SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2022

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

OF THE SECURITIES EXCHANGE ACT OF 1934

(Registrant’s telephone number, including area code)

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.

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files.)

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"~~filer," "smaller reporting company," and ~~“emerging~~"emerging growth ~~company”~~company" in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

Large accelerated filer þ Accelerated filer ¨Emerging growth 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).

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: ~~336,793,693~~405,798,111 shares outstanding at ~~October 23, 2017.~~April 26, 2022.

FORM 10-Q QUARTERLY REPORT

FOR THE QUARTER ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2022

~~DEFINED TERMS~~Other Information


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

NiSource Subsidiaries ~~Affiliates~~ and ~~Former Subsidiaries~~Affiliates
~~Capital Markets~~		~~NiSource Capital Markets, Inc.~~
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 ~~the Company~~"our")		NiSource Inc.
~~NiSource Finance~~Rosewater		~~NiSource Finance Corp.~~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
~~AFUDC~~ACE		Affordable Clean Energy
AFUDC		Allowance for funds used during construction
~~AOCI~~
AOCI		Accumulated Other Comprehensive Income (Loss)
ASC		Accounting Standards Codification
ASU		Accounting Standards Update
ATM		At-the-market
~~CAA~~BTA		~~Clean Air Act~~Build-transfer agreement
~~CCRs~~

CCRs		Coal Combustion Residuals
CEP		Capital Expenditure Program
CERCLA		Comprehensive Environmental Response Compensation and Liability Act (also known as Superfund)
~~CIAC~~Corporate Units		~~Contributions In Aid of Construction~~Series A Corporate Units
CO₂ COVID-19 ("the COVID-19 pandemic" or "the pandemic")		~~Carbon Dioxide~~Novel Coronavirus 2019 and its variants, including the Delta and Omicron variants, and any other variant that may emerge
~~CPP~~		~~Clean Power Plan~~
~~DPU~~DSIC		Distribution System Improvement Charge
DPU		Department of Public Utilities
~~DSM~~		~~Demand Side Management~~
~~ECR~~EPA		~~Environmental Cost Recovery~~
~~ECT~~	~~Environmental Cost Tracker~~
~~EGUs~~	~~Electric Utility Generating Units~~
~~ELG~~	~~Effluent limitations guidelines~~
~~EPA~~	United States Environmental Protection Agency
EPS		Earnings per share
~~FAC~~Equity Units		Series A Equity Units
FAC		Fuel adjustment clause
FASB		Financial Accounting Standards Board
~~GAAP~~
FMCA		Federally Mandated Cost Adjustment
GAAP		Generally Accepted Accounting Principles
GCA		Gas cost adjustment
~~GCR~~GHG		~~Gas cost recovery~~Greenhouse gases
~~GHG~~GWh		~~Greenhouse gases~~Gigawatt hours
~~GSEP~~		~~Gas System Enhancement Program~~
~~gwh~~IRP		~~Gigawatt hours~~
~~IBM~~	~~International Business Machines Corporation~~
~~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
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 Postemployment Benefits


~~DEFINED TERMS~~ PHMSA		Pipeline and Hazardous Materials Safety Administration
~~IURC~~PPA		~~Indiana Utility Regulatory Commission~~Power Purchase Agreement
~~LDCs~~		~~Local distribution companies~~
~~MGP~~		~~Manufactured Gas Plant~~
~~MISO~~PUCO		~~Midcontinent Independent System Operator~~
~~MMDth~~	~~Million dekatherms~~
~~MPSC~~	~~Maryland Public Service Commission~~
~~NAAQS~~	~~National Ambient Air Quality Standards~~
~~NOL~~	~~Net operating loss~~
~~NYMEX~~	~~New York Mercantile Exchange~~
~~OCC~~	~~Ohio Consumers' Counsel~~
~~OPEB~~	~~Other Postretirement Benefits~~
~~OUCC~~	~~Office of Utility Consumer Counselor~~
~~Pure Air~~	~~Pure Air on the Lake LP~~
~~RCRA~~	~~Resource Conservation and Recovery Act~~
~~ppb~~	~~Parts per billion~~
~~PUCO~~	Public Utilities Commission of Ohio
~~SEC~~

RNG		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
~~TDSIC~~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
STRIDE		Strategic Infrastructure Development Enhancement
TCJA		An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018 (commonly known as the Tax Cuts and Jobs Act of 2017)
TDSIC		Transmission, Distribution and Storage System Improvement Charge
~~VIE~~U.S. Attorney's Office		U.S. Attorney's Office for the District of Massachusetts

VIE		Variable Interest ~~Entities~~Entity
~~VSCC~~		~~Virginia State Corporation Commission~~

Note regarding forward-looking statements

This Quarterly Report on Form 10-Q contains ~~“forward-looking statements”~~"forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Investors and prospective investors should understand that many factors govern whether any forward-looking statement contained herein will be or can be realized. Any one of those factors could cause actual results to differ materially from those projected. These forward-looking statements include, but are not limited to, statements concerning ~~NiSource’s~~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, ~~NiSource’s~~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 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 ~~NiSource’s credit rating; NiSource’s ability to execute its growth strategy; changes in general economic, capital and commodity market conditions; pension funding obligations;~~interest rates; inflation; economic regulation and the impact of regulatory rate reviews; ~~NiSource's~~our ability to obtain expected financial or regulatory outcomes; ~~any damage to NiSource's reputation; compliance with environmental laws~~continuing and potential future impacts from the ~~costs of associated liabilities; fluctuations in demand from residential and commercial customers;~~COVID-19 pandemic; economic conditions ofin certain industries; ~~the success of NIPSCO's electric generation strategy; the price of energy commodities and related transportation costs;~~ the reliability of customers and suppliers to fulfill their payment and contractual obligations; potential impairments of goodwill or definite-lived intangible assets; changes in taxation and accounting principles; potential incidents and other operating risks associated with our business; the impact of an aging infrastructure; the impact of climate change; potential cyber-attacks; construction risks and natural gas costs and supply risks; extreme weather conditions; the attraction and retention of a qualified workforce; advances in technology; the ability of ~~NiSource's~~our subsidiaries to generate cash; ~~tax~~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 ~~associated~~related to the Greater Lawrence Incident; compliance with the ~~separation~~agreements entered into with the U.S. Attorney's Office to settle the U.S. Attorney's Office's investigation relating to the Greater Lawrence Incident; compliance with applicable laws, regulations and tariffs; compliance with environmental laws and the costs of ~~Columbia Pipeline Group, Inc. on July 1, 2015, and~~associated liabilities; changes in taxation; other matters ~~set forth~~ in the ~~“Risk Factors”~~"Risk Factors" section of ~~NiSource’s~~our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2021, and matters related to our electric generation transition as set forth in the "Risk Factors" section of this Quarterly Report on Form 10-Q, many of which risks are beyond ~~the control of NiSource.~~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. ~~NiSource undertakes~~We undertake no obligation to, and expressly ~~disclaims~~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.

ITEM 1. FINANCIAL STATEMENTS

~~Table of Contents~~

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

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

Net unrealized loss on cash flow hedges⁽²⁾

Unrecognized pension and OPEB benefit⁽³⁾

⁽¹⁾ ~~Net unrealized gain (loss) on available-for-sale securities, net of zero and $0.1 million tax benefit in the~~ ~~third~~ ~~quarter of 2017 and 2016, respectively, and $0.6 million and $1.2 million tax expense for the nine months ended 2017 and 2016, respectively.~~

⁽²⁾Net unrealized loss on cash flow hedges, net of $5.8 million and $14.0 million tax benefit in the third quarter of 2017 and 2016, respectively, and $13.1 million and $90.6 million tax benefit for the nine months ended 2017 and 2016, respectively.

⁽³⁾Unrecognized pension and OPEB benefit, net of $0.5 million and $0.1 million tax expense in the third quarter of 2017 and 2016, respectively, and $0.8 million and $0.4 million tax expense for the nine months ended 2017 and 2016, respectively.

~~Table of Contents~~

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

Condensed Consolidated Balance Sheets (unaudited)

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Condensed Consolidated Balance Sheets (unaudited) (continued)

~~Table of Contents~~

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

Condensed Statements of Consolidated Cash Flows (unaudited)

Change in cash and cash equivalents from (used for) discontinued operations

~~Supplemental Disclosures of Cash Flow Information~~

~~Table of Contents~~

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


	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

(in millions)
Common
Stock

Treasury
Stock

Additional
Paid-In
Capital

Retained
Deficit

Accumulated
Other
Comprehensive
Loss
Total
Balance as of January 1, 2017 $ 3.3
$ (88.7 ) $ 5,153.9
$ (972.2 ) $ (25.1 ) $ 4,071.2
Comprehensive Income (Loss):
Net Income —
—
—
180.9
—
180.9
Other comprehensive income, net of tax —
—
—
—
(18.6 ) (18.6 )
Common stock dividends ($0.70 per share) —
—
—
(229.3 ) —
(229.3 )
Treasury stock acquired —
(5.9 ) —
—
—
(5.9 )
Stock issuances:
Employee stock purchase plan —
—
3.7
—
—
3.7
Long-term incentive plan —
—
11.2
—
—
11.2
401(k) and profit sharing —
—
28.8
—
—
28.8
Dividend reinvestment plan —
—
6.3
—
—
6.3
ATM program 0.1
—
314.6
—
—
314.7
Balance as of September 30, 2017 $ 3.4
$ (94.6 ) $ 5,518.5
$ (1,020.6 ) $ (43.7 ) $ 4,363.0
(1)Net unrealized loss on available-for-sale debt securities, net of $1.5 million and $0.7 million tax benefit in the first quarter of 2022 and 2021, respectively.

(2)Net unrealized gain on cash flow hedges, net of $21.3 million and $28.0 million tax expense in the first quarter of 2022 and 2021, respectively.

(3)Unrecognized pension and OPEB benefit, net of zero and $0.9 million tax expense in the first quarter of 2022 and 2021, 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)


(in millions)	March 31, 2022		December 31, 2021
ASSETS
Property, Plant and Equipment
Plant	$	25,538.3	$	25,171.3
Accumulated depreciation and amortization	(7,417.6)		(7,289.5)


Net Property, Plant and Equipment(1)	18,120.7		17,881.8
Investments and Other Assets
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)	156.7		171.8
Other investments	82.4		87.1
Total Investments and Other Assets	239.9		259.7
Current Assets
Cash and cash equivalents	114.5		84.2
Restricted cash	15.9		10.7
Accounts receivable	989.6		849.1
Allowance for credit losses	(28.5)		(23.5)
Accounts receivable, net	961.1		825.6
Gas inventory	74.8		327.4
Materials and supplies, at average cost	146.9		139.1
Electric production fuel, at average cost	41.5		32.2
Exchange gas receivable	98.6		99.6

Regulatory assets	154.7		206.2

Prepayments and other	263.9		195.8
Total Current Assets(1)	1,871.9		1,920.8
Other Assets
Regulatory assets	2,276.3		2,286.0
Goodwill	1,485.9		1,485.9

Deferred charges and other	370.8		322.7
Total Other Assets	4,133.0		4,094.6
Total Assets	$	24,365.5	$	24,156.9

(1)Includes $690.4 million and $695.9 million at March 31, 2022 and December 31, 2021, respectively, of net property, plant and equipment assets and $27.4 million and $14.3 million at March 31, 2022 and December 31, 2021, respectively, of current assets of consolidated VIEs that may be used only to settle obligations of the consolidated 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)


(in millions, except share amounts)	March 31, 2022		December 31, 2021
CAPITALIZATION AND LIABILITIES
Capitalization
Stockholders’ Equity
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	1,546.5		1,546.5
Treasury stock	(99.9)		(99.9)
Additional paid-in capital	7,208.9		7,204.3
Retained deficit	(1,372.3)		(1,580.9)
Accumulated other comprehensive loss	(85.4)		(126.8)
Total NiSource Stockholders’ Equity	7,201.9		6,947.3
Noncontrolling interest in consolidated subsidiaries	329.5		325.6
Total Equity	7,531.4		7,272.9
Long-term debt, excluding amounts due within one year	9,179.8		9,183.4
Total Capitalization	16,711.2		16,456.3
Current Liabilities
Current portion of long-term debt	57.9		58.1
Short-term borrowings	520.0		560.0
Accounts payable	628.5		697.8
Dividends payable - common stock	95.3		—
Dividends payable - preferred stock	19.4		—
Customer deposits and credits	155.2		237.9
Taxes accrued	313.5		277.1
Interest accrued	94.3		105.5

Exchange gas payable	37.8		107.7
Regulatory liabilities	229.1		137.4


Accrued compensation and employee benefits	130.5		182.7

Other accruals	313.1		382.0
Total Current Liabilities(1)	2,594.6		2,746.2
Other Liabilities

Deferred income taxes	1,789.8		1,659.4


Accrued liability for postretirement and postemployment benefits	285.3		292.5
Regulatory liabilities	1,843.1		1,842.6
Asset retirement obligations	472.0		469.7
Other noncurrent liabilities	669.5		690.2
Total Other Liabilities(1)	5,059.7		4,954.4
Commitments and Contingencies (Refer to Note 15, "Other Commitments and Contingencies")
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)

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

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


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



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

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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

(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	—		—		—		—		295.5		—		1.0		296.5
Other comprehensive income, net of tax	—		—		—		—		—		81.2		—		81.2
Dividends:
Common stock ($0.44 per share)	—		—		—		—		(172.6)		—		—		(172.6)
Preferred stock (See Note 5)	—		—		—		—		(27.5)		—		—		(27.5)
Contribution from noncontrolling interest	—		—		—		—		—		—		7.5		7.5
Stock issuances:


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

(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.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)


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


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

Balance as of March 31, 2022	1,303	409,697	(3,963)	405,734













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


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

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

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.

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

1. Basis of Accounting Presentation

~~The~~Our accompanying Condensed Consolidated Financial Statements (unaudited) ~~for NiSource Inc. ("NiSource" or the “Company”)~~ 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 ~~contain~~include the accounts of us, our majority-owned subsidiaries, and VIEs of which we are the ~~Company~~primary beneficiary after the elimination of all intercompany accounts and ~~its majority-owned or controlled subsidiaries.~~transactions.

The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in ~~NiSource’s~~our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~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 ~~NiSource believes~~we believe that the disclosures made in this ~~quarterly report~~Quarterly Report on Form 10-Q are adequate to make the information herein not misleading.

2. Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements

~~NiSource is~~We are currently evaluating the impact of certain ASUs on ~~its~~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 issuedASU 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 March 31, 2022, we have not applied any expedients or options available under 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 amends the guidance for entities that issue convertible instruments and/or contracts indexed to and potentially settled in an entity's own equity. The pronouncement eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. Additionally, the pronouncement amends the guidance for the derivatives scope exception for contracts in an entity's own equity. Further, this pronouncement only impacts the denominator in the calculation of diluted EPS for our Equity Units as we are required to assume share settlement of the remaining purchase contract payment balance when applying the if-converted method. Moreover, we are required to utilize the average share price for the period instead of the end of period price. We adopted this pronouncement using the modified retrospective method as of January 1, 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 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.



~~Standard~~	~~Description~~	~~Effective Date~~	~~Effect on the financial statements or other significant matters~~
~~ASU 2017-07,~~ ~~Compensation -~~ ~~Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~	The pronouncement changes how defined benefit pension and other postretirement benefit plans present net periodic benefit cost. The service cost component of net periodic benefit cost will be included with other employee compensation costs whereas other components of the net periodic benefit cost will be disclosed separately outside of income from operations in the income statement. Additionally, only the service cost component of net periodic benefit cost will be eligible for capitalization.	~~Annual periods beginning after December 15, 2017, including interim periods therein. Early adoption is permitted.~~	NiSource plans to adopt the standard effective January 1, 2018. Upon adoption, NiSource will continue to present the service cost component of net periodic benefit cost within "Operation and maintenance"; however, other components of the net periodic benefit cost will be presented separately below "Operating Income" in the income statement. This change in income statement presentation will be implemented on a retrospective basis. Additionally, beginning prospectively on the date of adoption, only the service cost component of NiSource's net periodic benefit cost component will be eligible for capitalization as "Property, Plant and Equipment" on the balance sheet. NiSource is currently evaluating the impact of adoption on the Condensed Consolidated Financial Statements (unaudited) and Notes to Condensed Consolidated Financial Statements (unaudited).

