

~~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).

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 June 30, 2022 (in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other(2)		Total
Customer Revenues(1)
Residential	$	465.0	$	137.0	$	—	$	602.0
Commercial	160.6		134.7		—		295.3
Industrial	48.1		138.7		—		186.8
Off-system	59.1		—		—		59.1
Miscellaneous	8.6		4.7		—		13.3
Total Customer Revenues	$	741.4	$	415.1	$	—	$	1,156.5
Other Revenues	(0.3)		22.0		5.0		26.7
Total Operating Revenues	$	741.1	$	437.1	$	5.0	$	1,183.2

(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 June 30, 2021 (in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other(2)		Total
Customer Revenues(1)
Residential	$	378.6	$	131.9	$	—	$	510.5
Commercial	125.4		130.0		—		255.4
Industrial	44.0		119.0		—		163.0
Off-system	17.0		—		—		17.0
Miscellaneous	4.9		1.4		0.2		6.5
Total Customer Revenues	$	569.9	$	382.3	$	0.2	$	952.4
Other Revenues	4.4		21.2		8.0		33.6
Total Operating Revenues	$	574.3	$	403.5	$	8.2	$	986.0

(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.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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


Six months ended June 30, 2022 (in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other(2)		Total
Customer Revenues(1)
Residential	$	1,441.9	$	275.5	$	—	$	1,717.4
Commercial	517.1		269.2		—		786.3
Industrial	115.9		268.5		—		384.4
Off-system	77.8		—		—		77.8
Miscellaneous	22.6		8.3		—		30.9
Total Customer Revenues	$	2,175.3	$	821.5	$	—	$	2,996.8
Other Revenues	2.5		45.7		11.5		59.7
Total Operating Revenues	$	2,177.8	$	867.2	$	11.5	$	3,056.5
(1)Customer revenue amounts exclude intersegment revenues. See Note 18, "Business Segment Information," for discussion of intersegment revenues. (2)Other revenues related to the Transition Services Agreement entered into in connection with the sale of the Massachusetts Business.

Six months ended June 30, 2021 (in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other(2)		Total
Customer Revenues(1)
Residential	$	1,152.1	$	261.1	$	—	$	1,413.2
Commercial	396.9		252.8		—		649.7
Industrial	101.9		241.9		—		343.8
Off-system	31.4		—		—		31.4
Miscellaneous	14.7		5.7		0.4		20.8
Total Customer Revenues	$	1,697	$	761.5	$	0.4	$	2,458.9
Other Revenues	13.1		44.5		15.1		72.7
Total Operating Revenues	$	1,710.1	$	806.0	$	15.5	$	2,531.6
(1)Customer revenue amounts exclude intersegment revenues. See Note 18, "Business Segment Information," for discussion of intersegment revenues. (2)Other revenues related to the Transition Services Agreement entered into in connection with the sale of the Massachusetts Business.

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 six months ended June 30, 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 June 30, 2022	473.7		216.9

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 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.



~~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. Earnings Per Share~~

~~Basic EPS~~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 ~~computed by dividing net income by the weighted-average number of shares of common stock outstanding~~recorded for the ~~period. The weighted-average shares outstanding~~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 ~~diluted EPS includes~~credit losses account. When deemed to be uncollectible, customer accounts are written-off. A rollforward of our allowance for credit losses as of June 30, 2022 and December 31, 2021 are presented in the ~~incremental effects~~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	14.8		4.2		—		19.0
Write-offs charged against allowance	(21.3)		(2.7)		—		(24.0)
Recoveries of amounts previously written off	7.3		0.3		—		7.6
Balance as of June 30, 2022	$	19.7	$	5.6	$	0.8	$	26.1


(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 ~~various long-term incentive compensation plans. The computation~~allowance for credit losses discussed above, we considered benefits available under governmental COVID-19 relief programs, the impact of ~~diluted average common shares is~~unemployment benefits initiatives, and flexible payment plans being offered to customers affected by or experiencing hardship 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~~

~~ATM Program.~~ ~~On May 3, 2017, NiSource entered into four separate equity distribution agreements, pursuant~~a result of the pandemic, which could help to ~~which NiSource may sell, from time to time, up to an aggregate~~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 our overall evaluation, we have concluded that the allowance for credit losses as of ~~$500.0 million of its common stock.~~December 31, 2021 and June 30, 2022 adequately reflected the collection risk and net realizable value for our receivables. As of ~~September 30, 2017, approximately $182.8 million of equity remained available for issuance under the ATM program. The program expires on~~ December 31, ~~2018. Shares of~~2021, we resumed our common ~~stock are offered pursuant to NiSource's shelf registration statement filed with the SEC. The following table summarizes NiSource's activity under the ATM program:~~credit mitigation practices in all jurisdictions as all moratoriums had expired.

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)

4. Earnings Per Share

~~useful lives. Each LDC's approach to cost recovery may be unique, given~~The calculations of basic and diluted EPS are based on the ~~different laws, regulations~~weighted average number of shares of common stock and ~~precedent that exist~~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 ~~each jurisdiction.~~

~~Columbia~~the calculation of ~~Ohio.~~On November 28, 2012, 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, the PUCO Staff filed comments which recommended approval of the application with only minor revisions. The PUCO issued an order on April 26, 2017, approving Columbia of Ohio's application. New rates went into effect on May 1, 2017.

On February 27, 2017, Columbia of Ohio filed an application requesting authority to extend its IRP for an additional five years (2018-2022). On July 10, 2017, the PUCO Staff recommended approval of Columbia of Ohio's IRPpotential common stock outstanding for the ~~additional five years, with modifications to Columbia~~three and six months ended June 30, 2022 and 2021 using the if-converted method under US GAAP. For the purchase contracts, the number of Ohio's proposed IRP rates for the five-year period. A joint stipulation 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 briefing is scheduled toshares of our common stock that would be ~~completed by November 7, 2017. An order is expected by~~issuable at the end of ~~2017.~~

~~On October 27, 2017 Columbia~~each reporting period will be reflected in the denominator of ~~Ohio filed~~our diluted EPS calculation. If the average stock price during the period 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 average stock price during the period is above the initial reference price of $24.51, subject to anti-dilution adjustments, a ~~30-day notice that they plan to file a request~~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 ~~a rider to begin recovering plant~~interest expense incurred for the three and ~~associated deferrals~~six months ended June 30, 2022 and 2021 net of tax, related to the ~~CEP.~~ 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 during the period. Refer to Note 2, "Recent Accounting Pronouncements," for more information on ASU 2020-06.

