

~~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)


Three Months Ended June 30, 2022 (in millions)	Gas Distribution Operations(2)		Electric Operations(3)		Corporate and Other(4)		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 19, "Business Segment Information," for discussion of intersegment revenues.

(2)Amounts included in Gas Distributions Operations Other revenues primarily relate to weather normalization adjustment mechanisms.

(3)Amounts included in Electric Operations Other revenues primarily relate to MISO multi-value projects and revenue from non-jurisdictional transmission assets.

(4)Amounts associated with Corporate and Other revenues primarily relate 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, 2023 (in millions)	Gas Distribution Operations(2)		Electric Operations(3)		Corporate and Other		Total
Customer Revenues(1)
Residential	$	1,437.6	$	273.2	$	—	$	1,710.8
Commercial	512.7		281.0		—		793.7
Industrial	123.0		246.8		—		369.8
Off-system	40.1		—		—		40.1
Miscellaneous	30.1		18.8		—		48.9
Total Customer Revenues	$	2,143.5	$	819.8	$	—	$	2,963.3
Other Revenues	50.6		41.7		0.4		92.7
Total Operating Revenues	$	2,194.1	$	861.5	$	0.4	$	3,056.0
(1)Customer revenue amounts exclude intersegment revenues. See Note 19, "Business Segment Information," for discussion of intersegment revenues. (2)Amounts included in Gas Distributions Operations Other revenues primarily relate to weather normalization adjustment mechanisms. (3)Amounts included in Electric Operations Other revenues primarily relate to MISO multi-value projects and revenue from non-jurisdictional transmission assets.

Six months ended June 30, 2022 (in millions)	Gas Distribution Operations(2)		Electric Operations(3)		Corporate and Other(4)		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 19, "Business Segment Information," for discussion of intersegment revenues. (2)Amounts included in Gas Distributions Operations Other revenues primarily relate to weather normalization adjustment mechanisms. (3)Amounts included in Electric Operations Other revenues primarily relate to MISO multi-value projects and revenue from non-jurisdictional transmission assets. (4)Amounts associated with Corporate and Other revenues primarily relate 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, 2023 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, 2022	$	560.5	$	453.0
Balance as of June 30, 2023	372.9		191.5



~~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)

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.

~~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, final bill data, and inflation. 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 for diluted EPS includes the incremental effects~~relevant amount. We also monitor other circumstances that could affect our overall expected credit losses including, but not limited to, creditworthiness of ~~the various long-term incentive compensation plans. The computation of diluted average common shares is as follows:~~overall population in service territories, adverse conditions impacting an industry sector, and current economic conditions.

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 to which NiSource may sell, from time to time, up~~At each reporting period, we record expected credit losses to an ~~aggregate~~allowance for credit losses account. When deemed to be uncollectible, customer accounts are written-off. A rollforward of ~~$500.0 million~~our allowance for credit losses as of ~~its common stock. As of September~~June 30, ~~2017, approximately $182.8 million of equity remained available for issuance under the ATM program. The program expires on~~2023 and December 31, ~~2018. Shares of common stock~~2022 are ~~offered pursuant to NiSource's shelf registration statement filed with the SEC. The following table summarizes NiSource's activity under the ATM program:~~

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. Increasespresented 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.~~table below:

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.


(in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other		Total
Balance as of January 1, 2023	$	17.2	$	5.9	$	0.8	$	23.9
Current period provisions	16.8		3.2		—		20.0
Write-offs charged against allowance	(24.0)		(2.8)		—		(26.8)
Recoveries of amounts previously written off	10.4		0.3		—		10.7
Balance as of June 30, 2023	$	20.4	$	6.6	$	0.8	$	27.8

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


(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	29.1		6.9		—		36.0
Write-offs charged against allowance	(52.1)		(5.3)		—		(57.4)
Recoveries of amounts previously written off	21.3		0.5		—		21.8
Balance as of December 31, 2022	$	17.2	$	5.9	$	0.8	$	23.9

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, 2023 and 2022 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 stock price falls below the initial reference price of $24.51, subject to anti-dilution adjustments, the number of shares of our common stock used in calculating diluted EPS will be the maximum number of shares per the contract as described in Note 5, "Equity." Conversely, if the stock price is above the initial reference price of $24.51, subject to anti-dilution adjustments, a ~~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 is 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, 2023 and 2022 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.

The ~~CEP~~shares underlying the Series C Mandatory Convertible Preferred Stock included within the Equity Units are contingently convertible 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, 2023 and 2022, 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, 2023 and 2022.

Diluted EPS also includes the incremental effects of the ~~TDSIC statute require that, among~~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.

We began using the two-class method of computing earnings per share in 2023 because we have participating securities in the form of non-vested restricted stock units with a non-forfeitable right to dividend equivalents, for which vesting is predicated solely on the passage of time. The calculation of earnings per share using the two-class method excludes income attributable to these participating securities from the numerator and excludes the dilutive impact of those shares from the denominator.

During 2022, we had no outstanding securities other ~~things, requests for recovery include a seven-year plan of eligible investments. Once~~than common and preferred stock, which required holders’ participation in dividends and earnings; therefore, we were not required to calculate EPS under the ~~plan~~two-class method. Basic net income per share is ~~approved~~computed by dividing net income available to common shareholders by the ~~IURC, eighty percent~~weighted-average number of ~~eligible costs can be recovered using a periodic rate adjustment mechanism. The cost recovery mechanism~~shares of common stock outstanding during the period. Diluted net income per share is ~~referred~~computed by giving effect to ~~as a TDSIC mechanism. Recoverable costs include a return on, and~~all potential shares 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.

~~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 partiescommon stock, 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 Columbiaextent they are dilutive.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

The following table presents the calculation of our basic and diluted EPS:

~~of Virginia completed its refund of the difference between the interim customer rates implemented in 2016 and the rates approved by the final order.~~

~~Columbia of Maryland.~~On April 14, 2017, Columbia of Maryland filed a request with the MPSC to adjust base rates. On July 28, 2017, all parties filed a settlement agreement with the MPSC, under which Columbia of Maryland will receive an annual revenue increase of $2.4 million. The MPSC approved the settlement on September 19, 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 of the Electric Operations are significant, recurring in nature, and generally outside the control of NIPSCO. The IURC allows for recovery of such costs through cost tracking mechanisms. Such tracking mechanisms allow for abbreviated regulatory proceedings in order for NIPSCO to implement charges and recover appropriate costs. Tracking mechanisms allow for more timely recovery of such costs as compared with more traditional cost recovery mechanisms. Examples of such mechanisms include electric energy efficiency programs, MISO non-fuel costs and revenues, resource capacity charges, federally mandated costs and environmental related costs.