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 (unaudited):


Three Months Ended March 31, 2022 (in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other(2)		Total
Customer Revenues(1)
Residential	$	976.9	$	138.5	$	—	$	1,115.4
Commercial	356.5		134.5		—		491.0
Industrial	67.8		129.8		—		197.6
Off-system	18.7		—		—		18.7
Miscellaneous	14.0		3.6		—		17.6
Total Customer Revenues	$	1,433.9	$	406.4	$	—	$	1,840.3
Other Revenues	2.8		23.7		6.5		33.0
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 March 31, 2021 (in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other(2)		Total
Customer Revenues(1)
Residential	$	773.5	$	129.2	$	—	$	902.7
Commercial	271.4		122.9		—		394.3
Industrial	57.9		122.9		—		180.8
Off-system	14.4		—		—		14.4
Miscellaneous	9.9		4.2		0.2		14.3
Total Customer Revenues	$	1,127.1	$	379.2	$	0.2	$	1,506.5
Other Revenues	8.7		23.3		7.1		39.1
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.

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

~~Standard~~

~~Description~~

~~Effective Date~~

~~Effect on the financial statements or other significant matters~~

~~ASU 2016-12,~~ ~~Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients~~

~~The pronouncement clarifies implementation guidance in ASU 2014-09 on assessing collectability, noncash consideration and the presentation of sales and other similar taxes collected from customers.~~

~~Annual periods beginning after December 15, 2017, including interim periods therein. Early adoption is permitted for annual or interim periods beginning after December 15, 2016.~~

NiSource has formed an internal stakeholder group to promote information sharing and communication of the new requirements. Additionally, NiSource participates in an informal forum of industry peers where questions can be asked and interpretations of the new standard can be shared. Involvement in this group has resulted in additional clarity on industry-specific issues such as treatment of CIAC, scoping of tariff arrangements and presentation of alternative revenue programs. This clarity has furthered NiSource's adoption efforts. NiSource has separated its various revenue streams into high-level categories, which serve as the basis for accounting analysis and documentation as it relates to the pronouncement's impact on NiSource's revenues. Substantially all of NiSource’s revenues are tariff based, which NiSource concluded will be in scope of ASC 606. Based on evaluation performed to date, NiSource generally expects that the revenue from tariff based sales will continue to be equivalent to the natural gas or electricity supplied and billed each period (including unbilled revenues) and the adoption of the new guidance will not result in a material shift in the amount or timing of revenue recognition for such sales. NiSource has also undertaken efforts to outline mock footnote disclosures intended to satisfy ASC 606's disclosure requirements and expects to enhance its disclosures on revenue recognition policies and elections. Certain disclosure options continue to be evaluated at NiSource, including method and level of revenue disaggregation. NiSource intends to adopt this ASU effective January 1, 2018 and plans to use the modified retrospective method of adoption. If applicable, this method requires a cumulative effect adjustment to be recorded on the balance sheet as of January 1, 2018 and disclosures reconciling results under the new revenue recognition guidance to results under previous guidance. In its evaluation, NiSource continues to monitor industry implementation issues which could impact accounting policies and revenue recognition, including NiSource's preliminary conclusions described above.

~~ASU 2016-08,~~ ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations~~

The pronouncement clarifies the principal versus agent guidance in ASU 2014-09. The amendment clarifies how an entity should identify the unit of accounting for the principal versus agent evaluation, and how it should apply the control principle to certain types of arrangements.

~~ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~

The pronouncement outlines a single, comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

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 three months ended 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, 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.

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 March 31, 2022 and December 31, 2021 are presented in the table below:


(in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other		Total
Balance as of January 1, 2022	$	18.9	$	3.8	$	0.8	$	23.5
Current period provisions	5.8		2.8		—		8.6
Write-offs charged against allowance	(7.7)		(1.2)		—		(8.9)
Recoveries of amounts previously written off	5.2		0.1		—		5.3
Balance as of March 31, 2022	$	22.2	$	5.5	$	0.8	$	28.5


(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
Current period provisions	5.8		1.4		—		7.2
Write-offs charged against allowance	(46.7)		(7.7)		—		(54.4)
Recoveries of amounts previously written off	18.0		0.4		—		18.4
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 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 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 December 31, 2021 and March 31, 2022 adequately reflected the collection risk and net realizable value for our receivables. As of December 31, 2021, we resumed our common credit mitigation practices in all jurisdictions as all moratoriums had expired.



~~Standard~~	~~Description~~	~~Effective Date~~	~~Effect on the financial statements or other significant matters~~
~~ASU 2016-02,~~ ~~Leases (Topic 842)~~	The pronouncement introduces a lessee model that brings most leases on the balance sheet. The standard requires that lessees recognize the following for all leases (with the exception of short-term leases, as that term is defined in the standard) at the lease commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.	~~Annual periods beginning after December 15, 2018, including interim periods therein. Early adoption is permitted.~~	NiSource has formed an internal stakeholder group that meets periodically to share information and gather data related to leasing activity at NiSource. This includes compiling a list of all contracts that could meet the definition of a lease under the new standard and evaluating the accounting for these contracts under the new standard to determine the ultimate impact the new standard will have on NiSource’s financial statements. Also, this procedure has identified process improvements to ensure data from newly initiated leases is captured to comply with the new standard. This work included the assistance of a third-party advisory firm. NiSource plans to adopt this standard effective January 1, 2019.

~~Recently Adopted Accounting Pronouncements~~



~~Standard~~	~~Adoption~~
~~ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)~~	NiSource elected to adopt this ASU effective October 1, 2017. Upon adoption, restricted cash on the Statements of Consolidated Cash Flows will no longer be presented as an investing activity and will instead be included as a component of beginning and ending cash balances. The adoption of this standard will be reflected in the Statements of Consolidated Cash Flows beginning with NiSource's Annual Report on Form 10-K for the year ending December 31, 2017 (including all prior periods presented).
~~ASU 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to accounting for Hedging Activities~~	NiSource elected to adopt this ASU effective September 30, 2017. Upon adoption, NiSource is no longer required to separately measure and report hedge ineffectiveness. The guidance also eases the requirements related to ongoing hedge effectiveness assessments at NiSource. The adoption of this standard did not have a material impact on the Condensed Consolidated Financial Statements (unaudited) or Notes to Condensed Consolidated Financial Statements (unaudited).
~~ASU 2017-09,~~ ~~Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting~~	NiSource elected to adopt this ASU effective July 1, 2017. The adoption of this standard did not have a material impact on the Condensed Consolidated Financial Statements (unaudited) or Notes to Condensed Consolidated Financial Statements (unaudited).
~~ASU 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~	NiSource elected to adopt this ASU effective January 1, 2017. The adoption of this standard did not have a material impact on the Condensed Consolidated Financial Statements (unaudited) or Notes to Condensed Consolidated Financial Statements (unaudited).

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

3.4. Earnings Per Share

~~Basic~~The calculations of basic and diluted EPS ~~is computed by dividing net income by~~are based on the ~~weighted-average~~weighted average number of shares of common stock and potential common stock outstanding during the period. For the purposes of determining diluted EPS, the shares underlying the purchase contracts included within the Equity Units were included in the calculation of potential common stock outstanding for the ~~period. The weighted-average~~three months ended March 31, 2022 using the if-converted method under US GAAP. For the purchase contracts, the number of shares ~~outstanding for~~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 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 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 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 months ended March 31, 2022.

Diluted EPS also includes the incremental effects of the various long-term incentive compensation ~~plans. The computation of diluted average common shares is as follows:~~

Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands) 2017 2016 2017 2016
Denominator
Basic average common shares outstanding 331,139
322,318
326,662
321,445
Dilutive potential common shares:
Shares contingently issuable under employee stock plans 604
228
503
146
Shares restricted under employee stock plans 653
1,372
866
1,606
Diluted Average Common Shares 332,396
323,918
328,031
323,197

~~4. Common Stock~~

plans and the open ATM ~~Program.~~ ~~On May 3, 2017, NiSource entered into four separate equity distribution~~forward agreements pursuant to which NiSource may sell, from time to time, up to an aggregate of $500.0 million of its common stock. As of September 30, 2017, approximately $182.8 million of equity remained available for issuanceduring the period under the treasury stock method when the impact would be dilutive. Refer to Note 5, "Equity," for more information on our ATM ~~program. The program expires on December 31, 2018. Shares of common stock are offered pursuant to NiSource's shelf registration statement filed with the SEC.~~ forward agreements.

The following table ~~summarizes NiSource's activity under~~presents the ~~ATM program:~~calculation of our basic and diluted EPS:


	Three Months Ended March 31,
(in millions, except per share amounts)	2022		2021
Numerator:
Net Income Available to Common Shareholders - Basic	$	413.0	$	281.7
Dilutive effect of Equity Units	0.5		—
Net Income Available to Common Shareholders - Diluted	$	413.5	$	281.7
Denominator:
Average common shares outstanding - Basic	406.0		392.7
Dilutive potential common shares:
Equity Units purchase contracts	29.1		—
Equity Units purchase contract payment balance	4.0		—
Shares contingently issuable under employee stock plans	1.0		0.6
Shares restricted under employee stock plans	0.4		0.3
ATM forward agreements	0.9		0.3
Average Common Shares - Diluted	441.4		393.9
Earnings per common share:
Basic	$	1.02	$	0.72
Diluted	$	0.94	$	0.72

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Number of shares issued 10,612,915
—
11,931,376
—
Average price per share $ 26.67
$ —
$ 26.58
$ —
Proceeds, net of fees (in millions)
$ 281.0
$ —
$ 314.7
$ —

~~5. Regulatory Matters~~

~~Gas Distribution Operations Regulatory Matters~~

~~Cost Recovery and Trackers~~. Comparability of Gas Distribution Operations 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 the subject of trackers result in a corresponding increase in net revenues and therefore have essentially no impact on total operating income results.

Certain operating costs of the NiSource distribution companies are significant, recurring in nature, and generally outside the control of the distribution companies. Some states allow the recovery of such costs through cost tracking mechanisms. Such tracking mechanisms allow for abbreviated regulatory proceedings in order for the distribution companies to implement charges and recover appropriate costs. Tracking mechanisms allow for more timely recovery of such costs as compared with more traditional cost recovery mechanisms. Examples of such mechanisms include GCR adjustment mechanisms, tax riders, and bad debt recovery mechanisms.

A portion of the distribution companies' revenue is related to the recovery of gas costs, the review and recovery of which occurs through standard regulatory proceedings. All states in NiSource's operating area require periodic review of actual gas procurement activity to determine prudence and to permit the recovery of prudently incurred costs related to the supply of gas for customers. NiSource distribution companies have historically been found prudent in the procurement of gas supplies to serve customers.

Certain of the NiSource distribution companies have completed rate proceedings involving infrastructure replacement or are embarking upon regulatory initiatives to replace significant portions of their operating systems that are nearing the end of their

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

5. Equity

~~useful lives. Each LDC's approach~~ATM Program and Forward Sale Agreement. On February 22, 2021, we entered into six separate equity distribution agreements pursuant to ~~cost recovery~~which we are able to sell up to an aggregate of $750.0 million of our common stock.

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 ~~be unique, given~~settle the ~~different laws, regulations and precedent that exist~~forward sale agreement in ~~each jurisdiction.~~shares, cash, or net shares by December 15, 2022. Had we settled all the shares under the forward sale agreement at March 31, 2022, we would have received approximately $145.2 million, based on a net price of $24.44 per share.

~~Columbia~~As of ~~Ohio.On November 28, 2012,~~March 31, 2022, the PUCO approved Columbia of Ohio’s application to extend its IRP for an additional five years (2013-2017), allowing Columbia of Ohio to continue to invest and recover on its accelerated main replacements. Columbia of Ohio filed its application to adjust rates associated with its IRP and DSM Riders on February 27, 2017, which requested authority to increase annual revenues by approximately $31.5 million. On March 23, 2017,ATM program (including the ~~PUCO Staff filed comments which recommended approval~~impacts of the ~~application with only minor revisions.~~forward sale agreement discussed above) had approximately $300.0 million of equity available for issuance. The ~~PUCO issued an order~~program expires on ~~April 26, 2017, approving Columbia~~December 31, 2023.

Preferred Stock. As of ~~Ohio's application. New rates went into effect on May 1, 2017.~~

~~On February 27, 2017, Columbia~~March 31, 2022, we had 20,000,000 shares of ~~Ohio filed an application requesting authority to extend its IRP~~preferred stock authorized for ~~an additional five years (2018-2022). On July 10, 2017,~~issuance, of which 1,302,500 shares of preferred stock in the ~~PUCO Staff recommended approval of Columbia of Ohio's IRP~~aggregate for all series were outstanding. The following table displays preferred dividends declared for the ~~additional five years,~~period by outstanding series of shares:


				Three Months Ended March 31,			March 31,	December 31,
				2022	2021			2022		2021
(in millions except shares and per share amounts)	Liquidation Preference Per Share		Shares	Dividends Declared Per Share		Outstanding
5.650% Series A	$	1,000.00	400,000	28.25	28.25			$	393.9	$	393.9
6.500% Series B	$	25,000.00	20,000	812.50	812.50			$	486.1	$	486.1
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 ~~modifications~~a corresponding reduction to ~~Columbia~~preferred stock.

In addition, 20,000 shares of ~~Ohio's proposed IRP rates for the five-year period. A joint stipulation~~Series B–1 Preferred Stock, par value $0.01 per share, were outstanding as of March 31, 2022. Holders of Series B–1 Preferred Stock are not entitled to receive dividend payments and recommendation, outlining annual maximum IRP rates for the five-year period, was filed on August 18, 2017 and was supported or not opposed by all parties except the OCC. A hearing was held on October 2, 2017 and briefinghave no conversion rights. The Series B–1 Preferred Stock is ~~scheduled to be completed by November 7, 2017. An order is expected by the end of 2017.~~

On October 27, 2017 Columbia of Ohio filed a 30-day notice that they plan to file a request for a rider to begin recovering plant and associated deferrals related to the CEP. The CEP was established in 2011 and allows for deferral of interest, depreciation and property taxes on certain plant investments not recovered through its IRP modernization tracker.

~~NIPSCO Gas.On September 27, 2017, NIPSCO filed a base rate case~~paired with the ~~IURC, seeking an annual revenue increase of $143.5 million (inclusive of amounts being recovered through various tracker programs). As part of this filing~~Series B Preferred Stock and ~~among other items, NIPSCO proposed to update base rates for ongoing infrastructure improvements, revised depreciation rates and ongoing level of expenses to reflect~~may not be transferred, redeemed or repurchased except in connection with the ~~current costs of providing natural gas service. An order is expected in the second half of 2018.~~

On April 30, 2013, then Indiana Governor Pence signed Senate Enrolled Act 560, the TDSIC statute, into law. Among other provisions, this legislation provides for cost recovery outside of a base rate proceeding for newsimultaneous transfer, redemption or replacement electric and gas transmission, distribution, and storage projects that a public utility undertakes for the purposes of safety, reliability, system modernization, or economic development. Provisionsrepurchase of the ~~TDSIC statute require that, among other things, requests for recovery include a seven-year plan~~underlying Series B Preferred Stock.

As of eligible investments. Once the plan is approved by the IURC, eighty percent of eligible costs can be recovered using a periodic rate adjustment mechanism. The cost recovery mechanism is referred to as a TDSIC mechanism. Recoverable costs include a return on,March 31, 2022 and of, the investment, including AFUDC, post-in-service carrying charges, operation and maintenance expenses, depreciation and property taxes. The remaining twenty percent of recoverable costs are to be deferred for future recovery in the public utility’s next general rate case. The periodic rate adjustment mechanism is capped at an annual increase of no more than two percent of total retail revenues. On February 28, 2017, NIPSCO filed TDSIC-6 requesting approval of $271.32021, Series A Preferred Stock had $6.7 million of cumulative ~~net capital spend through December 31, 2016. An order approving NIPSCO's filing was received from the IURC on June 28, 2017,~~preferred dividends in arrears, or $16.63 per share, and ~~new rates went into effect on July 1, 2017. On August 31, 2017, NIPSCO filed TDSIC-7 requesting approval of $328.9~~Series B Preferred Stock had $1.4 million of cumulative ~~net capital spend through June 30, 2017. An order is expected~~preferred dividends in arrears, or $72.23 per share.

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. Each Corporate Unit consists of a forward contract to purchase shares of our common stock in the ~~fourth quarter~~future and a 1/10th, or 10%, undivided beneficial ownership interest in one share of ~~2017.~~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.

