NiSource Inc (NI) — Q3 2025 Earnings Call Transcript

All right. Thanks, Dustin. Good morning and welcome to NiSource's Third Quarter 2025 Investor Call. Joining me today are President and Chief Executive Officer, Lloyd Yates, Executive Vice President and Chief Financial Officer, Shawn Anderson, Executive Vice President of Technology, Customer and Chief Commercial Officer, Michael Luhrs; and Executive Vice President and Group President of NiSource Utilities, Melody Birmingham. Today, we'll review NiSource's financial performance for the third quarter and share updates on operations, strategy, and growth drivers. We'll open the call for your questions after our prepared remarks. Slides for today's call are available in the Investor Relations section of our website. Some statements made during this presentation will be forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. Information concerning such risks and uncertainties is included in the Risk Factors and MD&A sections of our periodic SEC filings. Additionally, some statements made on this call relate to non-GAAP earnings measures. Please refer to the supplemental slides, segment information and full financial schedules for information on the most directly comparable GAAP measure and a reconciliation of these measures. With that, I'll turn the call over to Lloyd.

Thank you, Durgesh, and good morning, everyone. Let's begin on Slide 3. At NiSource, our mission remains clear and consistent: to deliver safe, reliable energy that drives value to our customers. The NiSource team has been focused on executing our premier business plan. We have advanced the work to develop data centers in Indiana and we refreshed the long-term outlook for our business. As a result of this, we've strengthened our financial commitments, demonstrated a disciplined and well-defined base business plan, and have capitalized on emerging data center opportunities. Through approximately $7 billion of GenCo investments, generating approximately $1 billion in savings to be flowed back to our existing customers. This business model serves as a scalable platform for growth. These commitments are backed by our efficient capital deployment and safe and reliable operations within our robust regulatory framework. The refresh of our strategic plan outlook enables updated financial guidance while reaffirming our confidence in delivering sustainable value and extends the company's growth targets. This supports a 6% to 8% annual adjusted EPS growth rate in the base business through 2030. We are now introducing an 8% to 9% adjusted EPS compound annual growth rate for the consolidated business through 2033. This transparent approach drives predictability and aligns our financial plan with long-term stakeholder value. Turning to our key priorities on Slide 4. This quarter, we secured approval of the GenCo model in Indiana and full ownership of the Templeton Wind asset, reinforcing the strength of our constructive regulatory foundation. Our ongoing focus to refine our operations through AI efficiency and continuous improvement initiatives supports our steadfast commitment to customer affordability, ensuring that our investments and operational decisions support our goal of keeping energy costs reasonable and predictable for the communities we serve. Today, we reported third quarter adjusted EPS of $0.19, bringing our year-to-date total to $1.38. We are reaffirming the upper half of our 2025 adjusted EPS guidance of $1.85 to $1.89. We're also announcing 2026 consolidated EPS guidance of $2.02 to $2.07. Despite these strong financial commitments, significant upside remains as we continue to invest in regulated infrastructure to better serve our communities. Developing projects supporting data center growth, onshoring of manufacturing, and economic development across our territories remains robust across the outlook of our plan. Some of that robust pipeline has been realized through the recently executed contract with a large investment-grade data center customer. Let's move to Slide 5. Our AI and digital strategy is measurably driving efficiency, scalability, and better experiences for employees and customers. Our AI work management intelligence continues to deliver sustained field productivity uplifts of over 20%, as measured through work hours achieved, less idle time, and less rework. Building on this success, we are expanding AI into additional high-value areas, including a new supply chain program to reinforce our focus on customer affordability. We are also piloting AI for system reliability and faster storm response, including average prediction and resource staging. Across the enterprise, we're employing AI through secure, role-based tools and strong governance. These initiatives are outcome-driven, along with our regulatory commitments, designed to capture sustainable O&M efficiencies while improving service quality. We're making deliberate investments in the people and capabilities required to meet the growing needs of our data center customers. Our ability to execute large-scale construction projects stems from a proven track record of project management, deep technical experience, and a culture of accountability. These efforts align directly with our commitment to operational excellence, ensuring we're not only prepared to deliver, but positioned to lead this next phase of growth. On Slide 6, we continue to make strong progress on our regulatory agenda. We're advancing our tracker programs in Ohio and Indiana, and our Pennsylvania rate case remains on track with a final order expected by year-end. We're also advancing initiatives that promote economic development. These efforts expand the customer base, which leads to more efficient distribution of fixed costs. Columbia Gas of Virginia's partnership in delivering natural gas to Eli Lilly and Company's newly announced $5 billion manufacturing facility near Richmond exemplifies a proactive approach to economic transition and infrastructure development. This state-of-the-art facility is projected to create 650 permanent jobs and 1,800 construction jobs, showcasing how strategic investments can drive both immediate and long-term economic benefits for local communities. Columbia Gas of Virginia's collaboration with state and local agencies underscores the commitment to attracting high-impact investments and building foundational energy infrastructure that supports ongoing economic growth. In parallel with these economic initiatives, NiSource remains focused on its energy transition strategy by advancing coal plant retirements, including Schahfer at the end of 2025 and Michigan City in 2028. The company continues to closely monitor executive orders and regulatory developments and is working with federal and state officials and MISO to ensure these transitions are managed responsibly. The goal is to provide the best outcomes for customers and communities, ensuring reliability and affordability. These efforts, together with investments in new facilities and infrastructure, reinforce NiSource's commitment to supporting both community prosperity and a sustainable energy future. The IURC's approval of GenCo unlocks a unique business model designed to protect existing customers, serve new customers with speed and flexibility, and maintain the financial integrity of NIPSCO. The GenCo strategy goes beyond simply providing power and establishes a framework that strengthens our system, supports local communities, and drives long-term sustainable growth for all stakeholders. Last month, we executed a data center contract with a large investment-grade customer to support significant gas and battery storage build-out in Northern Indiana, representing approximately $6 billion to $7 billion in capital investment. This project fully aligns with our strategic priorities, enabling affordability for customers, supporting economic development in the communities we serve, enhancing shareholder value for a strengthened financial profile, and prudent risk management. I want to emphasize that customer affordability remains central to our strategy. The special contract ensures that growth enhances value for our existing customers, going well beyond cost neutrality. The counterparty's use of the NIPSCO infrastructure will generate significant bill savings for our retail customers, while investments in grid modernization will enhance reliability and reduce long-term operational expenses. This project also delivers meaningful economic development benefits, including job creation, workforce development, and increased tax revenues that support public services and infrastructure across Indiana. Lastly, this agreement enhances our existing financial commitments and will diversify and strengthen NiSource's earnings, cash flow, and growth profile, as Shawn will touch on later. But first, I'll turn it over to Michael to walk us through the agreement in more detail.

