting sensitive and confidential customer and employee information, electric grid infrastructure, and natural gas infrastructure. Deployment of new business technologies, along with maintaining legacy technology, represents a large-scale opportunity for attacks on our information systems and confidential customer and employee information, as well as on the integrity of the ~~outbreak, actions~~energy grid and the natural gas infrastructure. Increasing large-scale corporate attacks in conjunction with more sophisticated threats continue to challenge power and utility companies. Any failure of our computer systems, or those of our customers, suppliers or others with whom we do business, could materially disrupt our ability to operate our business and could result in a financial loss and possibly do harm to our reputation.

Additionally, our information systems experience ongoing, often sophisticated, cyber-attacks by a variety of sources, including foreign sources, with the apparent aim to breach our cyber-defenses. Although we attempt to maintain adequate defenses to these attacks and work through industry groups and trade associations to identify common threats and assess our countermeasures, a security breach of our information systems, or a security breach of the information systems of our customers, suppliers or others with whom we do business, could (i) adversely impact our ability to safely and reliably deliver electricity and natural gas to our customers through our generation, transmission and distribution systems and potentially negatively impact our compliance with certain mandatory reliability and gas flow standards, (ii) subject us to reputational and other harm or liabilities associated with theft or inappropriate release of certain types of information such as system operating information or information, personal or otherwise, relating to our customers or employees, (iii) impact our ability to manage our businesses, and/or (iv) subject us to legal and regulatory proceedings and claims from third parties, in addition to remediation costs, any of which, in turn, could have a material adverse effect on our businesses, cash flows, financial condition, results of operations and/or prospects. Although we do maintain cyber insurance, it is possible that such insurance will not adequately cover any losses or liabilities we may ~~be taken by governmental authorities, and to what extent and when normal economic and operating conditions can resume.~~incur as a result of a cybersecurity incident.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

Table of Contents

ITEM 6. EXHIBITS

NiSource Inc.



~~(2.1)~~(1.1)		~~Asset Purchase~~Form of Equity Distribution Agreement ~~dated as of February 26, 2020, by and among NiSource Inc., Bay State Gas Company d/b/a Columbia Gas of Massachusetts and Eversource Energy~~ (incorporated by reference to Exhibit ~~2.1~~1.1 of the NiSource Inc. Form 8-K filed on February ~~28, 2020)~~22, 2021).~~***~~

~~(4.1)~~(1.2)		~~Description~~Form of ~~NiSource Inc.’s Securities Registered Under Section 12 of the Exchange Act~~Master Forward Sale Confirmation (incorporated by reference to Exhibit ~~4.20~~1.2 of the NiSource Inc. Form ~~10-K~~8-K filed on February ~~28, 2020)~~22, 2021).

~~(4.2)~~(3.1)		Certificate of Designations with respect to the Series C Mandatory Convertible Preferred Stock, dated April 19, 2021 (incorporated by reference to Exhibit 3.1 of the NiSource Inc. Form ~~of 3.600% Notes due 2030~~8-K filed on April 19, 2021).

(4.1)		Purchase Contract and Pledge Agreement, dated April 19, 2021, between NiSource Inc. and U.S. Bank National Association, in its capacity as the purchase contract agent, collateral agent, custodial agent and securities intermediary (incorporated by reference to Exhibit 4.1 of the NiSource Inc. Form 8-K filed on April ~~8, 2020)~~19, 2021).

~~(10.1)~~(4.2)		Form of ~~Performance Share Award Agreement~~Series A Corporate Units Certificate (incorporated by reference tolisted under Exhibit ~~10.39 of the NiSource Form 10-K~~4.1 above). filed on February 28, 2020).**

~~(10.2)~~(4.3)		Form of ~~Restricted Stock Unit Award Agreement~~Series A Treasury Units Certificate (incorporated by reference to listed under Exhibit ~~10.40 of the NiSource Form 10-K~~4.1 above). filed on February 28, 2020).**

~~(10.3)~~(4.4)		Form of ~~Cash-Based Award Agreement~~Series A Cash Settled Units Certificate (incorporated by reference to listed under Exhibit ~~10.41 of the NiSource Form 10-K~~4.1 above). filed on February 28, 2020).**

~~(10.4)~~(4.5)		~~Columbia Gas~~Form of ~~Massachusetts Plea Agreement dated February 26, 2020~~Series C Mandatory Convertible Preferred Stock Certificate (incorporated by reference to listed under Exhibit ~~10.2 of the NiSource Inc. Form 8-K~~ ~~filed on February 27, 2020)~~3.1 above).

