10-K: NiSource Reports Strong 2025 Growth, Advances Data Center Strategy

NiSource Inc. reports increased net income and significant infrastructure investments in 2025, driven by successful regulatory outcomes and strategic expansion into data center services.

Summary

• Net Income attributable to NiSource increased to $929.5 million in 2025, up from $760.4 million in 2024.
• Basic Earnings Per Share rose to $1.96 in 2025, compared to $1.63 in 2024.
• Total Operating Revenues reached $6,642.2 million in 2025, an increase from $5,455.1 million in 2024.
• Operating Income for 2025 was $1,835.3 million, up from $1,455.5 million in 2024.
• Invested $1.6 billion in infrastructure modernization during 2025, including replacing 256 miles of distribution main and service lines, 45 miles of underground cable, and 1,656 electric poles.
• Added 24,000 customers across the Columbia and NIPSCO operating segments in 2025.
• Advanced the Data Center strategy by executing the ADS Contract, under which NIPSCO will provide electric service to ADS, procuring power from GenCo, with capacity commitments increasing to 2,400 MW by the end of 2032.
• GenCo plans to construct 400 MW of new battery storage and a new power generation facility consisting of two 1,300 MW Combined Cycle Gas Turbines (CCGTs), with an estimated aggregate cost of approximately $7 billion for these Contract Assets.
• The R.M. Schahfer coal facility was ordered by the U.S. Secretary of Energy to continue operating for 90 days through March 23, 2026, due to an energy emergency.
• Received orders for four rate cases in 2025, including Columbia of Maryland, Columbia of Pennsylvania, Columbia of Virginia, and NIPSCO Electric.
• Concluded the second and third phases of a Work and Asset Management (WAM) Enterprise Resource Planning (ERP) program, covering all gas distribution operations and generation assets.
• Forecasted capital investments for 2026-2030 include approximately $21.0 billion for the base business (exclusive of ADS Contract investments) and $7.0 billion for the Contract Assets related to the ADS Contract.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong report, highlighting significant financial growth, strategic expansion into high-growth data center markets, and continued commitment to infrastructure modernization and environmental goals, despite some operational challenges and substantial capital requirements.

Positives

• Net Income attributable to NiSource increased by $169.1 million (22.2%) year-over-year, demonstrating strong financial performance.
• Basic Earnings Per Share increased by $0.33 (20.2%) year-over-year.
• Total Operating Revenues increased by $1,187.1 million (21.8%) year-over-year, driven by higher revenues net of cost of energy.
• Operating Income increased by $379.8 million (26.1%) year-over-year.
• Successfully invested $1.6 billion in infrastructure modernization in 2025, enhancing safety and reliability.
• Achieved customer growth of 24,000 across its Columbia and NIPSCO operating segments.
• Secured favorable regulatory outcomes for four rate cases in 2025, supporting cost recovery and investments.
• Significantly advanced the data center strategy by executing the ADS Contract with Amazon.com, Inc.'s subsidiary, securing a large customer and a substantial future revenue stream.
• The GenCo Minority Interest Transaction with Blackstone Investor provides up to $1.325 billion in additional capital contributions over seven years, de-risking large capital projects.
• Maintained ISO 55001 Asset Management certifications and American Petroleum Institute Recommended Practice 1173 for its Safety Management System, underscoring commitment to operational excellence and safety.
• Reduced Scope 1 Greenhouse Gas (GHG) emissions by approximately 72% from 2005 levels as of the end of 2024, progressing towards the Net Zero Goal.
• Increased its revolving credit facility availability from $1.85 billion to $2.50 billion and extended its termination date to December 2030, enhancing liquidity.
• Maintained investment grade credit ratings from S&P (BBB+ Stable), Moody's (Baa2 Stable), and Fitch (BBB Stable).

Negatives

• The planned retirement of the R.M. Schahfer coal facility was delayed by a U.S. Secretary of Energy emergency order, requiring its operation through March 23, 2026.
• Total Operating Expenses increased by $807.3 million in 2025 compared to 2024, including higher operation and maintenance expenses ($355.1 million increase) and depreciation and amortization ($159.4 million increase).
• Higher long-term debt interest contributed to increased total other deductions, net in 2025.
• NIPSCO Operations experienced an $11.9 million increase in expenses related to uncollectible customer accounts.
• The Indiana Utility Regulatory Commission (IURC) initiated an investigation into the accuracy of NIPSCO's gas meters in November 2025.