Thanks, Lloyd. I'll begin on Slide 8. I'm happy to share this breakthrough infrastructure agreement driving significant energy development in Indiana. Due to confidentiality agreements and ongoing discussions with other parties, we are limited in the details we can share at this time, but we are excited to share these developments. Under this agreement, GenCo will construct 2 combined-cycle gas turbine power plants, each with a nominal output of 1,300 megawatts and 400 megawatts of battery storage capacity. Drawing on our expertise in the energy sector, these technology solutions were designed to ensure cost-effectiveness, long-term value, and meet system reliability standards. Our approach delivers benefits across the board, providing customer benefits, state-level energy planning and regulatory compliance, community economic development, shareholder benefits, and aligns with MISO's capacity requirements. This collaborative model ensures that all stakeholders, customers, the state, community, investors, and MISO are positioned for success. These assets will support transmission and substation infrastructure, representing a total capital investment of approximately $6 billion to $7 billion. The agreement outlines a multi-phase development plan with a clear demand-aligned ramp for efficient and scalable employment of resources. We plan to submit this special contract agreement to the IURC for a review before year-end and expect approval in the first half of 2026. The agreement is structured with a 15-year initial term providing long-term stability. Our returns will be generated under a fixed-rate contract structure with consistent capacity payments and pass-through treatment of certain costs. Termination protections also help mitigate early exit risk and further safeguard financial integrity. Furthermore, we have entered into an engineering, procurement and construction agreement with a joint venture between Quanta Infrastructure Solutions Group and Zachry Industrial for the development of the 2 GE Vernova state-of-the-art CCGT stations. Additionally, we have signed a separate EPC contract with Quanta to lead the construction of our advanced battery storage facilities, reinforcing our commitment and capability to deliver effective, reliable, and sustainable energy solutions for Indiana. We're confident in our ability to execute this project effectively, safely, and with minimal disruption to our existing operations. As Lloyd noted and as highlighted on Slide 9, affordability is central to our strategy, particularly in an inflationary environment where energy costs can pose significant challenges. This project has been carefully structured to uphold NiSource's commitment to customer affordability so that growth does not come at the expense of existing customers. NiSource has prioritized customer affordability by structuring a special contract that ensures NIPSCO retail customers are not financially responsible for the infrastructure costs associated with serving this large load customer. These protections apply both during the contract term and at its conclusion. This arrangement will allow for approximately $1 billion to be passed back to our existing NIPSCO electric customers, creating bill savings over the contract life. Through the construction and development of new assets, we are building a more resilient future-ready grid. Moving to Slide 10. This project drives meaningful economic development in Indiana, creating more than 2,000 jobs, spanning a range of skill levels and industries, and contributes to long-term employment opportunities. The boost to local and state tax revenues from an investment of this magnitude is tremendous, enhancing the overall value and sustainability of the community by supporting public services and infrastructure. Beyond direct financial contributions, the initiative promotes workforce development in our communities while also attracting top talent, energizing Indiana's economy and positioning the region for sustainable economic growth. We continue to see strong momentum from large load customers. Combined with the recent commission approval of the GenCo structure, we are unlocking a differentiated business model that protects these benefits and provides benefits to existing customers while enabling us to serve new large load customers with speed and flexibility. These developments give us high confidence in the pipeline, which Lloyd will speak to later. I'll now turn things over to Shawn.