The ~~CEP~~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 June 30, 2022 and 2021, the contingency was ~~established in 2011~~not resolved 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 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 and among other items, NIPSCO proposed to update base rates for ongoing infrastructure improvements, revised depreciation rates and ongoing level of expenses to reflect the current costs of providing natural gas service. An order is expectedthus no shares were reflected in the ~~second half~~denominator in the calculation 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 new or replacement electric and gas transmission, distribution, and storage projects that a public utility undertakesdiluted EPS for the ~~purposes of safety, reliability, system modernization, or economic development. Provisions~~three and six months ended June 30, 2022 and 2021.

Diluted EPS also includes the incremental effects of the ~~TDSIC statute require that, among other things, requests~~various long-term incentive compensation plans and the open ATM forward agreements during the period under the treasury stock method when the impact would be dilutive. Refer to Note 5, "Equity," for ~~recovery include a seven-year plan~~more information on our ATM forward agreements.

The following table presents the calculation 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,our basic 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 $271.3 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, and new rates went into effect on July 1, 2017. On August 31, 2017, NIPSCO filed TDSIC-7 requesting approval of $328.9 million of cumulative net capital spend through June 30, 2017. An order is expected in the fourth quarter of 2017.diluted EPS:

~~Columbia of Massachusetts.~~On July 7, 2014, the Governor of Massachusetts signed into law Chapter 149 of 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 estimated costs of the plan into rates as 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 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 parties to the proceeding that included a base revenue increase of $28.5 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


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except per share amounts)	2022		2021		2022		2021
Numerator:
Net Income Available to Common Shareholders - Basic	$	53.2	$	46.5	$	466.2	$	328.2
Dilutive effect of Equity Units	0.5		0.4		1.0		0.4
Net Income Available to Common Shareholders - Diluted	$	53.7	$	46.9	$	467.2	$	328.6
Denominator:
Average common shares outstanding - Basic	406.4		393.0		406.2		392.8
Dilutive potential common shares:
Equity Units purchase contracts	27.9		28.2		28.5		14.2
Equity Units purchase contract payment balance	3.3		—		3.6		—
Shares contingently issuable under employee stock plans	1.0		0.8		1.0		0.7
Shares restricted under employee stock plans	0.4		0.3		0.4		0.3
ATM forward agreements	1.2		0.6		1.1		0.5
Average Common Shares - Diluted	440.2		422.9		440.8		408.5
Earnings per common share:
Basic	$	0.13	$	0.12	$	1.15	$	0.84
Diluted	$	0.12	$	0.11	$	1.06	$	0.80

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

5. Equity

ATM Program and Forward Sale Agreement. On February 22, 2021, we entered into six separate equity distribution agreements pursuant to which we are able to sell up to an aggregate of ~~Virginia completed~~$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 ~~refund~~affiliated agent, at a weighted average price of $25.25 per share. We may settle the forward sale agreement in shares, cash, or net shares by December 15, 2022. Had we settled all the shares under the forward sale agreement at June 30, 2022, we would have received approximately $143.8 million, based on a net price of $24.20 per share.

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

Preferred Stock. As of June 30, 2022, we had 20,000,000 shares of preferred stock authorized for issuance, of which 1,302,500 shares of preferred stock in the ~~interim customer rates implemented in 2016~~aggregate for all series were outstanding. The following table displays preferred dividends declared for the period by outstanding series of shares:


				Three Months Ended June 30,		Six Months Ended June 30,		June 30,		December 31,
				2022	2021	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	406.25	406.25	1,218.75	1,218.75	$	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 a corresponding reduction to preferred stock.

In addition, 20,000 shares of Series B–1 Preferred Stock, par value $0.01 per share, were outstanding as of June 30, 2022. Holders of Series B–1 Preferred Stock are not entitled to receive dividend payments and ~~the rates approved by the final order.~~

~~Columbia of Maryland.On April 14, 2017, Columbia of Maryland filed a request~~have no conversion rights. The Series B–1 Preferred Stock is paired with the ~~MPSC to adjust base rates. On July 28, 2017, all parties filed a settlement agreement~~Series B Preferred Stock and may not be transferred, redeemed or repurchased except in connection 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, 2017 and rates went into effect on October 27, 2017.~~

~~Electric Operations Regulatory Matters~~

~~Cost Recovery 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~~simultaneous transfer, redemption or repurchase of the ~~Electric Operations are significant, recurring in nature,~~underlying Series B Preferred Stock.

As of June 30, 2022 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.

2021, Series 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 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 $256.2Preferred Stock had $1.0 million of cumulative ~~net capital expenditures through the period ended June 30, 2017. An order was received from the IURC on October 25, 2017,~~preferred dividends in arrears, or $2.51 per share, 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~~Series B Preferred Stock had $1.4 million of cumulative ~~net capital expenditures made through~~preferred dividends in arrears, or $72.23 per share.

Equity Units. On April ~~30, 2017. An order approving~~19, 2021, we completed the ~~request was received from the IURC on October 31, 2017 and new rates are expected~~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 ~~go into effect with the first billing cycle~~purchase shares 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 volatilityour common stock in the ~~price~~future and a 1/10th, or 10%, undivided beneficial ownership interest in one share of ~~natural gas.~~Series C Mandatory Convertible Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share. We are accounting for the Corporate Units as a single unit of account.

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


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

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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

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

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 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 June 30, 2022, no contract adjustment payments have been deferred with quarterly cash payments being remitted to the holders. As of June 30, 2022 and December 31, 2021 the purchase contract liability was $97.3 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 $33.4 million and $7.8 million were made during the six months ended June 30, 2022 and 2021, respectively.

