UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2021~~March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-16189

NiSource Inc.

(Exact name of registrant as specified in its charter)


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

801 East 86th Avenue
Merrillville,	IN	46410
(Address of principal executive offices)		(Zip Code)

(877) 647-5990

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading
Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, par value $0.01 per share

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

NI PR B

NYSE

Series A Corporate Units

NIMC

NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.)

Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ¨ Emerging growth company ☐ Non-accelerated filer ¨ Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Stock, $0.01 Par Value: ~~392,704,679~~405,798,111 shares outstanding at ~~October 25, 2021.~~April 26, 2022.

NISOURCE INC.

FORM 10-Q QUARTERLY REPORT

FOR THE QUARTER ENDED ~~SEPTEMBER 30, 2021~~MARCH 31, 2022

Table of Contents


			Page

	Defined Terms		3

PART I	FINANCIAL INFORMATION

	Item 1.	Financial Statements - unaudited

		Condensed Statements of Consolidated Income ~~(Loss)~~ (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)	1514

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3833

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5853

	Item 4.	Controls and Procedures	5853

PART II	OTHER INFORMATION

	Item 1.	Legal Proceedings	5954

	Item 1A.	Risk Factors	5954

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5955

	Item 3.	Defaults Upon Senior Securities	5955

	Item 4.	Mine Safety Disclosures	5955

	Item 5.	Other Information	5955

	Item 6.	Exhibits	6056

	Signature		6157


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

NiSource Subsidiaries and Affiliates
Columbia of Kentucky			Columbia Gas of Kentucky, Inc.
Columbia of Maryland			Columbia Gas of Maryland, Inc.
Columbia of Massachusetts			Bay State Gas Company
Columbia of Ohio			Columbia Gas of Ohio, Inc.
Columbia of Pennsylvania			Columbia Gas of Pennsylvania, Inc.
Columbia of Virginia			Columbia Gas of Virginia, Inc.
NIPSCO			Northern Indiana Public Service Company LLC
NiSource ("we," "us" or "our")			NiSource Inc.
Rosewater			Rosewater Wind Generation LLC and its wholly owned subsidiary, Rosewater Wind Farm LLC
Indiana Crossroads Wind			Indiana Crossroads Wind Generation LLC and its wholly owned subsidiary, Indiana Crossroads Wind Farm LLC

Abbreviations and Other
ACE			Affordable Clean Energy
AFUDC			Allowance for funds used during construction

AOCI			Accumulated Other Comprehensive Income (Loss)
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
ATM			At-the-market
BTA			Build-transfer agreement


CCRs			Coal Combustion Residuals
CEP			Capital Expenditure Program
CERCLA			Comprehensive Environmental Response Compensation and Liability Act (also known as Superfund)
Corporate Units			Series A Corporate Units
COVID-19 ("the COVID-19 pandemic" or "the pandemic")			Novel Coronavirus 2019 and its variants, including the Delta and Omicron variants, and any other variant that may emerge

DSIC			Distribution System Improvement Charge
DPU			Department of Public Utilities

EPA			United States Environmental Protection Agency
EPS			Earnings per share
Equity Units			Series A Equity Units
FAC			Fuel adjustment clause
FASB			Financial Accounting Standards Board

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


DEFINED TERMS
LIFO			Last In, First Out
LIHEAP			Low Income Heating Energy Assistance Programs
Massachusetts Business			All of the assets sold to, and liabilities 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
MWh			Megawatt hours
NTSB			National Transportation Safety Board
NYMEX			New York Mercantile Exchange
OPEB			Other ~~Postretirement~~Postemployment Benefits


PHMSA			Pipeline and Hazardous Materials Safety Administration
PPA			Power Purchase Agreement
~~PSC~~			~~Public Service Commission~~

~~PUC~~PUCO			Public Utilities Commission of Ohio

~~RCRA~~			~~Resource Conservation and Recovery Act~~
~~RFP~~RNG			~~Request for proposals~~Renewable Natural Gas

SAVE			Steps to Advance Virginia's Energy Plan
Scope 1 GHG Emissions			Direct emissions from sources owned or controlled by us (e.g., emissions from our combustion of fuel, vehicles, and process emissions and fugitive emissions)
SEC			Securities and Exchange Commission
Section 201 Tariffs			Tariffs imposed by Executive Order from the President of the U.S. on certain imported solar cells and modules at a rate of 15%, which were recently extended to 2026
SMRP			Safety Modification and Replacement Program
~~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
U.S. Attorney's Office			U.S. Attorney's Office for the District of Massachusetts

VIE			Variable Interest Entity

Note regarding forward-looking statements

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Investors and prospective investors should understand that many factors govern whether any forward-looking statement contained herein will be or can be realized. Any one of those factors could cause actual results to differ materially from those projected. These forward-looking statements include, but are not limited to, statements concerning our plans, strategies, objectives, expected performance, expenditures, recovery of expenditures through rates, stated on either a consolidated or segment basis, and any and all underlying assumptions and other statements that are other than statements of historical fact. 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, diverse workforce and ability to maintain good labor relations; our ability to manage new initiatives and organizational changes; the actions of activist stockholders; the performance of third-party suppliers and service providers; potential cybersecurity attacks; increased requirements and costs related to cybersecurity; 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 physical impacts of climate change and ~~extreme weather conditions;~~the transition to a lower carbon future; our ability to manage the financial and operational risks related to achieving our carbon emission reduction goals; our debt obligations; any changes to our credit rating or the credit rating of certain of our subsidiaries; any adverse effects related to our equity units; adverse economic and capital market conditions or increases in interest rates; inflation; 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 subsidiaries to generate cash; pension funding obligations; potential impairments of goodwill; changes in the method for determining LIBOR and 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 the Greater Lawrence Incident; compliance with the agreements entered into with the U.S. ~~Attorney’s~~Attorney's Office to settle the U.S. ~~Attorney’s Office’s~~Attorney's Office's investigation relating to the Greater Lawrence Incident; compliance with applicable laws, regulations and tariffs; compliance with environmental laws and the costs of associated liabilities; changes in taxation; other matters in the ~~“Risk Factors”~~"Risk Factors" section of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, and matters related to our electric generation transition as set forth in ~~our~~the "Risk Factors" section of this Quarterly Report on Form 10-Q, ~~for the quarterly period ended March 31, 2021,~~ 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 ~~(Loss)~~ (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)			1514
1. Basis of Accounting Presentation			1514
2. Recent Accounting Pronouncements			1514
3. Revenue Recognition			1514
4. Earnings Per Share			1917
5. Equity			2018

6. ~~Property, Plant and Equipment~~Gas in Storage			2219


7. Regulatory Matters			2220
8. Risk Management Activities			2320
9. Fair Value			2422

10. Income Taxes			2725
11. Pension and Other Postretirement Benefits			2725
12. Variable Interest Entities			2926
13. ~~Long~~-~~Term~~Long-Term Debt			3027
14. Short-Term Borrowings			3027
15. Other Commitments and Contingencies			3128
16. Accumulated Other Comprehensive Loss			3531
17. Other, Net			3631
18. Business Segment Information			3631
19. Subsequent Event			3732

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS

NiSource Inc.

Condensed Statements of Consolidated Income ~~(Loss)~~ (unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in millions, except per share amounts)	(in millions, except per share amounts)	2021		2020		2021		2020		(in millions, except per share amounts)	2022		2021
Operating Revenues	Operating Revenues									Operating Revenues
Customer revenues	Customer revenues	$	918.8	$	861.5	$	3,377.7	$	3,320.1	Customer revenues	$	1,840.3	$	1,506.5
Other revenues	Other revenues	40.6		41.0		113.3		150.6		Other revenues	33.0		39.1
Total Operating Revenues	Total Operating Revenues	959.4		902.5		3,491.0		3,470.7		Total Operating Revenues	1,873.3		1,545.6
Operating Expenses	Operating Expenses									Operating Expenses
Cost of energy	Cost of energy	208.3		143.1		913.4		793.9		Cost of energy	706.7		476.8
Operation and maintenance	Operation and maintenance	351.1		379.9		1,075.4		1,177.6		Operation and maintenance	394.3		361.5
Depreciation and amortization	Depreciation and amortization	188.9		180.6		560.2		542.4		Depreciation and amortization	192.7		185.0
Loss (gain) on sale of assets, net	Loss (gain) on sale of assets, net	(1.1)		35.9		6.9		399.8		Loss (gain) on sale of assets, net	(105.0)		8.1
Other taxes	Other taxes	65.1		70.2		212.6		224.3		Other taxes	84.3		81.0
Total Operating Expenses	Total Operating Expenses	812.3		809.7		2,768.5		3,138.0		Total Operating Expenses	1,273.0		1,112.4

Operating Income	Operating Income	147.1		92.8		722.5		332.7		Operating Income	600.3		433.2
Other Income (Deductions)	Other Income (Deductions)									Other Income (Deductions)
Interest expense, net	Interest expense, net	(84.4)		(95.2)		(253.5)		(285.1)		Interest expense, net	(83.7)		(84.6)
Other, net	Other, net	14.3		8.0		37.2		19.9		Other, net	10.9		10.5
Loss on early extinguishment of long-term debt		—		(243.4)		—		(243.4)

Total Other Deductions, Net	Total Other Deductions, Net	(70.1)		(330.6)		(216.3)		(508.6)		Total Other Deductions, Net	(72.8)		(74.1)

Income (Loss) before Income Taxes		77.0		(237.8)		506.2		(175.9)
Income before Income Taxes										Income before Income Taxes	527.5		359.1
Income Taxes	Income Taxes	14.8		(64.9)		90.6		(73.9)		Income Taxes	96.2		62.6

Net Income (Loss)		62.2		(172.9)		415.6		(102.0)
Net loss attributable to noncontrolling interest		(1.0)		—		(3.4)		—
Net Income (Loss) Attributable to NiSource		63.2		(172.9)		419.0		(102.0)
Net Income										Net Income	431.3		296.5
Net income attributable to noncontrolling interest										Net income attributable to noncontrolling interest	4.5		1.0
Net Income Attributable to NiSource										Net Income Attributable to NiSource	426.8		295.5
Preferred dividends	Preferred dividends	(13.8)		(13.8)		(41.4)		(41.4)		Preferred dividends	(13.8)		(13.8)
Net Income (Loss) Available to Common Shareholders		49.4		(186.7)		377.6		(143.4)
Earnings (Loss) Per Share

Basic Earnings (Loss) Per Share		$	0.13	$	(0.49)	$	0.96	$	(0.37)

Diluted Earnings (Loss) Per Share		$	0.12	$	(0.49)	$	0.91	$	(0.37)
Net Income Available to Common Shareholders										Net Income Available to Common Shareholders	413.0		281.7
Earnings Per Share										Earnings Per Share
Basic Earnings Per Share										Basic Earnings Per Share	$	1.02	$	0.72
Diluted Earnings Per Share										Diluted Earnings Per Share	$	0.94	$	0.72
Basic Average Common Shares Outstanding	Basic Average Common Shares Outstanding	393.2		383.8		392.9		383.5		Basic Average Common Shares Outstanding	406.0		392.7
Diluted Average Common Shares	Diluted Average Common Shares	430.3		383.8		415.8		383.5		Diluted Average Common Shares	441.4		393.9

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
September 30, Nine Months Ended
September 30,
(in millions, net of taxes) 2021 2020 2021 2020
Net Income (Loss) $ 62.2 $ (172.9) $ 415.6 $ (102.0)
Other comprehensive income (loss):
Net unrealized gain (loss) on available-for-sale debt securities(1)
(0.8) 1.4 (2.4) 1.7
Net unrealized gain (loss) on cash flow hedges(2)
6.6 26.0 41.4 (104.6)
Unrecognized pension and OPEB benefit(3)
0.4 0.9 0.3 1.9
Total other comprehensive income (loss) 6.2 28.3 39.3 (101.0)
Comprehensive Income (Loss) $ 68.4 $ (144.6) $ 454.9 $ (203.0)


	Three Months Ended March 31,
(in millions, net of taxes)	2022		2021
Net Income	$	431.3	$	296.5
Other comprehensive income:
Net unrealized loss on available-for-sale debt securities(1)	(5.7)		(2.5)
Net unrealized gain on cash flow hedges(2)	47.0		84.6
Unrecognized pension and OPEB benefit (costs)(3)	0.1		(0.9)
Total other comprehensive income	41.4		81.2
Comprehensive Income	$	472.7	$	377.7

(1)Net unrealized ~~gain (loss)~~loss on available-for-sale debt securities, net of ~~$0.2~~$1.5 million and $0.7 million tax benefit ~~and $0.4 million tax expense~~ in the ~~third~~first quarter of ~~2021~~2022 and ~~2020, respectively, and $0.6 million tax benefit and $0.5 million tax expense for the nine months ended~~ 2021, ~~and 2020,~~ respectively.

(2)Net unrealized gain ~~(loss)~~ on cash flow hedges, net of ~~$2.2~~$21.3 million and ~~$8.6~~$28.0 million tax expense in the ~~third~~first quarter of ~~2021~~2022 and ~~2020, respectively, and $13.7 million tax expense and $34.6 million tax benefit for the nine months ended~~ 2021, ~~and 2020,~~ respectively.

(3)Unrecognized pension and OPEB benefit, net of ~~$0.2~~zero and $0.9 million tax expense in the ~~third~~first quarter of ~~2021~~2022 and ~~2020, and $1.3 million and $0.1 million tax expense for the nine months ended~~ 2021, ~~and 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)


(in millions)	(in millions)	September 30, 2021		December 31, 2020		(in millions)	March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Property, Plant and Equipment	Property, Plant and Equipment					Property, Plant and Equipment
Plant	Plant	$	25,438.2	$	24,179.9	Plant	$	25,538.3	$	25,171.3
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(7,917.1)		(7,560.4)		Accumulated depreciation and amortization	(7,417.6)		(7,289.5)

Net Property, Plant and Equipment(1)	Net Property, Plant and Equipment(1)	17,521.1		16,619.5		Net Property, Plant and Equipment(1)	18,120.7		17,881.8
Investments and Other Assets	Investments and Other Assets					Investments and Other Assets

Available-for-sale debt securities (amortized cost of $164.6 and $163.9, allowance for credit losses of $0.2 and $0.5, respectively)		168.9		170.9
Unconsolidated affiliates						Unconsolidated affiliates	0.8		0.8
Available-for-sale debt securities (amortized cost of $161.7 and $169.3, allowance for credit losses of $0.6 and $0.2, respectively)						Available-for-sale debt securities (amortized cost of $161.7 and $169.3, allowance for credit losses of $0.6 and $0.2, respectively)	156.7		171.8
Other investments	Other investments	84.4		81.1		Other investments	82.4		87.1
Total Investments and Other Assets	Total Investments and Other Assets	253.3		252.0		Total Investments and Other Assets	239.9		259.7
Current Assets	Current Assets					Current Assets
Cash and cash equivalents	Cash and cash equivalents	38.5		116.5		Cash and cash equivalents	114.5		84.2
Restricted cash	Restricted cash	17.8		9.1		Restricted cash	15.9		10.7
Accounts receivable	Accounts receivable	555.1		843.6		Accounts receivable	989.6		849.1
Allowance for credit losses	Allowance for credit losses	(28.3)		(52.3)		Allowance for credit losses	(28.5)		(23.5)
Accounts receivable, net	Accounts receivable, net	526.8		791.3		Accounts receivable, net	961.1		825.6
Gas inventory	Gas inventory	311.1		191.2		Gas inventory	74.8		327.4
Materials and supplies, at average cost	Materials and supplies, at average cost	137.1		141.5		Materials and supplies, at average cost	146.9		139.1
Electric production fuel, at average cost	Electric production fuel, at average cost	23.2		68.4		Electric production fuel, at average cost	41.5		32.2
Exchange gas receivable	Exchange gas receivable	59.1		34.1		Exchange gas receivable	98.6		99.6

Regulatory assets	Regulatory assets	198.5		135.7		Regulatory assets	154.7		206.2

Prepayments and other	Prepayments and other	159.3		171.6		Prepayments and other	263.9		195.8
Total Current Assets(1)	Total Current Assets(1)	1,471.4		1,659.4		Total Current Assets(1)	1,871.9		1,920.8
Other Assets	Other Assets					Other Assets
Regulatory assets	Regulatory assets	1,755.4		1,794.8		Regulatory assets	2,276.3		2,286.0
Goodwill	Goodwill	1,485.9		1,485.9		Goodwill	1,485.9		1,485.9

Deferred charges and other	Deferred charges and other	291.5		228.9		Deferred charges and other	370.8		322.7
Total Other Assets~~(1)~~	Total Other Assets~~(1)~~	3,532.8		3,509.6		Total Other Assets~~(1)~~	4,133.0		4,094.6
Total Assets	Total Assets	$	22,778.6	$	22,040.5	Total Assets	$	24,365.5	$	24,156.9

(1)Includes ~~$171.6~~$690.4 million and ~~$175.6~~$695.9 million at March 31, 2022 and December 31, 2021, respectively, of net property, plant and equipment assets and ~~$5.3~~$27.4 million and ~~$1.7~~$14.3 million at March 31, 2022 and December 31, 2021, respectively, of current assets of a consolidated ~~VIE as of September 30, 2021 and December 31, 2020~~VIEs that may be used only to settle obligations of the consolidated ~~VIE.~~VIEs. Refer to Note 12, "Variable Interest Entities" for additional information.

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) (continued)


(in millions, except share amounts)	(in millions, except share amounts)	September 30, 2021		December 31, 2020		(in millions, except share amounts)	March 31, 2022		December 31, 2021
CAPITALIZATION AND LIABILITIES	CAPITALIZATION AND LIABILITIES					CAPITALIZATION AND LIABILITIES
Capitalization	Capitalization					Capitalization
Stockholders’ Equity	Stockholders’ Equity					Stockholders’ Equity
Common stock - $0.01 par value, 600,000,000 shares authorized; 392,628,625 and 391,760,051 shares outstanding, respectively		$	3.9	$	3.9
Preferred stock - $0.01 par value, 20,000,000 shares authorized; 1,302,500 and 440,000 shares outstanding, respectively		1,719.8		880.0
Common stock - $0.01 par value, 600,000,000 shares authorized; 405,734,408 and 405,303,023 shares outstanding, respectively						Common stock - $0.01 par value, 600,000,000 shares authorized; 405,734,408 and 405,303,023 shares outstanding, respectively	$	4.1	$	4.1
Preferred stock - $0.01 par value, 20,000,000 shares authorized; 1,302,500 shares outstanding						Preferred stock - $0.01 par value, 20,000,000 shares authorized; 1,302,500 shares outstanding	1,546.5		1,546.5
Treasury stock	Treasury stock	(99.9)		(99.9)		Treasury stock	(99.9)		(99.9)
Additional paid-in capital	Additional paid-in capital	6,735.3		6,890.1		Additional paid-in capital	7,208.9		7,204.3
Retained deficit	Retained deficit	(1,746.8)		(1,765.2)		Retained deficit	(1,372.3)		(1,580.9)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(117.4)		(156.7)		Accumulated other comprehensive loss	(85.4)		(126.8)
Total NiSource Stockholders’ Equity	Total NiSource Stockholders’ Equity	6,494.9		5,752.2		Total NiSource Stockholders’ Equity	7,201.9		6,947.3
Noncontrolling interest in consolidated subsidiaries	Noncontrolling interest in consolidated subsidiaries	89.2		85.6		Noncontrolling interest in consolidated subsidiaries	329.5		325.6
Total Stockholders' Equity		6,584.1		5,837.8
Total Equity						Total Equity	7,531.4		7,272.9
Long-term debt, excluding amounts due within one year	Long-term debt, excluding amounts due within one year	9,188.2		9,219.8		Long-term debt, excluding amounts due within one year	9,179.8		9,183.4
Total Capitalization	Total Capitalization	15,772.3		15,057.6		Total Capitalization	16,711.2		16,456.3
Current Liabilities	Current Liabilities					Current Liabilities
Current portion of long-term debt	Current portion of long-term debt	55.7		23.3		Current portion of long-term debt	57.9		58.1
Short-term borrowings	Short-term borrowings	380.0		503.0		Short-term borrowings	520.0		560.0
Accounts payable	Accounts payable	487.2		589.0		Accounts payable	628.5		697.8
Dividends payable - common stock	Dividends payable - common stock	86.4		��		Dividends payable - common stock	95.3		—
Dividends payable - preferred stock	Dividends payable - preferred stock	19.4		—		Dividends payable - preferred stock	19.4		—
Customer deposits and credits	Customer deposits and credits	232.5		243.3		Customer deposits and credits	155.2		237.9
Taxes accrued	Taxes accrued	199.6		244.1		Taxes accrued	313.5		277.1
Interest accrued	Interest accrued	94.1		104.7		Interest accrued	94.3		105.5

Exchange gas payable	Exchange gas payable	73.2		48.5		Exchange gas payable	37.8		107.7
Regulatory liabilities	Regulatory liabilities	173.2		161.3		Regulatory liabilities	229.1		137.4

Accrued compensation and employee benefits	Accrued compensation and employee benefits	178.4		141.8		Accrued compensation and employee benefits	130.5		182.7

Other accruals	Other accruals	266.9		220.4		Other accruals	313.1		382.0
Total Current Liabilities(1)	Total Current Liabilities(1)	2,246.6		2,279.4		Total Current Liabilities(1)	2,594.6		2,746.2
Other Liabilities	Other Liabilities					Other Liabilities

Deferred income taxes	Deferred income taxes	1,620.8		1,470.6		Deferred income taxes	1,789.8		1,659.4

Accrued liability for postretirement and postemployment benefits	Accrued liability for postretirement and postemployment benefits	308.8		336.1		Accrued liability for postretirement and postemployment benefits	285.3		292.5
Regulatory liabilities	Regulatory liabilities	1,874.8		1,904.2		Regulatory liabilities	1,843.1		1,842.6
Asset retirement obligations	Asset retirement obligations	427.9		477.1		Asset retirement obligations	472.0		469.7
Other noncurrent liabilities	Other noncurrent liabilities	527.4		515.5		Other noncurrent liabilities	669.5		690.2
Total Other Liabilities(1)	Total Other Liabilities(1)	4,759.7		4,703.5		Total Other Liabilities(1)	5,059.7		4,954.4
Commitments and Contingencies (Refer to Note 15, "Other Commitments and Contingencies")	Commitments and Contingencies (Refer to Note 15, "Other Commitments and Contingencies")					Commitments and Contingencies (Refer to Note 15, "Other Commitments and Contingencies")
Total Capitalization and Liabilities	Total Capitalization and Liabilities	$	22,778.6	$	22,040.5	Total Capitalization and Liabilities	$	24,365.5	$	24,156.9

(1)Includes $16.7 million and $10.0 million at March 31, 2022 and December 31, 2021, respectively, of current liabilities and $20.6 million and $20.5 million at March 31, 2022 and December 31, 2021, respectively, of other liabilities of consolidated VIEs that creditors do not have recourse to our general credit. Refer to Note 12, "Variable Interest Entities," for additional information.

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 Cash Flows (unaudited)


Three Months Ended March 31, (in millions)	2022		2021
Operating Activities
Net Income	$	431.3	$	296.5
Adjustments to Reconcile Net Income to Net Cash from Operating Activities:

Depreciation and amortization	192.7		185.0
Deferred income taxes and investment tax credits	87.2		55.2



Loss (gain) on sale of assets	(105.0)		8.1
Other adjustments	8.0		3.5
Changes in Assets and Liabilities:










Components of working capital	(42.4)		(89.3)
Regulatory assets/liabilities	24.9		8.4


Deferred charges and other noncurrent assets	(7.4)		(10.7)
Other noncurrent liabilities	(9.5)		(8.4)

Net Cash Flows from Operating Activities	579.8		448.3
Investing Activities
Capital expenditures	(450.1)		(367.0)
Insurance recoveries	105.0		—




Payment to renewable generation asset developer	—		(7.4)
Other investing activities	(25.3)		(27.4)

Net Cash Flows used for Investing Activities	(370.4)		(401.8)
Financing Activities

Repayments of finance lease obligations	(7.3)		(5.9)


Change in short-term borrowings, net (maturity ≤ 90 days)	(40.0)		17.0
Issuance of common stock, net of issuance costs	2.8		2.8

Equity costs, premiums and other debt related costs	(8.9)		(2.5)
Contributions from noncontrolling interest	—		7.5
Distributions to noncontrolling interest	(0.6)		—

Dividends paid - common stock	(95.3)		(86.2)
Dividends paid - preferred stock	(8.1)		(8.1)
Contract liability payment	(16.5)		—

Net Cash Flows used for Financing Activities	(173.9)		(75.4)
Change in cash, cash equivalents and restricted cash	35.5		(28.9)
Cash, cash equivalents and restricted cash at beginning of period	94.9		125.6
Cash, Cash Equivalents and Restricted Cash at End of Period	$	130.4	$	96.7

Nine Months Ended September 30, (in millions)
2021 2020
Operating Activities
Net Income (Loss) $ 415.6 $ (102.0)
Adjustments to Reconcile Net Income (Loss) to Net Cash from Operating Activities:
Loss on early extinguishment of debt — 243.4
Depreciation and amortization 560.2 542.4
Deferred income taxes and investment tax credits 89.0 (70.8)
Loss on sale of assets 6.4 399.4
Other adjustments 17.3 14.1
Changes in Assets and Liabilities:
Components of working capital (154.4) (148.6)
Regulatory assets/liabilities 54.8 9.9
Other noncurrent liabilities (49.6) (29.2)
Net Cash Flows from Operating Activities 939.3 858.6
Investing Activities
Capital expenditures (1,292.8) (1,292.2)
Cost of removal (94.0) (102.1)
Payment to renewable generation asset developer (7.4) —
Other investing activities — (5.6)
Net Cash Flows used for Investing Activities (1,394.2) (1,399.9)
Financing Activities
Proceeds from issuance of long-term debt — 2,974.0
Repayments of long-term debt and finance lease obligations (18.7) (1,616.4)
Issuance of short-term debt (maturity > 90 days) — 1,350.0
Repayment of short-term debt (maturity > 90 days) — (1,350.0)
Change in short-term borrowings, net (maturity ≤ 90 days) (123.0) (385.0)
Issuance of common stock, net of issuance costs 8.8 11.2
Equity costs, premiums and other debt related costs (9.7) (246.5)
Contributions from non-controlling interest, net of distributions 7.0 —
Issuance of equity units, net of underwriting costs 839.9 —
Dividends paid - common stock (258.8) (241.1)
Dividends paid - preferred stock (35.7) (35.7)
Contract liability payment (24.2) —
Net Cash Flows from Financing Activities 385.6 460.5
Change in cash, cash equivalents and restricted cash (69.3) (80.8)
Cash, cash equivalents and restricted cash at beginning of period 125.6 148.4
Cash, Cash Equivalents and Restricted Cash at End of Period $ 56.3 $ 67.6
Reconciliation to Balance Sheet


Three Months Ended March 31,(in millions)			2022
Cash and cash equivalents			114.5
Restricted Cash			15.9
Total Cash, Cash Equivalents and Restricted Cash			130.4

Supplemental Disclosures of Cash Flow Information


Nine Months Ended September 30, (in millions)		2021		2020
Three Months Ended March 31, (in millions)						Three Months Ended March 31, (in millions)	2022		2021
Non-cash transactions:	Non-cash transactions:					Non-cash transactions:
Capital expenditures included in current liabilities	Capital expenditures included in current liabilities	$	217.0	$	159.6	Capital expenditures included in current liabilities	$	183.4	$	155.6
Dividends declared but not paid	Dividends declared but not paid	105.8		99.9		Dividends declared but not paid	114.7		105.7