Risks

• Inability to execute business plan or growth strategy, including utility infrastructure investments and business opportunities.
• Operational hazards and risks in distribution, transmission, and generation activities, including potential public safety risks.
• Potential operational impasses or litigation from Joint Venture arrangements involving third-party investors.
• Failure to adapt to advances in technology, including alternative energy sources, and manage related costs, which could reduce competitiveness.
• Increased dependency on technology and potential failure of systems hindering business operations.
• Aging infrastructure leading to disruptions, increased capital expenditures, and maintenance costs.
• Inability to obtain insurance on acceptable terms or at all, or insufficient coverage against significant losses.
• Delays in implementing the electric generation strategy, including coal unit retirements or new resource additions, potentially not achieving intended results.
• Construction and supply risks for capital projects and programs, including the $7 billion Contract Assets for data centers.
• Fluctuations in weather, gas and electricity commodity costs, and economic conditions impacting customer demand.
• Inability to obtain an adequate, reliable, and cost-effective fuel supply to meet customer demand.
• Failure to attract, retain, or re-skill a qualified workforce and maintain good labor relations.
• Failure to effectively manage new initiatives and organizational changes.
• Actions of activist stockholders negatively affecting business and stock price.
• Substandard performance or quality by third-party suppliers and service providers.
• Cyber-attacks or security breaches on technology systems, including operational disruptions and loss or misuse of confidential information.
• Failure to comply with cybersecurity laws and regulations and the resulting impact on reputation and business.
• Impacts of natural disasters, acts of terrorism, acts of war, civil unrest, accidents, public health emergencies, or other catastrophic events disrupting operations.
• Exposure to significant reputational risks, potentially leading to loss of cost recovery, increased litigation, and negative public perception.
• Physical impacts of climate change and the transition to a lower carbon future materially adversely affecting results of operations.
• Operational and financial risks and liabilities associated with implementing and achieving carbon emission reduction goals, including the Net Zero Goal by 2040.
• Substantial indebtedness ($16,213.5 million as of December 31, 2025) could adversely affect financial condition.
• A drop in credit ratings could adversely impact cash flows, results of operation, financial condition, and liquidity.
• Adverse economic and market conditions, including increases in inflation or interest rates, recession, or changes in investor sentiment, could materially and adversely affect business.
• Most revenues are subject to regulation and exposed to the impact of regulatory rate reviews and proceedings.
• Actions of regulators and legislators could result in outcomes that adversely affect earnings and liquidity.
• Business operations are subject to economic conditions in certain industries (e.g., steel).
• Exposure to payment risk from customers and non-performance risk from suppliers or counterparties.
• Dependence on cash generated by subsidiaries to meet debt obligations and pay dividends.
• Capital market performance and other factors may decrease the value of benefit plan assets, requiring significant additional funding and impacting earnings.
• Any future impairments of goodwill could result in a significant charge to earnings and negatively impact compliance with certain contractual covenants.
• The outcome of legal and regulatory proceedings, investigations, inquiries, claims, and litigation may have a material adverse effect.
• Failure to comply with changes in, or new interpretations of, various federal, state, and local laws, regulations, tariffs, and policies.
• The cost of compliance with environmental laws and regulations, and associated liabilities (e.g., CCRs, GHG emissions), could be significant and may not be recoverable.
• Changes in tax laws or their interpretation, and challenges to tax positions, could adversely affect financial results.
• Data center growth in service territories, while providing opportunities, presents significant financial, operational, and regulatory risks.
• Construction delays, cost overruns, or performance issues with Contract Assets for data centers could reduce returns under the ADS Contract or other future contracts and require additional financing.
• The terms and availability of the significant additional financing required to construct data center assets.
• Pursuit of the partnership with ADS creates significant opportunity costs and reduces strategic and financial flexibility in the near term.
• The return structure and risk profile of the ADS Contract and any future data center contracts will differ from traditional utility operations.
• Significant customer concentration risk with ADS, including its right to terminate for convenience or reduce committed capacity.
• Increased stock price volatility as a result of factors outside the company's control, such as slowdowns in AI adoption or changes in data center customer financial positions.

Future Outlook

NiSource expects its data center operations to continue to grow, with forecasted capital investments of approximately $21.0 billion for its base business and an additional $7.0 billion for Contract Assets related to the ADS Contract during the 2026-2030 period. The company is committed to achieving net zero GHG emissions by 2040, primarily through retiring coal-fired generation, modernizing gas infrastructure, and deploying advanced leak-detection technologies. The Michigan City coal facility is scheduled for retirement by the end of 2028, and a new 400 MW natural gas peaking generation facility is under construction to support the retirement of existing vintage gas peaking facilities by the end of 2028. The Templeton wind project is expected to be in service in 2027. The company also plans to advance other lowor zero-emission energy resources and technologies, such as hydrogen and renewable natural gas.