Refer to Note 4,"Earnings Per Share," for additional information regarding our treatment of the Equity Units for diluted EPS. 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 June 30, 2022, we would have issued approximately 3.3 million shares.

6. 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. An order was received on July 27, 2022 approving the rate case.

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 net 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, labor adjustments, COVID-19 deferrals and environmental remediation costs, rider caps, and rate of return. On May 6, 2022 and May 13, 2022, respectively, Columbia of Ohio and the other parties filed written objections to the Staff report as well as written testimony. Local public hearings have concluded, and Columbia of Ohio has filed a motion requesting that the evidentiary hearing commence on October 18, 2022, to provide more time for settlement discussions.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

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 debit to depreciation expense of $9.6 million and $6.7 million for the three and six months ended June 30, 2022, and zero for the three and six months ended June 30, 2021, respectively, related to the regulatory deferral of income (loss) associated with our joint ventures, which is not included in current rates. Refer to Note 12, "Variable Interest Entities" for additional information.

FAC Adjustment

As ordered by the IURC on June 15, 2022, NIPSCO is required to refund to customers $8.0 million of over-collected fuel costs. The refund is recorded as a regulatory liability on the Condensed Consolidated Balance Sheets (unaudited).

7. 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:


	June 30, 2022				December 31, 2021
(in millions)	Assets		Liabilities		Assets		Liabilities
Current(1)
Derivatives designated as hedging instruments	$	—	$	9.5	$	—	$	136.4
Derivatives not designated as hedging instruments	33.7		0.5		10.6		0.4
Total	$	33.7	$	10.0	$	10.6	$	136.8
Noncurrent(2)
Derivatives designated as hedging instruments	$	—	$	—	$	—	$	—
Derivatives not designated as hedging instruments	71.9		1.5		13.8		7.4
Total	$	71.9	$	1.5	$	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 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 June 30, 2022 and December 31, 2021, we had 112.3 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 June 30, 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.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

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


(in millions)	June 30, 2022		December 31, 2021
Regulatory Assets
Losses on commodity price risk programs	$	6.8	$	9.6
Regulatory Liabilities
Gains on commodity price risk programs	127.7		34.2

Derivatives Designated as Hedging Instruments

Interest ~~Rate Risk Management~~

rate risk management. As of ~~September~~June 30, ~~2017, NiSource Finance has~~2022, we have one forward-starting interest rate ~~swaps~~swap with ~~an aggregate~~a notional value ~~totaling $1.0 billion~~of $250.0 million to hedge the variability in cash flows attributable to changes in the benchmark interest rate ~~during~~associated with a forecasted debt issuance. This interest rate swap is designated as a cash flow hedge.

On June 7, 2022, we settled a $250.0 million forward-starting interest rate swap agreement contemporaneously with the ~~periods~~issuance of $350.0 million of 5.00% senior unsecured notes maturing in 2052. The derivative contract was accounted for as a cash flow hedge. As part of the transaction, the associated net unrealized gain position of $10.2 million is being amortized from accumulated other comprehensive loss into interest expense over the life of the associated debt. Refer to Note 13, "Long Term Debt" for additional information.

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

(19.5)

(0.2)

365 months

(1) All amounts are net of tax.

The actual amounts reclassified from Accumulated other comprehensive loss to Net Income can differ from the ~~effective dates of the swaps~~estimate above due to ~~the anticipated dates of forecasted debt issuances, which are expected to take place by the end of 2019. These interest~~market rate ~~swaps are designated as cash flow hedges.~~ changes.

The ~~effective portions of 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 and six months ended June 30, 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 June 30, 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%~~June 30, 2022 and ~~4.375% senior notes, maturing in 2027 and 2047, respectively. These~~December 31, 2021 do not contain any credit-risk-related contingent features. Cash flows for derivative financial instruments are generally classified as 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.~~

7.8. 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~~June 30, ~~2017~~2022 and December 31, ~~2016~~:2021:


Recurring Fair Value Measurements June 30, 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 June 30, 2022
Assets

Risk management assets	$	—	$	105.6	$	—	$	105.6

Available-for-sale debt securities	—		149.8		—		149.8
Total	$	—	$	255.4	$	—	$	255.4
Liabilities

Risk management liabilities	$	—	$	11.5	$	—	$	11.5
Total	$	—	$	11.5	$	—	$	11.5


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)~~

Recurring Fair Value Measurements
December 31, 2016 (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, 2016
Assets
Risk management assets $ 5.4
$ 43.6
$ —
$ 49.0
Available-for-sale securities —
131.5
—
131.5
Total $ 5.4
$ 175.1
$ —
$ 180.5
Liabilities
Risk management liabilities $ 1.2
$ 58.9
$ 1.2
$ 61.3
Total $ 1.2
$ 58.9
$ 1.2
$ 61.3

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~~June 30, ~~2017~~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 7, "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~~7, "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 June 30, 2022 and December 31, 2021, we recorded $1.0 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~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021 were:


June 30, 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	$	51.1	$	—	$	(2.4)	$	—	$	48.7
Corporate/Other debt securities	109.1		0.1		(7.1)		(1.0)		101.1
Total	$	160.2	$	0.1	$	(9.5)	$	(1.0)	$	149.8

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 $47.0 million and $89.9 million, respectively, at June 30, 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~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016.~~2021.

~~The cost of maturities sold is based upon specific identification.~~ At ~~September~~June 30, ~~2017,~~2022, approximately ~~$8.4~~$3.3 million of U.S. Treasury debt securities and approximately ~~$3.2~~$10.0 million of Corporate/Other debt securities have maturities of less than a year.