~~Columbia of Massachusetts.On July 7, 2014,~~Selected information about the ~~Governor of Massachusetts signed into law Chapter 149 of~~Equity Units at the Acts of 2014, An Act Relative to Natural Gas Leaks (“the Act”). The Act authorizes natural gas distribution companies to file gas infrastructure replacement plans with the Massachusetts DPU to address the replacement of aging natural gas pipeline infrastructure. In addition, the Act provides that the Massachusetts DPU may, after review of the plans, allow the proposed estimatedissuance 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 ~~the plan into rates~~$27.0 million were recorded on a relative fair value basis as a reduction to preferred stock of ~~May 1 of the subsequent year. On October 31, 2016, Columbia of Massachusetts filed its GSEP for the 2017 construction year. In that filing, Columbia of Massachusetts proposed to recover~~$22.5 million and a cumulative revenue requirement of $17.2 million. An order was received from the Massachusetts DPU on April 28, 2017 approving the filing and rates went into effect on May 1, 2017. On October 31, 2017, Columbia of Massachusetts filed its GSEP for the 2018 construction year. Columbia of Massachusetts is proposing to recover a cumulative revenue requirement of $26.8 million including a waiver to collect the $3.1 million revenue requirement in excess of the GSEP cap provision. If the waiver is not approved, the cumulative revenue requirement will be $23.7 million. An order is expected from the Massachusetts DPU in the second quarter of 2018, with new rates effective May 1, 2018.

~~Columbia of Virginia.~~ On April 29, 2016, Columbia of Virginia filed a request with the VSCC, seeking an annual revenue increase of $37.0 million. On September 28, 2016, Columbia of Virginia implemented updated interim base rates subject to refund. On January 17, 2017, Columbia of Virginia presented a stipulation and proposed recommendation, representing a settlement by all partiesreduction to the ~~proceeding that included a base revenue increase~~purchase contract liability of ~~$28.5~~$4.5 million. ~~On March 17, 2017, by final order, the VSCC approved the settlement agreement without modification. In accordance with the terms of the final order, during 2017 Columbia~~

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.

The Series C Mandatory Convertible Preferred Stock is expected to be remarketed prior to December 1, 2023, and each share, 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 ~~Virginia completed its refund~~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 will pay quarterly contract adjustment payments to holders of the 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 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 was $113.3 million and $129.4 million, respectively. Purchase contract payments are recorded against this liability. Accretion of the 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 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.

6. Gas in Storage

We use both the LIFO inventory methodology and the weighted-average cost methodology to value natural gas in storage. Gas Distribution Operations prices natural gas storage injections at the average of the costs of natural gas supply purchased during the year. For interim periods, the difference between ~~the interim customer rates implemented in 2016~~current projected replacement cost and the ~~rates approved~~LIFO cost for quantities of gas temporarily withdrawn from storage is recorded as a temporary LIFO liquidation credit or debit within the Condensed Consolidated Balance Sheets (unaudited). Due to seasonality requirements, we expect interim variances in LIFO layers to be replenished by ~~the final order.~~

~~Columbia~~year end. We had a temporary LIFO liquidation debit of ~~Maryland.On April 14, 2017, Columbia~~$12.7 million and zero as of Maryland filed a request with the MPSC to adjust base rates. On July 28, 2017, all parties filed a settlement agreement with the MPSC, under which Columbia of Maryland will receive an annual revenue increase of $2.4 million. The MPSC approved the settlement on September 19, 2017March 31, 2022 and ~~rates went into effect on October 27, 2017.~~

~~Electric Operations Regulatory Matters~~

~~Cost Recovery~~December 31, 2021, respectively, for certain gas distribution companies recorded within "Prepayments and ~~Trackers~~. Comparability of Electric Operations 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 the subject of trackers result in a corresponding increase in net revenues and therefore have essentially no impact on total operating income results.

Certain operating costs of the Electric Operations are significant, recurring in nature, and generally outside the control of NIPSCO. The IURC allows for recovery of such costs through cost tracking mechanisms. Such tracking mechanisms allow for abbreviated regulatory proceedings in order for NIPSCO to implement charges and recover appropriate costs. Tracking mechanisms allow for more timely recovery of such costs as compared with more traditional cost recovery mechanisms. Examples of such mechanisms include electric energy efficiency programs, MISO non-fuel costs and revenues, resource capacity charges, federally mandated costs and environmental related costs.

A portion of NIPSCO's revenue is related to the recovery of fuel costs to generate power and the fuel costs related to purchased power. These costs are recovered through a FAC, a quarterly regulatory proceeding in Indiana.

~~NIPSCO has approval from the IURC to recover certain environmental related costs through an ECT. Under the ECT, NIPSCO is permitted to recover (1) AFUDC and a return~~other" on the capital investment expended by NIPSCO to implement environmental compliance plan projects and (2) related operation and maintenance and depreciation expenses once the environmental facilities become operational. On July 28, 2017, NIPSCO filed ECR-30 which included $256.2 million of cumulative net capital expenditures through the period ended June 30, 2017. An order was received from the IURC on October 25, 2017, and new rates went into effect the first billing cycle of November 2017.

NIPSCO made a TDSIC-2 rate adjustment mechanism filing on June 30, 2017 seeking recovery and ratemaking relief associated with $177.3 million of cumulative net capital expenditures made through April 30, 2017. An order approving the request was received from the IURC on October 31, 2017 and new rates are expected to go into effect with the first billing cycle of November 2017.

On November 1, 2016, NIPSCO filed a petition with the IURC for relief regarding the construction of additional environmental projects required to comply with the final rules for regulation of CCRs and the ELG. On June 9, 2017, a settlement agreement was filed with the IURC regarding the CCR projects and treatment of associated costs. An evidentiary hearing was held on August 21, 2017 and an order is expected by the end of 2017. Given the current postponement of the ELG rule, NIPSCO has agreed, with the settling parties, that the ELG projects and related costs would be addressed in a later proceeding. Refer to Note 14-C, “Environmental Matters,” for more information.

~~6. Risk Management Activities~~

NiSource is exposed to certain risks relating to its ongoing business operations, namely commodity price risk and interest rate risk. NiSource recognizes that the prudent and selective use of derivatives may help to lower its cost of debt capital, manage its interest rate exposure and limit volatility in the price of natural gas.Condensed Consolidated Balance Sheets (unaudited).

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

7. Regulatory Matters

NIPSCO change in accounting estimate

As part of the NIPSCO Gas Settlement and 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 accordance with the accounting principles of ASC 980, we recognize a regulatory liability or asset for amounts representing the 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 projects. The offset to the regulatory liability or asset associated with our renewable investments included in regulated rates is recorded in "Depreciation expense" on the Condensed Statements of Consolidated Income (unaudited). We recorded a credit to depreciation expense in the amount of $2.9 million and zero for the three months ended March 31, 2022 and March 31, 2021, respectively, related to the regulatory deferral of income (loss) associated with our joint ventures, which is not included in current rates.

8. Risk Management Activities

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

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


	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

(in millions) September 30, 2017 December 31, 2016
Risk Management Assets - Current⁽¹⁾

Interest rate risk programs $ —
$ 17.0
Commodity price risk programs 0.2
7.4
Total $ 0.2
$ 24.4
Risk Management Assets - Noncurrent⁽²⁾

Interest rate risk programs $ 20.1
$ 17.1
Commodity price risk programs 0.7
7.5
Total $ 20.8
$ 24.6
Risk Management Liabilities - Current⁽³⁾

Interest rate risk programs $ 36.9
$ 15.3
Commodity price risk programs 3.3
1.5
Total $ 40.2
$ 16.8
Risk Management Liabilities - Noncurrent
Interest rate risk programs $ —
$ 24.5
Commodity price risk programs 28.7
20.0
Total $ 28.7
$ 44.5

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

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

Derivatives Not Designated as Hedging Instruments

Commodity ~~Price Risk Management~~

~~NiSource and NiSource’s~~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. ~~NiSource purchases~~We purchase natural gas for sale and delivery to ~~its~~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 ~~NiSource’s~~our utility subsidiaries offer programs 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 ~~NiSource’s~~our commodity price risk programs is to mitigate the gas cost variability, for ~~NiSource~~us or on behalf of ~~its~~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 ten years~~ and is limited to ~~ten percent~~20% of ~~NIPSCO’s~~NIPSCO's average annual 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, 2017, NiSource Finance has~~March 31, 2022, we have two forward-starting interest rate swaps with an aggregate notional value totaling ~~$1.0 billion~~$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 by the end of 2019.~~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 ~~effective portions of~~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 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 ~~recognized~~recorded in ~~earnings concurrently with the recognition of interest~~"Interest expense, net" 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 ~~earnings.~~"Other, net" in the Condensed Statements of Consolidated Income (unaudited).

~~On May 11, 2017, NiSource Finance settled $950.0 million~~There were no amounts excluded from effectiveness testing for derivatives in cash flow hedging relationships at March 31, 2022 and December 31, 2021.

Our derivative instruments measured at fair value as of ~~forward-starting interest rate swap agreements contemporaneously with the issuance of $2.0 billion of 3.49%~~March 31, 2022 and ~~4.375% senior notes, maturing~~December 31, 2021 do not contain any credit-risk-related contingent features. Cash flows for derivative financial instruments are generally classified in ~~2027 and 2047, respectively. These derivative~~cash flows from operating activities.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

contracts were accounted for as cash flow hedges. As part of the transaction, the associated net unrealized loss position of $6.9 million is being amortized from accumulated other comprehensive loss into interest expense over the term of the associated interest payments.

On September 5, 2017, NiSource Finance settled $750.0 million of treasury lock agreements, initially entered into August 2017, contemporaneously with the issuance of $750.0 million of 3.95% senior notes, maturing in 2048. This derivative contract was accounted for as cash flow hedge. As part of the transaction, the associated net unrealized loss position of $19.0 million is being amortized from accumulated other comprehensive loss into interest expense over the term of the associated interest payments.

Cash associated with payments to settle interest rate swaps and treasury lock agreements are reflected within operating activities within the Condensed Statements of Consolidated Cash Flows (unaudited) for the nine months ended September 30, 2017.

Realized gains and losses from NiSource’s interest rate cash flow hedges are presented in “Interest expense, net” on the Condensed Statements of Consolidated Income (unaudited). There were no amounts excluded from effectiveness testing for derivatives in cash flow hedging relationships at September 30, 2017 and December 31, 2016.

~~NiSource’s derivative instruments measured at fair value as of September 30, 2017 and December 31, 2016 do not contain any credit-risk-related contingent features.~~

7.9. Fair Value

A. Fair Value Measurements

Recurring Fair Value ~~Measurements.~~Measurements

The following tables present financial assets and liabilities measured and recorded at fair value on ~~NiSource’s~~our Condensed Consolidated Balance Sheets (unaudited) on a recurring basis and their level within the fair value hierarchy as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~:2021:


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

Risk management assets	$	—	$	87.1	$	—	$	87.1

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

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


Recurring Fair Value Measurements December 31, 2021 (in millions)									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									Assets

Recurring Fair Value Measurements September 30, 2017 (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, 2017
Assets
Risk management assets	$	—	$	21.0	$	—	$	21.0	Risk management assets	$	—	$	24.4	$	—	$	24.4
Available-for-sale securities	—		139.3		—		139.3

Available-for-sale debt securities									Available-for-sale debt securities	—		171.8		—		171.8
Total	$	—	$	160.3	$	—	$	160.3	Total	$	—	$	196.2	$	—	$	196.2
Liabilities									Liabilities

Risk management liabilities	$	—	$	68.1	$	0.8	$	68.9	Risk management liabilities	$	—	$	144.2	$	—	$	144.2
Total	$	—	$	68.1	$	0.8	$	68.9	Total	$	—	$	144.2	$	—	$	144.2

~~Table of Contents~~

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

~~NiSource Inc.~~

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

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

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, ~~options~~ and ~~treasury lock agreements.~~options. In certain instances, these instruments may utilize models to measure fair value. ~~NiSource uses~~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, 2017~~March 31, 2022 and December 31, ~~2016~~,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 ~~NiSource’s~~our financial instruments.

NiSource Finance has entered into forward-starting interest rate swaps and treasury lock agreements to hedge the interest rate risk on coupon payments of forecasted issuances of long-term debt. These derivatives are designated as cash flow hedges. Credit risk is considered in the fair value calculation of each ~~agreement.~~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 ~~treasury lock agreements, and NiSource~~we can settle the contracts at any time. ~~For additional information see Note 6, "Risk Management Activities."~~

NIPSCO has entered into long-term forward natural gas purchase instruments ~~that range from five to ten years~~ to lock in a fixed price for its natural gas customers. ~~NiSource values~~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 ~~6, “Risk~~8, "Risk Management Activities.”"

Available-for-Sale Debt Securities. Available-for-sale debt securities are investments pledged as collateral for trust accounts related to ~~NiSource’s wholly-owned~~our wholly owned insurance company. ~~Available-for-sale securities are included within “Other investments” in the Condensed Consolidated Balance Sheets (unaudited). NiSource values~~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. ~~Total~~

Our available-for-sale debt securities impairments are recognized periodically using an allowance approach. At each reporting date, we utilize a quantitative and qualitative review process to assess the impairment of available-for-sale debt securities 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 will be required to 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 ~~gains~~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 ~~losses from available-for-sale securities are~~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 certain amounts recorded in the allowance for credit losses are deemed uncollectible, the allowance on the uncollectible portion will 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 will be recognized immediately in earnings. As of March 31, 2022 and December 31, 2021, we recorded $0.6 million and $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.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

The amortized cost, gross unrealized gains and losses, allowance for credit losses, and fair value of available-for-sale securities at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021 were:


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
U.S. Treasury debt securities	$	47.0	$	—	$	(1.8)	$	—	$	45.2
Corporate/Other debt securities	114.7		0.7		(3.3)		(0.6)		111.5
Total	$	161.7	$	0.7	$	(5.1)	$	(0.6)	$	156.7

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
U.S. Treasury debt securities	$	52.8	$	0.1	$	(0.4)	$	—	$	52.5
Corporate/Other debt securities	116.5		3.7		(0.7)		(0.2)		119.3
Total	$	169.3	$	3.8	$	(1.1)	$	(0.2)	$	171.8

September 30, 2017 (in millions)
Amortized
Cost
Gross Unrealized Gains Gross Unrealized Losses
Fair
Value
Available-for-sale securities
U.S. Treasury debt securities $ 34.3
$ —
$ (0.1 ) $ 34.2
Corporate/Other debt securities 104.2
1.3
(0.4 ) 105.1
Total $ 138.5
$ 1.3
$ (0.5 ) $ 139.3
December 31, 2016 (in millions)
Amortized
Cost
Gross Unrealized Gains Gross Unrealized Losses
Fair
Value
Available-for-sale securities
U.S. Treasury debt securities $ 35.0
$ 0.1
$ (0.6 ) $ 34.5
Corporate/Other debt securities 98.7
0.3
(2.0 ) 97.0
Total $ 133.7
$ 0.4
$ (2.6 ) $ 131.5
(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 $43.7 million and $65.1 million, respectively, at 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 $36.2 million and $35.4 million, respectively, at December 31, 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, 2017~~March 31, 2022 and ~~2016.~~2021.

~~The cost of maturities sold is based upon specific identification.~~ At ~~September 30, 2017,~~March 31, 2022, approximately ~~$8.4~~$5.4 million of U.S. Treasury debt securities and approximately ~~$3.2~~$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 ~~for the three~~as of March 31, 2022 and ~~nine months ended September 30, 2017 and 2016.~~December 31, 2021.

Non-recurring Fair Value ~~Measurements.~~ ~~There were no significant non-recurring~~Measurements

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

Purchase Contract Liability. At April 19, 2021, we recorded ~~during~~ the ~~three~~purchase contract liability at fair value using a discounted cash flow method and ~~nine months ended September 30, 2017.~~observable, market-corroborated inputs. This estimate was made at 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.

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. ~~NiSource’s~~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. ~~For the~~ ~~nine months endedSeptember 30, 2017~~,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.

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

(in millions) Carrying
Amount as of
September 30, 2017 Estimated Fair
Value as of
September 30, 2017
Carrying
Amount as of
Dec. 31, 2016

Estimated Fair
Value as of
Dec. 31, 2016
Long-term debt (including current portion) $ 7,808.4
$ 8,550.7
$ 6,421.3
$ 7,064.1

~~8. Transfers of Financial Assets~~

Columbia of Ohio, NIPSCO and Columbia of Pennsylvania each maintain a receivables agreement whereby they transfer their customer accounts receivables to third party financial institutions through wholly-owned and consolidated special purpose entities. The three agreements expire between March 2018 and October 2018 and may be further extended if mutually agreed to by the parties thereto.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

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


(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)	$	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 2022 and 2021, adjusted for tax expense associated with certain discrete items. The effective tax rates for the three months ended March 31, 2022 and 2021 were 18.2% and 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 increase in the three month effective tax rate of 0.8% in 2022 compared to 2021 is primarily attributed to the tax effect of the discrete item in 2022 related to the pre-tax book income recorded for the Columbia of Massachusetts insurance proceeds, offset by increased amortization of excess deferred federal income tax liabilities, lower state income taxes, and increased deduction for AFUDC equity in 2022.