Thanks, Michael. Good morning, folks. I'll start on Slide 11. As Lloyd and Michael have both highlighted, GenCo investments we plan to develop will enhance the value proposition our business delivers to its customers in Indiana and will enhance long-term shareholder value. This partnership represents an investment in inventory of approximately $7 billion, incremental to our refreshed $21 billion base plan capital expenditures forecast. Consistent with rate designs from our base business, GenCo's capital investments are designed to drive revenue and earnings growth immediately and will track the rate of deployed CapEx, which will bolster NiSource's financial profile. This partnership is projected to be accretive for NiSource shareholders in 2 key areas. First, over the initial term of the contract, the returns generated are forecasted to achieve a rate of return greater than NIPSCO's regulated rate of return. Second, the project is accretive to NiSource's earnings per share forecast in all years of the plan. Strong cash flow returns are forecasted from this project, which will provide a broad range of financing solutions to achieve 2 primary goals: one, maintain our commitment to credit quality and achieve a 14% to 16% FFO to debt in all years of our plan; and two, maximize the long-term value creation to shareholders by minimizing financing costs. GenCo investments are expected to strengthen NiSource's financial position by diversifying and increasing its earnings and cash flow potential while also establishing a new platform for long-term growth and development. Turning to Slide 12. We recognize the tremendous growth potential ahead and have carefully and diligently built comprehensive risk management protections into our plans to protect the long-term stability of our enterprise operations. Importantly, the contract provides for a fixed-rate structure, which mitigates exposure to dispatch, fuel, and merchant power risks, providing stable, predictable earnings and enhancing long-term planning confidence. To further safeguard value creation, the termination payment mechanisms will mitigate early exit risk and uphold financial integrity throughout the life of the contract. The contract includes certain cost-sharing arrangements designed to mitigate construction execution risk. The rate design is developed to allow for recovery of our currently projected construction costs over the agreement's term. We are confident that the provisions we've incorporated into this contract will enhance our financial flexibility and position NiSource for continued success. Looking ahead on Slide 13, we have a clearly defined path towards successful execution of this initiative, supported by key milestones. As announced last month, this data center contract is a strategic step forward in our long-term vision and approval of the GenCo model supports the speed to market customers need to ramp their services. The additional financial disclosures provided today extend our long-term business and financial plan and build upon a premium base business. Our future trajectory is enhanced through this project's multiyear development cycle and achieves full growth potential by 2032. Shifting gears, Slides 14 and 15 detail our third quarter adjusted EPS of $0.19 per share compared to $0.20 per share for the same period last year. Earnings benefited from constructive regulatory outcomes at NIPSCO Electric and Columbia operations. These gains were offset by depreciation from new assets placed in service, the impact of higher balances, long-term debt, and increased operating expenses. On Slide 16, we refreshed our 5-year capital expenditure plan outlook, starting with a base capital plan of $21 billion, which supports our 6-state traditional utility footprint. The refresh in our base capital plan is $1.6 billion larger than our prior base plan. CapEx increases are driven by several projects moving from our upside plan, including MISO long-range transmission Tranche 1, PHMSA compliance in Ohio, and customer transformation initiatives supporting the enterprise. In addition to the base plan investment, we are now introducing approximately $7 billion of data center investment at GenCo for a consolidated total of $28 billion of capital expenditures over the next 5 years. The magnitude of this new capital plan is substantial, signaling one of the largest investment cycles in NiSource's history. This significant increase, nearly 45% higher than the previous 5-year outlook, demonstrates the company's proactive response to evolving market demands and invests in safe and reliable energy systems to support our communities, especially as the sector approaches a generational opportunity driven by digital transformation across industries. Beyond the refresh in the base capital plan, we have also updated the upside capital portfolio of projects supporting our traditional utility operations. These projects now estimate at $2 billion of CapEx and reflect MISO D-LOL compliance projects, electric transmission investments, and system modernization and enhancement. These projects remain outside our current guidance, and once they reach our threshold to be included in our base plan, we will flow these through the full plan. As we assess market and system requirements, new long-term investments arise beyond our base and upside plans. These are highlighted on Slide 17. All of these projects require further development, and we are actively pursuing their commercialization. Consistent financial execution has strengthened our balance sheet, allowing NiSource to be flexible in capital allocation and be opportunistic to invest more in our system to enhance safety and reliability when necessary. Our updated long-term financial commitments are shared on Slide 18, which reflect the increased investment