NiSource (NI) Q1 FY26 earnings call: guidance and Q&A

What gives confidence in converting the 1-3 GW strategic negotiations bucket to 3 GW?

Lloyd Yates stated that signing ~4 GW to date, coupled with current engagement with multiple counterparties and strong demand, supports confidence in the 3 GW pipeline. The Genco model offers a compelling competitive advantage.

“To date, we've signed approximately 4 gigawatts of capacity per day to the centers when you couple that with our current engagement with multiple counterparties and strong demand, I think those facts support our confidence in advancing the 3 gigawatts of pipeline opportunities that are in active negotiations.”

asked by Andrew Cadaivi · answered by Lloyd Yates

How does NiSource earn on market capacity purchases given the capital-light construct for incremental hyperscaler load?

Shawn Anderson explained that earnings are created by looking at the total capacity, its cost, and an appropriate risk-adjusted return. This includes both capacity purchases and asset construction, with the net creating the EPS.

“As you mentioned, some of that is through capacity purchases. Some of that will be through constructing assets. And the net of that is what we guide to in the Genco guidance.”

asked by Andrew Cadaivi · answered by Shawn Anderson

How will the resource mix for additional megawatts evolve, and is earnings accretion linear or does it improve with Genco scale?

Shawn Anderson stated that earnings accretion is not linear but project-specific, driven by customer needs and timing. NiSource aims to find the most attractive and cost-effective resources. Lloyd Yates added that the Genco model allows for bespoke solutions.

“I don't think it's linear. I do think it's project-specific and largely driven by what a customer needs and when they need it by.”

asked by William Appicelli · answered by Shawn Anderson

How is NiSource interpreting the recent Governor's letter in Pennsylvania and its impact on future rate case strategy and investment?

Lloyd Yates stated active engagement with stakeholders to respond to the letter. He noted the constructive regulatory outcome last year and the flexibility of the 5-year financial plan to adapt. The company will emphasize safety, federal/state requirements, and maintaining a strong balance sheet.

“So Steve, right now, I'd say we're actively engaged intensively with all the stakeholders as we develop a response to Governor superiors letter.”

asked by Steven Fleishman · answered by Lloyd Yates

How is the increased Genco EPS guidance split between rate base/own gen vs. contracts, and will NiSource own more generation over time?

Lloyd Yates and Michael Luhrs indicated that NiSource will likely own a significant amount of the generation for bespoke solutions, focusing on contracted generation capacity to avoid commodity risk. Shawn Anderson clarified that the model doesn't strictly rely on return on rate base, allowing monetization of capacity attributes without necessarily owning all assets.

“I would look at it as we own effectively all of it when we're doing it. We are bringing it into that portfolio to serve those customers in a holistic fashion with speed to market.”

asked by Julien Dumoulin-Smith · answered by Michael Luhrs

Does the IURC need to approve new assets or contracts for the Genco pool, or can NiSource serve data centers with assets/purchases without separate regulatory approval?

Lloyd Yates explained that Genco is a regulated entity, and special contracts with the IURC for approval include information on assets being added. While a separate CPCN isn't required, the asset information is typically within the special contract, which the IURC approves.

“As we file those special contracts with the IURC 4 approval, we do provide them with information relative to what assets are being added to the system.”

asked by Travis Miller · answered by Lloyd Yates