~~(10.5)~~(31.1)		~~NiSource Deferred Prosecution Agreement dated February 26, 2020 (incorporated by reference to~~ ~~Exhibit 10.1 of the NiSource Inc. Form 8-K~~ ~~filed on February 27, 2020).~~

~~(10.6)~~	Term Loan Agreement, dated as of April 1, 2020, among NiSource Inc., as Borrower, the lenders party thereto, and KeyBank National Association, as Administrative Agent, and KeyBank National Association, PNC Bank, National Association and U.S. Bank National Association, as Joint Lead Arrangers and Joint Bookrunners (incorporated by reference to ~~Exhibit 10.1 of the NiSource Inc. 8-K~~ ~~filed on April 1, 2020).~~

~~(31.1)~~	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

(31.2)		Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

(32.1)		Certification of Chief Executive Officer pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).*

(32.2)		Certification of Chief Financial Officer pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).*

(101.INS)		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

(101.SCH)		Inline XBRL Schema Document

(101.CAL)		Inline XBRL Calculation Linkbase Document

(101.LAB)		Inline XBRL Labels Linkbase Document

(101.PRE)		Inline XBRL Presentation Linkbase Document

(101.DEF)		Inline XBRL Definition Linkbase Document

(104)		Cover page Interactive Data File (formatted as inline XBRL, and contained in Exhibit 101.)

*		Exhibit filed herewith.

**	~~Management contract or compensatory plan or arrangement of NiSource Inc.~~

~~***~~	~~Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. NiSource agrees to furnish supplementally a copy of any omitted schedules or exhibits to the SEC upon request.~~

Table of Contents

SIGNATURE

NiSource Inc.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NiSource Inc.

(Registrant)

Date:

May ~~6, 2020~~5, 2021

By:

/s/ ~~Donald E. Brown~~

Gunnar J. Gode

~~Donald E. Brown~~Gunnar J. Gode

~~Executive~~ Vice President, Chief Accounting Officer and ~~Chief Financial Officer~~

Controller
(Principal ~~Financial~~Accounting Officer)

5756


DE			35-2108964
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

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)



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
Series A Corporate Units	NIMC	NYSE

NiSource Inc. Condensed Consolidated Balance Sheets (unaudited) (continued)

(in millions, except share amounts)	March 31, 2020			December 31, 2019			(in millions, except share amounts)	March 31, 2021		December 31, 2020
CAPITALIZATION AND LIABILITIES							CAPITALIZATION AND LIABILITIES
Capitalization							Capitalization
Stockholders’ Equity							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
Common stock - $0.01 par value, 600,000,000 shares authorized; 392,129,866 and 391,760,051 shares outstanding, respectively							Common stock - $0.01 par value, 600,000,000 shares authorized; 392,129,866 and 391,760,051 shares outstanding, respectively	$	3.9	$	3.9
Preferred stock - $0.01 par value, 20,000,000 shares authorized; 440,000 shares outstanding	880.0			880.0			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		)	Treasury stock	(99.9)		(99.9)
Additional paid-in capital	6,671.5			6,666.2			Additional paid-in capital	6,892.9		6,890.1
Retained deficit	(1,483.4		)	(1,370.8		)	Retained deficit	(1,669.8)		(1,765.2)
Accumulated other comprehensive loss	(230.6		)	(92.6		)	Accumulated other comprehensive loss	(75.5)		(156.7)
Total Stockholders’ Equity	5,741.4			5,986.7
Total NiSource Stockholders’ Equity							Total NiSource Stockholders’ Equity	5,931.6		5,752.2
Noncontrolling interest in consolidated subsidiaries							Noncontrolling interest in consolidated subsidiaries	94.1		85.6
Total Stockholders' Equity							Total Stockholders' Equity	6,025.7		5,837.8
Long-term debt, excluding amounts due within one year	7,817.9			7,856.2			Long-term debt, excluding amounts due within one year	9,202.3		9,219.8
Total Capitalization	13,559.3			13,842.9			Total Capitalization	15,228.0		15,057.6
Current Liabilities							Current Liabilities
Current portion of long-term debt	7.9			13.4			Current portion of long-term debt	44.4		23.3
Short-term borrowings	2,046.4			1,773.2			Short-term borrowings	520.0		503.0
Accounts payable	505.6			666.0			Accounts payable	554.9		589.0
Dividends payable - common stock	80.4			—			Dividends payable - common stock	86.3		0
Dividends payable - preferred stock	19.4			—			Dividends payable - preferred stock	19.4		0
Customer deposits and credits	163.2			256.4			Customer deposits and credits	146.7		243.3
Taxes accrued	223.8			231.6			Taxes accrued	301.5		244.1
Interest accrued	95.1			99.4			Interest accrued	94.6		104.7