opportunity we are now positioned to access. There is no change to our current year projection. We are reaffirming 2025 adjusted EPS guidance of $1.85 to $1.89, expecting to achieve results in the upper half of this range. As Lloyd highlighted earlier, we have bifurcated the cash flow returns associated with our existing utility operations and are defining those through our base plan guidance. We are introducing new disclosure for the cash flow profile of the GenCo business model, now that it has been approved by the IURC. This new investment thesis will combine with the base plan guidance to produce consolidated financial returns and guidance range. We expect our base plan adjusted EPS to grow annually from 2026 through 2030, incorporating the refreshed financials in our plan. This provides the foundation for our 2026 guidance range, which we are initiating, consolidated adjusted EPS of $2.02 to $2.07 per share. Included in this range is $0.01 to $0.02 per share coming from the development of GenCo-related assets. Beyond 2026, we expect our base plan to continue to grow annually at 6% to 8%, which is fueled by a continuation of the 8% to 10% rate base growth planned across the next 5 years to support safe and reliable operations across our 6-state utility portfolio. Similar to 2026, we are now incorporating returns associated with new data center investments, which now produce a forecasted consolidated rate base growth of 9% to 11% over the same 5-year horizon. The returns associated with these investments provide for a consolidated adjusted EPS CAGR of 8% to 9% through 2033. Importantly, we will continue to rebase our annual base plan adjusted EPS growth guidance off of actual results, allowing for outperformance to compound across the plan horizon. We are committed to minimizing the financial impact that our safety, reliability, and compliance investments have on our customers. The GenCo structure enables an increase in capital investment without those expenditures flowing to existing customers. In addition, the customer flowback mechanism from this contract refunds system costs to customers while eliminating risk associated with fuel costs for large load generation assets. And finally, operational excellence and innovation in our operations project flat O&M over the life of the plan, all of which help support annual bill increases of less than 5% across NiSource. Additionally, we remain committed to a 14% to 16% FFO to debt in all years of the plan. Slide 19 details our financing plan. Our credit metrics have continued to improve, and strong operational cash flow continues to support capital investments. Long term, GenCo will further strengthen our balance sheet while we maintain financing flexibility to meet our strategic goals. We're excited to expand our partnership with Blackstone Infrastructure Partners through GenCo. As minority interest holders, Blackstone will contribute 19.9% of all investments, supporting both current initiatives and future growth opportunities. Blackstone has committed $1.5 billion in equity, which reinforces our capital structure and positions GenCo for long-term success in meeting the evolving energy demands of data centers. Efficient financing plans help to avoid financing drag and minimize public equity dilution to our shareholders, thereby maximizing overall return. We continue to favor utilization of our ATM structure. As of September 30, we have settled all forward agreements under the ATM, with approximately $50 million of remaining capacity in the program. We expect to issue $300 million to $500 million of maintenance ATM equity annually across the 5-year plan to support our consolidated capital expenditures. Turning to Slide 20. The company's adjusted EPS trajectory reflects strong and consistent execution, with adjusted EPS increasing from $1.37 in 2021 to a projected adjusted EPS of $1.88 this year based on our guided midpoint, representing an impressive 8.2% CAGR over the 5-year period. This performance underscores the resilience of our base plan, which has historically outperformed expectations and is projected to sustain 6% to 8% annual adjusted EPS growth through 2030. With that in mind, I'll point out the midpoint of our 2026 consolidated adjusted EPS guidance range of $2.02 to $2.07 represents an 8.8% growth from our 2025 midpoint. Building on this proven foundation, the introduction of GenCo adds a meaningful layer of growth, contributing an incremental $0.10 to $0.15 per share in 2030, growing to $0.25 to $0.45 per share through the horizon for a consolidated adjusted EPS CAGR of 8% to 9%. The GenCo EPS contribution range incorporates the recently announced data center agreement and contemplates multiple customers at the top end. Our strategic negotiation pipeline of 1 to 3 gigawatts, which Lloyd will touch on momentarily, offers us the opportunity to exceed the top end of the range. We have consistently demonstrated strong execution and growth as reflected on Slide 21. Our dedication to customers, investors, employees, and all stakeholders remains at the core of what we do. Strong execution of our base plan, including operations, financing, regulatory and prudent investment strategies position us favorably as we step into 2026 and beyond. The value proposition NiSource continues to offer investors is diversified and regulated utility assets with the opportunity to invest in both programmatic gas infrastructure and the long-term energy transition story of a fully integrated electric business. These elements have been core to our story and the emerging opportunity to support economic development, onshoring, and data center development truly differentiate our value proposition relative to many alternatives in the market today. And with that, I'll turn things back over to Lloyd.