Purchase contract liability, net of fees and payments(1)		145.4		—
Assets recorded for asset retirement obligations		—		70.3

Obligation to developer at formation of joint venture	Obligation to developer at formation of joint venture	$	6.0	$	—	Obligation to developer at formation of joint venture	$	—	$	6.0

~~(1)Refer to Note 5, "Equity," for additional information.~~

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 Equity (unaudited)


(in millions)	(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		(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 July 1, 2021		$	3.9	$	1,718.8	$	(99.9)	$	6,728.0	$	(1,704.1)	$	(123.6)	$	90.4	$	6,613.5
Balance as of January 1, 2022																		Balance as of January 1, 2022	$	4.1	$	1,546.5	$	(99.9)	$	7,204.3	$	(1,580.9)	$	(126.8)	$	325.6	$	7,272.9
Comprehensive Income:	Comprehensive Income:																	Comprehensive Income:
Net income (loss)		—		—		—		—		63.2		—		(1.0)		62.2
Net income																		Net income	—		—		—		—		426.8		—		4.5		431.3
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—		—		—		—		—		6.2		—		6.2		Other comprehensive income, net of tax	—		—		—		—		—		41.4		—		41.4
Dividends:	Dividends:																	Dividends:
Common stock ($0.22 per share)		—		—		—		—		(86.5)		—		—		(86.5)
Common stock ($0.47 per share)																		Common stock ($0.47 per share)	—		—		—		—		(190.7)		—		—		(190.7)
Preferred stock (See Note 5)	Preferred stock (See Note 5)	—		—		—		—		(19.4)		—		—		(19.4)		Preferred stock (See Note 5)	—		—		—		—		(27.5)		—		—		(27.5)
Distribution to noncontrolling interest		—		—		—		—		—		—		(0.2)		(0.2)
Distributions to noncontrolling interests																		Distributions to noncontrolling interests	—		—		—		—		—		—		(0.6)		(0.6)

Stock issuances:	Stock issuances:																	Stock issuances:

Equity Units		—		1.0		—		—		—		—		—		1.0

Employee stock purchase plan	Employee stock purchase plan	—		—		—		1.2		—		—		—		1.2		Employee stock purchase plan	—		—		—		1.2		—		—		—		1.2
Long-term incentive plan	Long-term incentive plan	—		—		—		4.0		—		—		—		4.0		Long-term incentive plan	—		—		—		0.9		—		—		—		0.9
401(k) and profit sharing	401(k) and profit sharing	—		—		—		2.5		—		—		—		2.5		401(k) and profit sharing	—		—		—		2.5		—		—		—		2.5
ATM program		—		—		—		(0.4)		—		—		—		(0.4)
Balance as of September 30, 2021		$	3.9	$	1,719.8	$	(99.9)	$	6,735.3	$	(1,746.8)	$	(117.4)	$	89.2	$	6,584.1
(1)Series A, Series B, and Series C shares have an aggregate liquidation preference of $400M, $500M, and $863M, 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		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 (loss)		—		—		—		—		419.0		—		(3.4)		415.6
Other comprehensive income, net of tax		—		—		—		—		—		39.3		—		39.3
Dividends:
Common stock ($0.88 per share)		—		—		—		—		(345.5)		—		—		(345.5)
Preferred stock (See Note 5)		—		—		—		—		(55.1)		—		—		(55.1)
Contribution from noncontrolling interest, net of distributions		—		—		—		—		—		—		7.0		7.0
Balance as of March 31, 2022																		Balance as of March 31, 2022	$	4.1	$	1,546.5	$	(99.9)	$	7,208.9	$	(1,372.3)	$	(85.4)	$	329.5	$	7,531.4

Stock issuances:

Equity Units		—		839.8		—		(173.3)		—		—		—		666.5
Employee stock purchase plan		—		—		—		3.7		—		—		—		3.7
Long-term incentive plan		—		—		—		8.3		—		—		—		8.3
401(k) and profit sharing		—		—		—		7.2		—		—		—		7.2
ATM program		—		—		—		(0.7)		—		—		—		(0.7)
Balance as of September 30, 2021		$	3.9	$	1,719.8	$	(99.9)	$	6,735.3	$	(1,746.8)	$	(117.4)	$	89.2	$	6,584.1

(1)Series A, Series B, and Series C shares have an aggregate liquidation preference of $400M, $500M, and $863M, respectively. See Note 5, "Equity" for additional information.

~~Table of Contents~~

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

~~NiSource Inc.~~

~~Condensed Statements of Consolidated Equity (unaudited) (continued)~~


(in millions)	(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		(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 July 1, 2020		$	3.8	$	880.0	$	(99.9)	$	6,676.5	$	(1,576.7)	$	(221.9)	$	—	$	5,661.8
Comprehensive Loss:
Net loss		—		—		—		—		(172.9)		—		—		(172.9)
Balance as of January 1, 2021																		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:																		Comprehensive Income:
Net income																		Net income	—		—		—		—		295.5		—		1.0		296.5
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—		—		—		—		—		28.3		—		28.3		Other comprehensive income, net of tax	—		—		—		—		—		81.2		—		81.2
Dividends:	Dividends:																	Dividends:
Common stock ($0.21 per share)		—		—		—		—		(80.6)		—		—		(80.6)
Common stock ($0.44 per share)																		Common stock ($0.44 per share)	—		—		—		—		(172.6)		—		—		(172.6)
Preferred stock (See Note 5)	Preferred stock (See Note 5)	—		—		—		—		(19.4)		—		—		(19.4)		Preferred stock (See Note 5)	—		—		—		—		(27.5)		—		—		(27.5)

Contribution from noncontrolling interest																		Contribution from noncontrolling interest	—		—		—		—		—		—		7.5		7.5
Stock issuances:	Stock issuances:																	Stock issuances:

Employee stock purchase plan	Employee stock purchase plan	—		—		—		1.5		—		—		—		1.5		Employee stock purchase plan	—		—		—		1.3		—		—		—		1.3
Long-term incentive plan	Long-term incentive plan	—		—		—		3.2		—		—		—		3.2		Long-term incentive plan	—		—		—		(0.5)		—		—		—		(0.5)
401(k) and profit sharing	401(k) and profit sharing	—		—		—		3.0		—		—		—		3.0		401(k) and profit sharing	—		—		—		2.3		—		—		—		2.3

Balance as of September 30, 2020		$	3.8	$	880.0	$	(99.9)	$	6,684.2	$	(1,849.6)	$	(193.6)	$	—	$	5,424.9
(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		Noncontrolling Interest in Consolidated Subsidiaries		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 Loss:
Net loss		—		—		—		—		(102.0)		—		—		(102.0)
Other comprehensive loss, net of tax		—		—		—		—		—		(101.0)		—		(101.0)
Dividends:
Common stock ($0.84 per share)		—		—		—		—		(321.7)		—		—		(321.7)
Preferred stock (See Note 5)		—		—		—		—		(55.1)		—		—		(55.1)
ATM program																		ATM program	—		—		—		(0.3)		—		—		—		(0.3)
Balance as of March 31, 2021																		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

Stock issuances:

Employee stock purchase plan		—		—		—		4.2		—		—		—		4.2
Long-term incentive plan		—		—		—		3.1		—		—		—		3.1
401(k) and profit sharing		—		—		—		10.7		—		—		—		10.7

Balance as of September 30, 2020		$	3.8	$	880.0	$	(99.9)	$	6,684.2	$	(1,849.6)	$	(193.6)	$	—	$	5,424.9

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

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

1312

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Condensed Statements of Consolidated Equity (unaudited) (continued)


		Preferred	Common				Preferred	Common
Shares (in thousands)	Shares (in thousands)	Shares	Shares	Treasury	Outstanding	Shares (in thousands)	Shares	Shares	Treasury	Outstanding
Balance as of July 1, 2021		1,303	396,292	(3,963)	392,329
Balance as of January 1, 2022						Balance as of January 1, 2022	1,303	409,266	(3,963)	405,303
Issued:	Issued:					Issued:

Employee stock purchase plan	Employee stock purchase plan	—	52	—	52	Employee stock purchase plan	—	44	—	44
Long-term incentive plan	Long-term incentive plan	—	151	—	151	Long-term incentive plan	—	300	—	300
401(k) and profit sharing	401(k) and profit sharing	—	97	—	97	401(k) and profit sharing	—	87	—	87

Balance as of September 30, 2021		1,303	396,592	(3,963)	392,629
Balance as of March 31, 2022						Balance as of March 31, 2022	1,303	409,697	(3,963)	405,734

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

Equity Units		863	—	—	—
Employee stock purchase plan		—	158	—	158
Long-term incentive plan		—	414	—	414
401(k) and profit sharing		—	297	—	297

Balance as of September 30, 2021		1,303	396,592	(3,963)	392,629

		Preferred	Common
Shares (in thousands)		Shares	Shares	Treasury	Outstanding
Balance as of July 1, 2020		440	386,880	(3,963)	382,917
Issued:	Issued:					Issued:

Employee stock purchase plan	Employee stock purchase plan	—	65	—	65	Employee stock purchase plan	—	55	—	55
Long-term incentive plan	Long-term incentive plan	—	2	—	2	Long-term incentive plan	—	212	—	212
401(k) and profit sharing	401(k) and profit sharing	—	130	—	130	401(k) and profit sharing	—	103	—	103

Balance as of September 30, 2020		440	387,077	(3,963)	383,114
Balance as of March 31, 2021						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		—	171	—	171
Long-term incentive plan		—	381	—	381
401(k) and profit sharing		—	426	—	426

Balance as of September 30, 2020		440	387,077	(3,963)	383,114

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

1413

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

1. Basis of Accounting Presentation

Our accompanying Condensed Consolidated Financial Statements (unaudited) reflect all normal recurring adjustments that are necessary, in the opinion of management, to present fairly the results of operations in accordance with GAAP in the United States of America. The accompanying financial statements include the accounts of us, our majority-owned subsidiaries, and VIEs of which we are the primary beneficiary after the elimination of all intercompany accounts and transactions.

The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021. Income for interim periods may not be indicative of results for the calendar year due to weather variations and other factors.

The Condensed Consolidated Financial Statements (unaudited) have been prepared pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made in this Quarterly Report on Form 10-Q are adequate to make the information herein not misleading.

2. Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements

We are currently evaluating the impact of certain ASUs on our Condensed Consolidated Financial Statements (unaudited) and Notes to Condensed Consolidated Financial Statements (unaudited), which are described below:

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and in January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope. These pronouncements provide 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. These pronouncements are effective upon issuance on March 12, 2020, and will apply through December 31, 2022. We have evaluated the temporary expedients and options available under this guidance and identified the financial instruments to which the expedients could be applied, if deemed necessary. As of ~~September 30, 2021,~~March 31, 2022, we have not applied any expedients ~~and~~or options available under ~~this ASU.~~these ASUs.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This pronouncement requires certain annual disclosures for transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy to other accounting guidance. This pronouncement is applicable for financial statements issued for annual periods beginning after December 15, 2021. We are currently evaluating the impact of adoption, if any, on the Notes to the Consolidated Financial Statements.

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivative and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. This pronouncement ~~simplifies~~amends the ~~accounting~~guidance for ~~certain financial instruments with characteristics of liabilities and equity, including~~entities that issue convertible instruments and/or contracts indexed to and ~~contracts on~~potentially settled in an entity's own equity. ~~Specifically,~~The pronouncement eliminates the ~~ASU "simplifies~~beneficial conversion and cash conversion accounting models for convertible ~~instruments by removing major separation models required under current GAAP." In addition,~~instruments. Additionally, the ~~ASU "removes certain settlement conditions that are required for equity contracts to qualify for it" and "simplifies~~pronouncement amends the ~~diluted earnings per share (EPS) calculations in certain areas." This pronouncement is effective~~guidance for the ~~annual period beginning after December 15, 2021, and interim periods within those fiscal years. This accounting~~derivatives scope exception for contracts in an entity's own equity. Further, this pronouncement ~~will impact~~only impacts the denominator in the calculation of diluted EPS for our Equity ~~Units. Beginning Q1 2022,~~Units as we ~~will be~~are required to assume share settlement of the remaining purchase contract ~~liability~~payment balance when applying the if-converted method. Moreover, we ~~will also be~~are required to utilize the average share price for the period instead of the end of period price. We ~~will adopt~~adopted this ~~ASU on its effective date.~~

~~Recently Adopted Accounting Pronouncements~~

~~In December 2019,~~pronouncement using the ~~FASB issued~~ ~~ASU 2019-12~~, ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~. This pronouncement simplifies the accounting for income taxes by eliminating certain exceptions to the general principles in ASC 740, income taxes. It also improves consistency of application for other areas of the guidance by clarifying and amending existing guidance. We adopted the amendments of this pronouncementmodified retrospective method as of January 1, ~~2021 with no material impact to the Condensed Consolidated Financial Statements (unaudited).~~2022.

3. Revenue Recognition

Revenue Disaggregation and Reconciliation. We disaggregate revenue from contracts with customers based upon reportable segment, as well as by customer class. The Gas Distribution Operations segment provides natural gas service and transportation

~~Table of Contents~~

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

~~NiSource Inc.~~

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

for residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, and Indiana. 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)

The tables below reconcile revenue disaggregation by customer class to segment revenue, as well as to revenues reflected on the Condensed Statements of Consolidated Income ~~(Loss)~~ (unaudited) ~~for the three and nine months ended September 30, 2021 and September 30, 2020:~~:


Three Months Ended September 30, 2021 (in millions)		Gas Distribution Operations		Electric Operations		Corporate and Other(2)		Total
Three Months Ended March 31, 2022 (in millions)										Three Months Ended March 31, 2022 (in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other(2)		Total
Customer Revenues(1)	Customer Revenues(1)									Customer Revenues(1)
Residential	Residential	$	304.3	$	178.7	$	—	$	483.0	Residential	$	976.9	$	138.5	$	—	$	1,115.4
Commercial	Commercial	99.2		151.6		—		250.8		Commercial	356.5		134.5		—		491.0
Industrial	Industrial	41.0		125.7		—		166.7		Industrial	67.8		129.8		—		197.6
Off-system	Off-system	14.5		—		—		14.5		Off-system	18.7		—		—		18.7
Miscellaneous	Miscellaneous	4.6		(1.0)		0.2		3.8		Miscellaneous	14.0		3.6		—		17.6
Total Customer Revenues	Total Customer Revenues	$	463.6	$	455.0	$	0.2	$	918.8	Total Customer Revenues	$	1,433.9	$	406.4	$	—	$	1,840.3
Other Revenues	Other Revenues	8.7		23.9		8.0		40.6		Other Revenues	2.8		23.7		6.5		33.0
Total Operating Revenues	Total Operating Revenues	$	472.3	$	478.9	$	8.2	$	959.4	Total Operating Revenues	$	1,436.7	$	430.1	$	6.5	$	1,873.3

(1)Customer revenue amounts exclude intersegment revenues. See Note 18, "Business Segment Information," for discussion of intersegment revenues.

(2)Other revenues primarily related to the Transition Services Agreement entered into in connection with the sale of the Massachusetts Business.


Three Months Ended September 30, 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)									Customer Revenues(1)
Residential	Residential	$	306.9	$	164.8	$	—	$	471.7	Residential	$	773.5	$	129.2	$	—	$	902.7
Commercial	Commercial	91.8		132.3		—		224.1		Commercial	271.4		122.9		—		394.3
Industrial	Industrial	42.8		102.7		—		145.5		Industrial	57.9		122.9		—		180.8
Off-system	Off-system	6.0		—		—		6.0		Off-system	14.4		—		—		14.4
Miscellaneous	Miscellaneous	6.8		7.2		0.2		14.2		Miscellaneous	9.9		4.2		0.2		14.3
Total Customer Revenues	Total Customer Revenues	$	454.3	$	407.0	$	0.2	$	861.5	Total Customer Revenues	$	1,127.1	$	379.2	$	0.2	$	1,506.5
Other Revenues	Other Revenues	15.8		25.2		—		41.0		Other Revenues	8.7		23.3		7.1		39.1
Total Operating Revenues	Total Operating Revenues	$	470.1	$	432.2	$	0.2	$	902.5	Total Operating Revenues	$	1,135.8	$	402.5	$	7.3	$	1,545.6

(1)Customer revenue amounts exclude intersegment revenues. See Note 18, "Business Segment Information," for discussion of intersegment revenues.

~~Table~~(2)Other revenues primarily related to the Transition Services Agreement entered into in connection with the sale of ~~Contents~~the Massachusetts Business.

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

~~NiSource Inc.~~

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

Nine Months Ended September 30, 2021
(in millions)
Gas Distribution Operations Electric Operations
Corporate and Other(2)
Total
Customer Revenues(1)
Residential $ 1,456.5 $ 439.8 $ — $ 1,896.3
Commercial 496.0 404.4 — 900.4
Industrial 142.9 367.7 — 510.6
Off-system 46.0 — — 46.0
Miscellaneous 19.2 4.6 0.6 24.4
Total Customer Revenues $ 2,160.6 $ 1,216.5 $ 0.6 $ 3,377.7
Other Revenues 21.8 68.4 23.1 113.3
Total Operating Revenues $ 2,182.4 $ 1,284.9 $ 23.7 $ 3,491.0
(1)Customer revenue amounts exclude intersegment revenues. See Note 18, "Business Segment Information," for discussion of intersegment revenues.
(2)Other revenues related to the Transition Services Agreement entered into in connection with the sale of the Massachusetts Business.
Nine Months Ended September 30, 2020
(in millions)
Gas Distribution Operations Electric Operations Corporate and Other Total
Customer Revenues(1)
Residential $ 1,518.1 $ 411.5 $ — $ 1,929.6
Commercial 483.9 365.4 — 849.3
Industrial 165.6 301.1 — 466.7
Off-system 32.7 — — 32.7
Miscellaneous 24.6 16.6 0.6 41.8
Total Customer Revenues $ 2,224.9 $ 1,094.6 $ 0.6 $ 3,320.1
Other Revenues 79.5 71.1 — 150.6
Total Operating Revenues $ 2,304.4 $ 1,165.7 $ 0.6 $ 3,470.7
(1)Customer revenue amounts exclude intersegment revenues. See Note 18, "Business Segment Information," for discussion of intersegment revenues.

Customer Accounts Receivable. Accounts receivable on our Condensed Consolidated Balance Sheets (unaudited) includes both billed and unbilled amounts, as well as certain amounts that are not related to customer revenues. Unbilled amounts of accounts receivable relate to a portion of a customer’s consumption of gas or electricity from the date of the last cycle billing through the last day of the month (balance sheet date). Factors taken into consideration when estimating unbilled revenue include historical usage, customer rates and weather. A significant portion of our operations are subject to seasonal fluctuations in sales. During the heating season, primarily from November through March, revenues and receivables from gas sales are more significant than in other months. The opening and closing balances of customer receivables for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 are presented in the table below. We had no significant contract assets or liabilities during the period. Additionally, we have not incurred any significant costs to obtain or fulfill contracts.

(in millions) Customer Accounts Receivable, Billed (less reserve) Customer Accounts Receivable, Unbilled (less reserve)
Balance as of December 31, 2020 $ 400.0 $ 327.2
Balance as of September 30, 2021 272.7 204.5


(in millions)	Customer Accounts Receivable, Billed (less reserve)		Customer Accounts Receivable, Unbilled (less reserve)
Balance as of December 31, 2021	$	459.6	$	337.0
Balance as of March 31, 2022	642.7		293.5

Utility revenues are billed to customers monthly on a cycle basis. We expect that substantially all customer accounts receivable will be collected following customer billing, as this revenue consists primarily of periodic, tariff-based billings for service and usage. We maintain common utility credit risk mitigation practices, including requiring deposits and actively pursuing collection of past due amounts. Our regulated operations also utilize certain regulatory mechanisms that facilitate recovery of

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

bad debt costs within tariff-based rates, which provides further evidence of collectibility. It is probable that substantially all of the consideration to which we are entitled from customers will be collected upon satisfaction of performance obligations.

~~Table of Contents~~

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

~~NiSource Inc.~~

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

Allowance for Credit Losses. To evaluate for expected credit losses, customer account receivables are pooled based on similar risk characteristics, such as customer type, geography, payment terms, and related macro-economic risks. Expected credit losses are established using a model that considers historical collections experience, current information, and reasonable and supportable forecasts. Internal and external inputs are used in our credit model including, but not limited to, energy consumption trends, revenue projections, actual charge-offs data, recoveries data, shut-offs, customer delinquencies, and final bill data. We continuously evaluate available information relevant to assessing collectability of current and future receivables. We evaluate creditworthiness of specific customers periodically or following changes in facts and circumstances. When we become aware of a specific commercial or industrial customer's inability to pay, an allowance for expected credit losses is recorded for the relevant amount. We also monitor other circumstances that could affect our overall expected credit losses including, but not limited to, creditworthiness of overall population in service territories, adverse conditions impacting an industry sector, and current economic conditions.

At each reporting period, we record expected credit losses to an allowance for credit losses account. When deemed to be uncollectible, customer accounts are written-off. A rollforward of our allowance for credit losses as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 are presented in the table below:


(in millions)	(in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other		Total		(in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other		Total
Balance as of January 1, 2021		$	41.8	$	9.7	$	0.8	$	52.3
Balance as of January 1, 2022										Balance as of January 1, 2022	$	18.9	$	3.8	$	0.8	$	23.5
Current period provisions	Current period provisions	7.7		(0.6)		—		7.1		Current period provisions	5.8		2.8		—		8.6
Write-offs charged against allowance	Write-offs charged against allowance	(34.7)		(6.2)		—		(40.9)		Write-offs charged against allowance	(7.7)		(1.2)		—		(8.9)
Recoveries of amounts previously written off	Recoveries of amounts previously written off	9.4		0.4		—		9.8		Recoveries of amounts previously written off	5.2		0.1		—		5.3
Balance as of September 30, 2021		$	24.2	$	3.3	$	0.8	$	28.3
Balance as of March 31, 2022										Balance as of March 31, 2022	$	22.2	$	5.5	$	0.8	$	28.5


(in millions)	(in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other		Total		(in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other		Total
Balance as of January 1, 2020		$	9.1	$	3.1	$	0.8	$	13.0
Balance as of January 1, 2021										Balance as of January 1, 2021	$	41.8	$	9.7	$	0.8	$	52.3
Current period provisions	Current period provisions	45.3		9.3		—		54.6		Current period provisions	5.8		1.4		—		7.2
Write-offs charged against allowance	Write-offs charged against allowance	(26.7)		(3.0)		—		(29.7)		Write-offs charged against allowance	(46.7)		(7.7)		—		(54.4)
Recoveries of amounts previously written off	Recoveries of amounts previously written off	14.1		0.3		—		14.4		Recoveries of amounts previously written off	18.0		0.4		—		18.4
Balance as of December 31, 2020		$	41.8	$	9.7	$	0.8	$	52.3
Balance as of December 31, 2021										Balance as of December 31, 2021	$	18.9	$	3.8	$	0.8	$	23.5

In connection with the COVID-19 pandemic, certain state regulatory commissions instituted regulatory moratoriums that impacted our ability to pursue our standard credit risk mitigation ~~practices.~~practices during 2021. Following the issuance of these moratoriums, certain of our regulated operations have been authorized to recognize a regulatory asset for bad debt costs above levels currently recovered in rates. At ~~the balance sheet date,~~December 31, 2021, in addition to our evaluation of the allowance for credit losses discussed above, we considered benefits available under governmental COVID-19 relief programs, the impact of unemployment benefits initiatives, and flexible payment plans being offered to customers affected by or experiencing hardship as a result of the pandemic, which could help to mitigate the potential for increasing customer account delinquencies. We also considered the on-time bill payment promotion and robust customer marketing strategy for energy assistance programs that we have implemented. Based upon this evaluation, we have concluded that the allowance for credit losses as of ~~September 30,~~December 31, 2021 and March 31, 2022 adequately reflected the collection risk and net realizable value for our receivables. ~~We have now~~As of December 31, 2021, we resumed our common credit mitigation practices in all jurisdictions as all moratoriums ~~have expired (see Note 7, "Regulatory Matters," for additional information on regulatory moratoriums and regulatory assets).~~had expired.

1816

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

4. Earnings Per Share

The calculations of basic and diluted EPS are based on the weighted average number of shares of common stock and potential common stock outstanding during the period. For the purposes of determining diluted EPS, the ~~effects of~~shares underlying the purchase contracts included within the Equity Units were included in the calculation of potential common stock outstanding for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 using the if-converted method under US GAAP. ~~This method assumes conversion at the beginning of the reporting period, or at time of issuance, if later.~~ For the purchase contracts, the number of shares of our common stock that would be issuable at the end of each reporting period will be reflected in the denominator of our diluted EPS calculation. If the stock price falls below the initial reference price of $24.51, subject to anti-dilution adjustments, the number of shares of our common stock used in calculating diluted EPS will be the maximum number of shares per the contract as described in Note 5, "Equity." Conversely, if the stock price is above the initial reference price of $24.51, subject to anti-dilution adjustments, a variable number of shares of our common stock will be used in calculating diluted EPS. A numerator adjustment was reflected in the calculation of diluted EPS for interest expense incurred in ~~2021,~~2022 net of tax, related to the purchase contracts.

We adopted ASU 2020-06 on January 1, 2022, which resulted in additional dilution from our Equity Units by requiring us to assume share settlement of the remaining purchase contract payment balance based on the average share price outstanding during the period. Refer to Note 2, "Recent Accounting Pronouncements," for more information on ASU 2020-06.

The shares underlying the Series C Mandatory Convertible Preferred Stock included within the Equity Units ~~represent~~are contingently convertible securities as the conversion is contingent on a successful remarketing as described in Note 5, "Equity." Contingently convertible shares where conversion is not tied to a market price trigger are excluded from the calculation of diluted EPS until such time as the contingency has been resolved under the if-converted method. As of ~~September 30, 2021,~~March 31, 2022, the contingency was not resolved and thus no shares were reflected in the denominator in the calculation of diluted EPS for the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022.

Diluted EPS also includes the incremental effects of the various long-term incentive compensation plans and the open ATM forward agreements during the period under the treasury stock method when the impact would be dilutive. Refer to Note 5, "Equity," for more information on our ATM forward agreements.