Non-recurring Fair Value Measurements

~~There are no material items in~~We measure the fair value ~~reconciliation~~ of ~~Level 3~~certain assets, ~~and liabilities measured~~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 the purchase contract liability at fair value onusing a ~~recurring basis for~~discounted cash flow method and 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 ~~three and nine months ended September 30, 2017 and 2016.~~

~~Non-recurring Fair Value Measurements.~~ ~~There were no significant non-recurring~~ fair value ~~measurements recorded during the three and nine months ended September 30, 2017.~~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~~As of June 30, ~~2017~~,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 June 30, 2022		Estimated Fair Value as of June 30, 2022		Carrying Amount as of Dec. 31, 2021		Estimated Fair Value as of Dec. 31, 2021
Long-term debt (including current portion)	$	9,557.5	$	8,770.0	$	9,241.5	$	10,415.7

(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)

9. Goodwill

Substantially all of our goodwill relates to the excess of cost over the fair value of the net assets acquired in the Columbia acquisition on November 1, 2000. Our goodwill balance was $1,485.9 million as of June 30, 2022 and December 31, 2021. All our goodwill has been allocated to our Gas Distribution Operations segment.

For our annual goodwill impairment analysis performed as of May 1, 2022, we performed a qualitative "step 0" assessment and determined that it was more likely than not that the estimated fair value of the reporting unit substantially exceeded the related carrying value of our reporting unit. For this test, we assessed various assumptions, events and circumstances that would have affected the estimated fair value of the reporting units as compared to their baseline May 1, 2020 "step 1" fair value measurement. There have been no impairments to the carrying value of our goodwill during the periods presented.

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 June 30, 2022 and 2021 were 17.7% and 18.8%, respectively. The effective tax rates for the six months ended June 30, 2022 and 2021 were 18.2% and 17.7%, respectively. These effective tax rates differ from the federal statutory tax rate of 21% primarily due to increased amortization of excess deferred federal income tax liabilities, as specified in the TCJA, tax credits, state income taxes and other permanent book-to-tax differences. These adjustments have a relative impact on the effective tax rate proportionally to pretax income or loss.

The decrease in the three month effective tax rate of 1.1% in 2022 compared to 2021 is primarily attributed to lower state income taxes due to the jurisdictional mix of pre-tax income and partnership income, offset by decreased amortization of excess deferred federal income tax liabilities.

The increase in the six month effective tax rate of 0.5% in 2022 compared to 2021 is primarily attributed to slightly higher state income taxes due to the jurisdictional mix of pre-tax income.

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 six months ended June 30, 2022, we contributed $1.3 million to our pension plans and $10.5 million to our OPEB plans.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

The following table provides the components of the plans' actuarially determined net periodic benefit cost for the three and six months ended June 30, 2022 and 2021:


	Pension Benefits				OPEB
Three Months Ended June 30, (in millions)	2022		2021		2022		2021
Components of Net Periodic Benefit (Income) Cost(1)
Service cost	$	7.0	$	7.5	$	1.6	$	1.5
Interest cost	9.8		7.9		3.0		2.5
Expected return on assets	(22.8)		(25.3)		(4.0)		(3.8)
Amortization of prior service credit	—		—		(0.6)		(0.6)
Recognized actuarial loss	4.8		5.5		0.7		1.2
Settlement loss	6.3		3.3		—		—
Total Net Periodic Benefit (Income) Cost	$	5.1	$	(1.1)	$	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).

	Pension Benefits				OPEB
Six Months Ended June 30, (in millions)	2022		2021		2022		2021
Components of Net Periodic Benefit (Income) Cost(1)
Service cost	$	14.1	$	15.1	$	3.2	$	3.0
Interest cost	19.2		15.6		6.0		5.0
Expected return on assets	(45.7)		(51.1)		(8.0)		(7.6)
Amortization of prior service credit	—		—		(1.2)		(1.2)
Recognized actuarial loss	9.3		10.8		1.4		2.4
Settlement loss	6.3		6.6		—		—
Total Net Periodic Benefit (Income) Cost	$	3.2	$	(3.0)	$	1.4	$	1.6
(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).

As of May 31, 2022, one of our qualified pension plans met the requirement for settlement accounting. A settlement charge of $6.3 million was recorded during the second quarter of 2022. As a result of the settlement, the pension plan was remeasured, resulting in a decrease to the net pension asset of $39.8 million, a net increase to regulatory assets of $30.0 million, and a net debit to accumulated other comprehensive loss of $3.5 million. Net periodic pension benefit cost for 2022 increased by $5.7 million as a result of the interim remeasurement.

For the interim remeasurement, the discount rate used to calculate the remeasured plan's pension benefit obligation was updated to 4.13% from 2.60% at December 31, 2021. At the time of the interim remeasurement, we also updated the discount rates and expected return on assets used to calculate net periodic pension benefit costs in 2022. Our discount rates for service and interest costs, respectively, were updated to 4.30% and 3.64% from 2.85% and 1.90% at January 1, 2022. The expected return on assets assumption was updated to 5.70% from 4.80% at January 1, 2022.

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 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.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

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. 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 obligation to developer is included within "Other accruals" on the Condensed Consolidated Balance Sheets (unaudited). 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. 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 obligation to developer is included within "Other accruals" on the Condensed Consolidated Balance Sheets (unaudited). 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)	June 30, 2022		December 31, 2021
Rosewater	$	83.9	$	88.2
Indiana Crossroads Wind	231.9		237.4
Total	$	315.8	$	325.6

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


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2022		2021		2022		2021
Rosewater	$	(4.0)	$	(3.4)	$	(2.9)	$	(2.4)
Indiana Crossroads Wind	(7.2)		—		(3.8)		—
Total	$	(11.2)	$	(3.4)	$	(6.7)	$	(2.4)

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.

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


(in millions)	June 30, 2022				December 31, 2021
	Rosewater		Indiana Crossroads Wind		Rosewater		Indiana Crossroads Wind
Net Property, Plant and Equipment	$	167.3	$	517.3	$	170.1	$	525.8
Current assets	7.8		12.6		6.2		8.1

Total assets(1)	175.1		529.9		176.3		533.9
Current liabilities	3.6		3.9		2.5		7.5
Asset retirement obligations	5.8		15.0		5.7		14.8

Total liabilities	$	9.4	$	18.9	$	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.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

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 June 30, 2022 and December 31, 2021 are expected to be repaid in May 2027 at maturity.