Thank you, Shawn. We are proud to have secured a data center contract with a creditworthy commercial partner, positioning us to deliver on all of our key strategic objectives as outlined on Slide 22. Our teams engaged across an array of stakeholders to protect our retail customer base while expanding shareholder investment opportunities, diversify our earnings profile with stable, predictable contracted earnings and cash flow, capitalize on load growth and data center opportunities, which validates our growth thesis in Northern Indiana, and establish a customer-centric business model that supports our communities. This partnership strengthens our competitive position as we continue negotiations with additional prospective customers and advance our strategy to deliver long-term value to Northern Indiana and our stakeholders. Finally, moving to Slide 23. Our GenCo strategy is underpinned by a robust and growing pipeline that positions us for long-term success in the data center market. This commercial partnership represents the proof set of the generation capacity opportunity we've highlighted for the past year. We have secured data center load that will be backed by 3 gigawatts of generation capacity, with negotiations progressing on an additional 1 to 3 gigawatts of projects from new and existing customers, creating a clear path to scale. Looking ahead, developing opportunities could expand this pipeline even further by an additional 3 gigawatts, reinforcing our ability to deliver sustained growth. This opportunity showcases the strength of our team and the precision of our strategy. I'm incredibly proud of the discipline and focus that has brought us to this point. Our team's operational excellence, customer focus, and accountability continue to set NiSource apart. And I'm confident it will be the driving force behind the successful execution of this initiative. With that, we'll open up the line for questions.