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

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

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

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

~~6. Risk Management Activities~~

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


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except per share amounts)	2023		2022		2023		2022
Numerator:
Net Income Available to Common Shareholders	$	39.9	$	53.2	$	359.1	$	466.2
Less: Income allocated to participating securities	—		—		0.2		—
Net Income Available to Common Shareholders - Basic	39.9		53.2		358.9		466.2
Add: Dilutive effect of Equity Units	0.4		0.5		0.8		1.0
Net Income Available to Common Shareholders - Diluted	$	40.3	$	53.7	$	359.7	$	467.2
Denominator:
Average common shares outstanding - Basic	413.3		406.4		413.1		406.2
Dilutive potential common shares:
Equity Units purchase contracts	31.3		27.9		31.2		28.5
Equity Units purchase contract payment balance	1.2		3.3		1.5		3.6
Shares contingently issuable under employee stock plans	0.6		1.0		0.7		1.0
Shares restricted under employee stock plans	0.4		0.4		0.4		0.4
ATM forward agreements	—		1.2		—		1.1
Average Common Shares - Diluted	446.8		440.2		446.9		440.8
Earnings per common share:
Basic	$	0.10	$	0.13	$	0.87	$	1.15
Diluted	$	0.09	$	0.12	$	0.80	$	1.06

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

5. Equity

ATM Program. 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 $750.0 million of our common stock. As of June 30, 2023, the ATM program had approximately $300.0 million of equity available for issuance. The program expires on December 31, 2023. There are no outstanding forward agreements as of June 30, 2023.

Preferred Stock. As of June 30, 2023, we had 20,000,000 shares of preferred stock authorized for issuance, of which 902,500 shares of preferred stock in the 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,
				2023	2022	2023	2022	2023		2022
(in millions except shares and per share amounts)	Liquidation Preference Per Share		Shares	Dividends Declared Per Share(2)				Outstanding
5.650% Series A	$	1,000.00	—	—	—	28.25	28.25	$	—	$	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

(2)Dividend declared per share for the six months ended June 30, 2023 reflects the dividend declared on our outstanding Series A Preferred Stock on March 14, 2023. The dividend was paid on June 15, 2023.

In addition, 20,000 shares of Series B–1 Preferred Stock, par value $0.01 per share, were outstanding as of June 30, 2023. Holders of Series B–1 Preferred Stock are not entitled to receive dividend payments and have no conversion rights. The Series B–1 Preferred Stock is paired with the Series B Preferred Stock and may not be transferred, redeemed or repurchased except in connection with the simultaneous transfer, redemption, or repurchase of the underlying Series B Preferred Stock.

On June 15, 2023, we redeemed all 400,000 outstanding shares of Series A Preferred Stock for a redemption price of $1,000 per share or $400.0 million in total. Following the redemption, dividends ceased to accrue on such shares of Series A Preferred Stock, the shares of Series A Preferred Stock are no longer deemed outstanding and all rights of the holders of the shares of Series A Preferred Stock were terminated. In conjunction with the redemption, we recorded a $6.2 million preferred stock redemption premium, calculated as the difference between the carrying value on the redemption date of the Series A Preferred Stock and the total amount of consideration paid to redeem, which was recorded as a reduction to retained earnings as of June 30, 2023. Since we are obligated to issue common stock under the Equity Units purchase contracts by the end of 2023, we did not recognize an excise tax liability, under the IRA, in connection with this redemption.

In June 2023, we filed a certificate of elimination to our Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware to eliminate from the Amended and Restated Certificate of Incorporation all matters set forth in the Certificate of Designations with respect to the Series A Preferred Stock. As a result, the 400,000 shares that were previously designated as Series A Preferred Stock were returned to the status of authorized but unissued shares of preferred stock, par value $0.01 per share, without designation as to series. The certificate of elimination does not change the total number of authorized shares of capital stock of NiSource or the total number of authorized shares of preferred stock.

As of June 30, 2023 and 2022, Series A Preferred Stock had $0.0 and $1.0 million of cumulative preferred dividends in arrears, or $0.00 and $2.51 per share. As of June 30, 2023 and 2022, Series B Preferred Stock had $1.4 million of cumulative preferred dividends in arrears, or $72.23 per share.

Equity Units. On April 19, 2021, we completed the sale of 8.625 million Equity Units, initially consisting of Corporate Units, each with a stated amount of $100. The offering generated net proceeds of $835.5 million, after underwriting and issuance expenses. Each Corporate Unit consists of a forward contract to purchase shares of our common stock in the future and a 1/10th, or 10%, undivided beneficial ownership interest in one share of Series C Mandatory Convertible Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

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.

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 were 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 required 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 pay quarterly contract adjustment payments 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. If we exercise our option to defer the payment of contract adjustment payments, then until the deferred contract adjustment payments have been paid, we will not declare or pay any dividends on, or make any distributions on, or redeem, purchase or acquire, or make a liquidation payment with respect to, any shares of our capital stock; make any payment of principal of, or interest or premium, if any, on, or repay, repurchase or redeem any of our debt securities that rank on parity with, or junior to, the contract adjustment payments; or make any guarantee payments under any guarantee by us of securities of any of our subsidiaries if our guarantee ranks on parity with, or junior to, the contract adjustment payments. As of June 30, 2023, no contract adjustment payments have been deferred with quarterly cash payments being remitted to the holders. As of June 30, 2023 and December 31, 2022 the purchase contract liability, net of issuance costs, was $32.6 million and $65.0 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 were made during both six month periods ended June 30, 2023 and 2022.

The Series C Mandatory Convertible Preferred Stock and forward purchase contracts are legally detachable and separately exercisable, however, due to the economic linkage between the forward purchase contract and the Series C Mandatory Convertible Preferred Stock, we have concluded that the ability to separate the Corporate Units is non-substantive. Accordingly, we are accounting for the Corporate Units as a single unit of account. We recorded the initial present value of the purchase contract payments as a liability with a corresponding reduction to preferred stock. This liability is included in "Other accruals" on theCondensed Consolidated Balance Sheets (unaudited).