On June 10, 2022, we completed the issuance and sale of $350.0 million of 5.00% senior unsecured notes maturing in 2052, which resulted in approximately $344.6 million of net proceeds after discount and debt issuance costs.

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 June 30, 2022 and December 31, 2021.

Commercial Paper Program. Our commercial paper program has a program limit of up to $1.5 billion. We had $270.0 million and $560.0 million of commercial paper outstanding with weighted-average interest rates of 2.00% and 0.24% as of June 30, 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 August 2022 and May 2023 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~~June 30, ~~2017,~~2022, the maximum amount of debt that could be recognized related to ~~NiSource’s~~our accounts receivable programs is ~~$265.0~~$285.0 million.

~~The following table reflects the gross receivables balance~~We had $285.0 million and ~~net receivables transferred as well as~~zero short-term borrowings related to the securitization transactions as of ~~September~~June 30, ~~2017~~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, respectively.

For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016, $47.8~~2021, $285.0 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~~$0.7 million and $0.4 million for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, respectively and ~~$1.9~~$1.0 million and ~~$1.6~~$0.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, respectively. ~~NiSource remains~~Columbia of Ohio, NIPSCO and Columbia of Pennsylvania remain responsible for collecting on the receivables securitized, and the receivables cannot be transferred to another party.

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~~June 30, ~~2017~~2022 and December 31, ~~2016, NiSource~~2021, we had issued stand-by letters of credit of ~~$13.0~~$14.7 million and ~~$14.7~~$18.9 million, respectively.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

We provide guarantees related to our future performance under BTAs for our renewable generation projects. At June 30, 2022 and December 31, 2021, our guarantees for BTAs totaled $485.2 million and $288.9 million, respectively. As of August 2022, the amount of the guarantees increased to $796.5 million in accordance with the Dunn's Bridge II and Indiana Crossroads Solar BTAs. The amount of each guaranty will fluctuate upon the completion of the various steps outlined in each BTA. See ''- D. Other Matters - Generation Transition,'' below for more information.

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

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

U.S. Department of Justice Investigation. On February 26, 2020, the Company and Columbia of Massachusetts entered into agreements with the U.S. Attorney's 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 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.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

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. On June 30, 2022, the Court of Chancery issued a Memorandum Opinion granting the motion to dismiss. The deadline for the plaintiff to appeal the dismissal is August 12, 2022.

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 of Contents~~

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

~~NiSource Inc.~~

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

C. 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~~June 30, ~~2017~~2022 and December 31, ~~2016, NiSource~~2021, we had recorded a liability of ~~approximately $112.6~~$98.2 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 of cost recovery.~~remediation. These 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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

remediation costs were noted as a result of the refresh completed as of June 30, ~~2017. The~~2022. Our total estimated liability ~~at NiSource~~ related to the facilities subject to remediation was ~~$108.0~~$91.9 million and ~~$105.5~~$85.1 million at ~~September~~June 30, ~~2017~~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.

D. 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 reached with certain parties regarding the CCR projects~~tax equity partner and ~~treatment~~timely completion of ~~associated costs. An evidentiary hearing was held on August 21, 2017~~construction. NIPSCO has received IURC approval for all of its BTAs and ~~an order~~PPAs. In July 2022, NIPSCO amended two of its BTAs and is ~~expected~~discussing potentially amending other BTAs and PPAs. Any amendments that result in increased project costs will require additional approval by the ~~end~~IURC in order to obtain recovery for increased costs. 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 ~~2017.~~

~~Water~~

~~ELG.~~ ~~On November 3, 2015,~~significant construction milestones. Once the ~~EPA issued a final rule~~tax equity partner has earned its negotiated rate of return and we have reached the agreed upon contractual date, NIPSCO has the option to ~~amend~~purchase at fair market value from the ~~ELG and standards for~~tax equity partner 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)

16. Accumulated Other Comprehensive Loss

~~Schahfer Generating Station by~~The following tables display the ~~end~~components 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.~~Accumulated Other Comprehensive Loss:

~~NiSource and NIPSCO committed to the retirement~~


(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 April 1, 2022	$	(3.6)	$	(75.5)	$	(6.3)	$	(85.4)
Other comprehensive income (loss) before reclassifications	(3.9)		55.9		(3.3)		48.7
Amounts reclassified from accumulated other comprehensive income (loss)	—		0.1		0.8		0.9
Net current-period other comprehensive income (loss)	(3.9)		56.0		(2.5)		49.6

Balance as of June 30, 2022	$	(7.5)	$	(19.5)	$	(8.8)	$	(35.8)
(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, 2022	$	2.1	$	(122.5)	$	(6.4)	$	(126.8)
Other comprehensive income (loss) before reclassifications	(9.8)		102.9		(3.3)		89.8
Amounts reclassified from accumulated other comprehensive loss	0.2		0.1		0.9		1.2
Net current-period other comprehensive income (loss)	(9.6)		103.0		(2.4)		91.0

Balance as of June 30, 2022	$	(7.5)	$	(19.5)	$	(8.8)	$	(35.8)

(1)All amounts are net of ~~the Bailly Generating Station units~~tax. Amounts in ~~connection with the filing~~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 April 1, 2021	$	3.5	$	(63.3)	$	(15.7)	$	(75.5)
Other comprehensive income (loss) before reclassifications	0.8		(49.8)		0.1		(48.9)
Amounts reclassified from accumulated other comprehensive loss	0.1		—		0.7		0.8
Net current-period other comprehensive income (loss)	0.9		(49.8)		0.8		(48.1)

Balance as of June 30, 2021	$	4.4	$	(113.1)	$	(14.9)	$	(123.6)
(1)All amounts are net of tax. Amounts in parentheses indicate debits.
(in millions)	Gains and Losses on Securities(1)		Gains and Losses on Cash Flow Hedges(1)		Pension and OPEB Items(1)		Accumulated Other Comprehensive Loss(1)
Balance as of January 1, 2021	$	6.0	$	(147.9)	$	(14.8)	$	(156.7)
Other comprehensive income (loss) before reclassifications	(1.4)		34.8		(1.3)		32.1
Amounts reclassified from accumulated other comprehensive loss	(0.2)		—		1.2		1.0
Net current-period other comprehensive income (loss)	(1.6)		34.8		(0.1)		33.1

Balance as of June 30, 2021	$	4.4	$	(113.1)	$	(14.9)	$	(123.6)

(1)All amounts are net 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).tax. Amounts in parentheses indicate debits.