So just without going into specific names, can you just maybe speak to the quality of the customer kind of behind the agreement? So is it a true hyperscaler, counterparty or colocator? And now that you've secured this initial deal, how are you sort of thinking about the broader pipeline as we think about that 1 to 3 gigawatts in negotiations? So the broader counterparty quality and what it could mean to the CAGR?

So what I will say is this is a very large investment-grade data center customer that will be served in front of the meter via the NIPSCO transmission network. As mentioned earlier, we're going to build 3,000 gigawatts, which will be 2.4 gigawatts of load. I think as we think about our pipeline, it was mentioned earlier that the unlock is a new business model. We've got the GenCo model set for September 2024. You’ve seen through this transaction a blueprint of what we're going to execute going forward. So as we look at negotiating with subsequent counterparties, we've shown you a blueprint of all the things we're going to put in place before we announce this to the market. And I think the team knows that we've aligned the organization to focus on these things, and we have a path toward execution on all of these subsequent customers, and we're excited about it.

Yes, sure. Thanks, Shar. Appreciate the question. So we've been actively engaged with our rating agencies while we've been developing the strategy. And candidly, we think that the thoughtful risk management provisions in the contract really provide protection that's quite similar to our existing base business. We don't believe a change in thresholds is warranted or will occur. Our current guidance is 14% to 16% in all years of our plan, and our downgrade threshold is 13%. So there's already adequate cushion baked in, and we think strengthening in the business and the cash flow profile should continue that trend.

I just wanted to ask if you can just kind of talk a little bit about the $0.25 versus the $0.45 range and what puts you at the high end or low end of that contribution? And I just wanted to confirm that the 3 gigawatts in strategic negotiations are incremental to this figure.

Yes, sure. So to retain our competitive advantage, we can't disclose the individual customer contributions. However, the GenCo structure adds a meaningful layer of growth that we've highlighted here. The $0.25 to $0.45 through 2033 contemplates multiple customers at the top end. But our full strategic negotiation pipeline, 1 to 3 gigawatts would outperform the top end of that range. Depending on customer preferences, choice of technology, and timeline for development, it can move around a fair amount, which is why we've got a broader range. The squaring is that the customer we announced in September fits within that range, and then the top end of that range would include some portion of the advanced negotiations with the ability to outperform the range in total if all that were to be unlocked. Yes. All of the earnings guidance we provided today reflects the total cost of financing, which includes all equity, all debt, and all noncontrolling interest related to minority interest investors. This is already included in the earnings per share contribution. The $300 million to $500 million equity represents the total equity in our guidance range for NiSource, which supports the full $28 billion of capital expenditures we announced today. All of that is included in the $300 million to $500 million annually of ATM equity from NiSource.

Great update, everyone. If I may dive a bit deeper, could you explain the $0.25 to $0.45 range? Specifically, is this mainly due to the initial $7 billion in capital expenditures over the first five years? How should we view the overall capital expenditures needed to achieve this? Additionally, considering the potential upside of 1 to 3 gigawatts, what would the earnings profile entail? Would it be as straightforward as doubling the $0.25 to $0.45 range for discussion purposes? How can you provide clarity on the sensitivity around this?

Answer the same question, Shawn.

So the CapEx that we projected in our 5-year plan ranges from $6 billion to $7 billion. That supports GenCo development. That includes all of the capital necessary to support the customer we announced in September. It also reflects some capital allocation that allows us to competitively compete for these large load opportunities and position us to access the strategic negotiations highlighted earlier. We've got no incremental disclosure guiding within the range of $0.25 to $0.45. That $0.25 to $0.45 of earnings power is reflective of the customer we announced in September, and on the higher end would reflect additional strategic negotiations flowing into it but is not required for us to reach that range.

So the part I'm going to talk to is about the 3 gigawatts and the opportunity in the pipeline. The key point here is that we have the ability to move quickly on the regulatory model, we have flow back to customers, we have the engineering, procurement, and construction partnership lined up, we have long lead time equipment secured, and we can execute that with minimal disruption to existing operations. That gives us a speed to market and execution that instills high confidence in our ability to pursue this 3-gigawatt pipeline. We feel very good about it from the aspect of executing it, but we will do that in a disciplined manner that supports our balance sheet, customers, and overall accretion.