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, 2023, we would have issued approximately 1.2 million shares.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

6. Gas in Storage

We use both the LIFO inventory methodology and the weighted-average cost methodology to value natural gas in storage. Natural gas storage injections are priced at the average of the costs of natural gas supply purchased during the year. For interim periods, the difference in the cost of replacing the current portion of stored gas inventory compared to the amount stated on a LIFO basis is recorded within the Condensed Consolidated Balance Sheets (unaudited). Due to seasonality requirements, we expect interim variances in LIFO layers to be replenished by year end. The LIFO basis exceeded the cost of replacing the current portion of stored gas by $11.6 million and zero as of June 30, 2023 and December 31, 2022, respectively, for certain gas distribution companies recorded within "Prepayments and other" on the Condensed Consolidated Balance Sheets (unaudited).

7. Regulatory Matters

NIPSCO change in accounting estimate

As part of the NIPSCO Gas Settlement and Stipulation Agreement filed on March 2, 2022, NIPSCO Gas agreed to change the depreciation methodology for its calculation of depreciation rates, which reduces depreciation expense and subsequent revenues and cash flows. An order was received on July 27, 2022 approving the rate case and rates were effective as of September 1, 2022. As part of the NIPSCO Electric pending electric base rate case and the Stipulation and Settlement Agreement filed on March 10, 2023 NIPSCO Electric agreed to change the depreciation methodology for its calculation of depreciation rates, which will reduce depreciation expense and subsequent revenues and cash flows if the stipulation is accepted. An order is expected in the electric rate case in August of 2023.

Columbia of Ohio regulatory filing update

Columbia of Ohio's base rate case was filed on June 30, 2021, requesting a net rate increase of approximately 21.3% or $221.4 million increase in revenue per year. The case was filed in conjunction with applications for an alternative rate plan, approval of certain deferral authority, and updates to certain riders. On October 31, 2022, Columbia of Ohio filed a joint stipulation and recommendation with certain parties to settle the base rate case. On January 26, 2023, the PUCO modified and approved the joint stipulation and recommendation, and Columbia of Ohio placed rates into effect on March 1, 2023. Applications for Rehearing were filed by the three parties who opposed certain rate design and energy efficiency assistance components of the joint stipulation and recommendation, which was granted for further consideration by the PUCO on March 22, 2023.

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 JVs and the amount included in regulated rates to recover our approved investments in consolidated JVs. 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). NiSource recorded depreciation expense of $13.7 million and $9.3 million for the three and six months ended June 30, 2023, and $9.6 million and $6.7 million for the three and six months ended June 30, 2022. Refer to Note 13, "Variable Interest Entities," for additional information.

8. Risk Management Activities

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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

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


	June 30, 2023				December 31, 2022
(in millions)	Assets		Liabilities		Assets		Liabilities
Current(1)

Derivatives not designated as hedging instruments	$	5.0	$	2.5	$	18.8	$	1.1
Total	$	5.0	$	2.5	$	18.8	$	1.1
Noncurrent(2)

Derivatives not designated as hedging instruments	$	34.6	$	1.7	$	66.0	$	1.9
Total	$	34.6	$	1.7	$	66.0	$	1.9

(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 and deferred credits", respectively, on the Condensed Consolidated Balance Sheets (unaudited).

⁽³⁾~~Presented in "Other accruals"~~Our derivative instruments aresubject to enforceable master netting arrangements or similar agreements. No collateral was either received or posted related to our outstanding derivative positions at June 30, 2023. If the above gross asset and liability positions were presented net of amounts owed or receivable from counterparties, we would report a net asset position of $35.4 million and $81.8 million at June 30, 2023 and December 31, 2022, respectively.

All gains and losses on ~~the Condensed Consolidated Balance Sheets (unaudited).~~derivative contracts are deferred as regulatory liabilities or assets and are remitted to or collected from customers through NIPSCO’s quarterly GCA mechanism.

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, 2023 and December 31, 2022, we had 88.9 MMDth and 99.0 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 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.

~~Interest Rate Risk Management~~

As of ~~September~~June 30, ~~2017, NiSource Finance has forward-starting interest rate swaps with an aggregate notional value totaling $1.0 billion~~2023, the remaining terms of these instruments range from one to hedge the variability in cash flows attributable to changes in the benchmark interest rate during the periods from the effective dates of the swaps to the anticipated dates of forecasted debt issuances, which are expected to take place by the end of 2019. These interest rate swaps are designated as cash flow hedges. four years.

The ~~effective portions of~~following table summarizes the gains and losses associated with the commodity price risk programs deferred as regulatory assets and liabilities:


(in millions)	June 30, 2023		December 31, 2022
Regulatory Assets
Losses on commodity price risk programs	$	16.4	$	10.0
Regulatory Liabilities
Gains on commodity price risk programs	40.5		90.0

Our derivative instruments measured at fair value as of June 30, 2023 and December 31, 2022 do not contain any credit-risk-related contingent features.

The net gain related to multiple of our settled interest rate swaps is recorded in AOCI. We amortize the net gain 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, 2023 and 2022 and are recorded ~~to AOCI and are recognized~~ in ~~earnings concurrently with the recognition of interest~~"Interest expense, net" on the ~~associated debt, once issued. If it becomes probable that a hedged forecasted transaction will no longer occur,~~Condensed Statements of Consolidated Income (unaudited). Amounts expected to be reclassified to earnings during the ~~accumulated gains or losses on the derivative will be recognized currently in earnings.~~

On May 11, 2017, NiSource Finance settled $950.0 million of forward-starting interest rate swap agreements contemporaneously with the issuance of $2.0 billion of 3.49% and 4.375% senior notes, maturing in 2027 and 2047, respectively. These derivativenext twelve months are immaterial.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

Amortization will continue for 347 months. See Note 17, "Accumulated Other Comprehensive Loss," for additional information.