Exchange gas payable	18.5			59.7			Exchange gas payable	25.5		48.5
Regulatory liabilities	177.9			160.2			Regulatory liabilities	169.6		161.3
Liabilities held for sale	470.9			—
Legal and environmental	17.5			20.1

Accrued compensation and employee benefits	129.4			156.3			Accrued compensation and employee benefits	131.2		141.8
Claims accrued	24.9			165.4

Other accruals	180.9			144.1			Other accruals	164.7		220.4
Total Current Liabilities	4,161.8			3,745.8			Total Current Liabilities	2,258.8		2,279.4
Other Liabilities							Other Liabilities
Risk management liabilities	312.1			134.0

Deferred income taxes	1,451.3			1,485.3			Deferred income taxes	1,573.6		1,470.6
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			Accrued liability for postretirement and postemployment benefits	328.9		336.1
Regulatory liabilities	2,033.8			2,352.0			Regulatory liabilities	1,881.0		1,904.2
Asset retirement obligations	435.9			416.9			Asset retirement obligations	479.7		477.1
Other noncurrent liabilities	187.3			218.5			Other noncurrent liabilities	444.5		515.5
Total Other Liabilities	4,871.6			5,071.1			Total Other Liabilities	4,707.7		4,703.5
Commitments and Contingencies (Refer to Note 18, "Other Commitments and Contingencies")	—			—
Commitments and Contingencies (Refer to Note 17, "Other Commitments and Contingencies")							Commitments and Contingencies (Refer to Note 17, "Other Commitments and Contingencies")
Total Capitalization and Liabilities	$	22,592.7		$	22,659.8		Total Capitalization and Liabilities	$	22,194.5	$	22,040.5

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


Three Months Ended March 31, (in millions)	2021		2020
Operating Activities
Net Income	$	296.5	$	75.6
Adjustments to Reconcile Net Income to Net Cash from Operating Activities:

Depreciation and amortization	185.0		184.3
Deferred income taxes and investment tax credits	55.2		(19.9)




Loss on sale of assets	8.1		280.2
Other adjustments	3.5		7.9
Changes in Assets and Liabilities:










Components of working capital	(89.3)		(147.1)
Regulatory assets/liabilities	8.4		12.9


Deferred charges and other noncurrent assets	(10.7)		(12.1)
Other noncurrent liabilities	(8.4)		(11.9)


Net Cash Flows from Operating Activities	448.3		369.9
Investing Activities
Capital expenditures	(367.0)		(452.1)



Cost of removal	(26.9)		(34.5)
Purchases of available-for-sale securities	(16.6)		(43.5)
Sales of available-for-sale securities	16.9		45.4
Payment to renewable generation asset developer	(7.4)		0
Other investing activities	(0.8)		0.1


Net Cash Flows used for Investing Activities	(401.8)		(484.6)
Financing Activities


Repayments of long-term debt and finance lease obligations	(5.9)		(4.1)
Issuance of short-term debt (maturity > 90 days)	0		500.0

Change in short-term borrowings, net (maturity ≤ 90 days)	17.0		(226.8)
Issuance of common stock, net of issuance costs	2.8		3.7

Equity costs, premiums and other debt related costs	(2.5)		(5.1)
Contributions from non-controlling interest, net of issuance costs	7.5		0
Dividends paid - common stock	(86.2)		(80.3)
Dividends paid - preferred stock	(8.1)		(8.1)