As we think about future customers, the choice of technology and construction timeline will matter and have an impact on how it flows within the range. Some assets are quicker to construct such as batteries that could accelerate construction timelines versus others like gas technologies. We do see an opportunity to accelerate customer demand ahead of even 2033. So the $0.25 to $0.45 CAGR does allow for upside if we have the ability to accelerate customer demand or construction timelines.

Yes. I think Indiana is open for business. If you talk to the governor's office, they like these economic development opportunities. They are focused on affordability. The idea that this transaction flows back a little over $1 billion to customers over the contract period reflects a positive relationship. They are interested in more opportunities. Affordability will be at the forefront, and we are very focused on that, and developing this GenCo model helps with that significantly.

Just wanted to start on the learnings and business expertise gained in the first data center contracting announcement. I know that GenCo probably plays a big role here. But just thinking about the keys to getting this project done and then how you guys can build on that and go ahead and execute additional contracting announcements going forward.

Michael, why don't you handle this one?

What I would say is that we feel this really creates a strategic platform for growth for us. Reflecting on comments, we have a 2,400-megawatt system now. This will double that system in load. We're building 3,000 megawatts of generation to support this. When you think about the business learnings, we've created a foundation and a platform. Through the regulatory, EPC, long lead time equipment, and ability of execution, it heightens our ability to execute on future opportunities, and that sets us up in a strategic way to develop the remainder of that pipeline. Yes. We started out with the fundamental pillar of the GenCo structure: maintain NIPSCO's financial integrity. We've given thoughtfulness to the risk profile of new investments. We've built protections into various contracts to address risks associated with multiple factors, including cost-sharing provisions.

Could you discuss the return profile or capital structure assumptions related to the GenCo?

Yes, thanks, Bill. We can't disclose the exact ROE as it's confidential with the customer. We've not disclosed the targeted return for GenCo, only that we expect it to achieve an overall return realized greater than NIPSCO's regulated rate of return. We sought and were approved by the IURC, for some level of flexibility in the capital structure for GenCo. Given the construction development cycles to support the speed to market for new customers, we'll strive to capitalize GenCo in a manner to do 3 things: support our existing financial commitments, safely and reliably support cash flows for construction and asset development, and maximize long-term value to our shareholders by minimizing dilution and financing friction.

Okay. And then just a question around the timing. You talked about some opportunities for upside here and pulling forward or accelerating maybe the ramp. It looks like most of the capital based on the CapEx slide you have, I think about $6.4 billion of the gross CapEx for GenCo is spent by the end of '30, but we're talking about full ramp by 2033. Can you speak to that timing differential of when most of the capital appears to have been invested versus the realization of the earnings?

Yes, Bill. The majority of the CapEx occurs between 2025 and 2030. Additional work will complete outside our 5-year plan horizon, which is critical because it helps us finalize energization steps necessary for the customer to conclude their ramp, which will finalize in 2032. The contract provides for a fixed-rate structure, which provides stable, predictable earnings and enhances long-term planning confidence. However, it's key to connect the conclusion of the construction timeline to energize our customers at the highest rate possible.

Okay. And to clarify, the upside from ongoing negotiations can be realized within the same time period. Is it practical to assume some of this could be stood up within this window through '33 in terms of additional capacity?

Yes, it is very practical.

Congrats. So just maybe this is a question more on both the kind of earnings and cash flow profile of GenCo. If I take the incremental investment net to NiSource and just did a normal equity and return and such, it would be, I think, maybe more than $0.10 to $0.15 by 2030. But you're also issuing less equity than normal and such. Could you just talk to how the contract has been structured to balance those 2? Also, how much more is needed to get to this 2033 in terms of capital investment, if anything?

Shawn?

Yes, Steve, the $7 billion guided CapEx total to support GenCo is sufficient to develop through 2032 and would be enough capital to support the $0.25 to $0.45 through that horizon. If the construction could occur faster, that could create upside for us as well. No incremental CapEx is necessarily included outside the 5-year capital guidance, but any upside would occur from that additional CapEx not reflected.

Yes. Sorry, Shawn, I'm going to pile on here. So just to think of it a bit more simply, if we look at the gigawatt addition and then kind of the EPS accretion, is roughly $0.08 per gigawatt a good rule of thumb as we think about this?