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

11. Pension and Other 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' 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' 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 three months ended March 31, 2022, we contributed $0.6 million to our pension plans and $5.1 million to our OPEB plans.

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


	Pension Benefits				OPEB
Three Months Ended March 31, (in millions)	2022		2021		2022		2021
Components of Net Periodic Benefit (Income) Cost(1)
Service cost	$	7.1	$	7.6	$	1.6	$	1.5
Interest cost	9.4		7.7		3.0		2.5
Expected return on assets	(22.9)		(25.8)		(4.0)		(3.8)
Amortization of prior service credit	—		—		(0.6)		(0.6)
Recognized actuarial loss	4.5		5.3		0.7		1.2
Settlement loss	—		3.3		—		—
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 (unaudited).

Table of Contents

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. We control decisions that are significant to Rosewater and Indiana Crossroads Wind's ongoing operations and economic results. Therefore, we have concluded that we are the primary beneficiary and have consolidated both.

Members of the respective joint ventures are NIPSCO (who is the managing member) and tax equity 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 respective joint venture. NIPSCO has an obligation to purchase, through a PPA at established market rates, 100% of the electricity generated by the joint ventures.

Rosewater

Rosewater owns and operates 102 MW of nameplate capacity wind generation assets. NIPSCO and the tax equity partner have made total contributions of $170.1 million, per the equity capital contribution agreement. NIPSCO and the tax equity partner contributed cash and NIPSCO also assumed an obligation to the developer of the wind generation 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.

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 contributions of $511.8 million, per the equity capital contribution agreement. NIPSCO and the tax equity partner contributed cash and NIPSCO also assumed an obligation to the developer of the wind generation 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 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 quarter that was not previously contractually required, nor do we expect to provide such support in the future.

Table of Contents

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 VIEs.


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

Total assets(1)	177.5		540.3		176.3		533.9
Current liabilities	4.3		12.4		2.5		7.5
Asset retirement obligations	5.7		14.9		5.7		14.8

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

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 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. 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 March 31, 2022 and December 31, 2021.

Commercial Paper Program. Our commercial paper program has a program limit of up to $1.5 billion. We had $165.0 million and $560.0 million of commercial paper outstanding with weighted-average interest rates of 0.75% and 0.24% as of March 31, 2022 and December 31, 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 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, 2017,~~March 31, 2022, the maximum amount of debt that could be recognized related to ~~NiSource’s~~our accounts receivable programs is ~~$265.0~~$480.0 million.

~~The following table reflects the gross receivables balance~~We had $355.0 million and ~~net receivables transferred as well as~~zero short-term borrowings related to the securitization transactions as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016:~~

(in millions) September 30, 2017 December 31, 2016
Gross Receivables $ 371.6
$ 618.3
Less: Receivables not transferred 109.4
308.3
Net receivables transferred $ 262.2
$ 310.0
Short-term debt due to asset securitization $ 262.2
$ 310.0
2021.

For the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016, $47.8~~2021, $355.0 million and ~~$11.0 million,~~zero, respectively, ~~was~~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 ~~$0.6~~$0.3 million and $0.4 million for the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016, respectively,~~2021, respectively. Columbia of Ohio, NIPSCO and ~~$1.9 million and $1.6 million for the nine months ended September 30, 2017 and 2016, respectively. NiSource remains~~Columbia of Pennsylvania remain responsible for collecting on the receivables securitized, and the receivables cannot be transferred to another party.

9.~~Goodwill~~

~~The following presents NiSource’s goodwill balance allocated by segment as of September 30, 2017:~~

(in millions) Gas Distribution Operations Electric Operations Corporate and Other Total
Goodwill $ 1,690.7
$ —
$ —
$ 1,690.7

NiSource applied the qualitative "step 0" analysis to its reporting units for the annual impairment test performed as of May 1, 2017. For this test, NiSource assessed various assumptions, events and circumstances that would have affected the estimated fair value of the reporting units as compared to its base line May 1, 2016 "step 1" fair value measurement. The results of this assessment indicated that it was not more likely than not that its reporting unit fair values were less than the reporting unit carrying values, accordingly, no "step 1" analysis was required.

~~10. Income Taxes~~

NiSource’s interim effective tax rates reflect the estimated annual effective tax rates for 2017 and 2016, adjusted for tax expense associated with certain discrete items. The effective tax rates for the three months ended September 30, 2017 and 2016 were 15.2% and 26.4%, respectively. The effective tax rate for the nine months ended September 30, 2017 and 2016 was 34.9% and 35.3%, respectively. These effective tax rates differ from the Federal tax rate of 35% primarily due to the effects of tax credits, state income taxes, utility ratemaking, and other permanent book-to-tax differences.

The decrease in the three month effective tax rate in 2017 versus the same period in 2016 is primarily due to current year revisions of apportionment factors used to measure state deferred tax liabilities. There was no material change in the year-to-date effective tax rate in 2017 versus the same period in 2016.

~~Additionally, there were no material changes recorded in 2017 to NiSource's uncertain tax positions as of December 31, 2016.~~

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

~~11. Pension and Other Postretirement Benefits~~

NiSource provides defined contribution plans and noncontributory defined benefit retirement plans that cover certain of its employees. Benefits under the defined benefit retirement plans reflect the employees’ compensation, years of service and age at retirement. Additionally, NiSource provides 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 NiSource. The expected cost of such benefits is accrued during the employees’ years of service. For most plans, cash contributions are remitted to grantor trusts.

NiSource previously disclosed in the notes to its financial statements for the year ended December 31, 2016, that it expected to contribute $9.1 million to its pension plans in 2017. For the nine months ended September 30, 2017, NiSource contributed $281.6 million to its pension plans, which included a $277 million discretionary contribution made during the third quarter of 2017. NiSource does not anticipate any further pension contributions in 2017. Contributions of $21.8 million have been made to NiSource's other postretirement benefit plans during the nine months ended September 30, 2017. Contributions made to pension and other postretirement benefit plans are presented in "Operating activities" on the Condensed Statements of Consolidated Cash Flows (unaudited).

~~The following tables provide the components of the plans’ actuarially determined net periodic benefit cost for the three and nine months ended September 30, 2017 and 2016:~~

Pension Benefits
Other Postretirement
Benefits
Three Months Ended September 30, (in millions)
2017 2016 2017 2016
Components of Net Periodic Benefit Cost
Service cost⁽¹⁾
$ 7.4
$ 7.7
$ 1.2
$ 1.3
Interest cost⁽¹⁾
17.1
22.4
4.5
5.5
Expected return on assets (30.8 ) (33.2 ) (4.0 ) (4.3 )
Amortization of prior service credit (0.1 ) —
(1.1 ) (1.2 )
Recognized actuarial loss 13.2
15.3
0.7
0.8
Settlement loss 10.6
—
—
—
Total Net Periodic Benefit Cost $ 17.4
$ 12.2
$ 1.3
$ 2.1

⁽¹⁾Effective January 1, 2017, NiSource adopted the methodology of using a full yield curve (spot rate) approach to estimate the service and interest components of net periodic benefit cost. This change in accounting estimate resulted in a decrease in these costs for the three months ended September 30, 2017 when compared to the same period in 2016.

Pension Benefits
Other Postretirement
Benefits
Nine Months Ended September 30, (in millions)
2017 2016 2017 2016
Components of Net Periodic Benefit Cost
Service cost⁽¹⁾
$ 22.4
$ 23.1
$ 3.6
$ 3.7
Interest cost⁽¹⁾
51.5
67.2
13.4
16.5
Expected return on assets (91.3 ) (99.6 ) (11.9 ) (12.9 )
Amortization of prior service credit (0.5 ) (0.2 ) (3.3 ) (3.6 )
Recognized actuarial loss 40.0
45.9
2.2
2.4
Settlement loss 10.6
—
—
—
Total Net Periodic Benefit Cost $ 32.7
$ 36.4
$ 4.0
$ 6.1

⁽¹⁾Effective January 1, 2017, NiSource adopted the methodology of using a full yield curve (spot rate) approach to estimate the service and interest components of net periodic benefit cost. This change in accounting estimate resulted in a decrease in these costs for the nine months ended September 30, 2017 when compared to the same period in 2016.

As of August 31, 2017, one of NiSource's qualified pension plans paid lump sums in excess of the plan's 2017 service cost plus interest cost, thereby meeting the requirement for settlement accounting. A settlement charge of $10.6 million was recorded during the third quarter of 2017. As a result of the settlement, the pension plan was remeasured resulting in a decrease to the pension benefit obligation, net of plan assets, of $1.3 million, a net decrease to regulatory assets of $10.6 million and a net credit to accumulated other comprehensive loss of $1.3 million.

~~Table of Contents~~

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

~~NiSource Inc.~~

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

The following table provides the key assumptions that were used to calculate the pension benefit obligation and the net periodic benefit cost at the measurement dates of August 31, 2017 and December 31, 2016.

August 31, 2017 December 31, 2016
Weighted-average Assumption to Determine Benefit Obligation:
Discount rate 3.50 % 4.03 %
Weighted-average Assumptions to Determine Net Periodic Benefit Costs for the period ended:
Discount rate - service cost⁽¹⁾
4.40 % 4.24 %
Discount rate - interest cost⁽¹⁾
3.31 % 4.24 %
Expected return on assets 7.25 % 8.00 %

⁽¹⁾ In January 2017, NiSource changed the method used to estimate the service and interest components of net periodic benefit cost for pension and other postretirement benefits. This change, compared to the previous method, resulted in a decrease in the actuarially-determined service and interest cost components. Historically, NiSource estimated service and interest cost utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. For fiscal 2017 and beyond, NiSource now utilizes a full yield curve approach to estimate these components by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows.

~~12. Long-Term Debt~~

NiSource Finance is a 100% owned, consolidated finance subsidiary of NiSource that engages in financing activities to raise funds for the business operations of NiSource and its subsidiaries. NiSource Finance was incorporated in March 2000 under the laws of the state of Indiana. Prior to 2000, the function of NiSource Finance was performed by Capital Markets. NiSource Finance obligations are fully and unconditionally guaranteed by NiSource. Consequently, no separate financial statements for NiSource Finance are required to be reported. No NiSource subsidiaries guarantee debt.

NiSource announced on April 26, 2017, that it intends to merge NiSource Finance and Capital Markets with and into NiSource during the second half of 2017, pending receipt of applicable approvals. The mergers are expected to be completed during the fourth quarter of 2017. Upon completion of the mergers, NiSource will become the primary obligor of NiSource Finance's and Capital Markets' outstanding obligations. The mergers are not expected to have any impact on NiSource's consolidated financial statements or the credit ratings of outstanding debt securities.

~~On March 27, 2017, Capital Markets redeemed $30.0 million of 7.86% and $2.0 million of 7.85% medium-term notes at maturity.~~

~~On April 3, 2017, Capital Markets redeemed $12.0 million of 7.82%, $10.0 million of 7.92%, $2.0 million of 7.93% and $1.0 million of 7.94% medium-term notes at maturity.~~

On May 22, 2017, NiSource Finance closed its placement of $2.0 billion in aggregate principal amount of its senior notes, comprised of $1.0 billion of 3.49% senior notes due 2027 and $1.0 billion of 4.375% senior notes due 2047. Related to this placement, NiSource settled $950.0 million of aggregate notional value forward-starting interest rate swaps, originally entered into to mitigate interest risk associated with the planned issuance of these notes. Refer to Note 6, "Risk Management Activities," for additional information.

During the second quarter of 2017, NiSource Finance executed a tender offer for $990.7 million of outstanding notes consisting of a combination of its 6.40% notes due 2018, 6.80% notes due 2019, 5.45% notes due 2020, and 6.125% notes due 2022. In conjunction with the debt retired, NiSource Finance recorded a $111.5 million loss on early extinguishment of long-term debt, primarily attributable to early redemption premiums.

~~On June 12, 2017, NIPSCO redeemed $22.5 million of 7.59% medium-term notes at maturity.~~

~~On July 1, 2017, NIPSCO redeemed $55.0 million of 5.70% medium-term notes at maturity.~~

~~On August 4, 2017, NIPSCO redeemed $5.0 million of 7.02% medium-term notes at maturity.~~

~~Table of Contents~~

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

~~NiSource Inc.~~

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

On September 14, 2017, NiSource Finance closed its placement of $750.0 million of 3.95% senior notes due 2048. Related to this placement, NiSource settled $750.0 million of aggregate notional value treasury lock agreements, originally entered into to mitigate the interest risk associated with the planned issuance of these notes. Refer to Note 6, "Risk Management Activities," for additional information.

~~On September 15, 2017, NiSource Finance redeemed $210.4 million of 5.25% senior unsecured notes at maturity.~~

~~13. Short-Term Borrowings~~

NiSource generates short-term borrowings from its revolving credit facility, commercial paper program, letter of credit issuances and accounts receivable transfer programs. Each of these borrowing sources is described further below.

NiSource Finance maintains a revolving credit facility to fund ongoing working capital requirements, including the provision of liquidity support for its commercial paper program, provide for issuance of letters of credit and also for general corporate purposes. NiSource Finance's revolving credit facility has a program limit of $1.85 billion and is comprised of a syndicate of banks led by Barclays. At September 30, 2017 and December 31, 2016, NiSource had no outstanding borrowings under this facility.

NiSource Finance's 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. As of September 30, 2017 and December 31, 2016, NiSource had commercial paper outstanding of $581.0 million and $1,178.0 million, respectively.

As of September 30, 2017 and December 31, 2016, NiSource had $13.0 million and $14.7 million of stand-by letters of credit, respectively. All stand-by letters of credit were under the revolving credit facility.

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) in the amount of $262.2 million and $310.0 million as of September 30, 2017 and December 31, 2016, respectively. Refer to Note 8, "Transfers of Financial Assets," for additional information.

~~Short-term borrowings were as follows:~~

(in millions) September 30,
2017 December 31,
2016
Commercial Paper weighted-average interest rate of 1.50% and 1.24% at September 30, 2017 and December 31, 2016, respectively $ 581.0
$ 1,178.0
Accounts receivable securitization facility borrowings 262.2
310.0
Total Short-Term Borrowings $ 843.2
$ 1,488.0

~~Given their maturities are less than 90 days, cash flows related to the borrowings and repayments of the items~~Items listed above are presented net in the Condensed Statements of Consolidated Cash Flows (unaudited). as their maturities are less than 90 days.

~~14.~~15. Other Commitments and Contingencies

A. Guarantees and Indemnities. ~~As a part~~We and certain of ~~normal business, NiSource and certain~~our subsidiaries enter into various agreements providing financial or performance assurance to third parties on behalf of certain ~~subsidiaries.~~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’~~subsidiaries' intended commercial purposes. As of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016, NiSource~~2021, we had issued stand-by letters of credit of ~~$13.0~~$14.4 million and ~~$14.7~~$18.9 million, respectively.

We provide guarantees related to our future performance under BTAs for our renewable generation projects. At March 31, 2022, our guarantees for BTAs totaled $485.2 million. 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 isand 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 Office to resolve the U.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 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 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, 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 March 12, 2020, the Court granted final approval of the settlement 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 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' 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' 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. Briefing on the defendants' 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 ~~is deemed~~we believe to be individually material at this time.

Due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim, proceeding or ~~proceeding~~investigation would not have a material adverse effect on ~~the Company’s~~our results of operations, financial position or liquidity. If one or more ~~of such~~other matters were decided against ~~the Company,~~us, the effects could be material to ~~the Company’s~~our results of operations in the period in which ~~the Company~~we would be required to record or adjust the related liability and could also be material to ~~the Company’s~~our cash flows in the periods ~~the Company~~that we would be required to pay such liability.

~~Table~~C. Other Greater Lawrence Incident Matters. In connection with the Greater Lawrence Incident, Columbia of ~~Contents~~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 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. After the cross motions for 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 its property insurer stipulated to the dismissal of the lawsuit on March 16, 2022.

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

~~NiSource Inc.~~

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

C.D. Environmental Matters.~~NiSource~~ Our operations are subject to environmental statutes and regulations related to air quality, water quality, hazardous waste and solid waste. ~~NiSource believes~~We believe that ~~it is~~we are in substantial compliance with the environmental regulations currently applicable to ~~its~~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 ~~significant portion~~majority of environmental assessment and remediation costs and asset retirement costs, further described below, to be recoverable through ~~rates for certain NiSource companies.~~rates.