For the three and nine months ended September 30, 2020, we had a net loss on the Condensed Statements of Consolidated Income (Loss) (unaudited) during the period, and any potentially dilutive shares would have had an anti-dilutive impact on EPS. The following table presents the calculation of our basic and diluted EPS:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in millions, except per share amounts)	(in millions, except per share amounts)	2021		2020		2021		2020		(in millions, except per share amounts)	2022		2021
Numerator:	Numerator:									Numerator:
Net Income (Loss) Available to Common Shareholders - Basic		$	49.4	$	(186.7)	$	377.6	$	(143.4)
Net Income Available to Common Shareholders - Basic										Net Income Available to Common Shareholders - Basic	$	413.0	$	281.7
Dilutive effect of Equity Units	Dilutive effect of Equity Units	0.6		—		1.0		—		Dilutive effect of Equity Units	0.5		—
Net Income (Loss) Available to Common Shareholders - Diluted		$	50.0	$	(186.7)	$	378.6	$	(143.4)
Net Income Available to Common Shareholders - Diluted										Net Income Available to Common Shareholders - Diluted	$	413.5	$	281.7
Denominator:	Denominator:									Denominator:
Average common shares outstanding - Basic	Average common shares outstanding - Basic	393.2		383.8		392.9		383.5		Average common shares outstanding - Basic	406.0		392.7
Dilutive potential common shares:	Dilutive potential common shares:									Dilutive potential common shares:
Equity Units		35.2		—		21.3		—
Equity Units purchase contracts										Equity Units purchase contracts	29.1		—
Equity Units purchase contract payment balance										Equity Units purchase contract payment balance	4.0		—
Shares contingently issuable under employee stock plans	Shares contingently issuable under employee stock plans	0.9		—		0.7		—		Shares contingently issuable under employee stock plans	1.0		0.6
Shares restricted under employee stock plans	Shares restricted under employee stock plans	0.3		—		0.3		—		Shares restricted under employee stock plans	0.4		0.3
Forward Agreements		0.7		—		0.6		—
ATM forward agreements										ATM forward agreements	0.9		0.3
Average Common Shares - Diluted	Average Common Shares - Diluted	430.3		383.8		415.8		383.5		Average Common Shares - Diluted	441.4		393.9
Earnings per common share:	Earnings per common share:									Earnings per common share:
Basic	Basic	$	0.13	$	(0.49)	$	0.96	$	(0.37)	Basic	$	1.02	$	0.72
Diluted	Diluted	$	0.12	$	(0.49)	$	0.91	$	(0.37)	Diluted	$	0.94	$	0.72

1917

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

5. Equity

ATM Program and Forward Sale ~~Agreements.~~Agreement. On February 22, 2021, we entered into six separate equity distribution agreements pursuant to which we are able to sell up to an aggregate of $750.0 million of our common stock.

On February 23, 2021, under the ATM program, we executed a forward sale agreement, which allows us to issue a fixed number of shares at a price to be settled in the future. From February 24, 2021 to March 17, 2021, the forward purchaser under our forward sale agreement borrowed 6,672,740 shares from third parties, which the forward purchaser sold, through its affiliated agent, at a weighted average price of $22.48 per share. We may settle the forward sale agreement in shares, cash, or net shares by December 15, 2021. Had we settled all the shares under the forward sale agreement at September 30, 2021, we would have received approximately $145.0 million, based on a net price of $21.73 per share.

On June 1, 2021, under the ATM program, we executed a forward sale agreement, which allows us to issue a fixed number of shares at a price to be settled in the future. From June 1, 2021 to June 11, 2021, the forward purchaser under our forward sale agreement borrowed 5,852,475 shares from third parties, which the forward purchaser sold, through its affiliated agent, at a weighted average price of $25.63 per share. We may settle the forward sale agreement in shares, cash, or net shares by December 15, 2021. Had we settled all the shares under the forward sale agreement at September 30, 2021, we would have received approximately $146.9 million, based on a net price of $25.10 per share.

On August 9, 2021, under the ATM program, we executed a forward sale agreement, which allows us to issue a fixed number of shares at a price to be settled in the future. From August 9, 2021 to September 1, 2021, the forward purchaser under our forward sale agreement borrowed 5,941,598 shares from third parties, which the forward purchaser sold, through its affiliated agent, at a weighted average price of $25.25 per share. We may settle the forward sale agreement in shares, cash, or net shares by December 15, 2022. Had we settled all the shares under the forward sale agreement at ~~September 30, 2021,~~March 31, 2022, we would have received approximately ~~$148.4~~$145.2 million, based on a net price of ~~$24.97~~$24.44 per share.

As of ~~September 30, 2021,~~March 31, 2022, the ATM program (including the impacts of the forward sale ~~agreements~~agreement discussed above) had approximately $300.0 million of equity available for issuance. The program expires on December 31, 2023.

Preferred Stock. As of ~~September 30, 2021,~~March 31, 2022, we had 20,000,000 shares of preferred stock authorized for issuance, of which 1,302,500 shares of preferred stock in the aggregate for all series were outstanding. The following table displays preferred dividends declared for the period by outstanding series of shares:


					Three Months Ended September 30,		Nine Months Ended September 30,		September 30,		December 31,						Three Months Ended March 31,			March 31,	December 31,
					2021	2020	2021	2020	2021		2020						2022	2021			2022		2021
(in millions except shares and per share amounts)	(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	5.650% Series A	$	1,000.00	400,000	28.25	28.25	56.50	56.50	$	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	6.500% Series B	$	25,000.00	20,000	406.25	406.25	1,625.00	1,625.00	$	486.1	$	486.1	6.500% Series B	$	25,000.00	20,000	812.50	812.50			$	486.1	$	486.1
Series C(1)	Series C(1)	$	1,000.00	862,500	—	—	—	—	$	839.8	$	—	Series C(1)	$	1,000.00	862,500	—	—			$	666.5	$	666.5

(1)The Series C Mandatory Convertible Preferred Stock initially will not bear any dividends. We recorded the initial present value of the purchase contract payments as a liability with a corresponding reduction to preferred stock.

In addition, 20,000 shares of Series B–1 Preferred Stock, par value $0.01 per share, were outstanding as of ~~September 30, 2021.~~March 31, 2022. 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 ~~September 30,~~March 31, 2022 and 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)~~

Equity Units. On April 19, 2021, we completed the sale of 8.625 million Equity Units, initially consisting of Corporate Units, each with a stated amount of $100. ~~The offering generated net proceeds of $835.5 million, after underwriting and 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. We are accounting for the Corporate Units as a single unit of account.

Selected information about the Equity Units at the issuance date is presented below:


(in millions except contract rate)	Issuance Date	Units Issued	Total Net Proceeds(1)		Purchase Contract Annual Rate		Purchase Contract Liability
Equity Units	April 19, 2021	8.625	$	835.5	7.75	%	$	168.8

(1)Issuance costs of $27.0 million were recorded on a relative fair value basis as a reduction to preferred stock of $22.5 million and a reduction to the purchase contract liability of $4.5 million.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

The purchase contract obligates holders to purchase shares of our common stock on December 1, 2023, subject to early settlement in certain situations.The purchase price paid under the purchase contract is $100 and the number of shares to be purchased will be determined under a settlement rate formula based on the volume-weighted average share price of our common stock near the settlement date, subject to a maximum settlement rate. The Series C Mandatory Convertible Preferred Stock will initially be pledged upon issuance as collateral to secure the purchase of common stock under the related purchase contracts.

We will pay quarterly contract adjustment payments at the rate of 7.75% per year on the stated amount of $100 per Equity Unit. The contract adjustment payments are payable in cash, shares of our common stock or a combination thereof, at our election. We have the right to defer the payment of contract adjustment payments until no later than the purchase contract settlement date. If we exercise our option to defer the payment of contract adjustment payments, then until the deferred contract adjustment payments have been paid, we will not declare or pay any dividends on, or make any distributions on, or redeem, purchase or acquire, or make a liquidation payment with respect to, any shares of our capital stock; make any payment of principal of, or interest or premium, if any, on, or repay, repurchase or redeem any of our debt securities that rank on parity with, or junior to, the contract adjustment payments; or make any guarantee payments under any guarantee by us of securities of any of our subsidiaries if our guarantee ranks on parity with, or junior to, the contract adjustment payments.

~~The Series C Mandatory Convertible Preferred Stock initially will not bear any dividends and the liquidation preference of the mandatory convertible preferred stock will not accrete.~~ The Series C Mandatory Convertible Preferred Stock is expected to be remarketed prior to December 1, 2023. Following a successful remarketing, dividends may become payable on the Series C Mandatory Convertible Preferred Stock and/or the minimum conversion rate of the Series C Mandatory Convertible Preferred Stock may be increased. Each2023, and each share, ~~of Series C Mandatory Convertible Preferred Stock,~~ unless previously converted, will automatically convert to common stock based on a conversion rate on the mandatory conversion date, which is expected to be on or about March 1, 2024. The conversion rate will be determined based on the volume-weighted average share price of our common stock near the conversion date, subject to a minimum and maximum conversion rate. Prior to December 1, 2023, the Series C Mandatory Convertible Preferred Stock will not bear any dividends and the liquidation preference will not accrete. Following a successful remarketing, dividends may become payable on the Series C Mandatory Convertible Preferred Stock and/or the minimum conversion rate of the Series C Mandatory Convertible Preferred Stock may be increased. If no successful remarketing of the Series C Mandatory Convertible Preferred Stock has previously occurred, effective as of December 1, 2023, the conversion rate will be zero, no shares of our common stock will be delivered upon automatic conversion and each share of Series C Mandatory Convertible Preferred Stock will be automatically transferred to us on the mandatory conversion date without any payment of cash or shares of our common stock thereon. In the event of such a remarketing failure, any shares of Series C Mandatory Convertible Preferred Stock held as part of Corporate Units will be automatically delivered to us on December 1, 2023 in full satisfaction of the relevant holder's obligation under the related purchase contracts.

We ~~recorded~~will pay quarterly contract adjustment payments to holders of the ~~initial present value~~Equity Units at the rate of 7.75% per year on the stated amount of $100 per Equity Unit. The contract adjustment payments are payable in cash, shares of our common stock or a combination thereof, at our election. The payment of contract adjustment payments may also be deferred until the purchase contract settlement date, December 1, 2023, at our election. As of March 31, 2022, no contract adjustment payments ~~as a~~have been deferred with quarterly cash payments being remitted to the holders. As of March 31, 2022 and December 31, 2021 the purchase contract liability ~~with a corresponding reduction to additional-paid-in-capital. The current portion of this liability is included in "Other accruals,"~~was $113.3 million and ~~the noncurrent portion is included in "Other noncurrent liabilities" on the Condensed Consolidated Balance Sheets (unaudited).~~$129.4 million, respectively. Purchase contract payments are recorded against this liability. Accretion of the ~~stock~~ purchase contract liability is recorded as interest expense. Cash payments of $16.7 million and zero were made during the three months ended March 31, 2022 and March 31, 2021, respectively.

Refer to Note 4, "Earnings Per Share," for additional information regarding our application of diluted EPS to the ~~purchase contracts and the Series C Mandatory Convertible Preferred Stock.~~Equity Units. Under the terms of the Equity Units, assuming no anti-dilution or other adjustments such as a fundamental change, the maximum number of shares of common stock we will issue under the purchase contracts is 35.2 million and maximum number of shares of common stock we will issue under the Series C Mandatory Convertible Preferred Stock is 35.2 million. Had we settled the remaining purchase contract payment balance in shares at March 31, 2022, we would have issued approximately 4.0 million shares.

~~Selected information about~~

6. Gas in Storage

We use both the ~~Equity Units is presented below:~~

(in millions except contract rate) Issuance Date Units Issued
Total Net Proceeds(1)
Purchase Contract Annual Rate
Purchase Contract Liability(2)
Equity Units April 19, 2021 8.625 $ 835.5 7.75 % $ 168.8

~~(1)Issuance~~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 ~~$27.0 million were~~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 ~~on a relative fair value basis~~ as a ~~reduction~~temporary LIFO liquidation credit or debit within the Condensed Consolidated Balance Sheets (unaudited). Due to ~~preferred stock~~seasonality requirements, we expect interim variances in LIFO layers to be replenished by year end. We had a temporary LIFO liquidation debit of ~~$22.5~~$12.7 million and ~~a reduction to~~zero as of March 31, 2022 and December 31, 2021, respectively, for certain gas distribution companies recorded within "Prepayments and other" on the ~~purchase contract liability of $4.5 million.~~

~~(2)Cash payments of $16.7 million and $24.5 million were made during the three and nine months ended September 30, 2021. The purchase contract liability was $145.4 million at September 30, 2021.~~Condensed Consolidated Balance Sheets (unaudited).

2119

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

~~6. Property, Plant~~7. Regulatory Matters

NIPSCO change in accounting estimate

As part of the NIPSCO Gas Settlement and ~~Equipment~~Stipulation Agreement filed on March 2, 2022, NIPSCO Gas has agreed to change the depreciation methodology for its calculation of deprecation rates, which will reduce depreciation expense and subsequent revenues and cash flows once new rates become effective, subject to approval by the IURC.

Columbia of Ohio regulatory filing update

On Wednesday, April 6, 2022, the PUCO Staff issued its Staff Report in Columbia of Ohio's base rate case, filed on June 21, 2021, which was filed in conjunction with applications for an alternative rate plan, approval of certain deferral authority, and updates to certain riders. Columbia of Ohio's application requested a rate increase approximating a 21.3% or $221.4 million increase in revenue per year. The Staff Report recommended a rate increase of 4.0% - 6.3% or $35.2 million to $57.6 million increase in revenue per year. The Staff recommended adjustments include, but are not limited to, plant assets, COVID-19 deferrals and environmental remediation costs. We are currently reviewing the Staff's recommendations and will file our written objections to the Staff report on May 6, 2022.

Regulatory deferral related to renewable energy investments

In ~~2020, MISO approved NIPSCO's plan to retire~~accordance with the ~~R.M. Schahfer Generating Station Units 14, 15, 17 and 18 in 2023. The December 2019 NIPSCO electric rate case order included approval to create~~accounting principles of ASC 980, we recognize a regulatory liability or asset ~~upon~~for amounts representing the ~~retirement~~timing difference between the profit earned from the joint ventures and the amount included in regulated rates to recover our approved investments in consolidated joint ventures. The amounts recorded in income will ultimately reflect the amount allowed in regulated rates to recover our investments over the useful life of the ~~R.M. Schahfer Generating Station.~~projects. The order allows for the recovery of, and on, the net book value of the station by the end of 2032. On March 11, 2021, NIPSCO submitted separate Attachment Y Notices for Units 14 and 15 seeking a suspension date of October 1, 2021 for both coal fired units at R.M. Schahfer Generating Station. On May 28, 2021, NIPSCO received approval from MISO to suspend and retire these two units on October 1, 2021. The remaining two units are still scheduled to be retired in 2023.

In connection with MISO's approvals of NIPSCO's planned retirement of the R.M. Schahfer Generating Station, we recorded plant retirement-related charges of zero and $4.6 million for the three and nine months ended September 30, 2020, respectively, comprised of write downs of certain capital projects that have been cancelled and materials and supplies inventory balances deemed obsolete dueoffset to the ~~planned retirement. As a result of the accelerated retirements of Units 14 and 15, we~~regulatory liability or asset associated with our renewable investments included in regulated rates is recorded severance charges and wrote down additional obsolete inventory. These charges totaled $3.6 million and $12.2 million for the three and nine months ended September 30, 2021, respectively. These charges are presented within "Operation and maintenance"in "Depreciation expense" on the Condensed Statements of Consolidated Income ~~(Loss)~~(unaudited). ~~At retirement,~~We recorded a credit to depreciation expense in the ~~net book value~~amount of ~~each retired unit will be reclassified from "Net Property, Plant~~$2.9 million and ~~Equipment," to current~~zero for the three months ended March 31, 2022 and long-term ''Regulatory Assets.'' The total net book value of R.M. Schahfer Generating Station's four coal units and other associated plant estimated to be retired was $831.8 million at September 30, 2021. Refer to Note 19,~~"Subsequent Event," for additional information.~~

~~On April 28,~~March 31, 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~~respectively, related to the ~~retirements~~regulatory deferral of ~~Units 14 and 15 on October 1, 2021 and any resulting cost impacts to customers.~~

~~7. Regulatory Matters~~

~~COVID-19 Regulatory Filings~~

~~In response to COVID-19, we received approvals or directives from the regulatory commissions~~income (loss) associated with our joint ventures, which is not included in ~~the states in which we operate. The ongoing impacts of these approvals or directives are described in the table below:~~

Jurisdiction Moratorium in Place?
Regulatory Asset balance as of September 30, 2021
(in millions)
Regulatory Asset balance as of December 31, 2020
(in millions)
Deferred COVID-19 Costs
Columbia of Ohio No $ 2.1 $ 2.0 Incremental operation and maintenance expenses
NIPSCO No $ 2.2 $ 9.2 Incremental bad debt expense and the costs to implement the requirements of the COVID-19 related order
Columbia of Pennsylvania No $ 6.5 $ 5.4 Incremental bad debt expense incurred from March 13, 2020 through December 31, 2021, above levels currently in rates
Columbia of Virginia No $ 1.4 $ — Incremental incurred costs (including incremental bad debt expense), subject to an earnings test review
Columbia of Maryland No $ 0.9 $ 0.7 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

The Pennsylvania PUC adopted an order on March 11, 2021, and subsequently reaffirmed their stance in a June 23, 2021 order, which lifted its prior pandemic-related moratorium on service terminations for non-payments of utility bills beginning April 1, 2021. Pursuant to that order, Pennsylvania utilities are required to offer payment plans on billing arrearages, with the length of such payment plans depending on a customer's income level. Pursuant to a subsequent order, Pennsylvania utilities were no longer required to offer these extended pandemic-related payment arrangements to customers in arrears as of October 1, 2021.

~~Table of Contents~~

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

~~NiSource Inc.~~

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

For Columbia of Virginia, the moratorium on non-residential disconnections ended on October 6, 2020, and the moratorium on residential disconnections and late payment fees ended on August 30, 2021. Legislative and regulatory requirements extending COVID-19 payment plans between 6 and 24 months remain in place.

In conjunction with the order issued by the PSC of Maryland on June 15, 2021, all termination moratoriums will be lifted the later of November 1, 2021 or 30 days after the Maryland Relief Act funds have been applied to customer accounts. Columbia of Maryland received approximately $0.8 million of assistance that were applied to customer accounts in August 2021 in accordance with the terms of the order. As such, all termination moratoriums were lifted and normal collections procedures resumed on November 1, 2021.

~~Unless otherwise noted above, all other pandemic-related regulatory actions have expired or been lifted.~~current rates.

8. Risk Management Activities

We are exposed to certain risks relating to our ongoing business ~~operations,~~operations; namely commodity price risk and interest rate risk. We recognize that the prudent and selective use of derivatives may help to lower our cost of debt capital, manage our interest rate exposure and limit volatility in the price of natural gas.

Risk management assets and liabilities on our derivatives are presented on the Condensed Consolidated Balance Sheets (unaudited) as shown below:

(in millions) September 30, 2021 December 31, 2020
Risk Management Assets - Current(1)
Interest rate risk programs $ — $ —
Commodity price risk programs 27.9 10.4
Total $ 27.9 $ 10.4
Risk Management Assets - Noncurrent(2)
Interest rate risk programs $ — $ —
Commodity price risk programs 18.8 2.8
Total $ 18.8 $ 2.8
Risk Management Liabilities - Current(3)
Interest rate risk programs $ 46.6 $ 70.9
Commodity price risk programs 0.4 7.3
Total $ 47.0 $ 78.2
Risk Management Liabilities - Noncurrent(4)
Interest rate risk programs $ 68.8 $ 99.5
Commodity price risk programs 6.9 45.1
Total $ 75.7 $ 144.6


	March 31, 2022				December 31, 2021
(in millions)	Assets		Liabilities		Assets		Liabilities
Current(1)
Derivatives designated as hedging instruments	$	—	$	68.1	$	—	$	136.4
Derivatives not designated as hedging instruments	39.5		1.2		10.6		0.4
Total	$	39.5	$	69.3	$	10.6	$	136.8
Noncurrent(2)
Derivatives designated as hedging instruments	$	—	$	—	$	—	$	—
Derivatives not designated as hedging instruments	47.6		1.8		13.8		7.4
Total	$	47.6	$	1.8	$	13.8	$	7.4

(1)~~Presented~~Currentassets and liabilities are presented in "Prepayments and other" and "Other accruals", respectively, on the Condensed Consolidated Balance Sheets (unaudited).

(2)~~Presented~~Noncurrentassets and liabilities are presented in "Deferred charges and other" ~~on the Condensed Consolidated Balance Sheets (unaudited).~~

~~(3)Presented in "Other accruals" on the Condensed Consolidated Balance Sheets (unaudited).~~

~~(4)Presented in~~and "Other noncurrent liabilities", respectively, on the Condensed Consolidated Balance Sheets (unaudited).

Derivatives Not Designated as Hedging Instruments

Commodity ~~Price Risk Management~~

price risk management.We, along with our utility customers, are exposed to variability in cash flows associated with natural gas purchases and volatility in natural gas prices. We purchase natural gas for sale and delivery to our retail, commercial and industrial customers, and for most customers the variability in the market price of gas is passed through in their rates. Some of our utility subsidiaries offer programs ~~to certain customers~~ whereby variability in the market price of gas is assumed by the respective

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

utility. The objective of our commodity price risk programs is to mitigate the gas cost variability, for us or on behalf of our customers, associated with natural gas purchases or sales by economically hedging the various gas cost components using a combination of futures, options, forwards or other derivative contracts. At March 31, 2022 and December 31, 2021, we had 117.2 MMDth and 124.5 MMDth, respectively, of net energy derivative volumes outstanding related to our natural gas hedges.

NIPSCO has received IURC approval to lock in a fixed price for its natural gas customers using long-term forward purchase ~~instruments. The term of these~~ instruments ~~may range from~~ ~~five~~ ~~to 10 years~~ and is limited to 20% of ~~NIPSCO’s~~NIPSCO's average annual

~~Table of Contents~~

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

~~NiSource Inc.~~

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

GCA purchase volume. ~~Gains~~As of March 31, 2022, the remaining terms of these instruments range from one to five years.

All gains and losses on these derivative contracts are deferred as regulatory liabilities or assets and are remitted to or collected from customers through NIPSCO’s quarterly GCA mechanism. These instruments are not designated as accounting hedges.

The following table summarizes the gains and losses associated with the commodity price risk programs:


(in millions)	March 31, 2022		December 31, 2021
Regulatory Assets
Losses on commodity price risk programs	$	1.1	$	9.6
Regulatory Liabilities
Gains on commodity price risk programs	111.9		34.2

Derivatives Designated as Hedging Instruments

Interest ~~Rate Risk Management~~

rate risk management. As of ~~September 30, 2021,~~March 31, 2022, we have two forward-starting interest rate swaps with an aggregate notional value totaling $500.0 million to hedge the variability in cash flows attributable to changes in the benchmark interest rate ~~during the periods from the effective dates of the swaps to the anticipated dates of~~associated with forecasted debt ~~issuances, which are expected to take place between 2022 and 2024.~~issuances. These interest rate swaps are designated as cash flow hedges.

Cash flow hedges included in "Accumulated other comprehensive loss" on the Condensed Consolidated Balance Sheets (unaudited) were:

(in millions)

AOCI(1)

Amounts Expected to be Reclassified to Earnings During the Next 12 Months(1)

Maximum Term

Interest Rate

47.0

0.3

368 months

(1) All amounts are net of tax.

The actual amounts reclassified from Accumulated other comprehensive loss to Net Income can differ from the estimate above due to market rate changes.

The gains and losses related to these swaps are recorded to ~~AOCI~~AOCI. Upon issuance, we amortize the gains and ~~will be recognized~~losses over the life of the debt associated with these swaps as we recognize interest expense. These amounts are immaterial for the three months ended March 31, 2022 and 2021 and are recorded in "Interest expense, net" ~~concurrently with the recognition of interest expense~~ on the ~~associated debt, once issued.~~ Condensed Statements of Consolidated Income (unaudited).

If it becomes probable that a hedged forecasted transaction will no longer occur, the accumulated gains or losses on the derivative will be recognized currently in "Other, net" in the Condensed Statements of Consolidated Income ~~(Loss)~~ (unaudited).

There were no amounts excluded from effectiveness testing for derivatives in cash flow hedging relationships at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

Our derivative instruments measured at fair value as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 do not contain any credit-risk-related contingent features. Cash flows for derivative financial instruments are generally classified in cash flows from operating activities.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

9. Fair Value

A. Fair Value Measurements

Recurring Fair Value Measurements

The following tables present financial assets and liabilities measured and recorded at fair value on our Condensed Consolidated Balance Sheets (unaudited) on a recurring basis and their level within the fair value hierarchy as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


Recurring Fair Value Measurements September 30, 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 September 30, 2021
Recurring Fair Value Measurements March 31, 2022 (in millions)										Recurring Fair Value Measurements March 31, 2022 (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, 2022
Assets	Assets									Assets

Risk management assets	Risk management assets	$	—	$	46.7	$	—	$	46.7	Risk management assets	$	—	$	87.1	$	—	$	87.1

Available-for-sale debt securities	Available-for-sale debt securities	—		168.9		—		168.9		Available-for-sale debt securities	—		156.7		—		156.7
Total	Total	$	—	$	215.6	$	—	$	215.6	Total	$	—	$	243.8	$	—	$	243.8
Liabilities	Liabilities									Liabilities

Risk management liabilities	Risk management liabilities	$	—	$	122.7	$	—	$	122.7	Risk management liabilities	$	—	$	71.1	$	—	$	71.1
Total	Total	$	—	$	122.7	$	—	$	122.7	Total	$	—	$	71.1	$	—	$	71.1

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 $ — $ 13.2 $ — $ 13.2
Available-for-sale debt securities — 170.9 — 170.9
Total $ — $ 184.1 $ — $ 184.1
Liabilities
Risk management liabilities $ — $ 222.8 $ — $ 222.8
Total $ — $ 222.8 $ — $ 222.8

~~Table of Contents~~

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

~~NiSource Inc.~~

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


Recurring Fair Value Measurements December 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 December 31, 2021
Assets


Risk management assets	$	—	$	24.4	$	—	$	24.4


Available-for-sale debt securities	—		171.8		—		171.8
Total	$	—	$	196.2	$	—	$	196.2
Liabilities

Risk management liabilities	$	—	$	144.2	$	—	$	144.2
Total	$	—	$	144.2	$	—	$	144.2

Risk Management Assets and Liabilities. Risk management assets and liabilities include interest rate swaps, exchange-traded NYMEX futures and NYMEX options and non-exchange-based forward purchase contracts.

Level 1- When utilized, exchange-traded derivative contracts are based on unadjusted quoted prices in active markets and are classified within Level 1. These financial assets and liabilities are secured with cash on deposit with the exchange; therefore, nonperformance risk has not been incorporated into these valuations. These financial assets and liabilities are deemed to be cleared and settled daily by NYMEX as the related cash collateral is posted with the exchange. As a result of this exchange rule, NYMEX derivatives are considered to have no fair value at the balance sheet date for financial reporting purposes, and are presented in Level 1 net of posted cash; however, the derivatives remain outstanding and are subject to future commodity price fluctuations until they are settled in accordance with their contractual terms.

Level 2- Certain non-exchange-traded derivatives are valued using broker or over-the-counter, on-line exchanges. In such cases, these non-exchange-traded derivatives are classified within Level 2. Non-exchange-based derivative instruments include swaps, forwards, and options. In certain instances, these instruments may utilize models to measure fair value. We use a similar model to value similar instruments. Valuation models utilize various inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability and market-corroborated inputs, (i.e., inputs derived principally from or corroborated by observable market data by correlation or other means). Where observable inputs are available for substantially the full term of the asset or liability, the instrument is categorized within Level 2.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

Level 3- Certain derivatives trade in less active markets with a lower availability of pricing information and models may be utilized in the valuation. When such inputs have a significant impact on the measurement of fair value, the instrument is categorized within Level 3.

Credit risk is considered in the fair value calculation of derivative instruments that are not exchange-traded. Credit exposures are adjusted to reflect collateral agreements ~~which~~that reduce exposures. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, there were no material transfers between fair value hierarchies. Additionally, there were no changes in the method or significant assumptions used to estimate the fair value of our financial instruments.

Credit risk is considered in the fair value calculation of each of our forward-starting interest rate swaps, as described in Note 8, "Risk Management Activities." As they are based on observable data and valuations of similar instruments, the hedges are categorized within Level 2 of the fair value hierarchy. There was no exchange of premium at the initial date of the swaps, and we can settle the contracts at any time.

NIPSCO has entered into long-term forward natural gas purchase instruments to lock in a fixed price for its natural gas customers. We value these contracts using a pricing model that incorporates market-based information when available, as these instruments trade less frequently and are classified within Level 2 of the fair value hierarchy. For additional information, see Note 8, ~~“Risk~~"Risk Management Activities.”"