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

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

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

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

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

7.9. Fair Value

A. Fair Value Measurements

Recurring Fair Value ~~Measurements.~~Measurements

The following tables present financial assets and liabilities measured and recorded at fair value on ~~NiSource’s~~our Condensed Consolidated Balance Sheets (unaudited) on a recurring basis and their level within the fair value hierarchy as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~:2022:


Recurring Fair Value Measurements June 30, 2023 (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, 2023
Assets

Risk management assets	$	—	$	39.6	$	—	$	39.6

Available-for-sale debt securities	—		154.9		—		154.9
Total	$	—	$	194.5	$	—	$	194.5
Liabilities

Risk management liabilities	$	—	$	4.2	$	—	$	4.2
Total	$	—	$	4.2	$	—	$	4.2


Recurring Fair Value Measurements December 31, 2022 (in millions)									Recurring Fair Value Measurements December 31, 2022 (in millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2022
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	$	—	$	84.8	$	—	$	84.8
Available-for-sale securities	—		139.3		—		139.3

Available-for-sale debt securities									Available-for-sale debt securities	—		151.6		—		151.6
Total	$	—	$	160.3	$	—	$	160.3	Total	$	—	$	236.4	$	—	$	236.4
Liabilities									Liabilities

Risk management liabilities	$	—	$	68.1	$	0.8	$	68.9	Risk management liabilities	$	—	$	3.0	$	—	$	3.0
Total	$	—	$	68.1	$	0.8	$	68.9	Total	$	—	$	3.0	$	—	$	3.0

~~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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

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.

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~~2023 and December 31, ~~2016~~,2022, 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. 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 can settle the contracts at any time. For additional information see Note 6, "Risk Management Activities."

NIPSCO has entered into long-term forward natural gas purchase instruments ~~that range from five to ten years~~ to lock in a fixed price for its natural gas customers. ~~NiSource values~~We value these contracts using a pricing model that incorporates market-based information when available, as these instruments trade less frequently and are classified within Level 2 of the fair value hierarchy. For additional information, see Note ~~6, “Risk~~8, "Risk Management Activities.”"

Available-for-Sale Debt Securities. Available-for-sale debt securities are investments pledged as collateral for trust accounts related to ~~NiSource’s wholly-owned~~our wholly owned insurance company. ~~Available-for-sale securities are included within “Other investments” in the Condensed Consolidated Balance Sheets (unaudited). NiSource values~~We value U.S. Treasury, corporate debt and mortgage-backed securities using a matrix pricing model that incorporates market-based information. These securities trade less frequently and are classified within Level 2. ~~Total~~

Our available-for-sale debt securities impairments are recognized periodically using an allowance approach. At each reporting date, we utilize a quantitative and qualitative review process to assess the impairment of available-for-sale debt securities at the individual security level. For securities in a loss position, we evaluate our intent to sell or whether it is more-likely-than-not that we will be required to sell the security prior to the recovery of its amortized cost. If either criteria is met, the loss is recognized in earnings immediately, with the offsetting entry to the carrying value of the security. If both criteria are not met, we perform an analysis to determine whether the unrealized ~~gains~~loss is related to credit factors. The analysis focuses on a variety of factors that include, but are not limited to, downgrade on ratings of the security, defaults in the current reporting period or projected defaults in the future, the security's yield spread over treasuries, and ~~losses from available-for-sale securities are~~other relevant market data. If the unrealized loss is not related to credit factors, it is included in other comprehensive income. If the unrealized loss is related to credit factors, the loss is recognized as credit loss expense in earnings during the period, with an offsetting entry to the allowance for credit losses. The amount of the credit loss recorded to the allowance account is limited by the amount at which the security's fair value is less than its amortized cost basis. If certain amounts recorded in the allowance for credit losses are deemed uncollectible, the allowance on the uncollectible portion will be charged off, with an offsetting entry to the carrying value of the security. Subsequent improvements to the estimated credit losses of available-for-sale debt securities will be recognized immediately in earnings. As of June 30, 2023 and December 31, 2022, we have $0.7 million and $0.9 million, respectively, recorded 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~~2023 and December 31, ~~2016~~2022 were:


June 30, 2023 (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	$	70.1	$	—	$	(4.2)	$	—	$	65.9
Corporate/Other debt securities	98.7		—		(9.0)		(0.7)		89.0
Total	$	168.8	$	—	$	(13.2)	$	(0.7)	$	154.9

December 31, 2022 (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	$	67.7	$	—	$	(4.5)	$	—	$	63.2
Corporate/Other debt securities	99.0		—		(9.7)		(0.9)		88.4
Total	$	166.7	$	—	$	(14.2)	$	(0.9)	$	151.6

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 $59.9 million and $83.7 million, respectively, at June 30, 2023.

(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 $61.0 million and $85.5 million, respectively, at December 31, 2022.

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~~2023 and ~~2016.~~2022.

~~The cost of maturities sold is based upon specific identification.~~ At ~~September~~June 30, ~~2017,~~2023, approximately ~~$8.4~~$12.9 million of U.S. Treasury debt securities and approximately ~~$3.2~~$3.6 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~~,2023, 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, 2023		Estimated Fair Value as of June 30, 2023		Carrying Amount as of Dec. 31, 2022		Estimated Fair Value as of Dec. 31, 2022
Long-term debt (including current portion)	$	11,032.2	$	10,079.7	$	9,553.6	$	8,479.4

(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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

~~8. Transfers~~Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

10. 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, 2023 and December 31, 2022. All our goodwill has been allocated to our Gas Distribution Operations segment.

For our annual goodwill impairment analysis performed as of May 1, 2023, 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.

11. Income Taxes

Our interim effective tax rates reflect the estimated annual effective tax rates for 2023 and 2022 applied to year-to-date pretax income, adjusted for tax expense associated with certain discrete items. These adjustments have a relative impact on the effective tax rate proportionally to pretax income or loss. The effective tax rates for the three months ended June 30, 2023 and 2022 were 23.3% and 17.7%, respectively. The effective tax rates for the six months ended June 30, 2023 and 2022 were 20.6% and 18.2%, respectively. These effective tax rates differ from the federal statutory tax rate of 21% primarily due to renewable partnership income, amortization of excess deferred federal income tax liabilities, as specified in the TCJA, tax credits, state flow through, and other permanent book-to-tax differences.

The increase in the three month effective tax rate of 5.6% in 2023 compared to 2022 is primarily attributed to increases in renewable partnership income, partially offset by increased amortization of excess deferred federal income tax liabilities, current year impacts of a state legislative change in a flow-through jurisdiction, and restricted stock unit excess benefit.

The increase in the six month effective tax rate of 2.4% in 2023 compared to 2022 is primarily attributed to increases in renewable partnership income, partially offset by increased amortization of excess deferred federal income tax liabilities, current year impacts of a state legislative change in a flow-through jurisdiction, and restricted stock unit excess benefit.