As of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016, NiSource~~2021, we had recorded a liability of ~~approximately $112.6~~$91.3 million and ~~$111.4~~$91.1 million, respectively, to cover environmental remediation at various sites. ~~The current portion of this~~This liability is included in ~~"Legal~~"Other accruals" and ~~environmental" in the Condensed Consolidated Balance Sheets (unaudited). The noncurrent portion is included in~~ "Other noncurrent liabilities" in the Condensed Consolidated Balance Sheets (unaudited). ~~NiSource recognizes~~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 ~~currently enacted~~ laws and regulations, the nature and extent of impact and the method of ~~remediation and the availability~~remediation. These

Table of ~~cost recovery. These~~ Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

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

~~Electric Operations' compliance estimates disclosed below are reflective of NIPSCO's Integrated Resource Plan submitted to the IURC on November 1, 2016. See section~~ D~~, "Other Matters," below for additional information.~~

~~Air~~

~~The actions listed below could require further reductions in emissions from various emission sources. NiSource will continue to closely monitor developments in these matters.~~

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

~~National Ambient Air Quality Standards.~~ The CAA requires the EPA to set NAAQS for six "criteria" air pollutants considered harmful to public health and the environment. Periodically, the EPA imposes new, or modifies existing, NAAQS. States containing areas that do not meet the new or revised standards, or contribute significantly to nonattainment of downwind states, may be required to take steps to achieve and maintain compliance with the standards. These steps could include additional pollution controls on boilers, engines, turbines and other facilities owned by electric generation and gas distribution operations.

~~Ozone:~~ On October 26, 2015, the EPA issued a final rule to lower the 8-hour ozone standard from 75 ppb to 70 ppb. After the EPA proceeds with designations, areas where NiSource operates that are currently designated in attainment with the standards may be reclassified as nonattainment. NiSource will continue to monitor this matter and cannot estimate its impact at this time.

~~Clean Power Plan.~~ ~~On October 23, 2015, the EPA issued a final rule to regulate CO~~₂ ~~emissions from existing fossil-fuel EGUs under section 111(d) of the CAA. The final rule establishes national CO~~₂ emission-rate standards that are applied to each state’s mix of affected EGUs to establish state-specific emission-rate and mass-emission limits. The final rule requires each state to submit a plan indicating how the state will meet the EPA's emission-rate or mass-emission limit, including possibly imposing reduction obligations on specific units. If a state does not submit a satisfactory plan, the EPA will impose a federal plan on that state. On February 9, 2016, the U.S. Supreme Court stayed implementation of the CPP until litigation is decided on its merits. On October 16, 2017, the EPA published in the Federal Register a Notice of Proposed Rulemaking that would repeal the CPP. The public will have 60 days to comment on this proposal, after which time the proposal may become final. NIPSCO will continue to monitor this matter and cannot estimate its impact at this time. Should costs be incurred to comply with the CPP, NIPSCO believes such costs will be eligible for recovery through customer rates.

~~Waste~~

CERCLA. ~~NiSource~~Our subsidiaries are potentially responsible parties at waste disposal sites under the CERCLA ~~(commonly known as Superfund)~~ and similar state laws. ~~Additionally, NiSource~~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. A We maintain a program ~~has been instituted~~ to identify and investigate former MGP sites where Gas Distribution Operations subsidiaries or predecessors may have liability. The program has identified 6453 such sites where liability is probable. Remedial actions at many

~~Table of Contents~~

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

~~NiSource Inc.~~

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

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

~~NiSource utilizes~~We utilize a probabilistic model to estimate ~~its~~our future remediation costs related to ~~its~~ MGP sites. The model was prepared with the assistance of a third party and incorporates ~~NiSource~~our experience and general industry experience with remediating MGP sites. ~~NiSource completes~~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, ~~2017. The~~2021. Our total estimated liability ~~at NiSource~~ related to the facilities subject to remediation was ~~$108.0~~$84.8 million and ~~$105.5~~$85.1 million at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, respectively. The liability represents ~~NiSource’s~~our best estimate of the probable cost to remediate the ~~facilities. NiSource believes~~MGP sites. We believe that it is reasonably possible that remediation costs could vary by as much as ~~$25~~$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. ~~On April 17, 2015,~~We are in compliance with the ~~EPA issued a~~EPA's final rule for the regulation of CCRs. The rule regulates CCRs under the RCRA Subtitle D, which determines them to be nonhazardous. The rule is implemented in phases and requires increased groundwater monitoring, reporting, recordkeeping and posting of related information to the Internet. TheCCR rule also ~~establishes requirements related to CCR management and disposal. The rule will allow NIPSCO to continue its byproduct beneficial use program.~~

~~The publication of the CCR rule~~ 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. In addition, to comply with the rule, NIPSCO will be required to incur future capital expenditures to modify its infrastructure and manage CCRs. Capital compliance costs are currently expected to total approximately $193 million. As allowed by the ~~EPA,~~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 ~~filed a petition on November 1, 2016~~will also continue to work with the ~~IURC seeking~~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 cannot estimate the 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 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 ~~projects and recovery of the costs associated with CCR compliance. On June 9, 2017, NIPSCO filed with~~BTA by the IURC, successful execution by NIPSCO of an agreement with a ~~settlement~~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 ~~with certain parties regarding~~ the ~~CCR projects and treatment of associated costs. An evidentiary hearing was held on August 21, 2017 and an order is expected by~~agreed upon contractual date, NIPSCO has the ~~end of 2017.~~

~~Water~~

~~ELG.~~ ~~On November 3, 2015,~~option to purchase at fair market value from the ~~EPA issued a final rule to amend~~tax equity partner the ELG and standards for the Steam Electric Power Generating category. The final rule became effective January 4, 2016. The rule imposes new water treatment and discharge requirements on NIPSCO's electric generating facilities to be applied between 2018 and 2023. On April 25, 2017, the EPA published noticeremaining interest in the Federal Register that the EPA is reconsidering the ELG in response to several petitions for reconsideration. On September 18, 2017, the EPA published notice in the Federal Register their intention to postpone the earliest compliance dates for flue gas desulfurization wastewater and bottom ash transport water requirements to potentially consider revisions to technology and numeric limits achievable. NIPSCO is unable to estimate the impact of the postponement of these compliance dates at this time. Based upon a preliminary engineering study, capital compliance costs are currently expected to cost approximately $170 million. On November 1, 2016, NIPSCO filed a petition with the IURC seeking approval of the projects and recovery of the costs associated with ELG compliance. Given the current postponement of certain compliance dates under the ELG rule, NIPSCO has agreed with the settling parties as part of the settlement agreement discussed in the "CCRs" subsection above, that these ELG projects and related costs would be addressed in a later proceeding.

~~D. Other Matters.~~

~~NIPSCO 2016 Integrated Resource Plan.~~Environmental, regulatory and economic factors, including low natural gas prices and aging coal-fired units, have led NIPSCO to consider modifying its current electric generation supply mix to include less coal-fired generation. Due to enacted CCR and ELG (subsequently postponed) legislation, NIPSCO would expect to incur over $1 billion in operating, maintenance, environmental and other costs over the next seven years if the current fleet of coal-fired generating units remain operational.

On November 1, 2016, NIPSCO submitted its 2016 Integrated Resource Plan with the IURC. The plan evaluated demand-side and supply-side resource alternatives to reliably and cost effectively meet NIPSCO customers' future energy requirements over the ensuing 20 years. The 2016 Integrated Resource Plan indicates that the most viable option for customers and NIPSCO involves the retirement of Bailly Generating Station (Units 7 and 8) as soon as mid-2018 and two units (Units 17 and 18) at the R.M.joint venture.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

Schahfer Generating Station by the end of 2023. It is projected over the long term that the cost to customers to retire these units at these dates will be lower than maintaining and upgrading them for continuing generation.

NiSource and NIPSCO committed to the retirement of the Bailly Generating Station units in connection with the filing of the 2016 Integrated Resource Plan, pending approval by the MISO. In the fourth quarter of 2016, the MISO approved NIPSCO's plan to retire the Bailly Generating Station units by May 31, 2018. In accordance with ASC 980-360, the remaining net book value of the Bailly Generating Station units was reclassified from "Net utility plant" to "Other property, at cost, less accumulated depreciation" on the Condensed Consolidated Balance Sheets (unaudited).

In connection with the MISO's approval of NIPSCO's planned retirement of the Bailly Generating Station units, NiSource recorded $22.1 million of plant retirement-related charges in the fourth quarter of 2016. These charges were comprised of contract termination charges related to NIPSCO's capital lease with Pure Air (discussed further below), voluntary employee severance benefits, and write downs of certain materials and supplies inventory balances.

~~NIPSCO Pure Air.~~ NIPSCO has a service agreement with Pure Air, a general partnership between Air Products and Chemicals, Inc. and First Air Partners LP, under which Pure Air provides scrubber services to reduce sulfur dioxide emissions for Units 7 and 8 at the Bailly Generating Station. Services under this contract commenced on July 1, 1992 and expired on June 30, 2012. The agreement was renewed effective July 1, 2012 for ten years requiring NIPSCO to pay for the services under a combination of fixed and variable charges. NiSource has made an exhaustive effort to obtain information needed from Pure Air to determine the status of Pure Air as a VIE. However, NIPSCO has not been able to obtain this information and, as a result, it is unclear whether Pure Air is a VIE and if NIPSCO is the primary beneficiary. NIPSCO will continue to request the information required to determine whether Pure Air is a VIE. NIPSCO has no exposure to loss related to the service agreement with Pure Air and payments under this agreement were $16.5 million and $16.0 million for the nine months ended September 30, 2017 and 2016, respectively. In accordance with GAAP, the renewed agreement was evaluated to determine whether the arrangement qualifies as a lease. Based on the terms of the agreement, the arrangement qualified for capital lease accounting. As the effective date of the new agreement was July 1, 2012, NiSource capitalized this lease beginning in the third quarter of 2012.

As further discussed above in this Note 14 under the heading "NIPSCO 2016 Integrated Resource Plan," NIPSCO plans to retire the generation station units serviced by Pure Air by May 31, 2018. In December 2016, as allowed by the provisions of the service agreement, NIPSCO provided Pure Air formal notice of intent to terminate the service agreement, effective May 31, 2018. Providing this notice to Pure Air triggered a contract termination liability of $16 million which was recorded in fourth quarter of 2016. This expense was included as part of the plant retirement-related charges discussed above. Payment of this liability is not due until NIPSCO ceases use of the scrubber services. The liability is presented in "Other accruals" on the Condensed Consolidated Balance Sheets (unaudited). In addition, NIPSCO remeasured the remaining capital lease asset and obligation to reflect the change in estimated remaining minimum lease payments. This remeasurement was a non-cash transaction that had no impact on the Statements of Consolidated Income.

~~Technology Services.~~ On December 31, 2013, NiSource Corporate Services Company signed a seven-year agreement with IBM to continue to provide business process and support functions to NiSource under a combination of fixed and variable charges, with the variable charges fluctuating based on the actual need for such services. The agreement was effective January 1, 2014 with a commencement date of April 1, 2014.

In April 2017, NiSource initiated a process to terminate its agreement with IBM and began negotiating contracts with IT service providers other than IBM. The terminated agreement calls for NiSource to pay certain charges in the event of a termination by NiSource for any reason other than material breach by IBM. NiSource and IBM are in discussions with respect to the charges owed IBM. Liabilities recorded related to termination charges as of September 30, 2017 are not material to the Condensed Consolidated Financial Statements (unaudited).

In May and June 2017, NiSource executed agreements with new IT service providers. The new agreements have terms ending at various dates throughout 2022. Knowledge sharing and transition of responsibilities from IBM to the new service providers is currently underway and is expected to be substantially complete by the end of 2017. Costs associated with transition activities, including legal and consulting fees, are expensed as incurred. Annual payments for services received under the new agreements are not expected to result in a material change to NiSource’s aggregate contractual obligations.

~~Table of Contents~~

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

~~NiSource Inc.~~

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

~~15.~~16. Accumulated Other Comprehensive Loss

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

Three Months Ended September 30, 2017 (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, 2017 $ 0.4
$ (18.8 ) $ (17.2 ) $ (35.6 )
Other comprehensive income (loss) before reclassifications 0.1
(9.7 ) —
(9.6 )
Amounts reclassified from accumulated other comprehensive loss —
0.4
1.1
1.5
Net current-period other comprehensive income (loss) 0.1
(9.3 ) 1.1
(8.1 )
Balance as of September 30, 2017 $ 0.5
$ (28.1 ) $ (16.1 ) $ (43.7 )

Nine Months Ended September 30, 2017 (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, 2017 $ (0.6 ) $ (6.9 ) $ (17.6 ) $ (25.1 )
Other comprehensive income (loss) before reclassifications 1.1
(23.3 ) 0.2
(22.0 )
Amounts reclassified from accumulated other comprehensive loss —
2.1
1.3
3.4
Net current-period other comprehensive income (loss) 1.1
(21.2 ) 1.5
(18.6 )
Balance as of September 30, 2017 $ 0.5
$ (28.1 ) $ (16.1 ) $ (43.7 )


(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)

Three Months Ended September 30, 2016 (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, 2016 $ 2.0
$ (139.7 ) $ (18.6 ) $ (156.3 )
Other comprehensive loss before reclassifications (0.3 ) (22.9 ) —
(23.2 )
Amounts reclassified from accumulated other comprehensive loss —
0.3
0.2
0.5
Net current-period other comprehensive income (loss) (0.3 ) (22.6 ) 0.2
(22.7 )
Balance as of September 30, 2016 $ 1.7
$ (162.3 ) $ (18.4 ) $ (179.0 )

Nine Months Ended September 30, 2016 (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, 2016 $ (0.5 ) $ (15.5 ) $ (19.1 ) $ (35.1 )
Other comprehensive income (loss) before reclassifications 2.3
(148.0 ) —
(145.7 )
Amounts reclassified from accumulated other comprehensive loss (0.1 ) 1.2
0.7
1.8
Net current-period other comprehensive income (loss) 2.2
(146.8 ) 0.7
(143.9 )
Balance as of September 30, 2016 $ 1.7
$ (162.3 ) $ (18.4 ) $ (179.0 )

⁽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	(2.2)		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.

~~16.~~

17. Other, Net

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


	Three Months Ended March 31,
(in millions)	2022		2021
Interest income	$	0.9	$	0.9
AFUDC equity	3.0		1.5

Pension and other postretirement non-service benefit	7.6		8.5

Miscellaneous	(0.6)		(0.4)
Total Other, net	$	10.9	$	10.5

18. Business Segment Information

At ~~September 30, 2017, NiSource’s~~Our operations are divided into ~~two~~2 primary reportable ~~segments. The~~segments, the Gas Distribution Operations ~~segment provides natural gas service~~ and ~~transportation for residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana and Massachusetts. The~~the Electric Operations segments. The remainder of our operations, which are not significant enough on a stand-alone basis to warrant treatment as an operating segment, ~~provides electric service in~~ 20 ~~counties in the northern part~~are presented as "Corporate and Other" and primarily are comprised of ~~Indiana.~~

~~Table~~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 ~~Contents~~

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

~~NiSource Inc.~~

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

revenues. The following table provides information about ~~business~~our reportable segments. ~~NiSource uses~~We use operating income as ~~its~~our primary measurement for each of the reported segments and ~~makes~~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) 2017 2016 2017 2016
Gross Revenues
Gas Distribution Operations
Unaffiliated $ 431.1
$ 392.4
$ 2,139.9
$ 1,935.6
Intersegment 3.5
3.1
10.6
9.6
Total 434.6
395.5
2,150.5
1,945.2
Electric Operations
Unaffiliated 485.8
465.4
1,365.5
1,249.2
Intersegment 0.2
0.4
0.6
0.6
Total 486.0
465.8
1,366.1
1,249.8
Corporate and Other
Unaffiliated 0.1
3.5
0.9
10.7
Intersegment 126.4
100.5
367.7
298.1
Total 126.5
104.0
368.6
308.8
Eliminations (130.1 ) (104.0 ) (378.9 ) (308.3 )
Consolidated Gross Revenues $ 917.0
$ 861.3
$ 3,506.3
$ 3,195.5
Operating Income (Loss)
Gas Distribution Operations $ (23.7 ) $ 4.3
$ 362.1
$ 392.7
Electric Operations 124.4
112.8
286.3
251.5
Corporate and Other (1.1 ) (3.4 ) (7.8 ) (10.9 )
Consolidated Operating Income $ 99.6
$ 113.7
$ 640.6
$ 633.3

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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

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 $71.9 million. 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.



Index		Page
Executive Summary		3234
Summary of Consolidated Financial Results		3236
Results and Discussion of Segment Operations		3436
~~Gas Distribution Operations~~	35
~~Electric Operations~~	38
Gas Distribution Operations		37
Electric Operations		40
Liquidity and Capital Resources		4144
~~Off Balance Sheet~~ Regulatory, Environmental and Safety Matters~~Arrangements~~		4348
Market Risk Disclosures		4351
Other Information		4452

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

~~Management’s~~Management's Discussion is designed to provide an understanding of ~~NiSource's~~our operations and financial performance and should be read in conjunction with ~~NiSource’s~~our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2021.