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

Our available-for-sale debt securities impairments are recognized periodically using an allowance approach. At each reporting date, we ~~quantitatively~~utilize a quantitative and ~~qualitatively~~qualitative review process to assess the impairment of available-for-sale debt securities ~~for impairment.~~at the individual security level. For securities in a loss position, we evaluate our intent to sell or whether it is more-likely-than-not that we ~~intend~~will be required to ~~hold,~~sell the security prior to the recovery of its amortized cost. If either criteria is met, the loss is recognized in earnings immediately, with the offsetting entry to the carrying value of the security. If both criteria are not met, we perform an analysis to determine whether the unrealized loss is related to credit factors. The analysis focuses on a variety of factors that include, but are not limited to, downgrade on ratings of the security, defaults in the current reporting period or projected defaults in the future, the security's yield spread over treasuries, and other relevant market data. If the unrealized loss is not related to credit factors, it is included in other comprehensive income. If the unrealized loss is related to credit factors, the loss is recognized as credit loss expense in earnings during the period, with an offsetting entry to the allowance for credit losses. The amount of the credit loss recorded to the allowance account is limited by the amount at which the security's fair value is less than its amortized cost basis. If ~~the credit losses~~certain amounts recorded in the allowance for credit losses are deemed uncollectible, the allowance on the uncollectible portion iswill be charged off, with an offsetting entry to the carrying value of the security. Subsequent improvements to the estimated credit losses of available-for-sale debt securities ~~are~~will be recognized immediately in earnings. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we recorded ~~$0.2~~$0.6 million and ~~$0.5~~$0.2 million, respectively, as an allowance for credit losses on available-for-sale debt securities as a result of the analysis described above. Continuous credit monitoring and portfolio credit balancing mitigates our risk of credit losses on our available-for-sale debt securities.

2523

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

~~the analysis described above. Continuous credit monitoring and portfolio credit balancing mitigates our risk of credit losses on our available-for-sale debt securities.~~

The amortized cost, gross unrealized gains and losses, allowance for credit losses, and fair value of available-for-sale securities at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were:


September 30, 2021 (in millions)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses(1)		Allowance for Credit Losses		Fair Value
March 31, 2022 (in millions)												March 31, 2022 (in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses(1)		Allowance for Credit Losses		Fair Value
Available-for-sale debt securities	Available-for-sale debt securities											Available-for-sale debt securities
U.S. Treasury debt securities	U.S. Treasury debt securities	$	45.7	$	0.2	$	(0.2)	$	—	$	45.7	U.S. Treasury debt securities	$	47.0	$	—	$	(1.8)	$	—	$	45.2
Corporate/Other debt securities	Corporate/Other debt securities	118.9		5.0		(0.5)		(0.2)		123.2		Corporate/Other debt securities	114.7		0.7		(3.3)		(0.6)		111.5
Total	Total	$	164.6	$	5.2	$	(0.7)	$	(0.2)	$	168.9	Total	$	161.7	$	0.7	$	(5.1)	$	(0.6)	$	156.7

December 31, 2020 (in millions)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses(2)		Allowance for Credit Losses		Fair Value
December 31, 2021 (in millions)												December 31, 2021 (in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses(2)		Allowance for Credit Losses		Fair Value
Available-for-sale debt securities	Available-for-sale debt securities											Available-for-sale debt securities
U.S. Treasury debt securities	U.S. Treasury debt securities	$	33.7	$	0.3	$	—	$	—	$	34.0	U.S. Treasury debt securities	$	52.8	$	0.1	$	(0.4)	$	—	$	52.5
Corporate/Other debt securities	Corporate/Other debt securities	130.2		7.7		(0.5)		(0.5)		136.9		Corporate/Other debt securities	116.5		3.7		(0.7)		(0.2)		119.3
Total	Total	$	163.9	$	8.0	$	(0.5)	$	(0.5)	$	170.9	Total	$	169.3	$	3.8	$	(1.1)	$	(0.2)	$	171.8

(1)Fair value of U.S. Treasury debt securities and Corporate/Other debt securities in an unrealized loss position without an allowance for credit losses is ~~$28.4~~$43.7 million and ~~$25.8~~$65.1 million, respectively, at ~~September 30, 2021.~~March 31, 2022.

(2)Fair value of U.S. Treasury debt securities and Corporate/Other debt securities in an unrealized loss position without an allowance for credit losses is ~~zero~~$36.2 million and ~~$13.2~~$35.4 million, respectively, at December 31, ~~2020.~~2021.

The cost of maturities sold is based upon specific identification. Realized gains and losses on available-for-sale securities were immaterial for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

~~The cost of maturities sold is based upon specific identification.~~ At ~~September 30, 2021,~~March 31, 2022, approximately ~~$12.6~~$5.4 million of U.S. Treasury debt securities and approximately ~~$1.4~~$6.9 million of Corporate/Other debt securities have maturities of less than a year.

There are no material items in the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

Non-recurring Fair Value Measurements

We measure the fair value of certain assets, including goodwill, on a non-recurring basis, typically ~~annually or~~ when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

In March 2021, we reached an agreement with Eversource regarding the final purchase price, including net working capital adjustments to the October 9, 2020 purchase price of our Massachusetts Business. The working capital amounts were measured at fair value, less costs to sell.

~~B. Other Fair Value Disclosures for Financial Instruments.~~ ~~The carrying amount of cash and cash equivalents, restricted cash, customer deposits and short-term borrowings is a reasonable estimate of fair value due to their liquid or short-term nature.~~

~~The following method and assumptions were used to estimate the fair value of each class of financial instruments.~~

Purchase Contract Liability. At April 19, 2021, we recorded the purchase contract liability at fair value using a discounted cash flow method and observable, market-corroborated inputs. This ~~value is a reasonable~~ estimate ~~of fair value~~was made at ~~September 30,~~April 19, 2021, and will not be remeasured at each subsequent balance sheet date. It has been categorized within Level 2 of the fair value hierarchy. Refer to Note 5, ''Equity'' for additional information.

~~Long-term Debt.~~B. Other Fair Value Disclosures for Financial Instruments. The carrying amount of cash and cash equivalents, restricted cash, notes receivable, customer deposits and short-term borrowings is a reasonable estimate of fair value due to their liquid or short-term nature. Our long-term borrowings are recorded at historical amounts.

The following method and assumptions were used to estimate the fair value of each class of financial instruments.

Long-term Debt. The fair value of outstanding long-term debt is estimated based on the quoted market prices for the same or similar securities. Certain premium costs associated with the early settlement of long-term debt are not taken into consideration in determining fair value. These fair value measurements are classified within Level 2 of the fair value hierarchy. As of March 31, 2022, there was no change in the method or significant assumptions used to estimate the fair value of long-term debt.

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ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

~~classified within Level 2 of the fair value hierarchy. As of September 30, 2021, there was no change in the method or significant assumptions used to estimate the fair value of long-term debt.~~

The carrying amount and estimated fair values of these financial instruments were as follows:


(in millions)	(in millions)	Carrying Amount as of September 30, 2021		Estimated Fair Value as of September 30, 2021		Carrying Amount as of Dec. 31, 2020		Estimated Fair Value as of Dec. 31, 2020		(in millions)	Carrying Amount as of March 31, 2022		Estimated Fair Value as of March 31, 2022		Carrying Amount as of Dec. 31, 2021		Estimated Fair Value as of Dec. 31, 2021
Long-term debt (including current portion)	Long-term debt (including current portion)	$	9,243.9	$	10,558.1	$	9,243.1	$	11,034.2	Long-term debt (including current portion)	$	9,237.7	$	9,202.0	$	9,241.5	$	10,415.7

10. Income Taxes

Our interim effective tax rates reflect the estimated annual effective tax rates for ~~2021~~2022 and ~~2020,~~2021, adjusted for tax expense associated with certain discrete items. The effective tax rates for the three months ended ~~September 30,~~March 31, 2022 and 2021 were 18.2% and ~~2020 were 19.2% and 27.3%, respectively. The effective tax rates for the nine months ended September 30, 2021 and 2020 were 17.9% and 42.0%~~17.4%, respectively. These effective tax rates differ from the federal statutory tax rate of 21% primarily due to increased amortization of excess deferred federal income tax liabilities, as specified in the TCJA, tax credits, state income taxes and other permanent book-to-tax differences. These adjustments have a relative impact on the effective tax rate proportionally to pretax income or loss.

The ~~decrease~~increase in the three month effective tax rate of ~~8.1%~~0.8% in ~~2021~~2022 compared to ~~2020~~2021 is primarily attributed to the tax effect of the discrete ~~items~~item in ~~2020~~2022 related to the pre-tax book ~~loss~~income recorded for the ~~classification as held~~Columbia of Massachusetts insurance proceeds, offset by increased amortization of excess deferred federal income tax liabilities, lower state income taxes, and increased deduction for ~~sale of the Massachusetts Business and loss on early extinguishment of long-term debt tax effected at statutory tax rates.~~

~~The decrease~~AFUDC equity in the nine month effective tax rate of 24.1% in 2021 compared to 2020 is primarily attributed to discrete items in 2020 related to the pre-tax book loss recorded for the classification as held for sale of the Massachusetts Business and loss on early extinguishment of long-term debt tax effected at statutory tax rates.

2022.

There were no material changes recorded in ~~2021~~2022 to our uncertain tax positions recorded as of December 31, ~~2020.~~2021.

11. Pension and Other ~~Postretirement~~Postemployment Benefits

We provide defined contribution plans and noncontributory defined benefit retirement plans that cover certain of our employees. Benefits under the defined benefit retirement plans reflect the ~~employees’~~employees' compensation, years of service and age at retirement. Additionally, we provide health care and life insurance benefits for certain retired employees. The majority of employees may become eligible for these benefits if they reach retirement age while working for us. The expected cost of such benefits is accrued during the ~~employees’~~employees' years of service. We determined that, for certain rate-regulated subsidiaries, the future recovery of postretirement benefit costs is probable, and we record regulatory assets and liabilities for amounts that would otherwise have been recorded to expense or accumulated other comprehensive loss. Current rates of rate-regulated companies include postretirement benefit costs, including amortization of the regulatory assets and liabilities that arose prior to inclusion of these costs in rates. For most plans, cash contributions are remitted to grantor trusts.

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we contributed ~~$3.3~~$0.6 million to our pension plans and ~~$15.0~~$5.1 million to our OPEB plans.

~~Table of Contents~~

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

~~NiSource Inc.~~

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

The following table provides the components of the ~~plans’~~plans' actuarially determined net periodic benefit cost for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Pension Benefits				OPEB					Pension Benefits				OPEB
Three Months Ended September 30, (in millions)		2021		2020		2021		2020
Three Months Ended March 31, (in millions)										Three Months Ended March 31, (in millions)	2022		2021		2022		2021
Components of Net Periodic Benefit (Income) Cost(1)	Components of Net Periodic Benefit (Income) Cost(1)									Components of Net Periodic Benefit (Income) Cost(1)
Service cost	Service cost	$	7.5	$	8.1	$	1.5	$	1.7	Service cost	$	7.1	$	7.6	$	1.6	$	1.5
Interest cost	Interest cost	7.9		13.1		2.5		3.8		Interest cost	9.4		7.7		3.0		2.5
Expected return on assets	Expected return on assets	(25.2)		(28.3)		(3.8)		(3.6)		Expected return on assets	(22.9)		(25.8)		(4.0)		(3.8)
Amortization of prior service credit	Amortization of prior service credit	—		0.2		(0.6)		(0.4)		Amortization of prior service credit	—		—		(0.6)		(0.6)
Recognized actuarial loss	Recognized actuarial loss	5.5		8.6		1.2		1.2		Recognized actuarial loss	4.5		5.3		0.7		1.2
Settlement loss	Settlement loss	2.9		8.0		—		—		Settlement loss	—		3.3		—		—
Total Net Periodic Benefit (Income) Cost	Total Net Periodic Benefit (Income) Cost	$	(1.4)	$	9.7	$	0.8	$	2.7	Total Net Periodic Benefit (Income) Cost	$	(1.9)	$	(1.9)	$	0.7	$	0.8

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

Pension Benefits OPEB
Nine Months Ended September 30, (in millions)
2021 2020 2021 2020
Components of Net Periodic Benefit (Income) Cost(1)
Service cost $ 22.6 $ 24.1 $ 4.5 $ 4.9
Interest cost 23.5 40.1 7.5 11.6
Expected return on assets (76.3) (85.1) (11.4) (10.8)
Amortization of prior service credit — 0.6 (1.8) (1.4)
Recognized actuarial loss 16.3 26.0 3.6 3.8
Settlement loss 9.5 8.0 — —
Total Net Periodic Benefit (Income) Cost $ (4.4) $ 13.7 $ 2.4 $ 8.1

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

During the first quarter of 2021, one of our qualified pension plans met the requirement for settlement accounting. A settlement charge of $3.3 million was recorded during the first quarter of 2021. As a result of the settlement, the pension plan was remeasured, resulting in a decrease to the net pension asset of $5.8 million, a net increase to regulatory assets of $2.1 million, and a net debit to accumulated other comprehensive loss of $0.4 million. Net periodic pension benefit cost for 2021 increased by $4.0 million as a result of the interim remeasurement.

During the second and third quarters of 2021, the requirements for settlement accounting were also met, resulting in settlement charges of $3.3 million and $2.9 million recorded for the three months ended June 30, 2021 and September 30, 2021, respectively.

The following table provides the key assumptions that were used to calculate the pension benefit obligation and the net periodic benefit cost at the interim remeasurement date for the plan that triggered settlement accounting:


	~~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~~	%

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ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

12. Variable Interest Entities

A VIE is an entity in which the controlling interest is determined through means other than a majority voting interest. ~~The primary beneficiary of a VIE is the business enterprise which has the power to direct the activities~~We control decisions that ~~most significantly impact the VIE’s economic performance. Also, the primary beneficiary either absorbs a significant amount of the VIE’s losses or has the right to receive benefits that could be~~are significant to ~~the VIE. We consider these qualitative elements in determining whether~~Rosewater and Indiana Crossroads Wind's ongoing operations and economic results. Therefore, we have concluded that we are the primary beneficiary ~~of a VIE,~~ and ~~we consolidate those VIEs for which we are determined to be the primary beneficiary.~~have consolidated both.

~~Rosewater (a joint venture) owns and operates 102 MW of nameplate capacity wind generation assets.~~ Members of the respective joint ~~venture~~ventures are NIPSCO (who is the managing member) and a tax equity ~~partner.~~partners. Earnings, tax attributes and cash flows are allocated to both NIPSCO and the tax equity partner in varying percentages by category and over the life of the partnership. Once the tax equity partner has earned their negotiated rate of return and we have reached the agreed upon contractual date, NIPSCO has the option to purchase at fair market value from the tax equity partner the remaining interest in the ~~aforementioned~~respective joint venture. NIPSCO has an obligation to purchase, through a PPA at established market rates, 100% of the electricity generated by ~~Rosewater.~~the joint ventures.

~~We control decisions that are significant to Rosewater's ongoing operations~~Rosewater

Rosewater owns and ~~economic results. Therefore, we have concluded that we are the primary beneficiary~~operates 102 MW of ~~Rosewater and have consolidated Rosewater.~~

We have applied the HLBV method of attributing income and loss to the noncontrolling interest held by the tax equity partner. HLBV accounting was applied as the allocation of Rosewater's economic results to members differs from the members' relative ownership percentages. Using the HLBV method, our earnings are calculated based on how the partnership would distribute its cash if it were to hypothetically sell all of its assets for their carrying amounts and liquidate at each reporting period. Under HLBV, we calculate the liquidation value allocable to each partner at the beginning and end of each period based on the contractual terms of the related entity's operating agreement and adjust our income for the period to reflect the change in our associated book value.

~~In March 2021, in exchange for additional respective membership interests in Rosewater,~~nameplate capacity wind generation assets. NIPSCO ~~contributed $0.1 million in cash,~~ and the tax equity partner ~~contributed $7.5~~have made total contributions of $170.1 million, ~~in cash, the second of two contractual cash contributions for each partner,~~ per the equity capital contribution agreement. NIPSCO and the tax equity partner contributed cash and NIPSCO also assumed an ~~additional~~ obligation of $6.0 million to the developer, which comes due in 2023 and is included in "Other noncurrent liabilities" in the Condensed Consolidated Balance Sheets (unaudited). From the contributed funds, Rosewater paid $7.4 million to the developer of the wind generation ~~assets.~~assets representing the remaining economic interest, which comes due in 2023. The developer of the facility is not a partner in the joint venture for federal income tax purposes and does not receive any share of earnings, tax attributes, or cash flows of Rosewater. ~~With asset construction now complete,~~

Indiana Crossroads Wind

Indiana Crossroads Wind owns and operates 302 MW of nameplate capacity wind generation assets. NIPSCO and the tax equity partner have made total ~~cash~~ contributions of ~~$0.8~~$511.8 million, per the equity capital contribution agreement. NIPSCO and ~~$93.6 million, respectively,~~the tax equity partner contributed cash and NIPSCO ~~has~~also assumed an obligation to the developer of ~~$75.7 million, totaling contributions~~the wind generation assets representing the remaining economic interest, which comes due in 2023. The developer of ~~$170.1 million~~the facility is not a partner in the joint venture for ~~both partners.~~ federal income tax purposes and does not receive any share of earnings, tax attributes, or cash flows of Indiana Crossroads Wind.

The following table displays the Noncontrolling interest in consolidated subsidiaries included in the Condensed Consolidated Balance Sheets (unaudited):



(in millions)	March 31, 2022		December 31, 2021
Rosewater	$	88.8	$	88.2
Indiana Crossroads Wind	240.7		237.4
Total	$	329.5	$	325.6

The following table displays the Net income attributable to noncontrolling interest included in the Condensed Statements of Consolidated Income (unaudited):


	Three Months Ended March 31,
(in millions)	2022		2021
Rosewater	$	1.1	$	1.0
Indiana Crossroads Wind	3.4		—
Total	$	4.5	$	1.0

We did not provide any financial or other support during the ~~year~~quarter that was not previously contractually required, nor do we expect to provide such support in the future.

At September 30, 2021 and December 31, 2020, $168.0 million and $156.4 million, respectively, in net assets (as detailed in the table below) related to Rosewater and the non-controlling interest attributable to the unrelated tax equity partner of $89.2 million and $85.6 million, respectively, were included in the Condensed Consolidated Balance Sheets (unaudited). Amounts allocated to the tax equity partner were $1.0 million and zero for the three months ended September 30, 2021 and 2020, respectively, and $3.4 million and zero for the nine months ended September 30, 2021 and 2020, respectively. These amounts are included in "Net loss attributable to non-controlling interest" on the Condensed Statements of Consolidated Income (Loss) (unaudited).

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ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

Our Condensed Consolidated Balance Sheets (unaudited) included the following assets and liabilities associated with ~~Rosewater:~~VIEs.


(in millions)	(in millions)	September 30, 2021		December 31, 2020		(in millions)	March 31, 2022				December 31, 2021
							Rosewater		Indiana Crossroads Wind		Rosewater		Indiana Crossroads Wind
Net Property, Plant and Equipment	Net Property, Plant and Equipment	$	171.6	$	175.6	Net Property, Plant and Equipment	$	168.7	$	521.7	$	170.1	$	525.8
Current assets	Current assets	5.3		1.7		Current assets	8.8		18.6		6.2		8.1

Total assets(1)	Total assets(1)	$	176.9	$	177.3	Total assets(1)	177.5		540.3		176.3		533.9
Current liabilities	Current liabilities	$	3.1	$	15.3	Current liabilities	4.3		12.4		2.5		7.5
Asset retirement obligations	Asset retirement obligations	5.7		5.5		Asset retirement obligations	5.7		14.9		5.7		14.8
Other noncurrent liabilities		0.1		0.1

Total liabilities	Total liabilities	$	8.9	$	20.9	Total liabilities	$	10.0	$	27.3	$	8.2	$	22.3

(1)The assets of Rosewater and Indiana Crossroads represent assets of a consolidated VIE that can be used only to settle obligations of the respective consolidated VIE. The creditors of the liabilities of Rosewater and Indiana Crossroads do not have recourse, to the general credit of the primary beneficiary.

13. Long-Term Debt

~~In conjunction with debt retired~~On April 1, 2022, we repaid $20.0 million of 7.99% medium term notes at maturity. The remaining $29.0 million of 7.99% medium term notes outstanding March 31, 2022 and December 31, 2021 are expected to be repaid in ~~August and September 2020, we recorded a $231.7 million loss on early extinguishment of long-term debt, primarily attributable to early redemption premiums.~~

In conjunction with debt retired in September 2020, Columbia of Massachusetts recorded an $11.7 million loss on early extinguishment of long-term debt, primarily attributable to early redemption premiums.May 2027 at maturity.

14. Short-Term Borrowings

We generate short-term borrowings through several sources, described in further detail below.

Revolving Credit Facility. We maintain a revolving credit facility to fund ongoing working capital requirements, including the provision of liquidity support for our commercial paper program, provide for issuance of letters of credit and also for general corporate purposes. Our revolving credit facility has a program limit of $1.85 billion and is comprised of a syndicate of ~~banks led by Barclays.~~banks. On February 18, 2022, we extended the termination date of our revolving credit facility to February 18, 2027. We had no outstanding borrowings under this facility as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

Commercial Paper Program. Our commercial paper program has a program limit of up to $1.5 ~~billion with a dealer group comprised of Barclays, Citigroup, Credit Suisse and Wells Fargo.~~billion. We had ~~$380.0~~$165.0 million and ~~$503.0~~$560.0 million of commercial paper outstanding with weighted-average interest rates of ~~0.17%~~0.75% and ~~0.27%~~0.24% as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

Accounts Receivable Transfer Programs. Columbia of Ohio, NIPSCO and Columbia of Pennsylvania each maintain a receivables agreement whereby they may transfer their customer accounts receivables to third-party financial institutions through wholly owned and consolidated special purpose entities. The 3 agreements expire between ~~May~~June 2022 and October 2022 and may be further extended if mutually agreed to by the parties thereto.

All receivables transferred to third parties are valued at face value, which approximates fair value due to their short-term nature. The amount of the undivided percentage ownership interest in the accounts receivables transferred is determined in part by required loss reserves under the agreements.

Transfers of accounts receivable are accounted for as secured borrowings resulting in the recognition of short-term borrowings on the Condensed Consolidated Balance Sheets (unaudited). As of ~~September 30, 2021,~~March 31, 2022, the maximum amount of debt that could be recognized related to our accounts receivable programs is ~~$205.0~~$480.0 million.

We had no$355.0 million and zero short-term borrowings related to the securitization transactions as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, $355.0 million and ~~2020,~~ zero, ~~and $122.0 million,~~ respectively, were recorded as cash flows ~~used for~~from financing activities related to the change in short-term borrowings due to securitization transactions. For the accounts receivable transfer programs, we pay used facility fees for amounts borrowed, unused commitment fees for amounts not borrowed, and upfront renewal fees. Fees associated with the securitization transactions were $0.3 million and ~~$0.6~~$0.4 million for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $1.1 million and $2.1 million for the nine months~~

~~Table of Contents~~

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

~~NiSource Inc.~~

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

~~ended September 30, 2021 and 2020,~~ respectively. Columbia of Ohio, NIPSCO and Columbia of Pennsylvania remain responsible for collecting on the receivables securitized, and the receivables cannot be transferred to another party.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

Items listed above are presented net in the Condensed Statements of Consolidated Cash Flows (unaudited) as their maturities are less than 90 days.

15. Other Commitments and Contingencies

A. Guarantees and Indemnities. We and certain of our subsidiaries enter into various agreements providing financial or performance assurance to third parties on behalf of certain subsidiaries as a part of normal business. Such agreements include guarantees and stand-by letters of credit. These agreements are entered into primarily to support or enhance the creditworthiness otherwise attributed to a subsidiary on a stand-alone basis, thereby facilitating the extension of sufficient credit to accomplish the subsidiaries' intended commercial purposes. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we had issued stand-by letters of credit of ~~$14.1~~$14.4 million and ~~$15.2~~$18.9 million, respectively.

We provide guarantees related to our future performance under BTAs for our renewable generation projects. At ~~September 30, 2021,~~March 31, 2022, our guarantees for ~~multiple~~ BTAs totaled ~~$574.4~~$485.2 million. ~~In October 2021, the amount of the guarantees increased to $774.4 million in accordance with the Fairbanks BTA.~~ The amount of each guaranty will fluctuate upon the completion of the various steps outlined in each BTA. See ''- E. Other Matters - Generation Transition,'' below for more information.

B. Legal Proceedings. On September 13, 2018, a series of fires and explosions occurred in Lawrence, Andover, and North Andover, Massachusetts related to the delivery of natural gas by Columbia of Massachusetts (the "Greater Lawrence Incident").

We have been subject to inquiries and investigations by government authorities and regulatory agencies regarding the Greater Lawrence Incident. On February 26, 2020, the Company and Columbia of Massachusetts entered into agreements with the U.S. Attorney’s Office for the District of Massachusetts to resolve the U.S. Attorney’s Office’s investigation relating to the Greater Lawrence Incident, as described below. The Company and Columbia of Massachusetts entered into an agreement with the Massachusetts Attorney General’s Office (among other parties) to resolve the Massachusetts DPU and the Massachusetts Attorney General’s Office investigations, that was approved by the Massachusetts DPU on October 7, 2020 as part of the sale of the Massachusetts Business to Eversource.

U.S. Department of Justice Investigation. On February 26, 2020, the Company and Columbia of Massachusetts entered into agreements with the U.S. ~~Attorney’s~~Attorney's Office to resolve the U.S. ~~Attorney’s Office’s~~Attorney's Office's investigation relating to the Greater Lawrence Incident. Columbia of Massachusetts agreed to plead guilty in the United States District Court for the District of Massachusetts (the ''Court'') to violating the Natural Gas Pipeline Safety Act (the ''Plea Agreement''), and the Company entered into a Deferred Prosecution Agreement (the ''DPA'').

On March 9, 2020, Columbia of Massachusetts entered its guilty plea pursuant to the Plea Agreement. The Court sentenced Columbia of Massachusetts on June 23, 2020, in accordance with the terms of the Plea Agreement (as modified). On June 23, 2021, the Court terminated Columbia of Massachusetts' period of probation under the Plea Agreement, which marked the completion of all terms of the Plea Agreement.

Under the DPA, the U.S. ~~Attorney’s~~Attorney's Office agreed to defer prosecution of the Company in connection with the Greater Lawrence Incident for a three-year period (which three-year period may be extended for twelve (12) months upon the U.S. Attorney’s ~~Office’s~~Office's determination of a breach of the DPA) subject to certain obligations of the Company, including, but not limited to, the Company's agreement, as to each of the Company’s subsidiaries involved in the distribution of gas through pipeline facilities in Massachusetts, Indiana, Ohio, Pennsylvania, Maryland, Kentucky and Virginia to implement and adhere to each of the recommendations from the NTSB stemming from the Greater Lawrence Incident. Pursuant to the DPA, if the Company complies with all of its obligations under the DPA, the U.S. Attorney’s Office will not file any criminal charges against the Company related to the Greater Lawrence Incident.

Private Actions. Various lawsuits, including several purported class action lawsuits, ~~have been~~were filed by various affected residents or businesses in Massachusetts state courts against the Company and/or Columbia of Massachusetts in connection with the Greater Lawrence Incident.