As of June 30, 2023, there have been no material changes to our unrecognized tax benefits or possible changes that could reasonably be expected to occur during the next twelve months. See Note 11 to the Company’s Consolidated Financial ~~Assets~~Statements in the Annual Report on Form 10-K for the year ended December 31, 2022, for a discussion of these unrecognized tax benefits.

12. 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, 2023, we contributed $2.0 million to our pension plans and $11.2 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, 2023 and 2022:


	Pension Benefits				OPEB
Three Months Ended June 30, (in millions)	2023		2022		2023		2022
Components of Net Periodic Benefit Cost(1)
Service cost	$	5.1	$	7.0	$	1.3	$	1.6
Interest cost	17.1		9.8		5.5		3.0
Expected return on assets	(23.6)		(22.8)		(3.8)		(4.0)
Amortization of prior service credit	—		—		(0.5)		(0.6)
Recognized actuarial loss	8.4		4.8		0.8		0.7
Settlement loss	0.1		6.3		—		—
Total Net Periodic Benefit Cost	$	7.1	$	5.1	$	3.3	$	0.7
(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)	2023		2022		2023		2022
Components of Net Periodic Benefit Cost(1)
Service cost	$	10.2	$	14.1	$	2.6	$	3.2
Interest cost	34.2		19.2		10.9		6.0
Expected return on assets	(47.2)		(45.7)		(7.6)		(8.0)
Amortization of prior service credit	—		—		(1.0)		(1.2)
Recognized actuarial loss	16.8		9.3		1.6		1.4
Settlement loss	0.1		6.3		—		—
Total Net Periodic Benefit Cost	$	14.1	$	3.2	$	6.5	$	1.4
(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).

13. Variable Interest Entities

A VIE is an entity in which the controlling interest is determined through means other than a majority voting interest. NIPSCO owns and operates two wind facilities, Rosewater and Indiana Crossroads Wind, which have 102 MW and 302 MW of nameplate capacity, respectively. NIPSCO also owns two solar facilities, Indiana Crossroads Solar and Dunn's Bridge I, which are both in service at June 2023, with a combined 465 MW of nameplate capacity. We control decisions that are significant to these entities' ongoing operations and economic results. Therefore, we have concluded that NIPSCO is the primary beneficiary and have consolidated all four entities.

Members of each respective JV include NIPSCO (who is the managing member) and a tax equity partner. Earnings, tax attributes and cash flows are allocated to both NIPSCO and the tax equity partner in varying percentages by category and over the life of the partnership. NIPSCO and each tax equity partner contributed cash to each JV. For the two wind facilities, NIPSCO assumed an obligation to the developers of each facility, representing the remaining economic interest. NIPSCO resolved this obligation by acquiring the developers' economic interests in June 2023 for $389.2 million. Once the tax equity partner has earned their negotiated rate of return and have reached a stated contractual date, NIPSCO has the option to purchase the remaining interest in the respective JV, at fair market value from the tax equity partner. NIPSCO has an obligation to purchase, through a PPA at established market rates, 100% of the electricity generated by our in-service JVs.

We did not provide any financial or other support during the quarter that was not previously contractually required, nor do we expect to provide such support in the future.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

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


(in millions)	June 30, 2023		December 31, 2022
Net Property, Plant and Equipment	$	1,349.7	$	978.5
Current assets	160.4		25.7

Total assets(1)	1,510.1		1,004.2
Current liabilities	344.5		128.2
Asset retirement obligations	54.4		30.6

Total liabilities	$	398.9	$	158.8

(1)The assets of each VIE 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 the VIEs do not have recourse to the general credit of the primary beneficiary.

14. Long-Term Debt

On March 24, 2023, we completed the issuance and sale of $750.0 million of 5.25% senior unsecured notes maturing in 2028, which resulted in approximately $742.2 million of net proceeds after discount and debt issuance costs.

On June 8, 2023, we completed the issuance and sale of an additional $300.0 million of 5.25% senior unsecured notes maturing in 2028 (the "2028 Notes"). The terms of the 2028 Notes, other than the issue date and the price to the public, are identical to the terms of, and constitute as a reopening of, our 5.25% senior unsecured notes due 2028 issued on March 24, 2023. On June 8, 2023, we also completed the issuance and sale of $450.0 million of 5.40% senior unsecured notes maturing in 2033. These issuances resulted in approximately $742.5 million of total net proceeds after discount and debt issuance costs. With the incremental issuance, we now have $1.05 billion of 5.25% senior unsecured notes maturing in 2028.

15. Short-Term Borrowings

We generate short-term borrowings from our revolving credit facility, commercial paper program, accounts receivable transfer programs, and term credit agreement. Each of these borrowing sources is described further 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. We had no outstanding borrowings under this facility as of June 30, 2023 and December 31, 2022.

Commercial Paper Program. Our commercial paper program has a program limit of up to $1.5 billion. We had $590.0 million and $415.0 million of commercial paper outstanding with weighted-average interest rates of 5.42% and 4.60% as of June 30, 2023 and December 31, 2022, respectively.

Accounts Receivable Transfer Programs. Columbia of Ohio, NIPSCO and Columbia of Pennsylvania each maintain a receivables agreement whereby they transfer their customer accounts receivables to ~~third party~~third-party financial institutions through ~~wholly-owned~~wholly owned and consolidated special purpose entities. The three agreements expire between ~~March 2018~~August 2023 and ~~October 2018~~May 2024 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)~~

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,~~2023, the maximum amount of debt that could be ~~recognized~~borrowed related to ~~NiSource’s~~our accounts receivable programs is ~~$265.0~~$372.0 million.

~~The following table reflects the gross receivables balance~~We had zero and ~~net receivables transferred as well as~~$347.2 million of short-term borrowings related to the securitization transactions as of ~~September~~June 30, ~~2017~~2023 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
2022, respectively.