~~NiSource is~~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 ~~seven~~six states. ~~NiSource generates~~We generate substantially all of ~~its~~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”~~''Business'' section of ~~NiSource’s~~our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2021 for further discussion of ~~its~~our regulated utility business segments.

~~NiSource’s~~Our goal is to develop strategies that benefit all stakeholders as ~~it addresses~~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, develops more contemporary pricing structures and embarks on long-term investment programs.~~patterns. These strategies ~~are intended to improve~~focus on improving safety and reliability, enhancing customer service, ensuring customer affordability and ~~safety, enhance customer services and reduce~~reducing emissions while generating sustainable returns. The safety of our customers, communities and employees remains our top priority. The 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, ~~NiSource continues~~we continue to pursue regulatory and legislative initiatives that will allow residential customers not currently on ~~NiSource's~~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, but we are facing challenges as described below. As of 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 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.

~~Summary of Consolidated Financial Results~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions, except per share amounts) 2017 2016 2017 vs. 2016 2017 2016 2017 vs. 2016
Total Net Revenues $ 683.4
$ 643.1
$ 40.3
$ 2,443.6
$ 2,245.9
$ 197.7
Total Operating Expenses 583.8
529.4
54.4
1,803.0
1,612.6
190.4
Operating Income 99.6
113.7
(14.1 ) 640.6
633.3
7.3
Total Other Deductions, net (83.1 ) (81.5 ) (1.6 ) (362.5 ) (263.4 ) (99.1 )
Income Taxes 2.5
8.5
(6.0 ) 97.1
130.6
(33.5 )
Income from Continuing Operations

14.0
23.7
(9.7 ) 181.0
239.3
(58.3 )
Income (Loss) from Discontinued Operations - net of taxes —
3.5
(3.5 ) (0.1 ) 3.4
(3.5 )
Net Income 14.0
27.2
(13.2 ) 180.9
242.7
(61.8 )
Basic Earnings Per Share from Continuing Operations $ 0.04
$ 0.07
$ (0.03 ) $ 0.55
$ 0.74
$ (0.19 )
Basic Average Common Shares Outstanding 331.1
322.3
8.8
326.7
321.4
5.3

OnIn 2021, we announced and filed with the IURC the Preferred Energy Resource Plan associated with our 2021 Integrated Resource Plan ("2021 Plan"). The 2021 Plan lays out a ~~consolidated basis, NiSource reported income from continuing operations of $14.0 million, or $0.04 per basic share~~timeline to retire the Michigan City Generating Station to occur between 2026 and 2028. The 2021 Plan calls for the ~~three months ended September 30, 2017, compared~~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 ~~$23.7 million, or $0.07 per basic share~~existing facilities at the Sugar Creek Generating Station, among other steps. Additionally, the 2021 Plan calls for a natural gas peaking unit to replace existing vintage gas peaking units at the ~~same period~~R.M. Schahfer Generating Station to support system reliability and resiliency, as well as upgrades to the transmission system to enhance 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 are continuing to evaluate potential projects under the 2021 Plan.

NiSource Next: Starting in ~~2016. The decrease in income from continuing~~2021, we optimized our workforce by redefining roles to sharpen our focus on safety and risk mitigation, operational rigor, and adherence to process and procedures, as well as implemented consistent span of control for leadership to increase individual responsibility and clear accountability. Additionally, we began to make advancements across our operations ~~during 2017 was due primarily~~ to ~~decreased operating income, as discussed below.~~

~~For~~improve safety, operational efficiencies, and customer satisfaction through continued standardization of work processes, the ~~three months ended September 30, 2017, NiSource reported operating income~~implementation of ~~$99.6 million compared~~new mobile technology to ~~$113.7 million for~~provide real-time access to information while serving our customers and enhanced customer self-service options to better meet customer expectations. These enhancements set the same period in 2016. The lower operating income was primarily due to increased operating expenses, including higher employee and administrative expenses, increased outside service costs and higher depreciation expense. These increases in operating expenses were partially offset by increased net revenues from new rates from base-rate proceedings and infrastructure replacement programs and increased rates from incremental capital spend on electric transmission projects at NIPSCO. These favorable net revenue drivers were partially offset by the effects of year-over-year weather variations, which reduced revenue in 2017 compared to 2016.

For the nine months ended September 30, 2017, NiSource reported consolidated income from continuing operations of $181.0 million, or $0.55 per basic share compared to $239.3 million, or $0.74 per basic share for the same period in 2016. The decrease

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

NiSource Inc.

foundation for 2022 and beyond, to continue improving safety and customer experience through analytics and 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 ~~income from continuing~~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, ~~during 2017 was due primarily~~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 ~~loss~~level that prevents the generating station from running, and NIPSCO would need to rely on ~~early extinguishment~~market purchases of ~~long-term debt, partially offset by~~replacement power, which could increase the cost of electricity for NIPSCO's customers.

We are faced with increased ~~operating income, as discussed below.~~

~~NiSource's operating income~~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 ~~nine~~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 seen an increase in natural gas costs as the spot market for natural gas has substantially increased since the 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 through 2022. For the quarter ended March 31, 2022, we have not seen this increase have a material impact on our results of operations. For more information on our commodity price impacts, see "Results and Discussion of Segment Operations - Gas Distribution Operations," and " - Market Risk Disclosures."

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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 months ended ~~September 30, 2017 was $640.6 million compared~~March 31, 2022 and 2021 are presented below:


	Three Months Ended March 31,
(in millions, except per share amounts)	2022		2021		Favorable (Unfavorable)
Operating Revenues	$	1,873.3	$	1,545.6	$	327.7
Operating Expenses
Cost of energy	706.7		476.8		(229.9)
Other Operating Expenses	566.3		635.6		69.3
Total Operating Expenses	1,273.0		1,112.4		(160.6)
Operating Income	600.3		433.2		167.1
Total Other Deductions, net	(72.8)		(74.1)		1.3
Income Taxes	96.2		62.6		(33.6)


Net Income	431.3		296.5		134.8
Net income attributable to noncontrolling interest	4.5		1.0		(3.5)
Net Income Attributable to NiSource	426.8		295.5		131.3
Preferred dividends	(13.8)		(13.8)		—
Net Income Available to Common Shareholders	413.0		281.7		131.3
Earnings Per Share
Basic Earnings Per Share	$	1.02	$	0.72	$	0.30
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 ~~$633.3 million for~~ the ~~same period~~customer, resulting in ~~2016.~~ an equal and offsetting amount reflected in operating revenues.

The ~~higher operating~~increase in net income available to common shareholders during 2022 was primarily due to ~~increased net~~higher revenues from ~~new rates from base-rate~~outcomes of gas base rate proceedings and ~~infrastructure replacement~~regulatory capital programs, ~~along with increased rates from incremental capital spend on electric transmission projects at NIPSCO, partially~~as well as an insurance settlement related to the Greater Lawrence Incident, offset by ~~unfavorable effects~~higher costs of ~~weather. The increase~~energy and income taxes in net revenues was partially offset by increased operating expenses due to higher employee and administrative expenses, increased outside service costs, higher material and supplies expenses and increased environmental costs. Additionally, depreciation expense and other taxes increased relative to 2016. These increases in operating expenses were partially offset by decreased amortization expense.

~~Other Income (Deductions), net~~

~~Other income (deductions), net reduced income by $83.1 million in the third quarter of 2017~~2022 compared to ~~a reduction in income of $81.5 million in~~ the ~~prior year.~~

2021. For additional information on the insurance settlement see Note 15, "Other Commitments and Contingencies - C. Other income (deductions), net reduced income by $362.5 million in the nine months ended September 30, 2017 compared to a reduction in income of $263.4 million in the prior year. This change is due primarily to a loss on early extinguishment of long-term debt of $111.5 million which was incurred in 2017. Refer to Note 12, "Long-Term Debt,"Greater Lawrence Incident Matters" in the Notes to the Condensed Consolidated Financial Statements (unaudited) for 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 in 2022 is comparable to the ~~early extinguishment of long-term debt.~~same period in 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.

Income Taxes

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

~~Capital Investment.~~ Intaxes and the nine months ended September 30, 2017, NiSource invested $1,216.4 million in capital expenditures across its gas and electric utilities. These expenditures were primarily aimed at furthering the safety and reliability of NiSource's gas distribution system, construction of new electric transmission assets and maintaining NiSource’s existing electric generation fleet. NiSource continues to execute on an estimated $30 billion in total projected long-term regulated utility infrastructure investments and expects to invest a total of approximately $1.6 to $1.7 billion in capital during 2017 to continue to modernize and improve its system across all seven states.

~~Liquidity.~~ NiSource believes that through income generated from operating activities, amounts available under its short-term revolving credit facility, commercial paper program, accounts receivable securitization facilities, long-term debt agreements and NiSource’s ability to access the capital markets, there is adequate capital available to fund its operating activities and capital expenditures in 2017 and beyond. At September 30, 2017 and December 31, 2016, NiSource had $1,275.3 million and $683.7 million, respectively, of net liquidity available, consisting of cash and available capacity under credit facilities. Additionally, as of September 30, 2017, NiSource has approximately $183 million of available remaining capacity to issue shares of common stock under its ATM program.

These factors and other impacts to the financial results are discussed in more detail within the following discussions of “Results and Discussion of Segment Operations” and “Liquidity and Capital Resources.”

~~Regulatory Developments~~

During the quarter ended September 30, 2017, NiSource continued to move forward on core infrastructure and environmental investment programs supported by complementary regulatory and customer initiatives across all seven states of its operating area. The discussion below summarizes significant regulatory developments that transpired during the third quarter of 2017:

~~Gas Distribution Operations~~

NIPSCO filed a gas base rate case with the IURC on September 27, 2017. The request, which seeks NIPSCO's first natural gas base rate increase in more than 25 years, supports continued investment in system upgrades, technology improvements and other measures to increase pipeline safety and system reliability. If approved as filed, the fully implemented request would increase annual revenues by $143.5 million, inclusive of amounts being recovered through various tracker programs. An order is expectedchange in the ~~second half of 2018.~~effective tax rate.

Columbia of Ohio filed a settlement agreement in its pending application for a five year extension of its IRP on August 18, 2017. This well-established pipeline replacement program, which is currently authorized through December 31, 2017,

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

~~NiSource Inc.~~

~~covers replacement of priority mainline pipe and targeted customer service lines. An order by the PUCO is expected by the end of 2017.~~

New rates went into effect on October 27, 2017 following approval of Columbia of Maryland's base rate case settlement by the MPSC. The settlement supports continued accelerated replacement of aging pipe as well as adoption of additional pipeline safety upgrades and increases annual revenue by $2.4 million.

NIPSCO continues to execute on its seven-year, $850 million gas infrastructure modernization program to further improve system reliability and safety. New rates under NIPSCO's semi-annual tracker update took effect July 1, 2017. The latest update, covering $328.9 million of cumulative net capital spend through June 30, 2017, was filed on August 31, 2017. An order is expected in the fourth quarter of 2017.

On October 31, 2017, Columbia of Massachusetts filed its GSEP for the 2018 construction year. Columbia of Massachusetts is proposing to recover a cumulative revenue requirement of $26.8 million including a waiver to collect the $3.1 million revenue requirement in excess of the GSEP cap provision. If the waiver is not approved, the cumulative revenue requirement will be $23.7 million. An order is expected from the Massachusetts DPU in the second quarter of 2018, with new rates effective May 1, 2018.

~~Electric Operations~~

NIPSCO continues to execute on its seven-year electric infrastructure modernization program, which includes enhancements to its electric transmission and distribution system designed to further improve system safety and reliability. The IURC-approved program represents approximately $1.25 billion of electric infrastructure investments expected to be made through 2022. On June 30, 2017, NIPSCO filed its latest tracker update request, covering $177.3 million in cumulative net capital expenditures through April 30, 2017. An order approving the request was received from the IURC on October 31, 2017.

NIPSCO's request, filed in November 2016, to invest in environmental upgrades at its Michigan City Unit 12 and R.M. Schahfer Units 14 and 15 generating facilities remains pending before the IURC. On June 9, 2017, NIPSCO, along with the Indiana OUCC, the Citizens Action Coalition and a group of NIPSCO industrial customers, submitted a settlement agreement seeking, among other things, approval and cost recovery for the CCR projects and moving ELG-related investments to a later proceeding. An IURC order is expected before the end of 2017.

Refer to Note 5, “Regulatory Matters,” as well as to Note 14, "Other Commitments and Contingencies," in the Notes to Condensed Consolidated Financial Statements (unaudited) for a complete discussion of key regulatory matters.

RESULTS AND DISCUSSION OF SEGMENT OPERATIONS

Presentation of Segment Information

~~NiSource’s~~Our operations are divided into two primary reportable segments: Gas Distribution Operations and Electric Operations. 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

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017 2016 2017 vs. 2016 2017 2016 2017 vs. 2016
Net Revenues
Sales revenues $ 434.6
$ 395.5
$ 39.1
$ 2,150.5
$ 1,945.2
$ 205.3
Less: Cost of gas sold (excluding depreciation and amortization) 94.6
76.1
18.5
662.0
569.6
92.4
Net Revenues 340.0
319.4
20.6
1,488.5
1,375.6
112.9
Operating Expenses

Operation and maintenance 257.9
213.4
44.5
792.3
668.3
124.0
Depreciation and amortization 67.9
64.3
3.6
199.5
188.8
10.7
Other taxes 37.9
37.4
0.5
134.6
125.8
8.8
Total Operating Expenses 363.7
315.1
48.6
1,126.4
982.9
143.5
Operating Income (Loss) $ (23.7 ) $ 4.3
$ (28.0 ) $ 362.1
$ 392.7
$ (30.6 )
Revenues

Residential $ 264.2
$ 247.7
$ 16.5
$ 1,404.4
$ 1,254.9
$ 149.5
Commercial 80.9
71.6
9.3
456.0
402.7
53.3
Industrial 39.7
36.4
3.3
156.5
139.9
16.6
Off-System 30.4
19.9
10.5
97.1
59.4
37.7
Other 19.4
19.9
(0.5 ) 36.5
88.3
(51.8 )
Total $ 434.6
$ 395.5
$ 39.1
$ 2,150.5
$ 1,945.2
$ 205.3
Sales and Transportation (MMDth)

Residential 14.5
13.7
0.8
157.2
169.5
(12.3 )
Commercial 17.3
16.3
1.0
111.3
114.7
(3.4 )
Industrial 125.9
130.4
(4.5 ) 380.3
393.7
(13.4 )
Off-System 11.1
7.4
3.7
33.8
27.3
6.5
Other 0.3
—
0.3
0.2
—
0.2
Total 169.1
167.8
1.3
682.8
705.2
(22.4 )
Heating Degree Days 75
33
42
2,911
3,297
(386 )
Normal Heating Degree Days 85
85
—
3,576
3,608
(32 )
% Warmer than Normal (12 )% (61 )%

(19 )% (9 )%
Gas Distribution Customers
Residential 3,114,223
3,088,525
25,698
Commercial 275,424
274,276
1,148
Industrial 6,163
6,408
(245 )
Other 3
—
3
Total 3,395,813
3,369,209
26,604

~~Net revenues are calculated as gross revenues less the associated cost of sales (excluding depreciation~~Financial and ~~amortization). Cost of sales at~~operational data for the Gas Distribution Operations segment ~~is principally comprised of~~for the ~~cost of natural gas used while providing transportation~~three months ended March 31, 2022 and ~~distribution services to its customers. The majority of the cost of sales~~2021 are ~~tracked costs that are passed through directly to the customer resulting in an equal and offsetting amount reflected in gross revenues.~~presented below:


	Three Months Ended March 31,
(in millions)	2022			2021			Favorable (Unfavorable)
Operating Revenues	$	1,439.8		$	1,138.9		$	300.9
Operating Expenses
Cost of energy	589.1			379.0			(210.1)
Operation and maintenance	277.3			248.8			(28.5)
Depreciation and amortization	100.7			92.9			(7.8)

Loss (gain) on sale of fixed assets and impairments, net	(105.0)			8.1			113.1
Other taxes	66.9			63.2			(3.7)
Total Operating Expenses	929.0			792.0			(137.0)
Operating Income	$	510.8		$	346.9		$	163.9
Revenues
Residential	$	977.6		$	782.3		$	195.3
Commercial	357.5			272.9			84.6
Industrial	68.1			58.2			9.9
Off-System	18.7			14.4			4.3
Other	17.9			11.1			6.8
Total	$	1,439.8		$	1,138.9		$	300.9
Sales and Transportation (MMDth)
Residential	122.9			118.4			4.5
Commercial	79.9			74.3			5.6
Industrial	135.1			136.4			(1.3)
Off-System	4.3			5.4			(1.1)
Other	0.2			0.2			—
Total	342.4			334.7			7.7
Heating Degree Days	2,841			2,703			138
Normal Heating Degree Days	2,824			2,854			(30)
% Colder (Warmer) than Normal	1		%	(5)		%
% Colder than 2021	5		%
Gas Distribution Customers
Residential	2,980,965			2,965,004			15,961
Commercial	254,876			254,188			688
Industrial	4,920			4,965			(45)
Other	3			3			—
Total	3,240,764			3,224,160			16,604

Comparability of ~~line item operating results~~operation and maintenance expenses, depreciation and amortization, and other taxes may ~~also~~ be impacted by regulatory, depreciation and tax ~~and depreciation~~ trackers ~~(other than those for cost of sales)~~ that allow for the recovery in rates of certain costs. ~~Therefore, increases in these tracked operating expenses are offset by increases in net revenues and have essentially no impact on income from continuing operations.~~

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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~~The underlying reasons for changes in our operating revenues for the three months ended ~~September 30, 2017 vs. September 30, 2016 Operating Income~~

~~For the third quarter of 2017, Gas Distribution Operations reported an operating loss of $23.7 million, versus operating income of $4.3 million in the comparable 2016 period.~~

~~Net revenues for third quarter of 2017 were $340.0 million, an increase of $20.6 million from the same period in 2016. The change in net revenues was primarily driven by:~~

~~New rates from base-rate proceedings and infrastructure replacement programs of $16.0 million.~~

~~Higher revenues from increased industrial, commercial and residential customer usage of $2.9 million.~~

~~The effects of increased residential customer growth of $1.3 million.~~

~~Operating expenses were $48.6 million higher for the third quarter of 2017~~March 31, 2022 compared to the same period in ~~2016. This change was primarily driven by:~~2021 are presented below.