Net Cash Flows (used for) from Financing Activities	(75.4)		179.3
Change in cash, cash equivalents and restricted cash	(28.9)		64.6


Cash, cash equivalents and restricted cash at beginning of period	125.6		148.4
Cash, Cash Equivalents and Restricted Cash at End of Period	$	96.7	$	213.0



(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






















(in millions)	Common Stock		Preferred Stock(1)		Treasury Stock		Additional Paid-In Capital		Retained Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interest in Consolidated Subsidiaries		Total
Balance as of January 1, 2021	$	3.9	$	880.0	$	(99.9)	$	6,890.1	$	(1,765.2)	$	(156.7)	$	85.6	$	5,837.8
Comprehensive Income:
Net income	0		0		0		0		295.5		0		1.0		296.5
Other comprehensive income, net of tax	0		0		0		0		0		81.2		0		81.2
Dividends:
Common stock ($0.44 per share)	0		0		0		0		(172.6)		0		0		(172.6)
Preferred stock (See Note 5)	0		0		0		0		(27.5)		0		0		(27.5)
Contribution from noncontrolling interest	0		0		0		0		0		0		7.5		7.5


Stock issuances:


Employee stock purchase plan	0		0		0		1.3		0		0		0		1.3
Long-term incentive plan	0		0		0		(0.5)		0		0		0		(0.5)
401(k) and profit sharing	0		0		0		2.3		0		0		0		2.3
ATM program	0		0		0		(0.3)		0		0		0		(0.3)
Balance as of March 31, 2021	$	3.9	$	880.0	$	(99.9)	$	6,892.9	$	(1,669.8)	$	(75.5)	$	94.1	$	6,025.7














	Preferred	Common
Shares (in thousands)	Shares	Shares	Treasury	Outstanding
Balance as of January 1, 2021	440	395,723	(3,963)	391,760
Issued:


Employee stock purchase plan	0	55	0	55
Long-term incentive plan	0	212	0	212
401(k) and profit sharing	0	103	0	103

Balance as of March 31, 2021	440	396,093	(3,963)	392,130













	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	0	46	0	46
Long-term incentive plan	0	347	0	347
401(k) and profit sharing	0	165	0	165

Balance as of March 31, 2020	440	386,657	(3,963)	382,694


Standard			Adoption
ASU 2019-12,~~Income~~ 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~~adopted the ~~effects~~amendments of this pronouncement ~~on our~~as of January 1, 2021 with no material impact to the 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.



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


Three Months Ended March 31, 2020 (in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other		Total
Three Months Ended March 31, 2021 (in millions)									Three Months Ended March 31, 2021 (in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other(2)		Total
Customer Revenues⁽¹⁾									Customer Revenues(1)
Residential	$	796.5	$	119.2	$	—	$	915.7	Residential	$	773.5	$	129.2	$	0	$	902.7
Commercial	269.4		120.2		—		389.6		Commercial	271.4		122.9		0		394.3
Industrial	74.2		109.1		—		183.3		Industrial	57.9		122.9		0		180.8
Off-system	18.7		—		—		18.7		Off-system	14.4		0		0		14.4
Miscellaneous	12.5		5.9		0.2		18.6		Miscellaneous	9.9		4.2		0.2		14.3
Total Customer Revenues	$	1,171.3	$	354.4	$	0.2	$	1,525.9	Total Customer Revenues	$	1,127.1	$	379.2	$	0.2	$	1,506.5
Other Revenues	56.7		22.9		—		79.6		Other Revenues	8.7		23.3		7.1		39.1
Total Operating Revenues	$	1,228.0	$	377.3	$	0.2	$	1,605.5	Total Operating Revenues	$	1,135.8	$	402.5	$	7.3	$	1,545.6


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	$	0	$	915.7
Commercial	269.4		120.2		0		389.6
Industrial	74.2		109.1		0		183.3
Off-system	18.7		0		0		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		0		79.6
Total Operating Revenues	$	1,228.0	$	377.3	$	0.2	$	1,605.5



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.