For the ~~nine~~six months ended ~~September~~June 30, ~~2017 and 2016, $47.8~~2023, $347.2 million ~~and $11.0 million, respectively,~~ was recorded as cash flows used for financing activities related to the change in short-term borrowings due to securitization transactions. ~~Fees associated with~~For the ~~securitization transactions were $0.6 million and $0.4 million for the three~~six months ended ~~September~~June 30, ~~2017 and 2016, respectively, and $1.9~~2022, $285.0 million and $1.6 million for the nine months ended September 30, 2017 and 2016, respectively. NiSource remains 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:~~was

(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~~recorded as cash flows from financing activities related to 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~~short-term borrowings due to securitization transactions. Fees associated with the securitization transactions were $0.7 million for the three months ended ~~September~~June 30, ~~2017 when compared~~2023 and 2022, and $1.6 million and $1.0 million for the six months ended June 30, 2023 and 2022, respectively. Columbia of Ohio, NIPSCO and Columbia of Pennsylvania remain responsible for collecting on the receivables securitized, and the receivables cannot be transferred 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

another party.

⁽¹⁾~~Effective January 1, 2017, NiSource adopted the methodology~~Term Credit Agreement. On December 20, 2022, we entered into a $1.0 billion term credit agreement with a syndicate of ~~using a full yield curve (spot rate) approach to estimate the service~~banks. The agreement matures on December 19, 2023 and interest ~~components of net periodic benefit cost. This change in accounting estimate resulted in a decrease in these costs for~~charged on the ~~nine months ended September 30, 2017 when compared to~~borrowings depends on 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~~variable rate structure elected at the ~~measurement dates~~time of ~~August 31, 2017~~each borrowing. The available variable rate structures from which we can choose are defined in the agreement. Under the agreement, we borrowed $1.0 billion on December 20, 2022 with an interest rate of SOFR plus 105 basis points. We had $1.0 billion outstanding under this agreement with interest rates of 6.13% and 5.37% as of June 30, 2023 and December 31, ~~2016.~~2022, respectively.

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, excluding the term credit agreement, are presented net in the Condensed Statements of Consolidated Cash Flows (unaudited). as their maturities are less than 90 days.

~~14.~~16. 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~~2023 and December 31, ~~2016, NiSource~~2022, we had issued stand-by letters of credit of ~~$13.0~~$10.2 million for the benefit of third parties.

We provide guarantees related to our future performance under BTAs for our renewable generation projects. At June 30, 2023 and December 31, 2022, our guarantees for multiple BTAs totaled $823.6 million and ~~$14.7~~$841.6 million, respectively. 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. ~~The Company is party to certain claims and legal proceedings arising in the ordinary course of business, none of which is deemed 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~~ 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.

Private Actions. 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"). There continue to be asserted wrongful death and bodily injury claims as it relates to the Greater Lawrence Incident. We continue to discuss potential settlements with remaining claimants. The outcomes and impacts of such private actions are uncertain at this time.

FERC Investigation. In April 2022, NIPSCO was notified that the FERC Office of Enforcement (“OE”) is conducting an investigation of an industrial customer for allegedly manipulating the MISO Demand Response (“DR”) market. The customer and NIPSCO are cooperating with the investigation. As of June 30, 2023, it is probable that the OE will require the customer to repay certain DR revenues received from MISO, and will require NIPSCO to disgorge administrative fees and foregone margin charges that NIPSCO collected pursuant to its own IURC-approved tariff. The investigation remains ongoing. NIPSCO currently estimates the maximum amount of its disgorgement exposure to be $7.7 million which will be returned to customers. As of June 30, NIPSCO expects to recover more than 50% of that amount.

Other Legal Proceedings.We are also party to other claims, regulatory and legal proceedings arising in the ordinary course of business in each state in which we have operations, none of which we believe to be individually material at this time.

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~~2023 and December 31, ~~2016, NiSource~~2022, we had recorded a liability of ~~approximately $112.6~~$84.5 million and ~~$111.4~~$86.5 million, respectively, to cover environmental remediation at various sites. ~~The current portion of this~~This liability is included in ~~"Legal~~"Other accruals" and ~~environmental"~~"Other noncurrent liabilities and deferred credits" 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, we 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 completed an annual refresh of the model in the second ~~quarter of each fiscal year.~~quarter. No material changes to the estimated future remediation costs were noted as a result of the refresh completed as of June 30, ~~2017. The~~2023. Our total estimated liability ~~at NiSource~~ related to the facilities subject to remediation was ~~$108.0~~$79.5 million and ~~$105.5~~$81.0 million at ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, respectively. The liability represents ~~NiSource’s~~our best estimate of the probable cost to remediate the ~~facilities. NiSource believes~~MGP sites. Our model indicates that it is reasonably possible that remediation costs could vary by as much as ~~$25~~$15.0 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,~~NIPSCO continues to meet the compliance requirements established by the EPA ~~issued a 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. The 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~~current CCR rule ~~resulted in~~required 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.

D. Other Matters.

Generation Transition.NIPSCO ~~filed~~has executed several PPAs to purchase 100% of the output from renewable generation facilities at a ~~petition~~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 ~~November 1, 2016 with the IURC seeking~~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 ~~a settlement reached with certain parties regarding~~and timely completion of construction. NIPSCO and the ~~CCR projects and treatment of associated costs. An evidentiary hearing was held on August 21, 2017 and an order is expected by~~tax equity partner, where applicable, for each respective BTA, are obligated to make cash contributions to the ~~end of 2017.~~

~~Water~~

~~ELG.~~ On November 3, 2015, the EPA issued a final rule to amend the ELG and standards for the Steam Electric Power Generating category. The final rule became effective January 4, 2016. The rule imposes new water treatment and discharge requirements on NIPSCO's electric generating facilities to be applied between 2018 and 2023. On April 25, 2017, the EPA published notice 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.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

JV that acquires the project at the date construction is substantially complete. Certain BTA agreements require NIPSCO to make partial payments upon the developer's completion of significant construction milestones.