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)

17. Other, Net

~~15. Accumulated Other Comprehensive Loss~~

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


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2022		2021		2022		2021
Interest income	$	0.6	$	0.7	$	1.5	$	1.6
AFUDC equity	4.0		3.4		7.0		4.9

Pension and other postretirement non-service benefit	4.7		8.6		12.3		17.1

Miscellaneous	(0.3)		(0.3)		(0.9)		(0.7)
Total Other, net	$	9.0	$	12.4	$	19.9	$	22.9

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, 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.~~

~~16.~~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 June 30,				Six Months Ended June 30,
(in millions)	2022		2021		2022		2021
Operating Revenues
Gas Distribution Operations
Unaffiliated	$	741.1	$	574.3	$	2,177.8	$	1,710.1
Intersegment	3.2		3.0		6.3		6.1
Total	744.3		577.3		2,184.1		1,716.2
Electric Operations
Unaffiliated	437.1		403.5		867.2		806.0
Intersegment	0.2		0.2		0.4		0.4
Total	437.3		403.7		867.6		806.4
Corporate and Other
Unaffiliated	5.0		8.2		11.5		15.5
Intersegment	120.7		117.4		234.2		221.3
Total	125.7		125.6		245.7		236.8
Eliminations	(124.1)		(120.6)		(240.9)		(227.8)
Consolidated Operating Revenues	$	1,183.2	$	986.0	$	3,056.5	$	2,531.6
Operating Income (Loss)
Gas Distribution Operations	$	80.6	$	61.2	$	591.4	$	408.1
Electric Operations	72.6		79.6		171.8		167.5
Corporate and Other	(9.9)		1.4		(19.6)		(0.2)
Consolidated Operating Income	$	143.3	$	142.2	$	743.6	$	575.4

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

Table of Contents

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

NiSource Inc.



Index		Page
Executive Summary		3237
Summary of Consolidated Financial Results		3239
Results and Discussion of Segment Operations		3439
~~Gas Distribution Operations~~	35
~~Electric Operations~~	38
Gas Distribution Operations		40
Electric Operations		43
Liquidity and Capital Resources		4147
~~Off Balance Sheet~~ Regulatory, Environmental and Safety Matters~~Arrangements~~		4351
Market Risk Disclosures		4354
Other Information		4455

Table of Contents

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 and electric 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 June 30, 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 the 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. In June 2022, the Biden Administration announced a 24-month tariff relief on solar panels subject to the ongoing U.S. Department of Commerce investigation and authorized the use of the Defense Production Act of 1950, as amended (the "Defense Production Act"), to accelerate domestic production of clean energy technologies, including solar panel parts. For additional information, see "Results and Discussion of Segment Operations - Electric Operations," in this Management's Discussion.

~~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 which is expected 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 the three months ended September 30, 2017, NiSource reported operating income~~improve safety, operational efficiencies, and customer satisfaction through continued standardization of $99.6 million compared to $113.7 million for 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 decreasework

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

NiSource Inc.

processes, the implementation of new mobile technology to 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 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~~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.

In the first half of 2022, NIPSCO experienced a rail service shortage in deliveries of coal, particularly to its Michigan City Generating Station, and the primary rail carrier for that generating station was ~~due primarily~~unable to provide assurance of adequate future service to maintain coal inventory. A lack of adequate coal deliveries to any of our coal-fired generating facilities for an extended period could deplete our inventories 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. NIPSCO believes these shortages have been resolved but continues to monitor deliveries of coal from its rail carriers. We do not expect this to have a material impact on our operations.

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 domestic production that has not increased commensurate with overall demand have contributed to the steep rise in gas commodity costs, which we expect to have an effect on customer bills through 2022. For the six months ended ~~September~~June 30, ~~2017 was $640.6 million compared~~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."

Table of Contents

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

NiSource Inc.

Summary of Consolidated Financial Results

A summary of our consolidated financial results for the three and six months ended June 30, 2022 and 2021 are presented below:


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except per share amounts)	2022		2021		Favorable (Unfavorable)		2022		2021		Favorable (Unfavorable)
Operating Revenues	$	1,183.2	$	986.0	$	197.2	$	3,056.5	$	2,531.6	$	524.9
Operating Expenses
Cost of energy	383.7		228.3		(155.4)		1,090.4		705.1		(385.3)
Other Operating Expenses	656.2		615.5		(40.7)		1,222.5		1,251.1		28.6
Total Operating Expenses	1,039.9		843.8		(196.1)		2,312.9		1,956.2		(356.7)
Operating Income	143.3		142.2		1.1		743.6		575.4		168.2
Total Other Deductions, net	(75.5)		(72.1)		(3.4)		(148.3)		(146.2)		(2.1)
Income Taxes	12.0		13.2		1.2		108.2		75.8		(32.4)


Net Income	55.8		56.9		(1.1)		487.1		353.4		133.7
Net income attributable to noncontrolling interest	(11.2)		(3.4)		7.8		(6.7)		(2.4)		4.3
Net Income Attributable to NiSource	67.0		60.3		6.7		493.8		355.8		138.0
Preferred dividends	(13.8)		(13.8)		—		(27.6)		(27.6)		—
Net Income Available to Common Shareholders	53.2		46.5		6.7		466.2		328.2		138.0
Earnings Per Share
Basic Earnings Per Share	$	0.13	$	0.12	$	0.01	$	1.15	$	0.84	$	0.31
Diluted Earnings Per Share	$	0.12	$	0.11	$	0.01	$	1.06	$	0.80	$	0.26

The majority of the cost of energy in both segments are tracked costs that are passed through directly to ~~$633.3 million~~the customer, resulting in an equal and offsetting amount reflected in operating revenues.