On ~~July 26, 2019,~~March 12, 2020, the Company, Columbia of Massachusetts and NiSource Corporate Services Company, a subsidiary of the Company, entered into a term sheet with the class action plaintiffs under which they agreed to settle the class action claims in connection with the Greater Lawrence Incident. Columbia of Massachusetts agreed to pay $143 million into a settlement fund to compensate the settlement class and the settlement class agreed to release Columbia of Massachusetts and affiliates from all

~~Table of Contents~~

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

~~NiSource Inc.~~

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

claims arising out of or related to the Greater Lawrence Incident. The following claims are not covered under the proposed settlement because they are not part of the consolidated class action: (1) physical bodily injury and wrongful death; (2) insurance subrogation, whether equitable, contractual or otherwise; and (3) claims arising out of appliances that are subject to the Massachusetts DPU orders. Emotional distress and similar claims are covered under the proposed settlement unless they are secondary to a physical bodily injury. The settlement class is defined under the term sheet as all persons and businesses in the three municipalities of Lawrence, Andover and North Andover, Massachusetts, subject to certain limited exceptions. The Court granted final approval of the settlement ~~on March 12, 2020.~~

of the consolidated class action. With respect to claims not included in the consolidated class action, many of the asserted wrongful death and bodily injury claims have settled, and we continue to discuss potential settlements with remaining claimants. The outcomes and impacts of such private actions are uncertain at this time.

Shareholder Derivative Lawsuit. On April 28, 2020, a shareholder derivative lawsuit was filed by the City of Detroit Police and Fire Retirement System in the United States District Court for the District of Delaware against certain of the ~~Company’s~~Company's current and former directors, alleging state-law claims for breaches of fiduciary duty with respect to the pipeline safety

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

management systems relating to the distribution of natural gas prior to the Greater Lawrence Incident and also including federal-law claims related to our proxy statement disclosures regarding our safety systems. The remedies sought included damages for the alleged breaches of fiduciary duty, corporate governance reforms, and restitution of any unjust enrichment. The defendants filed a motion to dismiss the lawsuit and oral argument was held on March 2, 2021. On March 9, 2021, the district court granted the ~~defendants’~~defendants' motion to dismiss. It dismissed the federal-law claims with prejudice for failure to state a claim on which relief can be granted and declined to exercise jurisdiction over the state-law claims, which were dismissed without prejudice.

Following the dismissal of the federal court action, on April 29, 2021, the same plaintiff filed a shareholder derivative lawsuit in the Delaware Court of Chancery against certain of our current and former directors. The new complaint alleged a single count for breach of fiduciary duty, and no longer alleged disclosure violations or breaches of federal securities laws. The complaint related to substantially the same matters as those alleged in the dismissed federal derivative complaint. The remedies sought included damages for the alleged breaches of fiduciary duty, corporate governance reforms, and restitution of compensation by the individual defendants. On May 19, 2021, the defendants filed a motion to dismiss the lawsuit, and on July 2, 2021, they filed their opening brief in support of the motion. On August 26, 2021, rather than respond to the ~~defendants’~~defendants' motion to dismiss and opening brief, the plaintiff filed an amended complaint. Like the original complaint in the Delaware Court of Chancery, the amended complaint alleges a single count for breach of fiduciary duty, based on substantially similar allegations, and seeks substantially similar remedies. On September 10, 2021, the defendants filed a motion to dismiss. ~~On October 13, 2021, the defendants filed their opening brief in support of the motion. The plaintiff's opposition to the motion is due~~Briefing on ~~December 3, 2021, and~~ the defendants' ~~reply brief is due~~motion to dismiss was completed on January 10, 2022, and oral argument on the defendants' motion to dismiss took place on February 3, 2022. Because of the preliminary nature of this lawsuit, we are not able to estimate a loss or range of loss, if any, that may be incurred in connection with this matter at this time.

Other Claims and Proceedings. We are also party to certain other claims, regulatory and legal proceedings arising in the ordinary course of business in each state in which we have operations, none of which we believe to be individually material at this time.

Due to the inherent uncertainty of litigation, there can be no assurance that the ~~outcome or~~ resolution of any particular claim, proceeding or investigation would not have a material adverse effect on our results of operations, financial position or liquidity. ~~Certain matters in connection with the Greater Lawrence Incident, for example, have had or may have a material impact as described above.~~ If one or more other matters were decided against us, the effects could be material to our results of operations in the period in which we would be required to record or adjust the related liability and could also be material to our cash flows in the periods that we would be required to pay such liability.

C. Other Greater Lawrence Incident Matters. In connection with the Greater Lawrence Incident, Columbia of Massachusetts, in cooperation with the Massachusetts Governor’s office, replaced the entire affected pipeline system. We 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 pipeline replacement. In January 2020, we filed a lawsuit against the property insurer, seeking payment of our property claim. On October 27, 2021, NiSource and the property insurer filed cross motions for summary judgment, each asking the court to determine whether there was coverage under the policy. ~~We do not expect these~~After the cross motions to

~~Table of Contents~~

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

~~NiSource Inc.~~

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

befor summary judgment were fully briefed, we reached an agreement to settle the coverage dispute for $105.0 million. After settlement payment was made, NiSource and ~~ruled upon until at least~~its property insurer stipulated to the ~~first quarter~~dismissal of ~~2022. We are currently unable to predict~~ the ~~timing or amount of any insurance recovery under the property policy.~~lawsuit on March 16, 2022.

D. Environmental Matters. Our operations are subject to environmental statutes and regulations related to air quality, water quality, hazardous waste and solid waste. We believe that we are in substantial compliance with the environmental regulations currently applicable to our operations.

It is management's continued intent to address environmental issues in cooperation with regulatory authorities in such a manner as to achieve mutually acceptable compliance plans. However, there can be no assurance that fines and penalties will not be incurred. Management expects a majority of environmental assessment and remediation costs and asset retirement costs, further described below, to be recoverable through ~~rates for certain of our companies.~~rates.

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we had recorded a liability of ~~$92.3~~$91.3 million and ~~$92.6~~$91.1 million, respectively, to cover environmental remediation at various sites. This liability is included in "Other accruals" and "Other noncurrent liabilities" in the Condensed Consolidated Balance Sheets (unaudited). We recognize costs associated with environmental remediation obligations when the incurrence of such costs is probable and the amounts can be reasonably estimated. The original estimates for remediation activities may differ materially from the amount ultimately expended. The actual future expenditures depend on many factors, including laws and regulations, the nature and extent of impact and the method of remediation. These

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ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

expenditures are not currently estimable at some sites. We periodically adjust our liability as information is collected and estimates become more refined.

CERCLA. Our subsidiaries are potentially responsible parties at waste disposal sites under the CERCLA 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. At this time, NIPSCO cannot estimate the full cost of remediating properties that have not yet been investigated, but it is possible that the future costs could be material to the Condensed Consolidated Financial Statements (unaudited).

MGP. We maintain a program to identify and investigate former MGP sites where Gas Distribution Operations subsidiaries or predecessors may have liability. The program has identified 5453 such sites where liability is probable. Remedial actions at many 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, 2021. Our total estimated liability related to the facilities subject to remediation was ~~$86.3~~$84.8 million and ~~$85.0~~$85.1 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The liability represents our best estimate of the probable cost to remediate the MGP sites. We believe that it is reasonably possible that remediation costs could vary by as much as $17 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. We are in compliance with the EPA's final rule for the regulation of 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 will also continue to work with the EPA and the Indiana Department of Environmental 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~~cannot estimate the ~~possibility of such an outcome is remote.~~likelihood that the agencies will deny approvals or the financial impact on us if these approvals are not obtained.

E. Other Matters.

Generation Transition. NIPSCO has executed several PPAs to purchase 100% of the output from renewable generation facilities at a fixed price per MWh. Each facility supplying the energy will have an associated nameplate capacity, and

~~Table of Contents~~

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

~~NiSource Inc.~~

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

payments under the PPAs will not begin until the associated generation facility is constructed by the owner/seller. NIPSCO has also executed several BTAs with developers to construct renewable generation facilities. NIPSCO's purchase obligation under each respective BTA is dependent on satisfactory approval of the BTA by the IURC, successful execution by NIPSCO of an agreement with a tax equity partner and timely completion of construction. NIPSCO has received IURC approval for all of its BTAs and PPAs. NIPSCO and the tax equity partner are obligated to make cash contributions to the joint venture that acquires the project at the date construction is substantially complete. Certain agreements require NIPSCO to make partial payments upon the developer's completion of significant construction milestones. Once the tax equity partner has earned its negotiated rate of return and we have reached the agreed upon contractual date, NIPSCO has the option to purchase at fair market value from the tax equity partner the remaining interest in the joint venture.

~~Employee Separation Benefits.~~ In the third quarter of 2020, we launched a program to evaluate our organizational structure under the auspices of NiSource Next, which has continued into 2021. We recognized the majority of the related severance expense in 2020 when employees accepted severance offers, absent a retention period. For employees that had a retention period, expense was recognized over the remaining service period. The total severance expense for employees is approximately $42 million, with substantially all of it incurred and paid to date.

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ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

16. 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 July 1, 2021 $ 4.4 $ (113.1) $ (14.9) $ (123.6)
Other comprehensive income (loss) before reclassifications (0.6) 6.5 — 5.9
Amounts reclassified from accumulated other comprehensive loss (0.2) 0.1 0.4 0.3
Net current-period other comprehensive income (loss) (0.8) 6.6 0.4 6.2
Balance as of September 30, 2021 $ 3.6 $ (106.5) $ (14.5) $ (117.4)
(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, 2021 $ 6.0 $ (147.9) $ (14.8) $ (156.7)
Other comprehensive income (loss) before reclassifications (2.0) 41.3 (1.3) 38.0
Amounts reclassified from accumulated other comprehensive loss (0.4) 0.1 1.6 1.3
Net current-period other comprehensive income (loss) (2.4) 41.4 0.3 39.3
Balance as of September 30, 2021 $ 3.6 $ (106.5) $ (14.5) $ (117.4)


(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, 2022	$	2.1	$	(122.5)	$	(6.4)	$	(126.8)
Other comprehensive income (loss) before reclassifications	(5.9)		47.0		—		41.1
Amounts reclassified from accumulated other comprehensive income (loss)	0.2		—		0.1		0.3
Net current-period other comprehensive income (loss)	(5.7)		47.0		0.1		41.4

Balance as of March 31, 2022	$	(3.6)	$	(75.5)	$	(6.3)	$	(85.4)

(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 July 1, 2020 $ 3.6 $ (207.8) $ (17.7) $ (221.9)
Other comprehensive income before reclassifications 1.2 26.0 1.0 28.2
Amounts reclassified from accumulated other comprehensive loss 0.2 — (0.1) 0.1
Net current-period other comprehensive income 1.4 26.0 0.9 28.3
Balance as of September 30, 2020 $ 5.0 $ (181.8) $ (16.8) $ (193.6)
(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 2.0 (104.6) 1.4 (101.2)
Amounts reclassified from accumulated other comprehensive loss (0.3) — 0.5 0.2
Net current-period other comprehensive income (loss) 1.7 (104.6) 1.9 (101.0)
Balance as of September 30, 2020 $ 5.0 $ (181.8) $ (16.8) $ (193.6)


(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)		—		0.5		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.

~~Table of Contents~~

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

~~NiSource Inc.~~

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

17. Other, Net

The following table displays the components of Other, Net included on the Condensed Statements of Consolidated Income ~~(Loss)~~ (unaudited):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in millions)	(in millions)	2021		2020		2021		2020		(in millions)	2022		2021
Interest income	Interest income	$	1.1	$	1.3	$	2.7	$	4.4	Interest income	$	0.9	$	0.9
AFUDC equity	AFUDC equity	3.5		1.8		8.4		4.9		AFUDC equity	3.0		1.5

Pension and other postretirement non-service benefit	Pension and other postretirement non-service benefit	9.3		0.6		26.4		6.4		Pension and other postretirement non-service benefit	7.6		8.5
Sale of emission reduction credits		—		4.6		—		4.6

Miscellaneous	Miscellaneous	0.4		(0.3)		(0.3)		(0.4)		Miscellaneous	(0.6)		(0.4)
Total Other, net	Total Other, net	$	14.3	$	8.0	$	37.2	$	19.9	Total Other, net	$	10.9	$	10.5

18. Business Segment Information

~~At September 30, 2021, our~~Our operations are divided into 2 primary reportable segments, the Gas Distribution Operations and the Electric Operations segments. ~~Corporate costs and other activities that~~The remainder of our operations, which are not significant enough 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~~presented as "Corporate and Other" ~~in the disclosures below.~~and primarily are comprised of interest expense on holding company debt, and unallocated corporate costs and activities. Refer to Note 3, "Revenue Recognition," for additional information on our segments and their sources of revenues.

~~Table of Contents~~

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

~~NiSource Inc.~~

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

The following table provides information about our ~~business~~reportable 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
September 30, Nine Months Ended
September 30,
(in millions) 2021 2020 2021 2020
Operating Revenues
Gas Distribution Operations
Unaffiliated $ 472.3 $ 470.1 $ 2,182.4 $ 2,304.4
Intersegment 3.0 3.0 9.1 9.0
Total 475.3 473.1 2,191.5 2,313.4
Electric Operations
Unaffiliated 478.9 432.2 1,284.9 1,165.7
Intersegment 0.2 0.1 0.6 0.5
Total 479.1 432.3 1,285.5 1,166.2
Corporate and Other
Unaffiliated 8.2 0.2 23.7 0.6
Intersegment 108.6 120.5 329.9 327.9
Total 116.8 120.7 353.6 328.5
Eliminations (111.8) (123.6) (339.6) (337.4)
Consolidated Operating Revenues $ 959.4 $ 902.5 $ 3,491.0 $ 3,470.7
Operating Income (Loss)
Gas Distribution Operations $ 11.0 $ (42.2) $ 419.1 $ 38.0
Electric Operations 140.4 130.0 307.9 295.4
Corporate and Other (4.3) 5.0 (4.5) (0.7)
Consolidated Operating Income $ 147.1 $ 92.8 $ 722.5 $ 332.7

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ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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


	Three Months Ended March 31,
(in millions)	2022		2021
Operating Revenues
Gas Distribution Operations
Unaffiliated	$	1,436.7	$	1,135.8
Intersegment	3.1		3.1
Total	1,439.8		1,138.9
Electric Operations
Unaffiliated	430.1		402.5
Intersegment	0.2		0.2
Total	430.3		402.7
Corporate and Other
Unaffiliated	6.5		7.3
Intersegment	113.5		103.9
Total	120.0		111.2
Eliminations	(116.8)		(107.2)
Consolidated Operating Revenues	$	1,873.3	$	1,545.6
Operating Income (Loss)
Gas Distribution Operations	$	510.8	$	346.9
Electric Operations	99.2		87.9
Corporate and Other	(9.7)		(1.6)
Consolidated Operating Income	$	600.3	$	433.2

19. Subsequent Event

~~On October 1, 2021, NIPSCO retired R.M. Schahfer Generating Station Units 14 and 15. The net book value~~In April 2022, Dunn's Bridge I reached a construction milestone under the BTA, triggering our obligation to make a milestone payment to the developer in the amount of the retired units was 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 14 and 15 and other associated plant retired is estimated to be approximately $600$71.9 million. The December 2019 NIPSCO electric rate case order allows for the recovery of, and on, the net book value of the station by the end of 2032 and implements a revenue credit for the retired units. The credit is based on the difference between the net book value of Units 14 and 15 upon retirement and the last base rate case proceeding. The credit will be provided to customers until new base rates are determined.We made this payment in April 2022.

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

NiSource Inc.

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

NiSource Inc.

EXECUTIVE SUMMARY

This ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations ("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~~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, ~~2020.~~2021.

We are an energy holding company under the Public Utility Holding Company Act of 2005 whose utility subsidiaries are fully regulated natural gas and electric utility companies serving customers in 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, ~~2020~~2021 for further discussion of our regulated utility business segments.

Our goal is to develop strategies that benefit all stakeholders as we (i) embark on long-term infrastructure investment and safety programs to better serve our customers, (ii) align our tariff structures with our cost structure, and (iii) address changing customer conservation patterns. These strategies focus on improving safety and reliability, enhancing customer service, ensuring customer affordability and reducing emissions while generating sustainable returns. The safety of our customers, communities and employees remains our top priority. The ~~SMS~~Safety Management System ("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.

Your Energy, Your Future: Our plan to replace our coal generation capacity by the end of 2028 with primarily renewable resources, as described in our 2018 Integrated Resource Plan ("2018 Plan"), is well ~~underway.~~underway, but we are facing challenges as described below. As of ~~September 30, 2021,~~March 31, 2022, we have executed and received IURC approval for BTAs and PPAs with a combined nameplate capacity of 1,950 MW and 1,380 MW, respectively, under the ~~plan. On October 21,~~2018 Plan. Further, we have placed three wind projects into service and completed the retirement of R.M. Schahfer Generating Station Units 14 and 15. We anticipate delays on our previously announced solar and storage projects due to several factors, including a recently announced U.S. Department of Commerce investigation. In connection with these delays, we currently expect to retire R.M. Schahfer's remaining two coal units by the end of 2025. For additional information, see "Results and Discussion of Segment Operations - Electric Operations," in this Management's Discussion and Part II, Item 1A. Risk Factors.

In 2021, we announced and filed with the IURC the Preferred Energy Resource Plan associated with our 2021 Integrated Resource Plan ~~which refines the~~("2021 Plan"). The 2021 Plan lays out a timeline to retire the Michigan City Generating Station to occur between 2026 and 2028. The ~~plan~~2021 Plan calls for the replacement of the retiring units with a diverse portfolio of resources including demand side management resources, incremental solar, stand-alone energy storage and upgrades to existing facilities at the Sugar Creek Generating Station, among other steps. Additionally, the ~~plan~~2021 Plan calls for a natural gas peaking unit to replace existing vintage gas peaking units at the R.M. Schahfer Generating Station to support system reliability and resiliency, as well as upgrades to the transmission system to enhance ~~its~~our electric generation transition. The planned retirement of the two vintage gas peaking units at the R.M. Schahfer Generating Station is expected to occur between 2025 and 2028. Final retirement dates for these units, as well as Michigan City, will be subject to MISO approval. We ~~intend~~are continuing to ~~file our~~evaluate potential projects under the 2021 ~~Integrated Resource Plan with the IURC in November 2021. For additional information, see "Results and Discussion of Segment Operations - Electric Operations," in this Management's Discussion.~~Plan.

NiSource Next: ~~We are executing on a defined, comprehensive, multi-year program designed~~Starting in 2021, we optimized our workforce by redefining roles to ~~deliver long-term safety, sustainable capability enhancements and cost optimization improvements. This program is advancing the high priority we place~~sharpen our focus on safety and risk mitigation, further enabling our SMS, and enhancing 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.~~

~~COVID-19:~~ ~~The safety~~adherence to process and procedures, as well as implemented consistent span of ~~our employees~~control for leadership to increase individual responsibility and ~~customers, while providing essential services during the COVID-19 pandemic, is paramount. We continue~~clear accountability. Additionally, we began to take a proactive, coordinated approach intended to prevent, mitigate and respond to COVID-19 by utilizing our Incident Command System (ICS). The ICS includes members of our executive council, a medical review professional, and members of functional teams frommake advancements across our ~~company. The ICS monitors state-by-state conditions~~operations to improve safety, operational efficiencies, and ~~determines steps~~customer satisfaction through continued standardization of work processes, the implementation of new mobile technology to ~~conduct~~provide real-time access to information while serving our ~~operations safely for employees~~customers and ~~customers.~~

~~We have implemented procedures designed~~enhanced customer self-service options to ~~protect our employees who work in~~better meet customer expectations. These enhancements set the ~~field and who continue to work in operational and corporate facilities, including social distancing, wearing face coverings and more frequent cleaning of~~

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

NiSource Inc.

~~equipment~~foundation for 2022 and ~~facilities. We have also implemented work-from-home policies and practices. We~~beyond, to continue to employ physical and cybersecurity measures to ensure that our operational and support systems remain functional. Our actions to date have mitigated the spread of COVID-19 amongst our employees and principal field contractors. We are also continuously evaluating changes to CDC guidance, and updating ourimproving safety ~~measures accordingly, in order to ensure employee~~ and customer ~~safety during this pandemic. We are following federal, state,~~experience through analytics and ~~local laws, regulations and guidelines related to the COVID-19 vaccinations.~~

Since the beginning of the COVID-19 pandemic, we have been helping our customers navigate this challenging time. We plan to continue our payment assistance programs and customer education and awareness of energy assistance programs such as the Low Income Home Energy Assistance Program (LIHEAP) to help customers deal with the impact of the pandemic. Regulatory deferrals for certain costs have been allowed by all of our state regulatory commissions.

We continue to monitor how COVID-19 is affecting our workforce, customers, suppliers, operations, financial results and cash flow. The extent of the impact in the future will vary and depend on the duration and severity of the impact on the global, national and local economies. For information on the impacts of COVID-19 for the three and nine months ended September 30, 2021, the state-specific suspension of disconnections, and COVID-19 regulatory filings see Note 3, ''Revenue Recognition,'' and Note 7, ''Regulatory Matters,'' in the Notes to Condensed Consolidated Financial Statements (unaudited).significant technology investments.

Economic Environment: We are monitoring risks related to increasing order and delivery lead times for construction and other materials, increasing risk of unavailability of materials due to global shortages in raw materials, and risk of decreased construction labor productivity in the event of disruptions in the availability of materials. We are also seeing increasing prices associated with certain materials and supplies. To the extent that delays occur or our costs increase, our business operations, results of operations, cash flows, and financial condition could be materially adversely affected. For more information on supply chain impacts to our electric generation strategy, see "Results and Discussion of Segment Operations - Electric Operations," in this Management's Discussion and Part II, Item 1A. Risk Factors.

NIPSCO is experiencing a rail service shortage in deliveries of coal, particularly to its Michigan City Generating Station, and the primary rail carrier for that generating station is unable to provide assurance of adequate future service to maintain coal inventory. If the lack of adequate coal deliveries to any of our coal-fired generating facilities continues for an extended period into the summer, inventories could be depleted to a level that prevents the generating station from running, and NIPSCO would need to rely on market purchases of replacement power, which could increase the cost of electricity for NIPSCO's customers.

We are faced with increased competition for employee and contractor talent in the current labor market, which has resulted in increased costs to attract and retain talent. We are ensuring that we use all internal human capital programs (development, leadership enablement programs, succession, performance management) to promote retention of our current employees along with having competitive and attractive appeal for potential recruits. With a focus on workforce planning, we are creating flexible work arrangements where we can, and being anticipatory in evaluating our talent footprint for the future to ensure we have the right people, in the right role, and at the right time. To the extent we are unable to execute on our workforce planning initiatives and experience increased employee and contractor costs, our business operations, results of operations, cash flows, and financial condition could be materially adversely affected.

We have ~~also~~ seen an increase in ~~forecasted~~natural gas costs as the spot market for natural gas has substantially increased since the ~~coming heating season that~~start of 2022. Low levels of gas in storage, continued liquified natural gas demand to ship U.S. supplies to Europe, and the slow ramp up in domestic production have contributed to the steep rise in gas commodity costs, which we expect to have an effect on customer ~~bills. We do~~bills through 2022. For the quarter ended March 31, 2022, we have not ~~expect~~seen this increase to have a material impact on our results of operations. For more information on our commodity price impacts, see ~~" - Results~~"Results and Discussion of Segment Operations - Gas Distribution Operations," and " - Market Risk Disclosures."

For more information on global availability of materials for our renewable projects, see " - Results and Discussion of Segment Operations - Electric Operations - Electric Supply and Generation Transition."

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

NiSource Inc.

Summary of Consolidated Financial Results

A summary of our consolidated financial results for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ are presented below:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
(in millions, except per share amounts)	(in millions, except per share amounts)	2021		2020		Favorable (Unfavorable)		2021		2020		Favorable (Unfavorable)		(in millions, except per share amounts)	2022		2021		Favorable (Unfavorable)
Operating Revenues	Operating Revenues	$	959.4	$	902.5	$	56.9	$	3,491.0	$	3,470.7	$	20.3	Operating Revenues	$	1,873.3	$	1,545.6	$	327.7
Operating Expenses	Operating Expenses													Operating Expenses
Cost of energy	Cost of energy	208.3		143.1		(65.2)		913.4		793.9		(119.5)		Cost of energy	706.7		476.8		(229.9)
Other Operating Expenses	Other Operating Expenses	604.0		666.6		62.6		1,855.1		2,344.1		489.0		Other Operating Expenses	566.3		635.6		69.3
Total Operating Expenses	Total Operating Expenses	812.3		809.7		(2.6)		2,768.5		3,138.0		369.5		Total Operating Expenses	1,273.0		1,112.4		(160.6)
Operating Income	Operating Income	147.1		92.8		54.3		722.5		332.7		389.8		Operating Income	600.3		433.2		167.1
Total Other Deductions, net	Total Other Deductions, net	(70.1)		(330.6)		260.5		(216.3)		(508.6)		292.3		Total Other Deductions, net	(72.8)		(74.1)		1.3
Income Taxes	Income Taxes	14.8		(64.9)		(79.7)		90.6		(73.9)		(164.5)		Income Taxes	96.2		62.6		(33.6)

Net Income (Loss)		62.2		(172.9)		235.1		415.6		(102.0)		517.6
Net loss attributable to noncontrolling interest		(1.0)		—		1.0		(3.4)		—		3.4
Net Income (Loss) Attributable to NiSource		63.2		(172.9)		236.1		419.0		(102.0)		521.0
Net Income														Net Income	431.3		296.5		134.8
Net income attributable to noncontrolling interest														Net income attributable to noncontrolling interest	4.5		1.0		(3.5)
Net Income Attributable to NiSource														Net Income Attributable to NiSource	426.8		295.5		131.3
Preferred dividends	Preferred dividends	(13.8)		(13.8)		—		(41.4)		(41.4)		—		Preferred dividends	(13.8)		(13.8)		—
Net Income (Loss) Available to Common Shareholders		49.4		(186.7)		236.1		377.6		(143.4)		521.0
Earnings (Loss) Per Share
Basic Earnings (Loss) Per Share		$	0.13	$	(0.49)	$	0.62	$	0.96	$	(0.37)	$	1.33
Diluted Earnings (Loss) Per Share		$	0.12	$	(0.49)	$	0.61	$	0.91	$	(0.37)	$	1.28
Net Income Available to Common Shareholders														Net Income Available to Common Shareholders	413.0		281.7		131.3
Earnings Per Share														Earnings Per Share
Basic Earnings Per Share														Basic Earnings Per Share	$	1.02	$	0.72	$	0.30
Diluted Earnings Per Share														Diluted Earnings Per Share	$	0.94	$	0.72	$	0.22

The majority of the cost of 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~~The increase in net income available to common shareholders of $49.4 million, or $0.12 per diluted share for the three months ended September 30, 2021, compared to a net loss available to common shareholders of $186.7 million, or $0.49 per diluted share for the same period in 2020. The increase in incomeduring 2022 was primarily due to ~~the loss on sale~~higher revenues from outcomes of ~~the Massachusetts business in 2020,~~gas base rate proceedings and regulatory capital programs, as well as ~~a favorable change~~an insurance settlement related to the Greater Lawrence Incident, offset by higher costs of energy and income taxes in ~~total other deductions for the three months ended September 30, 2021~~2022 compared to the ~~same period~~2021. For additional information on the insurance settlement see Note 15, "Other Commitments and Contingencies - C. Other Greater Lawrence Incident Matters" in ~~2020. See below~~the Notes to the Condensed Consolidated Financial Statements (unaudited) for ~~the primary drivers of this change.~~

For the nine months ended September 30, 2021, we reported net income available to common shareholders of $377.6 million, or $0.91 per diluted share compared to net loss available to common shareholders of $143.4 million, or $0.37 per diluted share for the same period in 2020. The primary driver for this increase was the loss on sale of the Massachusetts business in 2020.additional information.