(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	)


Three Months Ended March 31, 2021 (in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other		Total
Beginning balance	$	41.8	$	9.7	$	0.8	$	52.3
Current period provisions	5.9		2.9		0		8.8
Write-offs charged against allowance	(9.0)		(2.4)		0		(11.4)
Recoveries of amounts previously written off	4.1		0.1		0		4.2
Ending balance of the allowance for credit losses	$	42.8	$	10.3	$	0.8	$	53.9



	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


															Three Months Ended March 31,			March 31	December 31,
				Quarter Ended March 31, 2020		Quarter Ended March 31, 2019	March 31, 2020		December 31, 2019						2021	2020			2021		2020
(in millions except shares and per share amounts)	Liquidation Preference Per Share		Shares	Dividends Declared Per Share			Outstanding				(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	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	6.500% Series B	$	25,000.00	20,000	812.50	812.50			$	486.1	$	486.1



(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



(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


Recurring Fair Value Measurements March 31, 2021 (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, 2021
Assets

Risk management assets	$	0	$	4.2	$	0	$	4.2

Available-for-sale debt securities	0		167.9		0		167.9
Total	$	0	$	172.1	$	0	$	172.1
Liabilities

Risk management liabilities	$	0	$	101.0	$	0	$	101.0
Total	$	0	$	101.0	$	0	$	101.0


Recurring Fair Value Measurements December 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 December 31, 2020
Assets


Risk management assets	$	0	$	13.2	$	0	$	13.2


Available-for-sale debt securities	0		170.9		0		170.9
Total	$	0	$	184.1	$	0	$	184.1
Liabilities

Risk management liabilities	$	0	$	222.8	$	0	$	222.8
Total	$	0	$	222.8	$	0	$	222.8


March 31, 2021 (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	$	37.1	$	0.2	$	(0.3)	$	0	$	37.0
Corporate/Other debt securities	126.7		5.3		(0.8)		(0.3)		130.9
Total	$	163.8	$	5.5	$	(1.1)	$	(0.3)	$	167.9

December 31, 2020 (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	$	33.7	$	0.3	$	0	$	0	$	34.0
Corporate/Other debt securities	130.2		7.7		(0.5)		(0.5)		136.9
Total	$	163.9	$	8.0	$	(0.5)	$	(0.5)	$	170.9



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



(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


(in millions)	Carrying Amount as of March 31, 2021		Estimated Fair Value as of March 31, 2021		Carrying Amount as of Dec. 31, 2020		Estimated Fair Value as of Dec. 31, 2020
Long-term debt (including current portion)	$	9,246.7	$	10,178.0	$	9,243.1	$	11,034.2


	Pension Benefits						Other Postretirement Benefits							Pension Benefits				Other Postretirement Benefits
Three Months Ended March 31, (in millions)	2020			2019			2020			2019			Three Months Ended March 31, (in millions)	2021		2020		2021		2020
Components of Net Periodic Benefit Cost⁽¹⁾
Components of Net Periodic Benefit (Income) Cost(1)													Components of Net Periodic Benefit (Income) Cost(1)
Service cost	$	8.0		$	7.3		$	1.6		$	1.3		Service cost	$	7.6	$	8.0	$	1.5	$	1.6
Interest cost	13.5			18.2			3.9			4.8			Interest cost	7.7		13.5		2.5		3.9
Expected return on assets	(28.4		)	(27.2		)	(3.6		)	(3.3		)	Expected return on assets	(25.8)		(28.4)		(3.8)		(3.6)
Amortization of prior service credit	0.2			—			(0.5		)	(0.8		)	Amortization of prior service credit	0		0.2		(0.6)		(0.5)
Recognized actuarial loss	8.7			11.4			1.3			0.5			Recognized actuarial loss	5.3		8.7		1.2		1.3
Total Net Periodic Benefit Cost	$	2.0		$	9.7		$	2.7		$	2.5
Settlement loss													Settlement loss	3.3		0		0		0
Total Net Periodic Benefit (Income) Cost													Total Net Periodic Benefit (Income) Cost	$	(1.9)	$	2.0	$	0.8	$	2.7