Net income available to common shareholders for the three months ended June 30, 2022 is comparable to the same period in ~~2016.~~2021. The ~~higher operating~~increase in net income available to common shareholders during the six months ended June 30, 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 income taxes in 2022 compared to the 2021.

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

Other ~~Income (Deductions),~~Deductions, net

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

~~Other income (deductions), net reduced income by $362.5 million in the nine~~three and six months ended ~~September~~June 30, ~~2017 compared~~2022 is comparable to ~~a reduction~~the same periods 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~~2021. See Note ~~12,~~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 ~~information on the early extinguishment of long-term debt.~~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,

~~Table of Contents~~

~~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:~~segments, the Gas Distribution Operations and the Electric ~~Operations.~~Operations segments. 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.



~~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)~~(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)		1215

			Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3136

			Item 3.	Quantitative and Qualitative Disclosures About Market Risk		4556

			Item 4.	Controls and Procedures		4556

PART II			OTHER INFORMATION

			Item 1.	Legal Proceedings		4657

			Item 1A.	Risk Factors		4657

			Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		4657

			Item 3.	Defaults Upon Senior Securities		4657

			Item 4.	Mine Safety Disclosures		4657

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

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

	~~Signature~~		48


	Item 5.
~~DEFINED TERMS~~Other Information	57

	Item 6.	Exhibits	58

	Signature		59


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~~
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		Department of Public Utilities
~~DSM~~DSIC		~~Demand Side Management~~Distribution System Improvement Charge
~~ECR~~		~~Environmental Cost Recovery~~
~~ECT~~EPA		~~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

LIHEAP		Low Income Heating Energy Assistance Programs


DEFINED TERMS
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~~



	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



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, net of taxes)	2017			2016			2017			2016
Net Income	$	14.0		$	27.2		$	180.9		$	242.7
Other comprehensive income:
Net unrealized gain (loss) on available-for-sale securities⁽¹⁾	0.1			(0.3		)	1.1			2.2
Net unrealized loss on cash flow hedges⁽²⁾	(9.3		)	(22.6		)	(21.2		)	(146.8		)
Unrecognized pension and OPEB benefit⁽³⁾	1.1			0.2			1.5			0.7
Total other comprehensive loss	(8.1		)	(22.7		)	(18.6		)	(143.9		)
Comprehensive Income	$	5.9		$	4.5		$	162.3		$	98.8

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 Consolidated Balance Sheets (unaudited) (continued)

(in millions, except share amounts)	September 30, 2017			December 31, 2016
CAPITALIZATION AND LIABILITIES
Capitalization
Common Stockholders’ Equity
Common stock - $0.01 par value, 400,000,000 shares authorized; 336,691,078 and 323,159,672 shares outstanding, respectively	$	3.4		$	3.3
Treasury stock	(94.6		)	(88.7		)
Additional paid-in capital	5,518.5			5,153.9
Retained deficit	(1,020.6		)	(972.2		)
Accumulated other comprehensive loss	(43.7		)	(25.1		)
Total Common Stockholders’ Equity	4,363.0			4,071.2
Long-term debt, excluding amounts due within one year	7,518.6			6,058.2
Total Capitalization	11,881.6			10,129.4
Current Liabilities
Current portion of long-term debt	289.8			363.1
Short-term borrowings	843.2			1,488.0
Accounts payable	447.4			539.4
Dividends payable	58.9			—
Customer deposits and credits	253.1			264.1
Taxes accrued	148.4			195.4
Interest accrued	89.2			120.3
Exchange gas payable	68.0			83.7
Regulatory liabilities	55.1			116.7
Legal and environmental	27.5			37.4
Accrued compensation and employee benefits	167.0			161.4
Other accruals	119.2			82.7
Total Current Liabilities	2,566.8			3,452.2
Other Liabilities
Risk management liabilities	28.7			44.5
Deferred income taxes	2,619.4			2,528.0
Deferred investment tax credits	12.6			13.4
Accrued insurance liabilities	89.0			82.8
Accrued liability for postretirement and postemployment benefits	397.3			713.4
Regulatory liabilities	1,217.8			1,265.1
Asset retirement obligations	268.5			262.6
Other noncurrent liabilities	187.8			200.5
Total Other Liabilities	4,821.1			5,110.3
Commitments and Contingencies (Refer to Note 14, "Other Commitments and Contingencies")	—			—
Total Capitalization and Liabilities	$	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



(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



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


(in millions)	June 30, 2022		December 31, 2021
ASSETS
Property, Plant and Equipment
Plant	$	26,046.1	$	25,171.3
Accumulated depreciation and amortization	(7,534.4)		(7,289.5)


Net Property, Plant and Equipment(1)	18,511.7		17,881.8
Investments and Other Assets
Unconsolidated affiliates	0.8		0.8
Available-for-sale debt securities (amortized cost of $160.2 and $169.3, allowance for credit losses of $1.0 and $0.2, respectively)	149.8		171.8
Other investments	73.5		87.1
Total Investments and Other Assets	224.1		259.7
Current Assets
Cash and cash equivalents	77.8		84.2
Restricted cash	21.7		10.7
Accounts receivable	740.7		849.1
Allowance for credit losses	(26.1)		(23.5)
Accounts receivable, net	714.6		825.6
Gas inventory	307.5		327.4
Materials and supplies, at average cost	142.9		139.1
Electric production fuel, at average cost	41.2		32.2
Exchange gas receivable	134.6		99.6

Regulatory assets	179.7		206.2

Prepayments and other	291.7		195.8
Total Current Assets(1)	1,911.7		1,920.8
Other Assets
Regulatory assets	2,308.8		2,286.0
Goodwill	1,485.9		1,485.9

Deferred charges and other	371.6		322.7
Total Other Assets	4,166.3		4,094.6
Total Assets	$	24,813.8	$	24,156.9


Six Months Ended June 30,(in millions)			2022
Cash and cash equivalents			77.8
Restricted Cash			21.7
Total Cash, Cash Equivalents and Restricted Cash			99.5