Increased employee and administrative expenses of $25.4 million which includes the impact of a pension settlement charge recorded in 2017 along with a charge related to Columbia of Pennsylvania's portion of a 2017 pension contribution which, per regulatory order, is expensed on a cash basis.

~~Higher outside service costs of $14.4 million due to increased line locating expenses and IT service provider transition costs.~~

~~Increased depreciation of $3.6 million due to higher capital expenditures placed in service.~~

~~Nine months ended September 30, 2017 vs. September 30, 2016 Operating Income~~

~~For the nine months ended September 30, 2017, Gas Distribution Operations reported operating income of $362.1 million, a decrease of $30.6 million from the comparable 2016 period.~~

~~Net revenues for the nine months ended September 30, 2017 were $1,488.5 million, an increase of $112.9 million from the same period in 2016. The change in net revenues was primarily driven by:~~

~~New rates from base-rate proceedings and infrastructure replacement programs of $97.1 million.~~

~~Higher regulatory, tax and depreciation trackers, which are offset in expense, of $24.7 million.~~

~~The effects of increased residential customer growth of $5.7 million.~~

~~Partially offset by:~~

~~The effects of warmer weather of $14.6 million.~~

~~Operating expenses were $143.5 million higher for the nine months ended September 30, 2017 compared to the same period in 2016. This change was primarily driven by:~~

~~Increased employee and administrative expenses of $51.3 million which includes the impact of the aforementioned pension settlement charge and pension contribution.~~

~~Higher outside service costs of $32.9 million due to IT service provider transition costs and increased line locating expenses.~~

~~Higher regulatory, tax and depreciation trackers, which are offset in net revenues, of $24.7 million.~~

~~Increased depreciation of $9.7 million due to higher capital expenditures placed in service.~~

~~Increased property taxes of $6.9 million due to higher capital expenditures placed in service and an accrual adjustment recorded in 2016.~~

~~Higher environmental costs of $4.9 million.~~


	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, ~~NiSource calculates~~we calculate the weather-related revenue variance based on changing customer demand driven by weather variance from normal heating degree ~~days. NiSource's~~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 ~~the~~our aggregated ~~NiSource~~ composite heating degree day comparison.

~~Table of Contents~~Throughput

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

~~NiSource Inc.~~

~~Gas Distribution Operations~~

~~Weather~~The increase in ~~the Gas Distribution Operations service territories~~total volumes for the ~~third quarter of 2017 was about 12% warmer than normal and about 127% colder than 2016, leading to increased net revenues of $0.2 million for the quarter~~three months ended ~~September 30, 2017~~March 31, 2022 compared to ~~2016.~~

~~Weather~~the same period in the Gas Distribution Operations service territories for the nine months ended September 30, 2017 was about 19% warmer than normal and about 12% warmer than 2016, resulting in decreased net revenues of $14.6 million for the nine months ended September 30, 2017 compared to 2016.

~~Throughput~~

~~Total volumes sold and transported for the third quarter of 2017 were 169.1 MMDth, compared to 167.8 MMDth for 2016.~~

~~Total volumes sold and transported for the nine months ended September 30, 2017 were 682.8 MMDth, compared to 705.2 MMDth for 2016. This 3% decrease~~2021 is primarily attributable to the effects of ~~warmer weather in 2017.~~colder weather.

~~Economic Conditions~~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 ~~NiSource~~of our Gas Distribution Operations companies have state-approved recovery mechanisms that provide a means for full recovery of prudently incurred gas costs. ~~Gas~~These are tracked costs that are ~~treated as pass-through costs~~passed through directly to the customer, and ~~have no impact on~~ the ~~net revenues recorded in the period. The~~ gas costs included in revenues are matched with the gas cost expense recorded in the ~~period and 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.

~~At NIPSCO, sales~~ Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and customer billings are adjusted for amounts related to under and over-recovered purchased gas costs from prior periods per regulatory order. These amounts are primarily reflected in the “Other” gross revenues statistic provided at the beginning of this segment discussion. The adjustments to other gross revenues for the quarter ended September 30, 2017 and 2016 were a revenue decrease of $0.3 million and a revenue increase of $4.4 million, respectively. The adjustments to other gross revenues for the nine months ended September 30, 2017 and 2016 were a revenue decrease of $29.3 million and a revenue increase of $15.2 million, respectively.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. ~~These programs serve to further reduce NiSource's exposure to gas prices.~~

Table of Contents

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

NiSource Inc.

~~Electric~~Gas Distribution Operations

Net revenues are calculated as gross revenues less the associated cost of sales (excluding depreciation and amortization). Cost of sales at the Electric Operations segment is principally comprised of the cost of coal, related handling costs, natural gas purchasedThe underlying reasons for changes in our operating expenses for the internal generation of electricity at NIPSCO and the cost of power purchased from third-party generators of electricity. The majority of the cost of sales are tracked costs that are passed through directlythree months ended March 31, 2022 compared to the ~~customer resulting~~same period in ~~an equal~~2021 are presented below.


	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)

(1)See Note 15, ''Other Commitments and ~~offsetting amount reflected~~Contingencies,'' in ~~gross revenues.~~the Notes to Condensed Consolidated Financial Statements (unaudited) for additional information.

Comparability of line item operating results may also be impacted by regulatory and depreciation trackers (other than those for cost of sales) that allow for the recovery in rates of certain costs. Therefore, increases in these tracked operating expenses are offset by increases in net revenues and have essentially no impact on income from continuing operations.

Table of Contents

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

NiSource Inc.

Electric Operations

~~Three~~Financial and operational data for the Electric Operations segment for the three months ended ~~September 30, 2017 vs. September 30, 2016 Operating Income~~March 31, 2022 and 2021 are presented below:

~~For the third quarter~~


	Three Months Ended March 31,
(in millions)		2022		2021		Favorable (Unfavorable)

Operating Revenues		430.3		$	402.7	$	27.6


Operating Expenses
Cost of energy		117.6		97.8		(19.8)
Operation and maintenance		116.6		119.1		2.5
Depreciation and amortization		82.9		83.4		0.5

Other taxes		14.0		14.5		0.5
Total Operating Expenses		331.1		314.8		(16.3)
Operating Income		$	99.2	$	87.9	$	11.3
Revenues
Residential		$	138.5	$	129.2	$	9.3
Commercial		134.5		122.9		11.6
Industrial		130.0		123.1		6.9
Wholesale		2.6		3.4		(0.8)
Other		24.7		24.1		0.6
Total		$	430.3	$	402.7	$	27.6
Sales (GWh)
Residential		819.2		804.6		14.6
Commercial		885.3		867.9		17.4
Industrial		2,007.8		2,063.3		(55.5)
Wholesale		4.4		32.1		(27.7)
Other		25.1		27.3		(2.2)
Total		3,741.8		3,795.2		(53.4)




Electric Customers
Residential		423,177		419,582		3,595
Commercial		58,092		57,538		554
Industrial		2,135		2,156		(21)
Wholesale		712		720		(8)
Other		2		2		—
Total		484,118		479,998		4,120

Comparability of ~~2017, Electric Operations reported operating income of $124.4 million, an increase of $11.6 million from the comparable 2016 period.~~

~~Net revenues for the third quarter of 2017 were $347.0 million, an increase of $23.2 million from the same period in 2016. The change in net revenues was primarily driven by:~~

~~Partially offset by:~~

•~~The effects of cooler weather of $10.8 million.~~

~~Operating expenses were $11.6 million higher~~that allow for the ~~third quarter~~recovery in rates of ~~2017~~certain costs.

Table of Contents

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 revenues for the three months ended March 31, 2022 compared to the same period in ~~2016. This change was primarily driven by:~~2021 are presented below.

~~Higher regulatory and depreciation trackers, which are offset in net revenues, of $5.4 million.~~

~~Nine months ended September 30, 2017 vs. September 30, 2016 Operating Income~~

~~For the nine months ended September 30, 2017, Electric Operations reported operating income of $286.3 million, an increase of $34.8 million from the comparable 2016 period.~~

~~Net revenues for the nine months ended September 30, 2017 were $965.2 million, an increase of $95.4 million from the same period in 2016. The change in net revenues was primarily driven by:~~

~~Partially offset by:~~

~~Operating expenses were $60.6 million higher for the nine months ended September 30, 2017 compared to the same period in 2016. This change was primarily driven by:~~

Changes in Operating Revenues (in millions)

In general, ~~NiSource calculates~~we calculate the weather-related revenue variance based on changing customer demand driven by weather variance from normal heating or cooling degree days. ~~NiSource's~~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 ~~the~~our aggregated ~~NiSource~~ composite heating or cooling degree day comparison.

~~Table of Contents~~Sales

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

~~NiSource Inc.~~

~~Electric Operations~~

~~Weather~~The decrease in ~~the Electric Operations’ territories~~total volumes sold for the ~~third quarter of 2017 was about 5% cooler than normal and about 24% cooler than 2016, resulting in decreased net revenues of $10.8 million for the quarter ended September 30, 2017 compared to 2016.~~

~~Weather in the Electric Operations’ territories for the nine~~three months ended ~~September 30, 2017 was about 3% warmer than normal and about 18% cooler than 2016, resulting in decreased net revenues of $17.3 million for the nine months ended September 30, 2017 compared to 2016.~~

~~Electric Operations sales for the third quarter of 2017 were 4,473.2 gwh, a decrease of 175.4 gwh~~March 31, 2022 compared to the same period in ~~2016. The 4% decrease is~~2021 was primarily attributable to decreased ~~residential sales from~~usage primarily by industrial customers.

Commodity Price Impact

Cost of energy for the ~~cooler weather in the current year.~~

Electric Operations ~~sales~~segment is principally comprised of the cost of coal, natural gas purchased for internal generation of electricity at NIPSCO, and the ~~nine months ended September 30, 2017 were 12,709.0 gwh, a decrease~~cost of ~~171.3 gwh compared to the same period in 2016. The 1% decrease is primarily attributed to decreased residential sales~~power purchased from ~~cooler weather in the current year.~~

~~Economic Conditions~~

generators of electricity. NIPSCO has a state-approved recovery mechanism that provides a means for full recovery of prudently incurred ~~fuel costs. Fuel~~ costs of energy. The majority of these costs of energy are ~~treated as pass-through~~passed through directly to the customer, and the costs ~~and have no impact on~~of energy included in operating revenues are matched with the ~~net revenues~~cost of energy expense recorded in the period. The ~~fuel costs included in revenues are matched with the fuel cost expense recorded in the period and 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.

~~At NIPSCO, sales~~ Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and ~~customer billings are adjusted~~have essentially no impact on net income.

Table of Contents

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

NiSource Inc.

Electric Operations

The underlying reasons for ~~amounts related to under and over-recovered purchased fuel costs from prior periods per regulatory order. These amounts are primarily reflected~~changes in ~~the “Other” gross revenues statistic provided at the beginning of this segment discussion. The adjustments to other gross revenues~~our operating expenses for the ~~quarter ended September 30, 2017 and 2016 were a revenue increase of $7.8 million and $16.1 million, respectively. The adjustments to other gross revenues for the nine~~three months ended ~~September 30, 2017 and 2016 were a revenue increase of $6.9 million and $34.5 million, respectively.~~

~~NIPSCO 2016 Integrated Resource Plan.~~ Environmental, regulatory and economic factors, including low natural gas prices and aging coal-fired units, have led NIPSCO to consider modifying its current electric generation supply mix to include less coal-fired generation. Due to enacted CCR and ELG (subsequently postponed) legislation, NIPSCO would expect to incur over $1 billion in operating, maintenance, environmental and other costs over the next seven years if the current fleet of coal-fired generating units remain operational.

~~NiSource and NIPSCO committed~~March 31, 2022 compared to the ~~retirement of the Bailly Generating Station units~~same period in connection with the filing of the 2016 Integrated Resource Plan, pending approval by the MISO. In the fourth quarter of 2016, the MISO approved NIPSCO's plan to retire the Bailly Generating Station units by May 31, 2018.2021 are presented below.

Changes in Operating Expenses (in millions)

Lower depreciation and amortization expense driven by the joint venture depreciation adjustment(1)

(1)See Note ~~14-D, "Other~~7, "Regulatory Matters," in the Notes to Condensed Consolidated Financial Statements (unaudited) for additional information.

Electric Supply and Generation Transition

NIPSCO continues to execute on an electric generation transition consistent with the 2018 Plan, which outlines plans to retire its remaining coal-fired generation by 2028, to be replaced by lower-cost, reliable and cleaner options. 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 retired R.M. Schahfer Generating Station Units 14 and 15 on October 1, 2021. The remaining two coal units are currently expected to be retired by the end of 2025. See additional discussion in Part II, Item 1A. Risk Factors. See "Expected Project Delays" discussion, below, for anticipated barriers to the 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.

Table of Contents

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 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)

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

Expected Project Delays.Compared to the previously disclosed targeted construction completion dates in our Annual Report on Form 10-K for 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 pending U.S. Department of Commerce investigation on Antidumping and Countervailing Duties petition filed by a domestic solar manufacturer (the "DOC Investigation"), (ii) the U.S. Department of Homeland Security's June 2021 Withhold Release Order 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 resolution of these issues, including the final conclusion of the DOC Investigation will determine what additional costs or delays our solar 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 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 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 economic viability of the projects.

For additional discussion on the foregoing matters, see Part II, Item 1A. Risk Factors.

Table of Contents

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 March 31, 2022, the ATM program (including the impact of the forward sale agreement) had approximately $300.0 million of equity available for issuance. We also expect to remarket the Series C Mandatory Convertible Preferred stock prior to December 1, 2023, which could result in additional cash proceeds. 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 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 ~~from continuing operations~~ for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 was ~~$529.5~~$579.8 million, ~~a decrease~~an increase of ~~$3.3~~$131.5 million compared to the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2021. This ~~decrease~~increase was primarily driven by pension plan contributions in 2017 partially offset by a combination of changes in weather, gas prices and the related approved rates for recovery, which significantly impacted regulatory assets and regulatory liabilities between the two periods.

~~Regulatory Assets and Liabilities.~~ ~~During the nine months ended September 30, 2016, over-collected gas costs from 2015 were returned to customers resulting in a use of cash. In 2017, less~~year over year increased cash ~~was required to be returned to customers because the balance of over-collected gas costs from 2016 was smaller than in 2015.~~

~~Pension and Other Postretirement Plan Funding.~~ For the nine months ended September 30, 2017, NiSource contributed $281.6 million to its pension plans (including a $277 million discretionary contribution made during the third quarter of 2017) and $21.8 million to its other postretirement benefit plans. Given the current funded status of the pension plans (and barring unforeseen market volatility that would negatively impact the valuation of its plan assets), NiSource does not believe material contributions to its pension plans will be required for the foreseeable future.