For additional information on operating income variance drivers see "Results and Discussion of Segment Operations" for Gas and Electric Operations in this Management's Discussion.

Other Deductions, net

Other deductions, net ~~reduced income by $70.1 million during the three months ended September 30, 2021 compared to a reduction~~ in income of $330.6 million in the same period in 2020. This change was primarily driven by the loss on early extinguishment of debt in 2020, lower long-term and short-term debt interest in 2021 and higher non-service pension benefits in 2021. The lower interest in 2021 was due to lower rates on long-term debt and lower balances on short-term debt during the three months ended September 30, 2021 compared2022 is comparable to the same period in ~~2020. The higher non-service pension costs were driven by a decrease in the pension benefit obligations.~~2021. See Note 13, "Long-Term Debt," Note 14, "Short-Term Borrowings," and Note 11, "Pension and Other Postretirement Benefits," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information.

Other deductions, net reduced income by $216.3 million during the nine months ended September 30, 2021 compared to a reduction in income of $508.6 million in the same period in 2020. The drivers for this change were consistent with that of the quarter-to-date period.

~~Table of Contents~~

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

~~NiSource Inc.~~

Income Taxes

Refer to Note 10, "Income Taxes," in the Notes to Condensed Consolidated Financial Statements (unaudited) for information on income taxes and the change in the effective tax rate.

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.

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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 ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ are presented below:


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
(in millions)	(in millions)	2021			2020			Favorable (Unfavorable)		2021			2020			Favorable (Unfavorable)		(in millions)	2022			2021			Favorable (Unfavorable)
Operating Revenues	Operating Revenues	$	475.3		$	473.1		$	2.2	$	2,191.5		$	2,313.3		$	(121.8)	Operating Revenues	$	1,439.8		$	1,138.9		$	300.9
Operating Expenses	Operating Expenses																	Operating Expenses
Cost of energy	Cost of energy	89.0			63.0			(26.0)		597.0			559.6			(37.4)		Cost of energy	589.1			379.0			(210.1)
Operation and maintenance	Operation and maintenance	232.4			275.2			42.8		725.1			868.4			143.3		Operation and maintenance	277.3			248.8			(28.5)
Depreciation and amortization	Depreciation and amortization	96.9			88.4			(8.5)		283.4			271.7			(11.7)		Depreciation and amortization	100.7			92.9			(7.8)

Loss (gain) on sale of fixed assets and impairments, net	Loss (gain) on sale of fixed assets and impairments, net	(0.1)			35.6			35.7		8.0			400.2			392.2		Loss (gain) on sale of fixed assets and impairments, net	(105.0)			8.1			113.1
Other taxes	Other taxes	46.1			53.1			7.0		158.9			175.4			16.5		Other taxes	66.9			63.2			(3.7)
Total Operating Expenses	Total Operating Expenses	464.3			515.3			51.0		1,772.4			2,275.3			502.9		Total Operating Expenses	929.0			792.0			(137.0)
Operating Income (Loss)		$	11.0		$	(42.2)		$	53.2	$	419.1		$	38.0		$	381.1
Operating Income																		Operating Income	$	510.8		$	346.9		$	163.9
Revenues	Revenues																	Revenues
Residential	Residential	$	309.8		$	310.1		$	(0.3)	$	1,472.9		$	1,544.0		$	(71.1)	Residential	$	977.6		$	782.3		$	195.3
Commercial	Commercial	101.3			93.2			8.1		501.6			491.3			10.3		Commercial	357.5			272.9			84.6
Industrial	Industrial	41.4			42.9			(1.5)		144.0			166.2			(22.2)		Industrial	68.1			58.2			9.9
Off-System	Off-System	14.6			6.0			8.6		46.0			32.7			13.3		Off-System	18.7			14.4			4.3
Other	Other	8.2			20.9			(12.7)		27.0			79.1			(52.1)		Other	17.9			11.1			6.8
Total	Total	$	475.3		$	473.1		$	2.2	$	2,191.5		$	2,313.3		$	(121.8)	Total	$	1,439.8		$	1,138.9		$	300.9
Sales and Transportation (MMDth)	Sales and Transportation (MMDth)																	Sales and Transportation (MMDth)
Residential	Residential	12.4			15.5			(3.1)		161.5			173.8			(12.3)		Residential	122.9			118.4			4.5
Commercial	Commercial	17.3			17.7			(0.4)		118.8			119.8			(1.0)		Commercial	79.9			74.3			5.6
Industrial	Industrial	123.3			131.9			(8.6)		384.4			402.9			(18.5)		Industrial	135.1			136.4			(1.3)
Off-System	Off-System	4.1			3.7			0.4		15.7			19.0			(3.3)		Off-System	4.3			5.4			(1.1)
Other	Other	—			0.1			(0.1)		0.2			0.3			(0.1)		Other	0.2			0.2			—
Total	Total	157.1			168.9			(11.8)		680.6			715.8			(35.2)		Total	342.4			334.7			7.7
Heating Degree Days	Heating Degree Days	44			91			(47)		3,353			3,259			94		Heating Degree Days	2,841			2,703			138
Normal Heating Degree Days	Normal Heating Degree Days	70			71			(1)		3,475			3,531			(56)		Normal Heating Degree Days	2,824			2,854			(30)
% Colder (Warmer) than Normal	% Colder (Warmer) than Normal	(37)		%	28		%			(4)		%	(8)		%			% Colder (Warmer) than Normal	1		%	(5)		%
% Colder (Warmer) than 2020		(52)		%						3		%
% Colder than 2021																		% Colder than 2021	5		%
Gas Distribution Customers	Gas Distribution Customers																	Gas Distribution Customers
Residential	Residential									2,942,031			3,232,785			(290,754)		Residential	2,980,965			2,965,004			15,961
Commercial	Commercial									250,931			281,316			(30,385)		Commercial	254,876			254,188			688
Industrial	Industrial									4,904			5,967			(1,063)		Industrial	4,920			4,965			(45)
Other	Other									3			3			—		Other	3			3			—
Total	Total									3,197,869			3,520,071			(322,202)		Total	3,240,764			3,224,160			16,604

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.

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

NiSource Inc.

Gas Distribution Operations

~~Three and Nine Months Ended September 30, 2021 vs. September 30, 2020 Operating Income~~

~~For the three months ended September 30, 2021, Gas Distribution Operations reported~~The underlying reasons for changes in our operating income of $11.0 million, an increase of $53.2 million from the comparable 2020 period. For the nine months ended September 30, 2021, Gas Distribution Operations reported operating income of $419.1 million, an increase of $381.1 million from the comparable 2020 period.

~~Operating Revenues~~

~~Operating~~ revenues for the three months ended ~~September 30, 2021 were $475.3 million, an increase of $2.2 million from~~March 31, 2022 compared to the same period in ~~2020. Operating revenues for the nine months ended September 30,~~ 2021 ~~were $2,191.5 million, a decrease of $121.8 million from the same period in 2020.~~are presented below.

Favorable (Unfavorable)
Changes in Operating Revenues (in millions)
Three Months Ended September 30, 2021 vs 2020 Nine Months Ended September 30, 2021 vs 2020
Revenues associated with the Massachusetts Business in 2020 $ (40.4) $ (218.6)
The effects of colder (warmer) weather in 2021 compared to 2020 (1.3) 12.2
New rates from base rate proceedings and regulatory capital programs 18.8 79.4
Higher revenue due to the effects of resuming common credit mitigation practices 0.8 3.9
The effects of customer growth 0.1 5.1
Other 2.7 1.2
Change in operating revenues (before cost of energy and other tracked items) $ (19.3) $ (116.8)
Operating revenues offset in operating expense
Higher cost of energy billed to customers 32.3 145.5
Cost of energy associated with the Massachusetts Business in 2020 (6.3) (108.1)
Operation and maintenance trackers associated with the Massachusetts Business in 2020 (5.2) (36.4)
Higher (lower) tracker deferrals within operation and maintenance, depreciation, and tax 0.7 (6.0)
Total change in operating revenues $ 2.2 $ (121.8)


	Favorable (Unfavorable)
Changes in Operating Revenues (in millions)	Three Months Ended March 31, 2022 vs 2021
New rates from base rate proceedings and regulatory capital programs	61.1
The effects of colder weather in 2022 compared to 2021	10.5
Higher revenue related to off system sales	2.7
The effects of customer growth	2.3
Higher revenue due to the effects of resuming common credit mitigation practices	1.8
Decreased customer usage	(4.8)
Other	2.7
Change in operating revenues (before cost of energy and other tracked items)	$	76.3
Operating revenues offset in operating expense
Higher cost of energy billed to customers	210.1
Higher tracker deferrals within operation and maintenance, depreciation, and tax	14.5
Total change in operating revenues	$	300.9

Weather

In general, we calculate the weather-related revenue variance based on changing customer demand driven by weather variance from normal heating degree days, net of weather normalization mechanisms. Our composite heating degree days reported do not directly correlate to the weather-related dollar impact on the results of Gas Distribution Operations. Heating degree days experienced during different times of the year or in different operating locations may have more or less impact on volume and dollars depending on when and where they occur. When the detailed results are combined for reporting, there may be weather-related dollar impacts on operations when there is not an apparent or significant change in our aggregated composite heating degree day comparison.

Throughput

~~Total~~The increase in total volumes ~~sold and transported~~ for the three months ended September 30, 2021 were 157.1 MMDth, compared to 168.9 MMDth for the same period in 2020. This decrease is primarily attributable to the sale of the Massachusetts Business and the effects of warmer weather during the three months ended September 30, 2021March 31, 2022 compared to the same period in ~~2020.~~

~~Total volumes sold and transported for the nine months ended September 30,~~ 2021 ~~were 680.6 MMDth, compared to 715.8 MMDth for the same period in 2020. This decrease~~ is primarily attributable to the ~~sale of the Massachusetts Business, offset by the~~ effects of colder ~~weather during the nine months ended September 30, 2021 compared to the same period in 2020.~~weather.

Commodity Price Impact

Cost of 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. All of our Gas Distribution Operations companies have state-approved recovery mechanisms that provide a means for full recovery of prudently incurred gas costs. These are tracked costs that are passed through directly to the customer, and the gas costs included in revenues are matched with the gas cost expense

~~Table of Contents~~

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

~~NiSource Inc.~~

~~Gas Distribution Operations~~

recorded in the period. The difference is recorded on the Condensed Consolidated Balance Sheets (unaudited) as under-recovered or over-recovered gas cost to be included in future customer billings. Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and have essentially no impact on net income.

Certain Gas Distribution Operations companies continue to offer choice opportunities, where customers can choose to purchase gas from a third-party supplier, through regulatory initiatives in their respective jurisdictions.

~~Operating Expenses~~

Table of Contents

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

NiSource Inc.

Gas Distribution Operations

The underlying reasons for changes in our operating expenses ~~were $51.0 million lower~~ for the three months ended ~~September 30, 2021 and $502.9 million lower for the nine months ended September 30, 2021~~March 31, 2022 compared to the same ~~respective periods~~period in ~~2020.~~2021 are presented below.

Favorable (Unfavorable)
Changes in Operating Expenses (in millions)
Three Months Ended September 30, 2021 vs 2020 Nine Months Ended September 30, 2021 vs 2020
Operating expenses associated with the Massachusetts Business in 2020 $ 62.0 $ 188.8
Decrease (increase) in the loss on sale of the Massachusetts Business of $0.1 million and $(6.8) million in 2021 compared to $(35.6) million and $(400.2) million in 2020, respectively 35.7 393.4
Lower (higher) expense related to the NiSource Next initiative 12.3 (6.7)
Lower (higher) corporate insurance costs 1.8 (1.7)
Higher employee and administrative related expenses (23.4) (33.0)
Higher depreciation and amortization expense (8.2) (21.2)
Higher outside services expenses (5.1) (7.9)
Higher property tax expense (2.5) (7.1)
Higher environmental costs (1.6) (4.2)
Other 1.5 (2.5)
Change in operating expenses (before cost of energy and other tracked items) $ 72.5 $ 497.9
Operating expenses offset in operating revenue
Higher cost of energy billed to customers (32.3) (145.5)
Cost of energy associated with the Massachusetts Business in 2020 6.3 108.1
Operation and maintenance trackers associated with the Massachusetts Business in 2020 5.2 36.4
Lower (higher) tracker deferrals within operation and maintenance, depreciation, and tax (0.7) 6.0
Total change in operating expense $ 51.0 $ 502.9


	Favorable (Unfavorable)
Changes in Operating Expenses (in millions)	Three Months Ended March 31, 2022 vs 2021
Property insurance settlement related to the Greater Lawrence Incident(1)	105.0
The loss on sale and expenses related to the Massachusetts Business in 2021	12.2
Lower NiSource Next program expenses	4.6
Higher employee and administrative related expenses	(12.7)
Higher depreciation and amortization expense	(7.8)
Higher outside services expenses	(5.3)
Higher materials and supplies expense	(3.4)
Other	(5.0)
Change in operating expenses (before cost of energy and other tracked items)	$	87.6
Operating expenses offset in operating revenue
Higher cost of energy billed to customers	(210.1)
Higher tracker deferrals within operation and maintenance, depreciation, and tax	(14.5)
Total change in operating expense	(137.0)

~~Columbia of Massachusetts Asset Sale~~

On October 9, 2020, we completed the sale of our Massachusetts Business. In March 2021, we reached an agreement with Eversource regarding the final purchase price, including net working capital adjustments, which resulted in a decrease (increase)(1)See Note 15, ''Other Commitments and Contingencies,'' in the ~~pre-tax loss~~Notes to Condensed Consolidated Financial Statements (unaudited) for the three and nine months ended September 30, 2021 of $0.1 million and $(6.8) million, respectively. The total loss on the sale as of September 30, 2021 is $419.2 million based on asset and liability balances as of the close of the transaction on October 9, 2020, transaction costs and the final purchase price. The pre-tax loss is presented as "Loss (gain) on sale of assets, net" on the Condensed Statements of Consolidated Income (Loss) (unaudited).additional information.

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

NiSource Inc.

Electric Operations

Financial and operational data for the Electric Operations segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ are presented below:


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
(in millions)	(in millions)	2021			2020			Favorable (Unfavorable)		2021			2020			Favorable (Unfavorable)		(in millions)		2022		2021		Favorable (Unfavorable)

Operating Revenues	Operating Revenues	479.1			$	432.3		$	46.8	1,285.5			$	1,166.2		$	119.3	Operating Revenues		430.3		$	402.7	$	27.6

Operating Expenses	Operating Expenses																	Operating Expenses
Cost of energy	Cost of energy	119.3			80.1			(39.2)		316.4			234.3			(82.1)		Cost of energy		117.6		97.8		(19.8)
Operation and maintenance	Operation and maintenance	120.5			126.9			6.4		366.9			355.8			(11.1)		Operation and maintenance		116.6		119.1		2.5
Depreciation and amortization	Depreciation and amortization	83.3			80.8			(2.5)		250.4			240.3			(10.1)		Depreciation and amortization		82.9		83.4		0.5

Other taxes	Other taxes	15.6			14.5			(1.1)		43.9			40.4			(3.5)		Other taxes		14.0		14.5		0.5
Total Operating Expenses	Total Operating Expenses	338.7			302.3			(36.4)		977.6			870.8			(106.8)		Total Operating Expenses		331.1		314.8		(16.3)
Operating Income	Operating Income	$	140.4		$	130.0		$	10.4	$	307.9		$	295.4		$	12.5	Operating Income		$	99.2	$	87.9	$	11.3
Revenues	Revenues																	Revenues
Residential	Residential	$	178.7		$	168.3		$	10.4	$	439.8		$	411.5		$	28.3	Residential		$	138.5	$	129.2	$	9.3
Commercial	Commercial	151.6			135.4			16.2		404.4			365.4			39.0		Commercial		134.5		122.9		11.6
Industrial	Industrial	126.0			105.8			20.2		368.3			301.4			66.9		Industrial		130.0		123.1		6.9
Wholesale	Wholesale	4.8			3.9			0.9		11.3			9.9			1.4		Wholesale		2.6		3.4		(0.8)
Other	Other	18.0			18.9			(0.9)		61.7			78.0			(16.3)		Other		24.7		24.1		0.6
Total	Total	$	479.1		$	432.3		$	46.8	$	1,285.5		$	1,166.2		$	119.3	Total		$	430.3	$	402.7	$	27.6
Sales (GWh)	Sales (GWh)																	Sales (GWh)
Residential	Residential	1,159.4			1,145.3			14.1		2,785.0			2,734.8			50.2		Residential		819.2		804.6		14.6
Commercial	Commercial	1,057.0			996.0			61.0		2,829.1			2,706.5			122.6		Commercial		885.3		867.9		17.4
Industrial	Industrial	2,081.0			1,909.1			171.9		6,295.1			5,447.7			847.4		Industrial		2,007.8		2,063.3		(55.5)
Wholesale	Wholesale	37.2			5.3			31.9		81.7			81.6			0.1		Wholesale		4.4		32.1		(27.7)
Other	Other	36.1			24.4			11.7		83.7			74.1			9.6		Other		25.1		27.3		(2.2)
Total	Total	4,370.7			4,080.1			290.6		12,074.6			11,044.7			1,029.9		Total		3,741.8		3,795.2		(53.4)
Cooling Degree Days		658			599			59		976			891			85
Normal Cooling Degree Days		556			556			—		795			795			—
% Warmer than Normal		18		%	8		%			23		%	12		%
% Warmer than 2020		10		%						10		%

Electric Customers	Electric Customers																	Electric Customers
Residential	Residential									421,074			417,703			3,371		Residential		423,177		419,582		3,595
Commercial	Commercial									57,860			57,241			619		Commercial		58,092		57,538		554
Industrial	Industrial									2,140			2,160			(20)		Industrial		2,135		2,156		(21)
Wholesale	Wholesale									719			723			(4)		Wholesale		712		720		(8)
Other	Other									2			2			—		Other		2		2		—
Total	Total									481,795			477,829			3,966		Total		484,118		479,998		4,120

Comparability of operation and maintenance expenses and depreciation and amortization may be impacted by regulatory and depreciation trackers that allow for the recovery in rates of certain costs.

4640

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

NiSource Inc.

Electric Operations

~~Three and Nine Months Ended September 30, 2021 vs. September 30, 2020 Operating Income~~

~~For the three months ended September 30, 2021, Electric Operations reported~~The underlying reasons for changes in our operating income of $140.4 million, an increase of $10.4 million from the comparable 2020 period. For the nine months ended September 30, 2021, Electric Operations reported operating income of $307.9 million, an increase of $12.5 million from the comparable 2020 period.

~~Operating Revenues~~

~~Operating~~ revenues for the three months ended ~~September 30, 2021 were $479.1 million, an increase of $46.8 million from~~March 31, 2022 compared to the same period in ~~2020. Operating revenues for the nine months ended September 30,~~ 2021 ~~were $1,285.5 million, an increase of $119.3 million from the same period in 2020.~~are presented below.

Favorable (Unfavorable)
Changes in Operating Revenues (in millions)
Three Months Ended September 30, 2021 vs 2020 Nine Months Ended September 30, 2021 vs 2020
The effects of warmer weather in 2021 compared to 2020 $ 11.5 $ 15.7
Increased (decreased) customer usage (2.7) 13.5
New rates from regulatory capital and DSM programs 1.5 7.5
The effects of customer growth 1.5 3.6
Higher revenue due to the effects of resuming common credit mitigation practices 1.5 1.9
Increased fuel handling costs (3.9) (10.4)
Other 0.1 2.5
Change in operating revenues (before cost of energy and other tracked items) $ 9.5 $ 34.3
Operating revenues offset in operating expense
Higher cost of energy billed to customers 39.2 82.1
Higher (lower) tracker deferrals within operation and maintenance, depreciation and tax (1.9) 2.9
Total change in operating revenues $ 46.8 $ 119.3


	Favorable (Unfavorable)
Changes in Operating Revenues (in millions)	Three Months Ended March 31, 2021 vs 2021

PPA revenue from renewable joint venture projects	$	8.5
The effects of customer growth	1.3
New rates from regulatory capital and DSM programs	1.1
Decreased fuel handling costs	1.1
Decreased customer usage	(3.2)
Other	1.4
Change in operating revenues (before cost of energy and other tracked items)	$	10.2
Operating revenues offset in operating expense
Higher cost of energy billed to customers	19.8
Lower tracker deferrals within operation and maintenance, depreciation and tax	(2.4)
Total change in operating revenues	$	27.6

Weather

In general, we calculate the weather-related revenue variance based on changing customer demand driven by weather variance from normal heating or cooling degree days. Our composite heating or cooling degree days reported do not directly correlate to the weather-related dollar impact on the results of Electric Operations. Heating or cooling degree days experienced during different times of the year may have more or less impact on volume and dollars depending on when they occur. When the detailed results are combined for reporting, there may be weather-related dollar impacts on operations when there is not an apparent or significant change in our aggregated composite heating or cooling degree day comparison.

Sales

~~Electric Operations sales~~The decrease in total volumes sold for the three months ended ~~September 30, 2021 were 4,370.7 GWh, an increase of 290.6 GWh~~March 31, 2022 compared to the same period in ~~2020. This increase~~2021 was primarily attributable to decreased usage primarily by industrial ~~and commercial customers during the three months ended September 30, 2020 due to COVID-19.~~

Electric Operations sales for the nine months ended September 30, 2021 were 12,074.6 GWh, an increase of 1,029.9 GWh compared to the same period in 2020. This increase was primarily attributable to decreased usage by industrial and commercial customers during the second and third quarter of 2020 due to COVID-19. There was no significant variance during the first three months of 2021 compared to the same period in 2020.customers.

Commodity Price Impact

Cost of energy for the Electric Operations segment is principally comprised of the cost of coal, ~~related handling costs,~~ natural gas purchased for internal generation of electricity at NIPSCO, and the cost of power purchased from ~~third-party~~ generators of electricity. NIPSCO has a state-approved recovery mechanism that provides a means for full recovery of prudently incurred ~~fuel costs.~~costs of energy. The majority of these ~~fuel~~ costs of energy are passed through directly to the customer, and the ~~fuel~~ costs of energy included in operating

~~Table of Contents~~

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

~~NiSource Inc.~~

~~Electric Operations~~

revenues are matched with the ~~fuel~~ cost of energy expense recorded in the period. The difference is recorded on the Condensed Consolidated Balance Sheets (unaudited) as under-recovered or over-recovered fuel cost to be included in future customer billings. Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and have essentially no impact on net income.

~~Operating Expenses~~

Table of Contents

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

NiSource Inc.

Electric Operations

The underlying reasons for changes in our operating expenses ~~were $36.4 million higher~~ for the three months ended ~~September 30, 2021~~March 31, 2022 compared to the same period in ~~2020. Operating expenses were $106.8 million higher~~2021 are presented below.


	Favorable (Unfavorable)
Changes in Operating Expenses (in millions)	Three Months Ended March 31, 2022 vs 2021



Lower outside services expenses	$	6.1
Lower depreciation and amortization expense driven by the joint venture depreciation adjustment(1)	3.2
Lower materials and supplies expenses	2.5
Renewable joint venture project expenses	(6.9)
Effects of environmental recoveries in 2021	(5.2)
Other	1.4
Change in operating expenses (before cost of energy and other tracked items)	$	1.1
Operating expenses offset in operating revenue
Higher cost of energy billed to customers	(19.8)
Lower tracker deferrals within operation and maintenance, depreciation and tax	2.4
Total change in operating expense	$	(16.3)

(1)See Note 7, "Regulatory Matters," in the Notes to Condensed Consolidated Financial Statements (unaudited) for ~~the nine months ended September 30, 2021 compared to the same period in 2020.~~

Favorable (Unfavorable)
Changes in Operating Expenses (in millions)
Three Months Ended September 30, 2021 vs 2020 Nine Months Ended September 30, 2021 vs 2020
Higher employee and administrative expenses $ (8.9) $ (12.2)
Higher depreciation and amortization expense (3.0) (8.2)
Increased operating expenses related to the accelerated retirement of the R.M. Schahfer Generating Station's coal Units 14 and 15 (3.6) (7.6)
Lower (higher) expense related to the NiSource Next initiative 5.6 (4.3)
Lower (higher) environmental costs (2.2) 6.9
Lower outside services expenses 10.1 4.9
Lower materials and supplies expenses 2.2 0.8
Other 0.7 (2.1)
Change in operating expenses (before cost of energy and other tracked items) $ 0.9 $ (21.8)
Operating expenses offset in operating revenue
Higher cost of energy billed to customers (39.2) (82.1)
Lower (higher) tracker deferrals within operation and maintenance, depreciation and tax 1.9 (2.9)
Total change in operating expense $ (36.4) $ (106.8)
additional information.

Electric Supply and Generation Transition

NIPSCO continues to execute on an electric generation transition consistent with the ~~preferred pathway from its~~ 2018 ~~Integrated Resource~~ Plan, which outlines plans to retire its remaining coal-fired generation by 2028, to be replaced by lower-cost, reliable and cleaner options. ~~The plan is expected to be a key element of a 90% reduction in our Scope 1 GHG emissions by 2030 compared with 2005 levels and to save NIPSCO electric customers more than $4 billion over 30 years.~~ We expect to have capital investment requirements of approximately $2.0 billion, primarily inbetween 2022 and ~~2023,~~2024, with any remainder expected in 2025, to replace the generation capacity of ~~all~~ R.M. Schahfer Generating Station's coal-fired units. We retired R.M. Schahfer Generating Station Units 14 and 15 on October 1, 2021. The remaining two coal units are ~~still scheduled~~currently expected to be retired by the end of 2025. See additional discussion in ~~2023. Refer~~Part II, Item 1A. Risk Factors. See "Expected Project Delays" discussion, below, for anticipated barriers to ~~Note 6, "Property, Plant and Equipment," Note 15-E, "Other Matters," and Note 19, "Subsequent Event" in~~ the ~~Notes to Condensed Consolidated Financial Statements (unaudited) for further information.~~success of our electric generation transition.

The current replacement plan primarily includes renewable sources of energy, including wind, solar, and battery storage to be obtained through a combination of NIPSCO ownership and PPAs. NIPSCO has sold, and may in the future sell, renewable energy credits from this generation to third parties because this helps keep our energy more affordable for our customers. NIPSCO has executed several PPAs to purchase 100% of the output from renewable generation facilities at a fixed price per MWh. Each facility supplying the energy will have an associated nameplate capacity, and payments under the PPAs will not begin until the associated generation facility is constructed by the owner/seller. NIPSCO has also executed several BTAs with developers to construct renewable generation facilities. Our current replacement program will be augmented by the Preferred Energy Resource Plan outlined in our 2021 Integrated Resource Plan. See "Executive Summary - Your Energy, Your Future" in this Management's Discussion for additional information.

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

NiSource Inc.

Electric Operations

Under our current replacement plan, we have placed three wind projects into service, totaling approximately 804 MW of nameplate capacity. The following table summarizes the remaining executed PPAs and BTAs from our generation ~~transition:~~transition that have yet to begin commercial operations. All announced projects have received IURC approval.