(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 April 1, 2022	$	4.1	$	1,546.5	$	(99.9)	$	7,208.9	$	(1,372.3)	$	(85.4)	$	329.5	$	7,531.4
Comprehensive Income:
Net income	—		—		—		—		67.0		—		(11.2)		55.8
Other comprehensive income, net of tax	—		—		—		—		—		49.6		—		49.6
Dividends:
Common stock ($0.24 per share)	—		—		—		—		(95.4)		—		—		(95.4)
Preferred stock (See Note 5)	—		—		—		—		(8.2)		—		—		(8.2)
Distributions to noncontrolling interests	—		—		—		—		—		—		(2.5)		(2.5)

Stock issuances:


Employee stock purchase plan	—		—		—		1.3		—		—		—		1.3
Long-term incentive plan	—		—		—		6.0		—		—		—		6.0
401(k) and profit sharing	—		—		—		2.4		—		—		—		2.4

Balance as of June 30, 2022	$	4.1	$	1,546.5	$	(99.9)	$	7,218.6	$	(1,408.9)	$	(35.8)	$	315.8	$	7,540.4
(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, 2022	$	4.1	$	1,546.5	$	(99.9)	$	7,204.3	$	(1,580.9)	$	(126.8)	$	325.6	$	7,272.9
Comprehensive Income:
Net income	—		—		—		—		493.8		—		(6.7)		487.1
Other comprehensive income, net of tax	—		—		—		—		—		91.0		—		91.0
Dividends:
Common stock ($0.71 per share)	—		—		—		—		(286.1)		—		—		(286.1)
Preferred stock (See Note 5)	—		—		—		—		(35.7)		—		—		(35.7)
Distributions to noncontrolling interests	—		—		—		—		—		—		(3.1)		(3.1)


Stock issuances:


Employee stock purchase plan	—		—		—		2.5		—		—		—		2.5
Long-term incentive plan	—		—		—		6.9		—		—		—		6.9
401(k) and profit sharing	—		—		—		4.9		—		—		—		4.9

Balance as of June 30, 2022	$	4.1	$	1,546.5	$	(99.9)	$	7,218.6	$	(1,408.9)	$	(35.8)	$	315.8	$	7,540.4


	Preferred	Common
Shares (in thousands)	Shares	Shares	Treasury	Outstanding
Balance as of April 1, 2022	1,303	409,697	(3,963)	405,734
Issued:


Employee stock purchase plan	—	39	—	39
Long-term incentive plan	—	28	—	28
401(k) and profit sharing	—	77	—	77

Balance as of June 30, 2022	1,303	409,841	(3,963)	405,878

	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	—	83	—	83
Long-term incentive plan	—	328	—	328
401(k) and profit sharing	—	164	—	164

Balance as of June 30, 2022	1,303	409,841	(3,963)	405,878

	Preferred	Common
Shares (in thousands)	Shares	Shares	Treasury	Outstanding
Balance as of April 1, 2021	440	396,093	(3,963)	392,130
Issued:

Equity Units	863	—	—	—
Employee stock purchase plan	—	52	—	52
Long-term incentive plan	—	51	—	51
401(k) and profit sharing	—	96	—	96

Balance as of June 30, 2021	1,303	396,292	(3,963)	392,329

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

Equity Units	863	—	—	—
Employee stock purchase plan	—	107	—	107
Long-term incentive plan	—	263	—	263
401(k) and profit sharing	—	199	—	199

Balance as of June 30, 2021	1,303	396,292	(3,963)	392,329



	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 June 30, 2022 vs 2021		Six Months Ended June 30, 2022 vs 2021
New rates from base rate proceedings and regulatory capital programs	$	23.9	$	85.0
Increased (decreased) customer usage	3.3		(1.5)
Higher revenue related to off system sales	1.4		4.1
The effects of customer growth	1.3		3.6
Higher revenue due to the effects of resuming common credit mitigation practices	1.2		3.0
The effects of weather in 2022 compared to 2021	0.2		10.7
Other	4.1		6.8
Change in operating revenues (before cost of energy and other tracked items)	$	35.4	$	111.7
Operating revenues offset in operating expense
Higher cost of energy billed to customers	124.4		334.5
Higher tracker deferrals within operation and maintenance, depreciation, and tax	7.2		21.7
Total change in operating revenues	$	167.0	$	467.9


	Favorable (Unfavorable)
Changes in Operating Expenses (in millions)	Three Months Ended June 30, 2022 vs 2021		Six Months Ended June 30, 2022 vs 2021
Higher employee and administrative related expenses	$	(9.2)	$	(21.9)
Higher depreciation and amortization expense	(8.2)		(16.0)
Higher materials and supplies expense	(4.0)		(7.4)
Higher outside services expenses	(3.3)		(8.6)
Higher environmental remediation costs	(3.1)		(3.6)
Lower NiSource Next program expenses	7.2		11.8
Lower other than income taxes primarily related to property tax expense	5.5		5.7
The loss on sale and expenses related to the Massachusetts Business in 2021	1.8		14.2
Property insurance settlement related to the Greater Lawrence Incident	—		105.0
Other	(2.7)		(7.6)
Change in operating expenses (before cost of energy and other tracked items)	$	(16.0)	$	71.6
Operating expenses offset in operating revenue
Higher cost of energy billed to customers	(124.4)		(334.5)
Higher tracker deferrals within operation and maintenance, depreciation, and tax	(7.2)		(21.7)
Total change in operating expense	$	(147.6)	$	(284.6)


(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	Pending	Pending
NIPSCO - Gas(5)	10.50	%	9.85	%	$	109.7	$	71.8	September 29, 2021	Approved July 27, 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	Order Expected Q1 2023	October 2022
Columbia Gas of Maryland	10.95	%	In process		$	5.5	In process		May 13, 2022	Order Expected Q4 2022	December 2022



(4.1)		Form of ~~3.490%~~5.000% Notes due ~~2027~~2052 (incorporated by reference to Exhibit 4.1 to the NiSource Inc. Form 8-K filed on ~~May 17, 2017)~~June 10, 2022).

~~(4.2)~~(31.1)		~~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.