Management Comments

• Our business strategy focuses on providing safe and reliable service through our core, rate-regulated, asset-based utilities, with the goal of adding value to all of our stakeholders.
• We remain committed to the advancement of our SMS for the safety of our customers, communities and employees.
• NiSource continues to maintain its certification to the American Petroleum Institute Recommended Practice 1173, which serves as the guiding practice for our SMS.
• In 2025, NiSource successfully maintained its ISO 55001 Asset Management certifications through LRQA, a global leader in engineering and technology services. These certifications reaffirm our unwavering commitment to safety for our employees and partners, customers, and systems and highlight our continued dedication to operational excellence and the integrity of our SMS.
• We believe we are, in all material respects, in compliance with applicable laws and regulations at both the state and federal level and do not expect future compliance requirements to have a material impact on our capital expenditures, earnings, or competitive position.
• We believe data center development can enhance our local tax base, diversify the employment base across the state of Indiana, and provide greater value to existing customers and shareholders.
• We continually evaluate ways to effectively manage the potential power demand, generation sources, and transmission capabilities to meet potential further load growth from additional data center customers, while at the same time focusing on our environmental goals.
• We plan to move as efficiently as possible while maintaining the integrity of our commercial, planning, regulatory, procurement and operational execution processes.
• 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 a competitive and attractive appeal for potential recruits.

Industry Context

StockSavvy.ai notes that NiSource's aggressive pursuit of data center contracts, exemplified by the ADS Contract and planned $7 billion investment, aligns with a broader industry trend of utilities adapting to significant load growth from hyperscale data centers, particularly in regions with favorable energy costs and infrastructure. The company's focus on renewable generation and battery storage for these new loads also reflects the increasing demand for sustainable energy solutions from large tech clients. The emergency order to keep a coal plant operational highlights the ongoing tension between energy transition goals and grid reliability challenges, a common theme across the U.S. utility sector. NiSource's strategic partnerships, like the GenCo Minority Interest Transaction with Blackstone, are a common approach for utilities to de-risk large capital projects and leverage external capital and expertise in complex, capital-intensive ventures.

Comparison to Industry Standards

• NiSource's Net Zero GHG emissions goal by 2040 is ambitious and aligns with leading utilities committed to aggressive decarbonization, positioning it favorably among environmentally conscious investors.
• The $7 billion investment in generation and transmission assets for data centers is a substantial commitment, comparable to major infrastructure projects undertaken by other large utilities serving tech hubs, such as Dominion Energy's investments in Virginia for data centers or Duke Energy's grid modernization efforts.
• The 19.9% equity interest sale to Blackstone Investor for GenCo is a common strategy for utilities to de-risk large capital projects and bring in external capital and expertise, similar to joint ventures seen in renewable energy development across the sector, such as NextEra Energy Partners' use of tax equity financing for its wind and solar projects.

Management Changes

Corporate Governance

Legal Proceedings

• NIPSCO filed a complaint at FERC seeking a modification of the MISO Tariff to establish a mechanism for recovery and allocation of costs to comply with the R.M. Schahfer emergency order.
• NIPSCO made two filings with the IURC related to the R.M. Schahfer emergency order: one to confirm accounting treatment of the current electric rate order, and the second for recovery of federally mandated expenses.
• The Indiana Office of the Utility Consumer Counselor (OUCC) filed a limited Request for Rehearing with the IURC and a Notice of Appeal of the IURC order approving the GenCo settlement, which was immediately stayed. All appeals were subsequently dismissed.
• NIPSCO and GenCo filed an application with the IURC seeking approval of a retail special contract for electric service between NIPSCO and ADS, a related power purchase agreement, and an alternative regulatory plan. A hearing is scheduled for February 2026, with an order anticipated in the second quarter of 2026.
• The IURC initiated an investigation in November 2025 into the accuracy of NIPSCO's gas meters, with a procedural schedule established and a hearing expected in July 2026.
• The Pennsylvania Public Utility Commission issued a final order for the Columbia of Pennsylvania rate case, accepting in part and denying in part Columbia's exceptions. Two parties have filed petitions for reconsideration on certain aspects of the final order.