~~Schahfer Generating Station~~Proposed Sale of 19.9% Equity Interest in Northern Indiana Public Service Company LLC. On June 17, 2023, NiSource and our wholly-owned subsidiary, NIPSCO Holdings II LLC, a Delaware limited liability company (“NIPSCO Holdings II”), entered into a purchase and sale agreement (the “BIP Purchase Agreement”) with BIP BLUE BUYER L.L.C., an affiliate of BIP. NIPSCO Holdings II is the 100% owner of all issued and outstanding membership interests of NIPSCO. NIPSCO Holdings II is a wholly-owned subsidiary of NIPSCO Holdings I LLC (“NIPSCO Holdings I”), which is a wholly-owned subsidiary of NiSource. Under the terms of the BIP Purchase Agreement, BIP will acquire newly issued membership interests of NIPSCO Holdings II which will represent a 19.9% ownership in NIPSCO Holdings II at closing, for a purchase price of $2.150 billion in cash, subject to adjustment based on the timing of closing and the amount of NiSource capital contributions made prior to closing (the “NIPSCO Minority Equity Interest Sale”). At the closing of the NIPSCO Minority Equity Interest Sale, through their respective percentage ownership of NIPSCO Holdings II, NiSource will own an 80.1% controlling interest in NIPSCO, while BIP will own the remaining 19.9% non-controlling interest. The parties currently expect for the NIPSCO Minority Equity Interest Sale to close by the end of 2023. ItThe closing of the NIPSCO Minority Equity Interest Sale is ~~projected over the long term that the cost to customers to retire these units at these dates will be lower than maintaining and upgrading them for continuing generation.~~

~~NiSource and NIPSCO committed~~subject to the ~~retirement~~satisfaction of certain customary closing conditions described in the BIP Purchase Agreement, including receipt of authorization by FERC. NIPSCO and BIP filed a joint petition with FERC on June 26, 2023 seeking approval of the ~~Bailly Generating Station units in connection with the filing~~NIPSCO Minority Equity Interest Sale.

The BIP Purchase Agreement may be terminated: (i) by mutual written consent of the ~~2016 Integrated Resource Plan, pending approval~~parties; (ii) by either party if the MISO. In the fourth quarter of 2016, the MISO approved NIPSCO's plan to retire the Bailly Generating Station units by May 31, 2018. In accordance with ASC 980-360, the remaining net book value of the Bailly Generating Station units was reclassified from "Net utility plant" to "Other property, at cost, less accumulated depreciation" on the Condensed Consolidated Balance Sheets (unaudited).

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

~~NIPSCO Pure Air.~~ NIPSCO has a service agreement with Pure Air, a general partnership between Air Products and Chemicals, Inc. and First Air Partners LP, under which Pure Air provides scrubber services to reduce sulfur dioxide emissions for Units 7 and 8 at the Bailly Generating Station. Services under this contract commenced on July 1, 1992 and expired on June 30, 2012. The agreement was renewed effective July 1, 2012 for ten years requiring NIPSCO to pay for the services under a combination of fixed and variable charges. NiSource has made an exhaustive effort to obtain information needed from Pure Air to determine the status of Pure Air as a VIE. However, NIPSCOclosing 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. Basedoccurred on ~~the terms of the agreement, the arrangement qualified for capital lease accounting. As~~or before one year after the effective date of the ~~new agreement was July 1, 2012,~~BIP Purchase Agreement; (iii) by BIP or NiSource, ~~capitalized this lease beginning in~~as the ~~third quarter~~case may be, prior to the closing upon certain material breaches or failures to perform any 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~~representations, warranties, covenants or agreements by the ~~provisions of~~other party; or (iv) by either party prior to 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 chargesclosing in the event of a ~~termination by~~final and non-appealable law or order restraining, enjoining or otherwise prohibiting the closing in any competent jurisdiction.

The BIP Purchase Agreement prohibits NIPSCO and NIPSCO Holdings II from paying any dividends or similar distributions to NiSource ~~for any reason other than material breach by IBM. NiSource and IBM are in discussions with respect~~prior to the ~~charges owed IBM. Liabilities recorded related to termination charges as~~closing of ~~September 30, 2017 are not material~~the NIPSCO Minority Equity Interest Sale.

Pursuant to the ~~Condensed Consolidated Financial Statements (unaudited).~~

~~In May~~terms of the BIP Purchase Agreement, at closing of the NIPSCO Minority Equity Interest Sale, BIP, NIPSCO Holdings I, NIPSCO Holdings II and ~~June 2017,~~ NiSource ~~executed agreements with new IT service providers.~~will enter into an Amended and Restated Limited Liability Company Operating Agreement (the “Holdings II LLC Agreement”). The ~~new agreements have terms ending~~Holdings II LLC Agreement, among other things, provides for ongoing governance, exit rights, additional capital contributions, distributions, and other arrangements for NIPSCO Holdings II from and after the closing of the NIPSCO Minority Equity Interest Sale. As part of the NIPSCO Minority Equity Interest Sale, BIP is committed to funding its pro rata share of ongoing capital requirements, which is supported by a $250 million equity commitment letter. Upon the closing of the NIPSCO Minority Equity Interest Sale, the board of directors of NIPSCO Holdings II (the “Holdings II Board”) will consist of seven directors. The Holdings II LLC Agreement will allow BIP to appoint at ~~various dates throughout 2022. Knowledge sharing and transition of responsibilities from IBM~~least two directors to the ~~new service providers is currently underway~~Holdings II Board so long as BIP holds at least a 17.5% Percentage Interest (as defined in the Holdings II LLC Agreement). The Holdings II LLC Agreement also contains certain investor protections, including, among other things, requiring BIP approval for NIPSCO Holdings II to take certain major actions. In addition, the Holdings II LLC Agreement will contain certain transfer restrictions and ~~is expected~~other transfer rights and obligations applicable to ~~be substantially complete~~both BIP and NiSource.

NiSource intends to use the proceeds from the purchase price and future capital contributions by ~~the end of 2017. Costs~~BIP to support NIPSCO’s capital expenditure plans for serving customers, reduce NiSource’s debt and fund ongoing capital needs 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.~~renewable generation transition.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

~~15.~~17. Accumulated Other Comprehensive Loss

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

Loss, net of tax:


(in millions)													(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, 2023													Balance as of April 1, 2023	$	(9.2)	$	(12.5)	$	(13.0)	$	(34.7)
Other comprehensive income (loss) before reclassifications													Other comprehensive income (loss) before reclassifications	(1.4)		(0.3)		—		(1.7)
Amounts reclassified from accumulated other comprehensive loss													Amounts reclassified from accumulated other comprehensive loss	0.2		0.1		0.3		0.6
Net current-period other comprehensive income													Net current-period other comprehensive income	(1.2)		(0.2)		0.3		(1.1)