Project Name Transaction Type Technology Nameplate Capacity (MW) Storage Capacity (MW) Submitted to IURC IURC Approval Targeted Construction Completion
Jordan Creek 20 year PPA Wind 400 — 02/01/2019 6/05/2019 In Service (12/10/2020)
Rosewater(1)
BTA Wind 102 — 02/01/2019 8/07/2019 In Service (12/29/2020)
Indiana Crossroads I(2)
BTA Wind 300 — 10/22/2019 2/19/2020 Q4 2021
Greensboro 20 year PPA Solar & Storage 100 30 7/17/2020 1/27/2021 Q4 2022
Brickyard 20 year PPA Solar 200 — 7/17/2020 1/27/2021 Q4 2022
Cavalry(2)
BTA Solar & Storage 200 60 11/30/2020 5/5/2021 Q4 2023
Dunn's Bridge I(2)
BTA Solar 265 — 11/30/2020 5/5/2021 Q4 2022
Dunn's Bridge II(2)
BTA Solar & Storage 435 75 11/30/2020 5/5/2021 Q4 2023
Green River 20 year PPA Solar 200 — 12/23/2020 5/5/2021 Q2 2023
Gibson(3)
22 year PPA Solar 280 — 01/29/2021 6/29/2021 Q2 2023
Fairbanks(2)
BTA Solar 250 — 03/03/2021 6/29/2021 Q3 2023
Indiana Crossroads(2)
BTA Solar 200 — 03/19/2021 7/28/2021 Q4 2022
Elliott(2)(3)
BTA Solar 200 — 03/31/2021 7/28/2021 Q2 2023
Indiana Crossroads II 15 year PPA Wind 204 — 04/30/2021 9/1/2021 Q4 2023

Project Name

Transaction Type

Technology

Nameplate Capacity (MW)

Storage Capacity (MW)

Original Targeted Construction Completion

Estimated Construction Completion

Dunn's Bridge I(1)

BTA

Solar

265

—

Q4 2022

2023

Indiana Crossroads(1)

BTA

Solar

200

—

Q4 2022

2023

Dunn's Bridge II(1)

BTA

Solar & Storage

435

Q4 2023

2023 - 2024

Cavalry(1)

BTA

Solar & Storage

200

Q4 2023

2023 - 2024

Fairbanks(1)

BTA

Solar

250

—

Q3 2023

2024 - 2025

Elliott(1)

BTA

Solar

200

—

Q2 2023

2024 - 2025

Indiana Crossroads II

15 year PPA

Wind

204

—

Q4 2023

2023

Brickyard

20 year PPA

Solar

200

—

Q4 2022

2024

Greensboro

20 year PPA

Solar & Storage

100

Q4 2022

2023 - 2024

Gibson

22 year PPA

Solar

280

—

Q2 2023

2024

Green River

20 year PPA

Solar

200

—

Q2 2023

2024

(1)~~Refer to Note 12, "Variable Interest Entities," for additional information.~~

~~(2)~~Ownership of the facility will be transferred to joint ventures whose members include NIPSCO and an unrelated tax equity partner.

~~(3)~~Expected Project Delays.~~See below~~Compared to the previously disclosed targeted construction completion dates in our Annual Report on Form 10-K for ~~additional information~~the year ended December 31, 2021, we estimate delays for most projects to range from six to 18 months, resulting in the majority of our projects, and investment, being in service in 2023 and 2024. We do not currently anticipate any delays to the 2023 in-service date of our outstanding wind energy project. The expected delays and inflationary cost pressures communicated from the developers of our solar and storage projects are primarily due to (i) unavailability of solar panels and other uncertainties related to the ~~targeted construction completion time~~pending U.S. Department of ~~this project.~~

On October 27, 2021, we received notice of a potential force majeure event under the BTA for our Elliott solar generation project related to the supply of solar panel modules to be installed by the seller developing the project under the BTA. The notice states that shipments for the Elliott project will be delayed because solar panel modules currently being importedCommerce investigation on Antidumping and Countervailing Duties petition filed by a ~~certain supplier, including those to be delivered to~~domestic solar manufacturer (the "DOC Investigation"), (ii) the ~~Elliott project, have been, or are reasonably likely to be, detained by~~ U.S. ~~Customs and Border Protection (“CBP”) in connection with the~~Department of Homeland Security's June ~~24,~~ 2021 Withhold Release Order ~~("WRO")~~ on silica-based products made by Hoshine Silicon Industry Co., Ltd., (iii) Section 201 Tariffs and (iv) persistent general global supply chain and labor availability issues. We are also monitoring potential delays communicated by the developers of our renewable energy projects related to local permitting processes and obtaining interconnection rights. Preliminary findings from the DOC Investigation, including potential tariff amounts, are expected to be released in August 2022, with a final decision expected between January 2023 and March 2023. We have received and are evaluating several notices of possible force majeure from developers in connection with solar panel availability. The ~~supplier~~resolution of these issues, including the final conclusion of the DOC Investigation will determine what additional costs or delays our solar ~~panel modules has advised the sellers that the delivery~~projects will be subject to as a result of any tariffs imposed. If any of these impacts result in cost increases for certain projects, such potential impacts are expected to result in the need for us to seek additional ~~similar~~regulatory review and approvals. Additionally, significant changes to project costs and schedules as a result of these factors could impact the viability of the projects.

We, along with the developers of these generation projects, are continuously evaluating potential impacts to the targeted completion date of each project. Delays to the completion dates of our projects could also include delays in the financial return of certain investments and impact the overall timing of our electric generation transition.Although we are not currently expecting delays to extend the completion dates of our six solar ~~panel modules has been delayed indefinitely. We have been informed that~~and storage BTA projects beyond the ~~supplier is taking actions to avoid detention~~currently planned sunset of ~~any future similar shipments, but even~~investment tax credits at the end of 2025, if ~~these actions are successful,~~such delays occur, they could impact the ~~delivery~~economic viability of ~~solar panel modules will likely be delayed by several months. At this time, no claim of an actual force majeure has been provided by~~ the ~~seller under the BTA. Further, no~~projects.

For additional ~~details have been provided~~discussion on the extent or expected duration of the potential detainment or the ability to obtain substitute solar panel modules that are not subject to the WRO, or the expected impact, if any, to the timely performance of the seller's obligations under the BTA. We have been informed that the seller is working diligently to determine whether and how to mitigate the effects of the potential detainment in order to minimize potential delays or failure to perform under the BTA.

Also on October 27, 2021, we received a substantially similar notice of a potential force majeure event from the same seller claiming a potential force majeure under our PPA for the Gibson solar project.

NIPSCO and the seller are evaluating options to mitigate delays and maintain the original project schedules, including various alternative power supply options in the event either or both of the Elliott and Gibson projects were to become delayed. We cannot currently predict what, if any, impact these notifications of potential force majeure or general availability of solar panels will have on NIPSCO or on our results of operations.foregoing matters, see Part II, Item 1A. Risk Factors.

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

NiSource Inc.

Liquidity and Capital Resources

We continually evaluate the availability of adequate financing to fund our ongoing business operations, working capital and core safety and infrastructure investment programs. Our financing is sourced through cash flow from operations and the issuance of debt and/or equity. External debt financing is provided primarily through the issuance of long-term debt, accounts receivable securitization programs and our $1.5 billion commercial paper program, which is backstopped by our committed revolving credit facility with a total availability from third-party lenders of $1.85 billion. On February 18, 2022, we amended our revolving credit agreement to, among other things, extend its term to February 18, 2027. The commercial paper program and credit facility provide cost-effective, short-term financing until it can be replaced with a balance of long-term debt and equity financing that achieves our desired capital structure. We utilize an ATM equity program that allows us to issue and sell shares of our common stock up to an aggregate issuance of $750.0 million through December 31, 2023. As of ~~September 30, 2021,~~March 31, 2022, the ATM program (including the impact of the forward sale ~~agreements)~~agreement) had approximately $300.0 million of equity available for issuance. ~~On April 19, 2021, we completed~~We also expect to remarket the ~~sale of 8.625 million Equity Units,~~Series C Mandatory Convertible Preferred stock prior to December 1, 2023, which ~~provided net proceeds of $835.5 million~~could result in additional cash proceeds. , after underwriting and issuance costs. We intend to use the net proceeds from the offering for renewable generation investments and general corporate purposes, including additions to working capital and repayment of existing indebtedness. See Note 5, ''Equity,'' in the Notes to Condensed Consolidated Financial Statements (unaudited) for more information on our ATM program and Equity Units.

We believe these sources provide adequate capital to fund our operating activities and capital expenditures in ~~2021~~2022 and beyond.

Greater Lawrence Incident: As discussed in Note 15, ''Other Commitments and Contingencies,'' in the Notes to the Condensed Consolidated Financial Statements (unaudited), due to the inherent uncertainty of litigation, there can be no assurance that the outcome or resolution of any particular claim related to the Greater Lawrence Incident will not continue to have an adverse impact on our cash flows. Through income generated from operating activities, amounts available under the short-term revolving credit facility, and our ability to access capital markets, we believe we have adequate capital available to settle remaining anticipated claims associated with the Greater Lawrence Incident.

Operating Activities

Net cash from operating activities for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$939.3~~$579.8 million, an increase of ~~$80.7~~$131.5 million compared to the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. This increase was primarily driven by a year over year decrease in net payments related to the Greater Lawrence Incident. During 2021, we paid approximately $13.0 million compared to $221.8 million of payments during the same period in 2020. This was offset by $131.8 million of decreasedincreased cash inflows related to the ~~under~~ collection of under-recovered gas and fuel ~~costs~~costs.

Investing Activities

Net cash used for investing activities for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$1,394.2~~$370.4 million, a decrease of ~~$5.7~~$31.4 million compared to the ~~nine~~three months ended ~~September 30, 2020. We project total 2021~~March 31, 2021. Our current year investing activities were comprised of increased capital expenditures related to besystem growth and reliability, offset by the property insurance settlement related to the Greater Lawrence Incident.

As we evaluate adjustments to renewable generation project timing, the company remains on track to make capital investments totaling approximately ~~$2 billion.~~$8 billion during the 2022-2024 period. We expect to have capital investment requirements of approximately $2.0 billion, primarily between 2022 and 2024, with any remainder expected in 2025, to replace the generation capacity of R.M. Schahfer Generating Station's coal-fired units. We have flexibility in the timing of other gas and electric infrastructure capital investments that can allow adjustments to compensate for delays in renewable generation projects. These forecasted capital investments and those included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 are subject to continuing review and adjustment. Actual capital expenditures may vary from these estimates. For example, the timing and ultimate cost associated with solar and battery storage capital expenditures may vary due to the U.S. Department of Commerce's investigation into an Antidumping and Countervailing Duties circumvention claim on solar cells and panels supplied from Malaysia, Vietnam, Thailand and Cambodia. For additional information, see "Results and Discussion of Segment Operations - Electric Operations," in this Management's Discussion and Part II, Item 1A. Risk Factors.

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

NiSource Inc.

~~Liquidity and Capital Resources~~

Regulatory Capital Programs. We replace pipe and modernize our gas infrastructure to enhance safety and reliability by reducing leaks, which subsequently reduces GHG emissions. In ~~2021,~~2022, we continue to move forward on core infrastructure and environmental investment programs supported by complementary regulatory and customer initiatives across all six states of our operating area.

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 or pending commission approval:

(in millions)

Company

Program

Incremental Revenue

Incremental Capital Investment

Investment Period

Costs Covered(1)

Rates
Effective

Company

Program

Incremental Revenue

Incremental Capital Investment

Investment Period

Costs Covered(1)

Rates
Effective

Columbia of Ohio(2)

IRP - 2021

22.2

212.6

1/20-12/20

Replacement of (1) hazardous service lines, (2) cast iron, wrought iron, uncoated steel, and bare steel pipe, (3) natural gas risers prone to failure and (4) installation of AMR devices.

May 2021

Columbia of Ohio(2)

IRP - 2022

25.0

232.9

1/21-12/21

Replacement of (1) hazardous service lines, (2) cast iron, wrought iron, uncoated steel, and bare steel pipe, (3) natural gas risers prone to failure and (4) installation of AMR devices.

May 2022

Columbia of Ohio(2)

CEP - 2021

18.0

177.2

1/20-12/20

Assets not included in the IRP.

September 2021

Columbia of Ohio(2)

CEP - 2022

32.2

253.5

1/21-12/21

Assets not included in the IRP.

September 2022

NIPSCO - Gas

TDSIC 3

0.2

52.1

1/21-6/21

New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.

January 2022

NIPSCO - Gas

TDSIC 4

17.2

77.5

7/21-12/21

New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.

July 2022

NIPSCO - Gas~~(2)~~

FMCA 6

(2.1)

20.7

10/20-3/21

Project costs to comply with federal mandates.

October 2021

NIPSCO - Gas~~(2)~~

FMCA 7

0.4

32.8

4/21-9/21

Project costs to comply with federal mandates.

April 2022

Columbia of Pennsylvania(3)

DSIC - Q4 2020

0.8

25.0

9/20-11/20

Eligible project costs including piping, couplings, gas service lines, excess flow valves, risers, meter bars, meters, and other related capitalized cost, to improve the distribution system.

January 2021

Columbia of Virginia~~(4)~~(3)

SAVE - 2022

15.8

63.0

1/22-12/22

Replacement projects that (1) enhance system safety or reliability, or (2) reduce, or potentially reduce, greenhouse gas emissions.

January 2022

Columbia of Virginia~~(4)~~(3)

SAVE - 2022

4.0

63.0

1/22-12/22

Replacement projects that (1) enhance system safety or reliability, or (2) reduce, or potentially reduce, greenhouse gas emissions.

January 2022

Columbia of Kentucky

SMRP - 2021

2.6

40.0

1/21-12/21

Replacement of mains and inclusion of system safety investments.

May 2021

Columbia of Maryland

STRIDE - 2022

1.4

17.5

1/22-12/22

Pipeline upgrades designed to improve public safety or infrastructure reliability.

January 2022

Columbia of Maryland

STRIDE - 2022

1.3

17.5

1/22-12/22

Pipeline upgrades designed to improve public safety or infrastructure reliability.

January 2022

NIPSCO - Electric(4)

TDSIC - 9

0.2

42.7

2/21-5/21

New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.

February 2022

NIPSCO - Electric(5)

TDSIC - 1

10.4

148.5

6/21-1/22

New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.

August 2022

NIPSCO - Electric(5)

TDSIC - 9

0.2

42.7

2/21-5/21

New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.

February 2022

(1)Programs do not include any costs already included in base rates.

(2)~~Decrease~~The January through March 2021 investments included in ~~incremental revenue due~~these filings are also included in the pending Columbia of Ohio rate case. The infrastructure filings will be adjusted to ~~lower O&M expenses as compared to~~reflect the ~~prior filing.~~final rate case outcome.

(3)Effective January 23, 2021, Columbia of Pennsylvania's DSIC rate was set to zero due to the inclusion of the incremental capital and revenue in base rates following the Pennsylvania PUC's Final Order in the 2020 rate case.

~~(4)~~Columbia of Virginia filed its application to amend and extend its SAVE program with the Virginia SCC on August 12, 2021, requesting approval of a two-year SAVE program for calendar years 2022-2023 that includes incremental capital investments of $63.0 million and $72.0 million, respectively. The Commission ~~action is expected on or before~~approved the Company's application in its December ~~10, 2021.~~6, 2021 Order Approving SAVE Rider.

~~(5)~~(4)On April 1, 2021, NIPSCO filed a notice with the IURC that it intended to terminate its current Electric TDSIC plan effective May 31, 2021. NIPSCO filed the TDSIC-9 petition on September 28, 2021, with capital investment through the plan termination date of May 2021, and received an order on January 26, 2022 approving TDSIC-9.

(5) NIPSCO filed for a new electric TDSIC plan on June 1, 2021. An order ~~is expected by the end of~~approving NIPSCO's new electric TDSIC plan was received on December 28, 2021. NIPSCO filed ~~the TDSIC-9 petition~~its first tracker, TDSIC – 1, on ~~September 28, 2021, and an~~March 30, 2022. An order is expected in ~~January~~July 2022 with rates requested to be effective August 2022.

In 2022, NIPSCO filed additional petitions associated with the FMCA program to recover federally mandated compliance investments.

On March 30, 2022, NIPSCO Electric filed a petition with the IURC seeking approval of NIPSCO's federally mandated costs for closure of Michigan City Generating Station's CCR ash ponds. The project includes a total estimated $40.0 million of federally mandated retirement costs. NIPSCO is requesting all associated accounting and ratemaking relief, including establishment of a periodic rate adjustment through the FMCA mechanism. Refer to Note 15, ''Other Commitments and Contingencies - D Environmental Matters,'' in the Notes to the Condensed Consolidated Financial Statements (unaudited) for further discussion of the CCRs.

On April 1, 2022, NIPSCO Gas filed a petition with the IURC seeking approval of NIPSCO's federally mandated costs for a Pipeline Safety III Compliance Plan. The federally mandated costs include a total estimated $228.7 million of capital costs as well as $34.1 million of operation and maintenance programs. NIPSCO Gas is requesting all associated accounting and ratemaking relief, including establishment of a periodic rate adjustment mechanism.

Financing Activities

Common Stock, Preferred Stock and ~~Preferred Stock.~~Equity Unit Sale. Refer to Note 5, ''Equity,'' in the Notes to Condensed Consolidated Financial Statements (unaudited) for information on common and preferred stock activity.

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NiSource Inc.

Short-term Debt and Sale of Trade Accounts Receivables. Refer to Note 14, ''Short-Term Borrowings,'' in the Notes to Condensed Consolidated Financial Statements (unaudited) for information on short-term debt activity, including sale of trade accounts receivable.

~~Equity Unit Sale.~~ ~~Refer to Note 5, ''Equity,'' in the Notes to Condensed Consolidated Financial Statements (unaudited) for information on equity units activity.~~

~~Non-controlling~~Noncontrolling Interest. Refer to Note 12, "Variable Interest Entities," in the Notes to Condensed Consolidated Financial Statements (unaudited) for information on contributions from ~~non-controlling~~noncontrolling interest activity.

~~Net Available Liquidity.~~ AsSources of ~~September 30, 2021, an aggregate of $1,698.3 million of net liquidity was available, including cash and credit available under the revolving credit facility.~~

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

~~NiSource Inc.~~

Liquidity ~~and Capital Resources~~

The following table displays our liquidity position as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


(in millions)	(in millions)	September 30, 2021		December 31, 2020		(in millions)	March 31, 2022		December 31, 2021
Current Liquidity	Current Liquidity					Current Liquidity
Revolving Credit Facility	Revolving Credit Facility	$	1,850.0	$	1,850.0	Revolving Credit Facility	$	1,850.0	$	1,850.0
Accounts Receivable Program(1)		203.9		273.3
Accounts Receivable Programs(1)						Accounts Receivable Programs(1)	480.0		251.2
Less:	Less:					Less:

Commercial Paper	Commercial Paper	380.0		503.0		Commercial Paper	165.0		560.0

Accounts Receivable Programs Utilized						Accounts Receivable Programs Utilized	355.0		—
Letters of Credit Outstanding Under Credit Facility	Letters of Credit Outstanding Under Credit Facility	14.1		15.2		Letters of Credit Outstanding Under Credit Facility	14.4		18.9
Add:	Add:					Add:
Cash and Cash Equivalents	Cash and Cash Equivalents	38.5		116.5		Cash and Cash Equivalents	114.5		84.2
Net Available Liquidity	Net Available Liquidity	$	1,698.3	$	1,721.6	Net Available Liquidity	$	1,910.1	$	1,606.5

(1)Represents the lesser of the seasonal limit or maximum borrowings supportable by the underlying receivables.

Debt Covenants. We are subject to financial covenants under our revolving credit facility, which require us to maintain a debt to capitalization ratio that does not exceed 70%. As of ~~September 30, 2021,~~March 31, 2022, the ratio was ~~59.7%~~56.4%.

Credit Ratings. The credit rating agencies periodically review our ratings, taking into account factors such as our capital structure and earnings profile. The following table includes our and NIPSCO's credit ratings and ratings outlook as of ~~September 30, 2021.~~March 31, 2022. There were no changes to the below credit ratings or outlooks since ~~December 31,~~February 2020.

A credit rating is not a recommendation to buy, sell, or hold securities, and may be subject to revision or withdrawal at any time by the assigning rating organization.

S&P

Moody's

Fitch

Rating

Outlook

Rating

Outlook

Rating

Outlook

NiSource

BBB+

Stable

Baa2

Stable

BBB

Stable

NIPSCO

BBB+

Stable

Baa1

Stable

BBB

Stable

Commercial Paper

A-2

Stable

P-2

Stable

Certain of our subsidiaries have agreements that contain ''ratings triggers'' that require increased collateral if our credit rating or the credit ratings of certain of our subsidiaries are below investment grade. These agreements are primarily for insurance purposes and for the physical purchase or sale of power. As of ~~September 30, 2021,~~March 31, 2022, the collateral requirement that would be required in the event of a downgrade below the ratings trigger levels would amount to approximately ~~$46.7~~$58.1 million. In addition to agreements with ratings triggers, there are other agreements that contain ''adequate assurance'' or ''material adverse change'' provisions that could necessitate additional credit support such as letters of credit and cash collateral to transact business.

Equity. Our authorized capital stock consists of 620,000,000 shares, $0.01 par value, of which 600,000,000 are common stock and 20,000,000 are preferred stock. As of ~~September 30, 2021, 392,628,625~~March 31, 2022, 405,734,408 shares of common stock and 1,302,500 shares of preferred stock were outstanding.

Contractual Obligations. A summary of contractual obligations is included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020. Other than the purchase contract liability related to our Equity Units, discussed in Note 5, "Equity," in the Notes to the Condensed Consolidated Financial Statements (unaudited), there~~2021. There were no material changes from year-end during the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022.

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NiSource Inc.

Guarantees, Indemnities and ~~Indemnities.~~Other Off Balance Sheet Arrangements. We and certain of our subsidiaries enter into various agreements providing financial or performance assurance to third parties on behalf of certain subsidiaries as a part of normal business. Such agreements include guarantees and stand-by letters of credit. Refer to Note 15, ''Other Commitments and Contingencies,'' in the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information ~~on guarantees.~~about such arrangements.

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NiSource Inc.

Regulatory, Environmental and ~~Other~~Safety Matters

Cost Recovery and Trackers

Comparability of our line item operating results is impacted by regulatory trackers that allow for the recovery in rates of certain costs such as those described below. Increases in the expenses that are subject to approved regulatory tracker mechanisms generally lead to increased regulatory assets, which ultimately result in a corresponding increase in operating revenues and, therefore, have essentially no impact on total operating income results. Certain approved regulatory tracker mechanisms allow for abbreviated regulatory proceedings in order for the operating companies to quickly implement revised rates and recover associated costs.

A portion of the Gas Distribution revenue is related to the recovery of gas costs, the review and recovery of which occurs through standard regulatory proceedings. All states in our operating area require periodic review of actual gas procurement activity to determine prudence and to confirm the recovery of prudently incurred energy commodity costs supplied to customers.

~~Increased~~We recognize that energy efficiency reduces emissions, conserves natural resources and saves our customers money. Our gas distribution companies offers programs such as energy efficiency upgrades, home checkups and weatherization services. The increased efficiency of natural gas appliances and improvements in home building codes and standards ~~has contributed~~contributes to a long-term trend of declining average use per customer. ~~As a result,~~While we are looking to expand offerings so the energy efficiency programs can benefit as many customers as possible, our Gas Distribution Operations have pursued changes in rate design to more effectively match recoveries with costs incurred. Columbia of Ohio has adopted a straight fixed variable rate design that closely links the recovery of fixed costs with fixed charges. Columbia of Maryland and Columbia of Virginia have regulatory approval for weather and revenue normalization adjustments for certain customer classes, which adjust monthly revenues that exceed or fall short of approved levels. Columbia of Pennsylvania continues to operate its pilot residential weather normalization adjustment and also has a fixed customer charge. This weather normalization adjustment only adjusts revenues when actual weather compared to normal varies by more than 3%. Columbia of Kentucky incorporates a weather normalization adjustment for certain customer classes and also has a fixed customer charge. In a prior gas base rate proceeding, NIPSCO implemented a higher fixed customer charge for residential and small customer classes moving toward recovering more of its fixed costs through a fixed recovery charge, but has no weather or usage protection mechanism.

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, which is updated quarterly to reflect actual costs incurred to supply electricity to customers.

While increased efficiency of electric appliances and improvements in home building codes and standards has similarly impacted the average use per electric customer in recent years, NIPSCO expects a future ~~trend with increases~~growth in per customer usage ~~driven by~~as a result of increasing electric applications. Further growth is anticipated as electric vehicles become more prevalent. These ongoing changes in use of electricity will likely lead to development of innovative rate designs, and NIPSCO will continue efforts to design rates that increase the certainty of recovery of fixed costs.

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NiSource Inc.

Regulatory, Environmental and ~~Other~~Safety Matters

Rate Case Actions

The following table describes current rate case actions as applicable in each of our jurisdictions net of tracker impacts:


(in millions)	(in millions)												(in millions)
Company	Company	Proposed ROE		Approved ROE		Requested Incremental Revenue		Approved Incremental Revenue		Filed	Status	Rates Effective	Company	Proposed ROE		Approved ROE		Requested Incremental Revenue		Approved Incremental Revenue		Filed	Status	Rates Effective
Currently Approved in Current or Future Rates													Currently Approved in Current or Future Rates

Columbia of Pennsylvania(1)		9.86	%	9.86	%	$	76.8	$	63.5	April 24, 2020	Approved February 19, 2021	January 2021
Columbia of Pennsylvania~~(2)~~(1)	Columbia of Pennsylvania~~(2)~~(1)	10.95	%	In process		$	98.3	In process		March 30, 2021	Order Expected Q4 2021	December 2021	Columbia of Pennsylvania~~(2)~~(1)	10.95	%	None specified		$	98.3	$	58.5	March 30, 2021	Approved December 16, 2021	December 2021
Columbia of Maryland~~(3)~~	Columbia of Maryland~~(3)~~	10.85	%	In process		$	4.8	In process		May 14, 2021	Order Expected December 2021	December 2021	Columbia of Maryland~~(3)~~	10.85	%	9.65	%	$	4.8	$	2.4	May 14, 2021	Approved December 3, 2021	December 2021
Columbia of Kentucky~~(4)~~(2)	Columbia of Kentucky~~(4)~~(2)	10.30	%	In process		$	26.7	In process		May 28, 2021	Order Expected Q1 2022	January 2022	Columbia of Kentucky~~(4)~~(2)	10.30	%	9.35	%	$	26.7	$	18.3	May 28, 2021	Approved December 28, 2021	January 2022
Columbia of Virginia(3)													Columbia of Virginia(3)	10.95	%	None specified		$	14.2	$	1.3	August 28, 2018	Approved June 12, 2019	February 2019
Columbia of Ohio	Columbia of Ohio	10.95	%	In process		$	221.4	In process		June 30, 2021	Order Expected Q3 2022	July 2022	Columbia of Ohio	11.50	%	10.39	%	$	87.8	$	47.1	March 3, 2008	Approved December 3, 2008	December 2008
NIPSCO - Gas													NIPSCO - Gas	10.70	%	9.85	%	$	138.1	$	105.6	September 27, 2017	Approved September 19, 2018	October 2018
NIPSCO - Electric													NIPSCO - Electric	10.80	%	9.75	%	$	21.4	$	(53.5)	October 31, 2018	Approved December 4, 2019	January 2020
Active Rate Cases													Active Rate Cases
Columbia of Ohio(4)													Columbia of Ohio(4)	10.95	%	In process		$	221.4	In process		June 30, 2021	Order Expected Q3 2022	Q3 2022
NIPSCO - Gas(5)	NIPSCO - Gas(5)	10.50	%	In process		$	115.3	In process		September 29, 2021	Order Expected Q3 2022	September 2022	NIPSCO - Gas(5)	10.50	%	In process		$	109.7	In process		September 29, 2021	Order Expected Q3 2022	September 2022

Columbia of Pennsylvania													Columbia of Pennsylvania	11.20	%	In process		$	82.2	In process		March 18, 2022	Order Expected Q4 2022	December 2022
Columbia of Virginia(6)													Columbia of Virginia(6)	10.75	%	In process		$	40.6	In process		April 29, 2022	Pending procedural schedule	October 2022

(1)~~The 9.86%~~No approved ROE ~~and~~is identified for this matter since the ~~$76.8 million requested incremental~~approved revenue ~~stated above reflect compromise positions taken by~~increase is the result of a black box settlement under which parties agree upon the amount of increase without specifying ratemaking elements to establish the Company's revenue requirement. Pursuant to the settlement, for purposes of calculating its DSIC, Columbia of Pennsylvania ~~during~~shall use the ~~briefing stages of its 2020 base~~equity return rate ~~case. In its initial filing on April 24, 2020, Columbia of Pennsylvania proposed an ROE of 10.95% and requested incremental revenue of $100.4 million. A Final Order from~~for gas utilities contained in the Pennsylvania ~~PUC was received~~Commission’s most recent Quarterly Report on ~~February 19, 2021 for rates effective retroactive to January 23, 2021. On March 8, 2021,~~ the ~~Pennsylvania Office~~Earnings of Consumer Advocate filed a Petition for Reconsideration, seeking to have the Pennsylvania PUC modify its February 19 Final Order. On April 15, 2021, the Pennsylvania PUC issued an Opinion and Order denying the Office of Consumer Advocate’s Petition. Parties have 30 days in which to file an appeal. The OCA did not file a Notice of Appeal by the Commission’s May 17, 2021 due date. CPA began back billing customers for usage from January 23, 2021 at the new rates beginning March 20, 2021.Jurisdictional Utilities, including quarterly updates thereto.