Related Party Transactions

• Certain Affiliates of the Company provide various services to the Company and its Subsidiaries through Affiliate Agreements, which are to continue in the ordinary course of business, consistent with past practices and corporate allocation policies, and on non-discriminatory terms.
• The NiSource Member is responsible for ensuring that methodologies used to allocate costs to the Company Group are consistently applied and do not disproportionately impact the Company or its Subsidiaries, and will share annual corporate services audits with the BIP Investor Member.
• GenCo Offtake Agreements are in place between the Company or its Subsidiaries and NIPSCO Holdings II (NHII) or its Subsidiaries, for power, storage, capacity, or ancillary products to serve large load or hyperscale customers.
• NIPSCO has contracts with three rail operators providing coal transportation services, with certain minimum payments required through 2026-2028.

Stakeholder Impact

• Shareholders: Benefit from increased net income and EPS, continued dividend payments, and significant capital investment for growth (data centers, infrastructure). However, they face potential dilution from equity raises and risks associated with the data center strategy and substantial indebtedness.
• Customers: Expected to benefit from enhanced safety and reliability through infrastructure modernization and energy efficiency programs. Potential for savings from NIPSCO's existing system use for data centers, but also potential for increased rates to recover costs and impact from the gas meter investigation.
• Employees: Supported by leadership development programs, extensive technical and non-technical training, and a focus on talent attraction and retention with competitive benefits. However, they may experience pressure from organizational changes and potential impacts of labor relations.
• Regulators: Engaged in ongoing proceedings with IURC, FERC, PHMSA, and EPA regarding rate cases, energy transition, environmental compliance, and data center contracts. The emergency order for R.M. Schahfer highlights regulatory intervention for grid reliability.
• Communities: Data center development is expected to enhance the local tax base and diversify employment in Indiana. The company's Net Zero GHG emissions goal aims to reduce environmental impact.

Next Steps

• NIPSCO to provide electric service to ADS, with capacity commitment increasing to 2,400 MW by the end of 2032.
• GenCo to construct 400 MW of new battery storage and two 1,300 MW CCGTs, expected commercial operation between 2028 and 2032.
• IURC approval is pending for the ADS Contract and related Power Purchase Agreement (PPA) between NIPSCO and GenCo.
• A hearing is scheduled for February 2026 for the ADS contract approval, with an order anticipated in the second quarter of 2026.
• NIPSCO to continue operating the R.M. Schahfer coal facility through March 23, 2026, under an emergency order.
• NIPSCO filed a complaint at FERC seeking modification of the MISO Tariff for cost recovery related to the R.M. Schahfer emergency order.
• NIPSCO made two filings with the IURC for R.M. Schahfer emergency order cost recovery.
• The Michigan City coal facility is scheduled for retirement by the end of 2028.
• Construction of a new 400 MW natural gas peaking generation facility is underway, expected to support the planned retirement of existing vintage gas peaking facilities by the end of 2028.
• The IURC investigation into NIPSCO's gas meters is ongoing, with a hearing expected in July 2026.
• Columbia of Ohio filed an application in December 2025 to continue its PHMSA IRP Rider for calendar year 2027, seeking recovery of $404.3 million in capital.
• NIPSCO filed a Gas TDSIC Plan (2026-2030) in December 2025, seeking recovery of $764.7 million in estimated capital.
• The Templeton wind Build-Transfer Agreement (BTA) project (200 MW) is expected to be placed in service in 2027.
• The company will continue to evaluate additional agreements with data center customers.
• Plans to advance other lowor zero-emission energy resources and technologies, such as hydrogen, renewable natural gas, long-duration storage, and carbon capture and utilization technologies.
• Collective bargaining agreements are set to expire between March 2026 and June 2027.
• Expected contributions of approximately $2.7 million to pension plans and $18.3 million to postretirement medical and life plans in 2026.

Key Dates

Recommendation

NiSource demonstrates strong financial performance and a clear growth strategy, particularly with its significant data center initiatives and ongoing infrastructure modernization. However, the substantial capital requirements for these projects, coupled with regulatory uncertainties, potential construction delays, and customer concentration risk with ADS, warrant a cautious 'hold' recommendation. While the long-term outlook is positive, investors should monitor execution risks and the evolving regulatory landscape.

Keywords

NiSource, Utility, Natural Gas, Electric, SEC Filing, 10-K, Financial Report, Data Centers, Energy Transition, Renewable Energy, Infrastructure, Capital Expenditures, Regulatory, ESG, Indiana, Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Blackstone, Amazon Data Services, R.M. Schahfer, MISO, GHG Emissions, Net Zero, Corporate Governance, Risk Management