	February 28, 2021
Weighted-average Assumption to Determine Benefit Obligation
Discount rate	2.57	%
Weighted-average Assumptions to Determine Net Periodic Benefit Costs for the period ended
Discount rate - service cost	2.81	%
Discount rate - interest cost	1.57	%
Expected return on assets	4.80	%



	Total Costs Incurred through			Costs Incurred during the Three Months Ended
(in millions)	December 31, 2019			March 31, 2020		Incident to Date
Third-party claims	$	1,041		$	—	$	1,041
Other incident-related costs	420			9		429
Total	1,461			9		1,470
Insurance recoveries recorded	(800		)	—		(800		)
Total costs incurred	$	661		$	9	$	670



(in millions)	Gains and Losses on Securities⁽¹⁾			Gains and Losses on Cash Flow Hedges⁽¹⁾			Pension and OPEB Items⁽¹⁾			Accumulated Other Comprehensive Loss⁽¹⁾
Balance as of January 1, 2020	$	3.3		$	(77.2	)	$	(18.7	)	$	(92.6	)
Other comprehensive income (loss) before reclassifications	(5.2		)	(133.3		)	0.4			(138.1		)
Amounts reclassified from accumulated other comprehensive income (loss)	(0.2		)	—			0.3			0.1
Net current-period other comprehensive income (loss)	(5.4		)	(133.3		)	0.7			(138.0		)
Balance as of March 31, 2020	$	(2.1	)	$	(210.5	)	$	(18.0	)	$	(230.6	)


Changes in Operating Revenues (in millions)	Favorable (Unfavorable)
Revenues associated with the Massachusetts Business in 2020	$	(122.3)
New rates from base rate proceedings, infrastructure replacement programs and Columbia of Ohio's CEP	38.0
The effects of colder weather in 2021 compared to 2020	15.6
The effects of customer growth	3.4
Other	(2.1)
Change in operating revenues (before cost of energy and other tracked items)	$	(67.4)
Operating revenues offset in operating expense
Higher cost of energy billed to customers	81.3
Cost of energy associated with the Massachusetts Business in 2020	(79.7)
Operation and maintenance trackers associated with the Massachusetts Business in 2020	(24.3)
Lower operation and maintenance, depreciation, and tax trackers	(2.0)
Total change in operating revenues	$	(92.1)


Changes in Operating Expenses (in millions)	Favorable (Unfavorable)
Loss on sale of the Massachusetts Business of $6.9 million in 2021 compared to $280.2 million in 2020	$	273.3
Operating expenses associated with the Massachusetts Business in 2020	65.6
Lower employee and administrative expenses	4.9
Severance and outside services expense related to NiSource Next initiative	(5.9)
Higher depreciation and amortization expense primarily due to higher capital expenditures placed in service	(5.8)
Other	3.7
Change in operating expenses (before cost of energy and other tracked items)	$	335.8
Operating expenses offset in operating revenue
Higher cost of energy billed to customers	(81.3)
Cost of energy associated with the Massachusetts Business in 2020	79.7
Operation and maintenance trackers associated with the Massachusetts Business in 2020	24.3
Lower operation and maintenance, depreciation, and tax trackers	2.0
Total change in operating expense	$	360.5


Changes in Operating Revenues (in millions)	Favorable (Unfavorable)
Increased customer usage, primarily driven by residential customers	$	4.8
New rates from infrastructure improvement and DSM programs	2.8
The effects of customer growth	1.0
Other	1.4
Change in operating revenues (before cost of energy and other tracked items)	$	10.0
Operating revenues offset in operating expense
Higher cost of energy billed to customers	12.8
Higher operation and maintenance and depreciation trackers	2.4
Total change in operating revenues	$	25.2


Changes in Operating Expenses (in millions)	Favorable (Unfavorable)
Higher generation-related maintenance	$	(4.2)
Increased depreciation primarily due to additional plant placed in service	(3.4)
Severance and outside services expenses related to the NiSource Next initiative	(2.3)
Decreased environmental costs	6.8
Lower employee and administrative costs	4.3
Other	(1.8)
Change in operating expenses (before cost of energy and other tracked items)	$	(0.6)
Operating expenses offset in operating revenue
Higher cost of energy billed to customers	(12.8)
Higher operation and maintenance and depreciation trackers	(2.4)
Total change in operating expense	$	(15.8)