We have no incremental guidance on earnings per share per gig because customer technology choice, construction timelines will have an implication there.

Fair. Shooters got to shoot. So as we consider the procurement and the EPC contract associated with it, when thinking of the Quanta contract, is that strictly for the first 3 gigs? Or do you have the ability to upsize depending on opportunity?

Yes. We've set up the structure and partnership to be able to upsize as we grow. The initial agreements cover the 2 CCGTs and 400 megawatts of batteries and associated infrastructure.

We've partnered with Quanta and Zachry to execute subsequent projects much faster than the traditional process of RFPs, which take a long time. Our collective goal is to quickly meet customer needs in an agile way, and this partnership enables that.

Perfect. And then if I could just squeeze one more in quickly. On the affordability theme, is the pitch to the government essentially that as you grow this, you could provide incremental savings to end consumers?

That is our objective. As we add new customers who utilize the transmission grid, we should continue to flow back savings to our retail customers, which will help with affordability.

I'm just going to go back to the cash flow profile one more time. In the contract, is there any cash inflow from the customer before they start ramping? And can the financing be more short-term in nature to cover 3 to 4 years of high cash outflow for the CapEx and then paid back once the customer starts paying?

You want to take that, Shawn?

Yes, the contract has been structured to prioritize cash flow to aid in the construction timelines. The total financing forecast includes cash inflow before full ramping up.

Batteries provide reliability and quick response capabilities, which are essential for system reliability. Our development continues to require a diversity of assets, from renewables to batteries to gas assets. This flexibility strengthens the overall system.

It sounds like part of the $7 billion is either transmission or distribution. Is that all going to be spent at GenCo or is some of that going to be spent at NIPSCO?

Yes, for guidance purposes, we're going to segment things into the GenCo segment.

Right. But is the actual spending taking place partly at the utility and partly at the GenCo?

Yes, that is correct.

Can you give us an idea of how much of the $7 billion would be allocated specifically for generation? I assume it's the majority, but...

It is the majority, but we're not in a position to guide within that range.

Can you give us an idea of the cost per kW of the CCGTs or the battery?

That's competitive information as well.

The 8% to 9%, is that essentially inclusive of the $7 billion, and the lower 6% to 8% is excluding that $7 billion?

Yes. Our base plan guidance reflects a 6% to 8% annual adjusted earnings per share growth that our base plan has achieved in the past and is expected to grow annually through 2030. The consolidated CAGR reflects the $7 billion in CapEx and returns associated with this customer. That provides the $0.25 to $0.45 inside that 8% to 9% CAGR.

Can you provide sort of the load that goes with each of the EPS data points that you're identifying for the GenCo So I guess it would be for this new customer?

Unfortunately, we cannot provide that information.

Maybe a last question. In the GenCo proceeding, some intervenors were looking to share returns above NIPSCO's allowed return on equity. Is there a similar sharing mechanism that was ultimately contemplated as part of the GenCo approval? Or is that yet to be determined as you go through individual contracts?

We'll submit the contract for this customer by year-end. In that contract, there's a flowback mechanism of over $1 billion going back to our retail customers. There's no sharing of returns.

Just regarding the decision to keep on Blackstone as a 20% stakeholder in GenCo. How much of consideration was retaining 100% of the business and those earnings against insulating some of that financing risk?

We believe Blackstone is the strongest long-term partner for GenCo. They provide a robust platform for future investment, support for the state of Indiana. Their commitment not only includes $1.5 billion of equity, but also the ability to grow these projects, reducing our overall financing needs, and reinforcing our balance sheet. It lowers our cost of capital and offers diversification from traditional capital markets, providing flexibility that drives greater value for our shareholders. Across the plan horizon, about 50% of the CapEx portfolio is natural gas investment. About 25% is related to NIPSCO traditional electric operations and about 25% ends up being GenCo support on the generation build-out predominantly. 2029 approaches some D-LOL compliance requirements necessary for generation investments, which explains the larger investments in that year, along with PHMSA compliance requirements at Columbia Gas of Ohio and MISO long-range transmission which also starts in '29.

Thank you for your interest in NiSource. We're excited about this period of time of growth in our company and appreciate your questions and investments. Thank you.