(2)~~CPA filed a Joint Petition~~The approved ROE for Settlement on September 7, 2021 for an annual revenue increase of $58.5 million. On October 5, 2021 a Recommended Decision was issued by the Administrative Law Judge (ALJ) that recommended approval of this amount without modification.natural gas capital riders (e.g. SMRP) is 9.275%.

(3)~~On October 29, 2021, the Public Utility Law Judge issued~~Columbia of Virginia's rate case resulted in a ~~proposed order which, if approved by the Maryland PSC, will authorize $2.6 million in incremental annual revenue.~~black box settlement, representing a settlement to a specific revenue increase but not a specified ROE. The ~~proposed order will become~~settlement provides use of a ~~final order on December 10, 2021, unless modified or reversed by the Maryland PSC.~~9.70% ROE for future SAVE filings.

(4)~~Columbia~~A proposed Incremental Revenue of ~~Kentucky~~$212.3M is reflected in the update filed ~~a Joint Stipulation, Settlement Agreement and Recommendation~~with the PUCO on ~~October 27, 2021 for an annual revenue increase of $18.6 million.~~March 31, 2022.

(5)Proposed new rates would be implemented in 2 steps, with implementation of step 1 rates to be effective in September 2022 and step 2 rates to be effective in March 2023. A proposed ROE of 9.85% and

~~COVID-19 Regulatory Deferrals~~

~~In addition to the cost deferred to a regulatory asset as noted in Note 7, "Regulatory Matters,"~~Incremental Revenue of $71.8M are reflected in the ~~Notes~~Settlement and Stipulation Agreement filed with the IURC on March 2, 2022.

(6)The revenue request including the SAVE tracker related amount is $58.2 million. Beginning October 2022, interim rates will be billed subject to Condensed Consolidated Financial Statements (unaudited), certain states have permitted us to track lost late and disconnect fee revenues due to the pandemic. While these costs do not qualify as regulatory assets under ASC 980, we will consider seeking recovery of these costs in future regulatory proceedings.refund, pending a final commission order.

PHMSA Regulations

On December 27, 2020, the Protecting Our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act of 2020 was signed into law, reauthorizing funding for federal pipeline safety programs through September 30, 2023. Among other things, the PIPES Act requires that PHMSA revise the pipeline safety regulations to require operators to update, as needed, their existing distribution integrity management plans, emergency response plans, and operation and maintenance plans. The PIPES Act also requires PHMSA to adopt new requirements for managing records and updating, as necessary, existing district regulator stations to eliminate common modes of failure that can lead to overpressurization. PHMSA must also require that operators implement ~~leak detection~~ and ~~repair programs that meet safety needs and protect the environment, require the use of~~utilize advanced leak detection ~~practices~~technologies that enable the location and ~~technologies, and require operators to be able to locate and categorize~~categorization of all leaks that are hazardous, or potentially hazardous, to human safety or the ~~environment, or that can become hazardous.~~environment. Natural gas companies, including usNiSource and our subsidiaries, may see increased costs depending on how PHMSA implements the new mandates resulting from the PIPES Act.

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

NiSource Inc.

Regulatory, Environmental and ~~Other~~Safety Matters

Climate Change Issues

Increased frequency of severe and extreme weather events associated with climate change could materially impact our facilities, energy sales, and results of operations. We are unable to predict these events. However, we perform ongoing assessments of physical risk, including physical climate risk, to our business. More extreme and volatile temperatures, increased storm intensity and flooding, and more volatile precipitation leading to changes in lake and river levels are among the weather events that are most likely to impact our business. Efforts to mitigate these physical risks continue to be implemented on an ongoing basis.

Future legislative and regulatory programs, at both the federal and state levels, could significantly limit allowed GHG emissions or impose a cost or tax on GHG emissions. Revised or additional future GHG legislation and/or regulation related to the generation of electricity or the extraction, production, distribution, transmission, storage and end use of natural gas could materially impact our gas supply,financial position, financial results and cash flows. We continue to monitor the implementation of any final and proposed climate change-related legislation and regulations, including the Infrastructure Investment and Jobs Act, passed in November 2021, and the EPA's proposed methane regulations for the oil and natural gas industry, but we cannot predict their final form or impact on our business at this time. We have identified potential opportunities associated with the Infrastructure Investment and Jobs Act and are evaluating how they may align with our strategy going forward. The energy-related provisions include new federal funding for power grid infrastructure and resiliency investments, new and existing energy efficiency and weatherization programs, electric vehicle infrastructure for public chargers and additional LIHEAP funding over the next five years.

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 U.S. Court of Appeals for the D.C. Circuit vacated and remanded the rule on January 19, 2021. On October 29, 2021, the U.S. Supreme Court agreed to review the scope of the ~~EPA’s~~EPA's authority to impose GHG emission standards under the Clean Air Act. We will continue to monitor this matter.

In February 2021, the United States rejoined the Paris Agreement, an international treaty through which parties set nationally determined contributions to reduce GHG emissions, build resilience, and adapt to the impacts of climate change. Subsequently, the Biden Administration released a target for the United States to achieve a 50%-52% GHG reduction from 2005 levels by 2030, which supports the President's goals to create a carbon-free power sector by 2035 and net zero emissions economy no later than 2050. There are many pathways to reach these goals.

~~There is also increasing interest at~~The Virginia Clean Economy Act was signed into law in 2020. While the ~~federal level to legislate GHG reductions related to~~Act does not establish any new mandates on Columbia of Virginia, certain natural gas customers may, over the ~~production, storage, transmission and~~long-term, reduce their use of electricity and natural gas. There is a proposal in draft Build Back Better legislation that contemplates a new methane fee. If enacted, certain NiSource gas storage facilities may be affected unless emissions are reduced, but the impact is not expected to be material, and any federally mandated costs are potentially recoverable through rates. On November 2, 2021, the EPA proposed methane regulations for the oil and natural gas ~~industry. We~~to meet the 100% renewable electricity requirement. Columbia of Virginia will continue to monitor ~~all proposed legislation and regulations,~~this matter, but we cannot predict ~~their~~its final ~~form or~~ impact on our business at this time. Separately, the Virginia Energy Innovation Act ("the Act"), enacted into law in April 2022, and effective July 1, 2022, allows natural gas utilities to supply alternative forms of gas that meet certain standards and reduce emissions intensity. The Act also provides that the costs of enhanced leak detection and repair may be added to a utility’s plan to identify proposed eligible infrastructure replacement projects and related cost recovery mechanisms, known as the SAVE Plan. Furthermore, under the Act, utilities can recover eligible biogas supply infrastructure costs on an ongoing basis. The provisions of these laws may provide opportunities for Columbia of Virginia as it participates in the transition to a lower carbon future.

~~In October 2021, a work group~~The Climate Solutions Now Act of 2022 requires Maryland to reduce GHG emissions by 60% by 2031 (from 2006 levels), and it requires the state to reach net zero emissions by 2045. The Maryland Department of the ~~Maryland~~Environment is required to adopt a plan to achieve the 2031 goal by December 2023, and it is required to adopt a plan for the net zero goal by 2030. The Act also enacts a state policy to move to broader electrification of both existing buildings and new construction, and requires the Public Service Commission to complete a study assessing the capacity of ~~Climate Change published~~gas and electric distribution systems to successfully serve customers under a Building Energy Transition Plan. Policy proposals included in this draft plan, such as the adoption of an all-electric construction code, are supported by the Commission but do not necessarily reflect current state policy. The report is intendedtransition to guide Maryland policy makers on decisions related to reducing GHG emissions from buildings in pursuit of achieving targets in Maryland's 2030 Greenhouse Gas Reduction Act Plan and the Commission's recommendation that Maryland achieve net-zero emissions by 2045.a highly electrified building sector. Columbia of Maryland will continue to monitor this matter, but we cannot predict its final impact on our business at this time.

In response to these transition risks and opportunities, we continue to actively implement our plans to reduce Scope 1 GHG emissions by ~~90 percent~~90% from 2005 levels by 2030, ~~through~~and to significantly reduce methane emissions, a component of Scope 1 GHG emissions. These plans include the retirement of coal-fired electric generation, increased sourcing of renewable energy, and methane reductions from priority pipeline replacement, traditional leak detection and repair, and deployment of advanced leak detection and repair. As ~~discussed above in this Management's Discussion within "Results and Discussion~~ of ~~Segment Operations - Electric Operations", NIPSCO continues to execute on an electric generation transition consistent with~~ the ~~preferred pathways identified in its 2018 and~~end of 2021, ~~Integrated Resource Plans. We expect to have capital investment requirements of~~we had reduced Scope 1 GHG emissions by approximately ~~$2.0 billion, primarily in 2022 and 2023, to replace the generation capacity previously supplied by R.M. Schahfer. NIPSCO has sold, and may in the future sell, renewable energy credits~~58% from ~~this generation to third parties because this helps keep our energy more affordable for our customers.~~

Additionally, we joined the Low-Carbon Resources Initiative (LCRI) in 2021, a five-year initiative to accelerate the development and demonstration of low-carbon energy technologies. LCRI's Research Vision focuses on technologies such as clean hydrogen, bioenergy and renewable natural gas needed to enable affordable pathways to economy-wide decarbonization.2005 levels.

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NiSource Inc.

Regulatory, Environmental and Safety Matters

~~Off-Balance Sheet Arrangements~~Additionally, we are active in several efforts to accelerate the development and demonstration of lower-carbon energy technologies and resources, such as hydrogen and RNG, to enable affordable pathways to economy-wide decarbonization.

~~We, along~~In April 2022, Columbia of Pennsylvania and Columbia of Virginia each filed petitions to implement the Green Path Rider, which will be a voluntary rider that allows customers to opt in and offset either 50% or 100% of their natural gas related emissions. To reduce the emissions, the utilities will purchase RNG attributes and carbon offsets to match the usage for customers opting into the program.

As discussed above in this Management's Discussion within "Results and Discussion of Segment Operations - Electric Operations," and Part II, Item 1A. Risk Factors, NIPSCO continues to execute on an electric generation transition consistent with ~~certain of our subsidiaries, enter into various agreements providing financial or performance assurance to third parties on behalf of certain subsidiaries. Such agreements include guarantees~~the preferred pathways identified in its 2018 and ~~stand-by letters of credit.~~

~~Refer to Note 15, ''Other Commitments and Contingencies,'' in the Notes to Condensed Consolidated Financial Statements (unaudited) for additional information about such arrangements.~~2021 Integrated Resource Plans.

Market Risk Disclosures

Risk is an inherent part of our businesses. The extent to which we properly and effectively identify, assess, monitor and manage each of the various types of risk involved in our businesses is critical to our profitability. We seek to identify, assess, monitor and manage, in accordance with defined policies and procedures, the following principal market risks that are involved in our businesses: commodity price risk, interest rate risk and credit risk. We manage risk through a multi-faceted process with oversight by the Risk Management Committee that requires constant communication, judgment and knowledge of specialized products and markets. Our senior management takes an active role in the risk management process and has developed policies and procedures that require specific administrative and business functions to assist in the identification, assessment and control of various risks. These may include, but are not limited to market, operational, financial, compliance and strategic risk types. In recognition of the increasingly varied and complex nature of the energy business, our risk management process, policies and procedures continue to evolve and are subject to ongoing review and modification.

Commodity Price Risk

~~We are exposed to~~Our Gas and Electric Operations have commodity price risk ~~as a result~~primarily related to the purchases of ~~our subsidiaries' operations involving~~ natural gas and power. To manage this market risk, our subsidiaries use derivatives, including commodity futures contracts, swaps, forwards and options. We do not participate in speculative energy trading activity.

Commodity price risk resulting from derivative activities at our rate-regulated subsidiaries is limited and does not bear signification exposure to earnings risk, since ~~regulations~~our current regulatory mechanisms allow recovery of prudently incurred purchased power, fuel and gas costs through the ~~ratemaking~~rate-making process, including gains or losses on these derivative instruments. These changes are included in the GCA and FAC regulatory rate-recovery mechanisms. If ~~states should explore additional regulatory reform,~~these mechanisms were to be adjusted or eliminated, these subsidiaries may begin providing services without the benefit of the traditional ~~ratemaking~~rate-making process and may be more exposed to commodity price risk. For additional information, see "Results and Discussion of Segment Operations" in this Management's Discussion.

Our subsidiaries are required to make cash margin deposits with their brokers to cover actual and potential losses in the value of outstanding exchange traded derivative contracts. The amount of these deposits, some of which are reflected in our restricted cash balance, may fluctuate significantly during periods of high volatility in the energy commodity markets.

Refer to Note 8, "Risk Management Activities," in the Notes to Condensed Consolidated Financial Statements (unaudited) for further information on our commodity price risk assets and liabilities as of ~~September 30, 2021 or~~March 31, 2022 and December 31, ~~2020.~~2021.

Interest Rate Risk

We are exposed to interest rate risk as a result of changes in interest rates on borrowings under our revolving credit agreement, commercial paper program and accounts receivable programs, ~~and now-settled term loan,~~ which have interest rates that are indexed to short-term market interest rates. Based upon average borrowings and debt obligations subject to fluctuations in short-term market interest rates, an increase (or decrease) in short-term interest rates of 100 basis points (1%) would have increased (or decreased) interest expense by ~~$0.4~~$1.5 million and ~~$1.8~~$1.2 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and $3.2 million and $10.9 million for the three and nine months ended September 30, 2020,~~ respectively. We are also exposed to interest rate risk as a result of changes in benchmark rates that can influence the interest rates of future long-term debt issuances. From time to time we may enter into forward interest rate instruments to lock in long term interest costs and/ or rates.

Refer to Note 8, "Risk Management Activities," in the Notes to Condensed Consolidated Financial Statements (unaudited) for further information on our interest rate risk assets and liabilities as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

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

NiSource Inc.

Credit Risk

Due to the nature of the industry, credit risk is embedded in many of our business activities. Our extension of credit is governed by a Corporate Credit Risk Policy. In addition, Risk Management Committee guidelines are in place which document management approval levels for credit limits, evaluation of creditworthiness, and credit risk mitigation efforts. Exposures to credit risks are monitored by the risk management function, which is independent of commercial operations. Credit risk arises due to the possibility that a customer, supplier or counterparty will not be able or willing to fulfill its obligations on a transaction on or before the settlement date. For derivative-related contracts, credit risk arises when counterparties are obligated to deliver or purchase defined commodity units of gas or power to us at a future date per execution of contractual terms and

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

~~NiSource Inc.~~

conditions. Exposure to credit risk is measured in terms of both current obligations and the market value of forward positions net of any posted collateral such as cash and letters of credit.

We closely monitor the financial status of our banking credit providers. We evaluate the financial status of our banking partners through the use of market-based metrics such as credit default swap pricing levels, and also through traditional credit ratings provided by major credit rating agencies.

Certain individual state regulatory commissions instituted regulatory moratoriums in connection with the COVID-19 pandemic that impacted our ability to pursue our credit risk mitigation practices for customer accounts receivable. Following the issuances of these moratoriums, certain of our regulated operations have been authorized to recognize a regulatory asset for bad debt costs above levels currently in rates. We have now resumed our common credit mitigation practices in all jurisdictions as all moratoriums have expired. Refer to Note 7, "Regulatory Matters" in the Notes to Condensed Consolidated Financial Statements (unaudited) for state-specific regulatory moratoriums.

Other Information

Critical Accounting Estimates

For our annual goodwill impairment analysis performed as of May 1, 2021, we performed a qualitative "step 0" assessment and determined that it was more likely than not that the estimated fair value of the reporting unit substantially exceeded the related carrying valueA summary of our reporting unit. For this test, we assessed various assumptions, events and circumstances that would have affected the estimated fair value of the reporting units as compared to their baseline May 1, 2020 "step 1" fair value measurement. There have been no impairments to the carrying value of our goodwill during the periods presented.

~~Refer to Note 3, "Revenue Recognition,"~~critical accounting estimates is included in the ~~Notes to Condensed Consolidated Financial Statements (unaudited)~~Company's Annual Report on Form 10-K for ~~additional information about management judgment used in determining allowance for credit losses.~~

~~Refer to Note 12, "Variable Interest Entities,"~~the year ended December 31, 2021. There were no material changes made in the ~~Notes to Condensed Consolidated Financial Statements (unaudited) for additional information about management judgement used in determining how to account for our VIE.~~three months ended March 31, 2022.

Recently Issued Accounting Pronouncements

Refer to Note 2, "Recent Accounting Pronouncements," in the Notes to Condensed Consolidated Financial Statements (unaudited) for additional information about recently issued and adopted accounting pronouncements.

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NiSource Inc.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~For a discussion regarding quantitative~~Quantitative and qualitative disclosures about market risk ~~see “Management’s~~are reported in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Market Risk Disclosures.”"

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our chief executive officer and our chief financial officer are responsible for evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon that evaluation, our chief executive officer and chief financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that financial information was processed, recorded and reported accurately.

Changes in Internal Controls

There have been no changes in our internal control over financial reporting during the most recently completed quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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NiSource Inc.

PART II

ITEM 1. LEGAL PROCEEDINGS

For a description of our legal proceedings, see Note ~~15-B, "Legal~~15, "Other Commitments and Contingencies" "B-, Legal Proceedings," in the Notes to Condensed Consolidated Financial Statements (unaudited).

ITEM 1A. RISK FACTORS

~~Please refer to the~~The risk factors set forth in Part I, Item 1A of the ~~Company’s~~ Annual Report on Form 10-K for the year ended December 31, ~~2020, as~~2021 are supplemented bywith the following risk factor, which should be read in conjunction with the risk factors set forth in ~~Part II, Item 1A~~the Annual Report on Form-10-K.

Operational Risk

Aspects of the ~~Company's Quarterly Report on Form 10-Q~~implementation of our electric generation strategy, including the retirement of our coal generation units, are expected to be delayed and may not achieve intended results.

Our plan to replace our coal generation capacity by the end of 2028 with primarily renewable resources, as described in our 2018 Plan, is well underway, but we are facing challenges as described below. The 2018 Plan outlined the retirement of R.M. Schahfer Generation Station's four coal units by mid-2023, with a preferred replacement plan including wind, solar, and battery storage projects. The 2021 Plan that we submitted to the IURC calls for the ~~quarterly period ended March 31, 2021.~~replacement of our remaining coal generation units with a diverse portfolio of resources including demand side management resources, incremental solar, stand-alone energy storage and upgrades to existing facilities at the Sugar Creek Generating Station, among other steps. The precise timing of the retirements will be informed by regulatory and policy changes, our ability to maintain reliability of the system and our ability to secure replacement capacity. For additional information, see below and "Results and Discussion of Segment Operations - Electric Operations," in Management's Discussion and Analysis of Financial Condition and Results of Operations.

Recent developments, including macro supply chain issues and U.S. federal policy actions, have created significant uncertainty around the availability of key input material necessary to develop and place solar projects in service in the U.S.Solar industry supply chain issues include the Antidumping and Countervailing Duties Anti Circumvention Petition filed by a domestic solar manufacturer, the Uyghur Forced Labor Protection Act and Forced Labor Withhold Release Order, Section 201 Tariffs, and general global supply chain and labor availability issues.The most prominent effect of these issues is the significant curtailment of imported solar panels and other key components required to complete utility scale solar projects in the U.S. Any solar panels that are available are priced much higher than previously anticipated and the incremental cost may not be recoverable through customer rates. As a result of the challenges in obtaining solar panels, many solar projects in the U.S. have been delayed or canceled. As we are in the midst of a transition to a solar dominant electric generation portfolio, our projects are subject to the effects of these issues, and there is currently uncertainty around the timing of completion for our portfolio of projects under the 2018 Plan.We have received and are evaluating several notices of possible force majeure from developers in connection with the solar and storage projects. Depending on the outcome of these issues, developers and financing partners could seek to either modify the terms of or abandon the development of solar projects, which could negatively impact the planned in-service dates and cost estimates that have been approved by our regulators.

Our expectation has been that solar energy sources would be one of the primary ways in which we will meet our electric generation capacity and reliability obligations to the MISO market and reliably serve our customers when we retire our coal generation capacity. The high level of uncertainty surrounding the completion of our solar renewable energy projects creates significant risks for us to reliably meet our capacity and energy obligations to MISO and to provide reliable and affordable energy to our customers. Delays to the completion dates of our ten approved (or planned) solar projects are expected to impact our capacity position and our ability to meet our resource adequacy obligations to MISO. Delays to the completion dates of our projects could also include delays in the financial return of certain investments and impact the overall timing of our electric generation transition.Although we are not currently expecting delays to extend the completion dates of our six solar and storage BTA projects beyond the currently planned sunset of investment tax credits at the end of 2025, if such delays occur, they could impact the viability of the projects.

We are evaluating potential paths to mitigate these risks, including extending operations of the remaining two coal units at Schahfer from the previously planned retirement date of May 2023 to the end of 2025 in order to continue to have sufficient electric generation resources in our portfolio to meet our capacity and reliability obligations. Having additional flexibility in the timing of the exact date of the retirement will allow us to better manage the uncertainty in the timing of the completion of our renewable projects. We currently have a pending application with the EPA to continue operation of a coal ash pond that is tied

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ITEM 1A. RISK FACTORS

NiSource Inc.

to operation of Schahfer Units 17 and 18. The application is being updated to reflect extending operation of our coal ash pond from 2023 to the end of 2025, with the coal ash pond closing by October 2028. It is difficult to assess the likelihood that the EPA would approve extending the operation of our coal ash pond. In recent proposed EPA actions denying continued operation of coal ash ponds at other utilities, EPA said that coal ash ponds should cease receipt of CCR within 135 days of final EPA action unless certain conditions are demonstrated, such as potential reliability issues. We believe that we can continue to operate the two units to the end of 2025 while still meeting the CCR rule's final October 2028 deadline for pond closure.Extending the operation of the two remaining Schahfer coal units beyond 2025 would require substantial investment in infrastructure to process CCRs without the coal ash pond. We are also evaluating the ability to secure electric capacity from other resources in the event that one or more of our solar projects is not viable.

Furthermore, extending operations of the remaining two coal units at Schahfer from the previously planned retirement date of May 2023 may require us to acquire additional emission allowances for compliance with the EPA’s proposed interstate air pollution transport rule, also known as the “Good Neighbor” Plan, which was published in the Federal Register on April 6, 2022. We are currently evaluating the proposed rule. The cost to acquire additional emission allowances may be material.

As noted above, there are inherent risks and uncertainties in executing the projects that were outlined in the 2018 and 2021 Plans, both for what has been already executed and the additional capacity still planned to be secured in the future, including changes in market conditions, supply chain disruptions, regulatory approvals, environmental regulations, commodity costs and customer expectations, which are impeding our ability to achieve intended results and associated timelines. Changes in the cost, availability and supply of generation capacity are affecting the implementation of the results from the 2021 Plan. Advancements in technology in replacement resources may not become commercially available or economically feasible as projected in the 2021 Plan and the implementation execution may vary from that which has been communicated. Our future success will depend, in part, on our ability to successfully implement our long-term electric generation plans, to offer services that meet customer demands and evolving industry standards, and to recover all, or a significant portion of, any unrecovered investment in obsolete assets.

As noted above, we expect our electric generation strategy to require additional investment to meet our MISO obligations and may require significant future capital expenditures, operating costs and charges to earnings that may negatively impact our financial position, financial results and cash flows. An inability to secure and deliver on renewable projects is negatively impacting our generation transition timeline and may negatively impact our achievement of decarbonization goals and reputation.

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.

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ITEM 6. EXHIBITS

NiSource Inc.


(10.1)			First Amendment to the NiSource Inc. 2020 Omnibus Incentive Plan.* **

(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.

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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:

~~November 3, 2021~~May 4, 2022

By:

/s/ Gunnar J. Gode

Gunnar J. Gode

Vice President, Chief Accounting Officer and Controller
(Principal Accounting Officer)

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Jurisdiction	Moratorium in Place?	Regulatory Asset balance as of September 30, 2021 (in millions)		Regulatory Asset balance as of December 31, 2020 (in millions)		Deferred COVID-19 Costs
Columbia of Ohio	No	$	2.1	$	2.0	Incremental operation and maintenance expenses
NIPSCO	No	$	2.2	$	9.2	Incremental bad debt expense and the costs to implement the requirements of the COVID-19 related order
Columbia of Pennsylvania	No	$	6.5	$	5.4	Incremental bad debt expense incurred from March 13, 2020 through December 31, 2021, above levels currently in rates
Columbia of Virginia	No	$	1.4	$	—	Incremental incurred costs (including incremental bad debt expense), subject to an earnings test review
Columbia of Maryland	No	$	0.9	$	0.7	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


	Favorable (Unfavorable)
Changes in Operating Revenues (in millions)	Three Months Ended September 30, 2021 vs 2020		Nine Months Ended September 30, 2021 vs 2020
Revenues associated with the Massachusetts Business in 2020	$	(40.4)	$	(218.6)
The effects of colder (warmer) weather in 2021 compared to 2020	(1.3)		12.2
New rates from base rate proceedings and regulatory capital programs	18.8		79.4
Higher revenue due to the effects of resuming common credit mitigation practices	0.8		3.9
The effects of customer growth	0.1		5.1
Other	2.7		1.2
Change in operating revenues (before cost of energy and other tracked items)	$	(19.3)	$	(116.8)
Operating revenues offset in operating expense
Higher cost of energy billed to customers	32.3		145.5
Cost of energy associated with the Massachusetts Business in 2020	(6.3)		(108.1)
Operation and maintenance trackers associated with the Massachusetts Business in 2020	(5.2)		(36.4)
Higher (lower) tracker deferrals within operation and maintenance, depreciation, and tax	0.7		(6.0)
Total change in operating revenues	$	2.2	$	(121.8)