~~NiSource will continue to contribute to its other postretirement plans. In total, NiSource expects to contribute $25.3 million to these plans in 2017.~~

~~For the nine months ended September 30, 2016, NiSource contributed $2.7 million to its pension plans and $18.6 million to its other postretirement benefit plans.~~

~~Income Taxes.~~ ~~As of September 30, 2017, NiSource has a recorded deferred tax asset of $818.1 million~~inflows related to ~~a Federal NOL carryforward. As a result~~the collection of being in an NOL position, NiSource was not required to make any cash payments for Federal income tax purposes during the nine months ended September 30, 2017 or 2016. This NOL carryforward expires in 2030; however, NiSource expects to fully utilize the carryforward benefit prior to its expiration.under-recovered gas and fuel costs.



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

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


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	NI	NYSE
Depositary Shares, each representing a 1/1,000th ownership interest in a share of 6.50% Series B 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


						Page

			Defined Terms			3

PART I			FINANCIAL INFORMATION

					~~Page~~

	~~Defined Terms~~		3

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

	Item 1.	Financial Statements - unaudited

				Condensed Statements of Consolidated Income(unaudited)		67

				Condensed Statements of Consolidated Comprehensive Income (unaudited)		78

				Condensed Consolidated Balance Sheets (unaudited)		89

				Condensed Statements of Consolidated Cash Flows (unaudited)		1011

				Condensed Statements of Consolidated Equity (unaudited)		1112

				Notes to Condensed Consolidated Financial Statements (unaudited)		1214

			Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3133

			Item 3.	Quantitative and Qualitative Disclosures About Market Risk		4553

			Item 4.	Controls and Procedures		4553

PART II			OTHER INFORMATION

			Item 1.	Legal Proceedings		4654

			Item 1A.	Risk Factors		4654

			Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		4655

			Item 3.	Defaults Upon Senior Securities		4655

			Item 4.	Mine Safety Disclosures		4655

	~~Item 5.~~	~~Other Information~~	46

	~~Item 6.~~	~~Exhibits~~	47

	~~Signature~~		48


	Item 5.
~~DEFINED TERMS~~Other Information	55

	Item 6.	Exhibits	56

	Signature		57



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except per share amounts)	2017			2016			2017			2016
Net Revenues
Gas Distribution	$	239.4		$	212.3		$	1,403.0		$	1,244.3
Gas Transportation	191.6			180.0			735.1			689.5
Electric	485.8			465.5			1,365.5			1,249.2
Other	0.2			3.5			2.7			12.5
Gross Revenues	917.0			861.3			3,506.3			3,195.5
Cost of Sales (excluding depreciation and amortization)	233.6			218.2			1,062.7			949.6
Total Net Revenues	683.4			643.1			2,443.6			2,245.9
Operating Expenses
Operation and maintenance	383.3			336.6			1,184.9			1,028.9
Depreciation and amortization	143.0			136.3			428.5			406.0
Gain on sale of assets and impairments, net	—			(0.1		)	(0.1		)	(0.4		)
Other taxes	57.5			56.6			189.7			178.1
Total Operating Expenses	583.8			529.4			1,803.0			1,612.6
Operating Income	99.6			113.7			640.6			633.3
Other Income (Deductions)
Interest expense, net	(87.9		)	(85.0		)	(260.8		)	(261.5		)
Other, net	4.8			3.5			9.8			(1.9		)
Loss on early extinguishment of long-term debt	—			—			(111.5		)	—
Total Other Deductions, Net	(83.1		)	(81.5		)	(362.5		)	(263.4		)
Income from Continuing Operations before Income Taxes	16.5			32.2			278.1			369.9
Income Taxes	2.5			8.5			97.1			130.6
Income from Continuing Operations	14.0			23.7			181.0			239.3
Income (Loss) from Discontinued Operations - net of taxes	—			3.5			(0.1		)	3.4
Net Income	14.0			27.2			180.9			242.7
Basic Earnings Per Share
Continuing operations	$	0.04		$	0.07		$	0.55		$	0.74
Discontinued operations	—			0.01			—			0.02
Basic Earnings Per Share	$	0.04		$	0.08		$	0.55		$	0.76
Diluted Earnings Per Share
Continuing operations	$	0.04		$	0.07		$	0.55		$	0.74
Discontinued operations	—			0.01			—			0.01
Diluted Earnings Per Share	$	0.04		$	0.08		$	0.55		$	0.75
Dividends Declared Per Common Share	$	0.175		$	0.165		$	0.700		$	0.640
Basic Average Common Shares Outstanding	331.1			322.3			326.7			321.4
Diluted Average Common Shares	332.4			323.9			328.0			323.2

NiSource Inc. Condensed Consolidated Balance Sheets (unaudited)

(in millions)	September 30, 2017			December 31, 2016
ASSETS
Property, Plant and Equipment
Utility plant	$	20,657.6		$	19,368.0
Accumulated depreciation and amortization	(6,906.2		)	(6,613.7		)
Net utility plant	13,751.4			12,754.3
Other property, at cost, less accumulated depreciation	290.7			313.7
Net Property, Plant and Equipment	14,042.1			13,068.0
Investments and Other Assets
Unconsolidated affiliates	5.6			6.6
Other investments	207.7			193.3
Total Investments and Other Assets	213.3			199.9
Current Assets
Cash and cash equivalents	19.3			26.4
Restricted cash	9.0			9.6
Accounts receivable (less reserve of $17.4 and $23.3, respectively)	480.0			847.0
Gas inventory	325.2			279.9
Materials and supplies, at average cost	102.3			101.7
Electric production fuel, at average cost	84.0			112.8
Exchange gas receivable	42.9			5.4
Regulatory assets	203.9			248.7
Prepayments and other	65.8			130.6
Total Current Assets	1,332.4			1,762.1
Other Assets
Regulatory assets	1,666.2			1,636.7
Goodwill	1,690.7			1,690.7
Intangible assets	234.4			242.7
Deferred charges and other	90.4			91.8
Total Other Assets	3,681.7			3,661.9
Total Assets	$	19,269.5		$	18,691.9

NiSource Inc. Condensed Statements of Consolidated Cash Flows (unaudited)

Nine Months Ended September 30, (in millions)	2017			2016
Operating Activities
Net Income	$	180.9		$	242.7
Adjustments to Reconcile Net Income to Net Cash from Continuing Operations:
Loss on early extinguishment of debt	111.5			—
Depreciation and amortization	428.5			406.0
Deferred income taxes and investment tax credits	96.3			137.7
Other adjustments	28.5			24.5
Changes in Assets and Liabilities:
Components of working capital	32.6			(52.0		)
Regulatory assets/liabilities	(12.9		)	(202.2		)
Postretirement and postemployment benefits	(314.5		)	(20.9		)
Other noncurrent assets	(3.7		)	(3.0		)
Other noncurrent liabilities	(17.7		)	—
Net Operating Activities from Continuing Operations	529.5			532.8
Net Operating Activities from (used for) Discontinued Operations	0.1			(0.8		)
Net Cash Flows from Operating Activities	529.6			532.0
Investing Activities
Capital expenditures	(1,216.4		)	(1,083.4		)
Cost of removal	(78.9		)	(79.5		)
Purchases of available-for-sale securities	(139.4		)	(33.4		)
Sales of available-for-sale securities	129.4			25.9
Other investing activities	(0.8		)	2.2
Net Cash Flows used for Investing Activities	(1,306.1		)	(1,168.2		)
Financing Activities
Issuance of long-term debt	2,750.0			500.0
Repayments of long-term debt and capital lease obligations	(1,352.4		)	(210.9		)
Premiums and other debt related costs	(139.8		)	(0.3		)
Change in short-term borrowings, net	(644.9		)	491.6
Issuance of common stock	332.6			16.8
Acquisition of treasury stock	(5.9		)	(8.1		)
Dividends paid - common stock	(170.2		)	(152.3		)
Net Cash Flows from Financing Activities	769.4			636.8
Change in cash and cash equivalents from (used for) continuing operations	(7.2		)	1.4
Change in cash and cash equivalents from (used for) discontinued operations	0.1			(0.8		)
Cash and cash equivalents at beginning of period	26.4			15.5
Cash and Cash Equivalents at End of Period	$	19.3		$	16.1



As of September 30, (in millions)	2017		2016
Non-cash transactions:
Capital expenditures included in current liabilities	$	219.1	$	131.2
Dividends declared but not paid	$	58.9	$	53.1



Shares (in thousands)	Common Shares	Treasury Shares		Outstanding Shares
Balance as of January 1, 2017	326,664	(3,504	)	323,160
Treasury Stock acquired		(245	)	(245	)
Issued:
Employee stock purchase plan	155	—		155
Long-term incentive plan	241	—		241
401(k) and profit sharing	1,188	—		1,188
Dividend reinvestment plan	261	—		261
ATM program	11,931	—		11,931
Balance as of September 30, 2017	340,440	(3,749	)	336,691



	Three Months Ended		Nine Months Ended
	September 30,		September 30,
(in thousands)	2017	2016	2017	2016
Denominator
Basic average common shares outstanding	331,139	322,318	326,662	321,445
Dilutive potential common shares:
Shares contingently issuable under employee stock plans	604	228	503	146
Shares restricted under employee stock plans	653	1,372	866	1,606
Diluted Average Common Shares	332,396	323,918	328,031	323,197



(in millions)	September 30, 2017		December 31, 2016
Risk Management Assets - Current⁽¹⁾
Interest rate risk programs	$	—	$	17.0
Commodity price risk programs	0.2		7.4
Total	$	0.2	$	24.4
Risk Management Assets - Noncurrent⁽²⁾
Interest rate risk programs	$	20.1	$	17.1
Commodity price risk programs	0.7		7.5
Total	$	20.8	$	24.6
Risk Management Liabilities - Current⁽³⁾
Interest rate risk programs	$	36.9	$	15.3
Commodity price risk programs	3.3		1.5
Total	$	40.2	$	16.8
Risk Management Liabilities - Noncurrent
Interest rate risk programs	$	—	$	24.5
Commodity price risk programs	28.7		20.0
Total	$	28.7	$	44.5



September 30, 2017 (in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities
U.S. Treasury debt securities	$	34.3	$	—	$	(0.1	)	$	34.2
Corporate/Other debt securities	104.2		1.3		(0.4		)	105.1
Total	$	138.5	$	1.3	$	(0.5	)	$	139.3
December 31, 2016 (in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities
U.S. Treasury debt securities	$	35.0	$	0.1	$	(0.6	)	$	34.5
Corporate/Other debt securities	98.7		0.3		(2.0		)	97.0
Total	$	133.7	$	0.4	$	(2.6	)	$	131.5



(in millions)	Carrying Amount as of September 30, 2017		Estimated Fair Value as of September 30, 2017		Carrying Amount as of Dec. 31, 2016		Estimated Fair Value as of Dec. 31, 2016
Long-term debt (including current portion)	$	7,808.4	$	8,550.7	$	6,421.3	$	7,064.1



	Pension Benefits						Other Postretirement Benefits
Three Months Ended September 30, (in millions)	2017			2016			2017			2016
Components of Net Periodic Benefit Cost
Service cost⁽¹⁾	$	7.4		$	7.7		$	1.2		$	1.3
Interest cost⁽¹⁾	17.1			22.4			4.5			5.5
Expected return on assets	(30.8		)	(33.2		)	(4.0		)	(4.3		)
Amortization of prior service credit	(0.1		)	—			(1.1		)	(1.2		)
Recognized actuarial loss	13.2			15.3			0.7			0.8
Settlement loss	10.6			—			—			—
Total Net Periodic Benefit Cost	$	17.4		$	12.2		$	1.3		$	2.1



	August 31, 2017		December 31, 2016
Weighted-average Assumption to Determine Benefit Obligation:
Discount rate	3.50	%	4.03	%
Weighted-average Assumptions to Determine Net Periodic Benefit Costs for the period ended:
Discount rate - service cost⁽¹⁾	4.40	%	4.24	%
Discount rate - interest cost⁽¹⁾	3.31	%	4.24	%
Expected return on assets	7.25	%	8.00	%



Three Months Ended September 30, 2017 (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, 2017	$	0.4		$	(18.8	)	$	(17.2	)	$	(35.6	)
Other comprehensive income (loss) before reclassifications	0.1			(9.7		)	—			(9.6		)
Amounts reclassified from accumulated other comprehensive loss	—			0.4			1.1			1.5
Net current-period other comprehensive income (loss)	0.1			(9.3		)	1.1			(8.1		)
Balance as of September 30, 2017	$	0.5		$	(28.1	)	$	(16.1	)	$	(43.7	)

Nine Months Ended September 30, 2017 (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, 2017	$	(0.6	)	$	(6.9	)	$	(17.6	)	$	(25.1	)
Other comprehensive income (loss) before reclassifications	1.1			(23.3		)	0.2			(22.0		)
Amounts reclassified from accumulated other comprehensive loss	—			2.1			1.3			3.4
Net current-period other comprehensive income (loss)	1.1			(21.2		)	1.5			(18.6		)
Balance as of September 30, 2017	$	0.5		$	(28.1	)	$	(16.1	)	$	(43.7	)



	Three Months Ended September 30,									Nine Months Ended September 30,
(in millions, except per share amounts)	2017			2016			2017 vs. 2016			2017			2016			2017 vs. 2016
Total Net Revenues	$	683.4		$	643.1		$	40.3		$	2,443.6		$	2,245.9		$	197.7
Total Operating Expenses	583.8			529.4			54.4			1,803.0			1,612.6			190.4
Operating Income	99.6			113.7			(14.1		)	640.6			633.3			7.3
Total Other Deductions, net	(83.1		)	(81.5		)	(1.6		)	(362.5		)	(263.4		)	(99.1		)
Income Taxes	2.5			8.5			(6.0		)	97.1			130.6			(33.5		)
Income from Continuing Operations	14.0			23.7			(9.7		)	181.0			239.3			(58.3		)
Income (Loss) from Discontinued Operations - net of taxes	—			3.5			(3.5		)	(0.1		)	3.4			(3.5		)
Net Income	14.0			27.2			(13.2		)	180.9			242.7			(61.8		)
Basic Earnings Per Share from Continuing Operations	$	0.04		$	0.07		$	(0.03	)	$	0.55		$	0.74		$	(0.19	)
Basic Average Common Shares Outstanding	331.1			322.3			8.8			326.7			321.4			5.3


	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


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

Columbia of Pennsylvania(1)	10.95	%	None specified		$	98.3	$	58.5	March 30, 2021	Approved December 16, 2021	December 2021
Columbia of Maryland	10.85	%	9.65	%	$	4.8	$	2.4	May 14, 2021	Approved December 3, 2021	December 2021
Columbia of Kentucky(2)	10.30	%	9.35	%	$	26.7	$	18.3	May 28, 2021	Approved December 28, 2021	January 2022
Columbia of Virginia(3)	10.95	%	None specified		$	14.2	$	1.3	August 28, 2018	Approved June 12, 2019	February 2019
Columbia of Ohio	11.50	%	10.39	%	$	87.8	$	47.1	March 3, 2008	Approved December 3, 2008	December 2008
NIPSCO - Gas	10.70	%	9.85	%	$	138.1	$	105.6	September 27, 2017	Approved September 19, 2018	October 2018
NIPSCO - Electric	10.80	%	9.75	%	$	21.4	$	(53.5)	October 31, 2018	Approved December 4, 2019	January 2020
Active Rate Cases
Columbia of Ohio(4)	10.95	%	In process		$	221.4	In process		June 30, 2021	Order Expected Q3 2022	Q3 2022
NIPSCO - Gas(5)	10.50	%	In process		$	109.7	In process		September 29, 2021	Order Expected Q3 2022	September 2022
Columbia of Pennsylvania	11.20	%	In process		$	82.2	In process		March 18, 2022	Order Expected Q4 2022	December 2022
Columbia of Virginia(6)	10.75	%	In process		$	40.6	In process		April 29, 2022	Pending procedural schedule	October 2022


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

~~(4.1)~~(31.1)		~~Form of 3.490% Notes due 2027 (incorporated by reference to Exhibit 4.1 to the NiSource Inc. Form 8-K filed on May 17, 2017).~~

~~(4.2)~~	~~Form of 4.375% Notes due 2047 (incorporated by reference to Exhibit 4.2 to the NiSource Inc. Form 8-K filed on May 17, 2017).~~

~~(4.3)~~	~~Form of 3.950% Notes due 2048 (incorporated by reference to Exhibit 4.1 to the NiSource Inc. Form 8-K filed on September 8, 2017).~~

~~(12)~~	~~Ratio of Earnings to Fixed Charges.~~*

~~(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.