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	)
Balance as of June 30, 2023													Balance as of June 30, 2023	$	(10.4)	$	(12.7)	$	(12.7)	$	(35.8)
(1)All amounts are net of tax. Amounts in parentheses indicate debits.													(1)All amounts are net of tax. Amounts in parentheses indicate debits.
(in millions)													(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, 2023													Balance as of January 1, 2023	$	(11.2)	$	(12.6)	$	(13.3)	$	(37.1)
Other comprehensive income (loss) before reclassifications	0.1			(9.7		)	—			(9.6		)	Other comprehensive income (loss) before reclassifications	0.3		(0.3)		—		—
Amounts reclassified from accumulated other comprehensive loss	—			0.4			1.1			1.5			Amounts reclassified from accumulated other comprehensive loss	0.5		0.2		0.6		1.3
Net current-period other comprehensive income (loss)	0.1			(9.3		)	1.1			(8.1		)	Net current-period other comprehensive income (loss)	0.8		(0.1)		0.6		1.3
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	)
Balance as of June 30, 2023													Balance as of June 30, 2023	$	(10.4)	$	(12.7)	$	(12.7)	$	(35.8)

Three Months Ended September 30, 2016 (in millions)
Gains and Losses on Securities⁽¹⁾

Gains and Losses on Cash Flow Hedges⁽¹⁾

Pension and OPEB Items⁽¹⁾

Accumulated
Other
Comprehensive
Loss⁽¹⁾
Balance as of July 1, 2016 $ 2.0
$ (139.7 ) $ (18.6 ) $ (156.3 )
Other comprehensive loss before reclassifications (0.3 ) (22.9 ) —
(23.2 )
Amounts reclassified from accumulated other comprehensive loss —
0.3
0.2
0.5
Net current-period other comprehensive income (loss) (0.3 ) (22.6 ) 0.2
(22.7 )
Balance as of September 30, 2016 $ 1.7
$ (162.3 ) $ (18.4 ) $ (179.0 )

Nine Months Ended September 30, 2016 (in millions)
Gains and Losses on Securities⁽¹⁾

Gains and Losses on Cash Flow Hedges⁽¹⁾

Pension and OPEB Items⁽¹⁾

Accumulated
Other
Comprehensive
Loss⁽¹⁾
Balance as of January 1, 2016 $ (0.5 ) $ (15.5 ) $ (19.1 ) $ (35.1 )
Other comprehensive income (loss) before reclassifications 2.3
(148.0 ) —
(145.7 )
Amounts reclassified from accumulated other comprehensive loss (0.1 ) 1.2
0.7
1.8
Net current-period other comprehensive income (loss) 2.2
(146.8 ) 0.7
(143.9 )
Balance as of September 30, 2016 $ 1.7
$ (162.3 ) $ (18.4 ) $ (179.0 )

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


(in millions)	Gains and Losses on Securities(1)		Gains and Losses on Cash Flow Hedges(1)		Pension and OPEB Items(1)		Accumulated Other Comprehensive Loss(1)
Balance as of 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 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)

~~16. Business Segment Information~~

At ~~September 30, 2017, NiSource’s operations~~(1)All amounts are ~~divided into two primary reportable segments. The Gas Distribution Operations segment provides natural gas service and transportation for residential, commercial and industrial customers~~net of tax. Amounts in ~~Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana and Massachusetts. The Electric Operations segment provides electric service in~~ 20 ~~counties in the northern part of Indiana.~~parentheses indicate debits.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

18. Other, Net

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


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2023		2022		2023		2022
Interest income	$	1.8	$	0.6	$	3.6	$	1.5
AFUDC equity	4.4		4.0		9.2		7.0

Pension and other postretirement non-service benefit (cost)	(4.9)		4.7		(8.4)		12.3

Miscellaneous	0.7		(0.3)		(0.9)		(0.9)
Total Other, net	$	2.0	$	9.0	$	3.5	$	19.9

19. Business Segment Information

Our operations are divided into two primary reportable segments, the Gas Distribution Operations and 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, are presented as "Corporate and Other" and primarily are comprised of 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 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)	2023		2022		2023		2022
Operating Revenues
Gas Distribution Operations
Unaffiliated	$	692.8	$	741.1	$	2,194.1	$	2,177.8
Intersegment	3.1		3.2		6.2		6.3
Total	695.9		744.3		2,200.3		2,184.1
Electric Operations
Unaffiliated	397.0		437.1		861.5		867.2
Intersegment	0.1		0.2		0.3		0.4
Total	397.1		437.3		861.8		867.6
Corporate and Other
Unaffiliated	0.2		5.0		0.4		11.5
Intersegment	122.8		120.7		239.5		234.2
Total	123.0		125.7		239.9		245.7
Eliminations	(126.0)		(124.1)		(246.0)		(240.9)
Consolidated Operating Revenues	$	1,090.0	$	1,183.2	$	3,056.0	$	3,056.5
Operating Income (Loss)
Gas Distribution Operations	$	115.4	$	80.6	$	562.3	$	591.4
Electric Operations	49.6		72.6		131.5		171.8
Corporate and Other	3.9		(9.9)		6.1		(19.6)
Consolidated Operating Income	$	168.9	$	143.3	$	699.9	$	743.6

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		3440
~~Gas Distribution Operations~~	35
~~Electric Operations~~	38
Gas Distribution Operations		41
Electric Operations		44
Liquidity and Capital Resources		4148
~~Off Balance Sheet~~ Regulatory, Environmental and Safety Matters~~Arrangements~~		4352
Market Risk Disclosures		4356
Other Information		4457

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.~~2022.

~~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~~2022 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) focus 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. Serving as a guiding practice for our SMS, NiSource is certified in conformance to the American Petroleum Institute Recommended Practice 1173, which is the foundation to our journey towards operational excellence. Additionally, ~~NiSource continues~~we continue to pursue regulatory and legislative initiatives that will allow residential customers not currently on ~~NiSource's~~our system to obtain gas service in a cost effective manner.

Your Energy, Your Future: Our plan to replace our coal generation capacity by the end of 2028 with primarily renewable resources, initiated through our 2018 Integrated Resource Plan ("2018 Plan"), is well underway, and we are continually adjusting to the dynamic renewable energy landscape. As of June 30, 2023, we have achieved in-service status for our first two solar BTAs. We have also taken contractual actions on a number of our other renewable projects to address the timing of these projects as well as consider the broad market issues facing the industry. We remain on track to retire R.M Schahfer's remaining two coal units by the end of 2025. On January 1, 2023, the provisions of the IRA became effective. We are evaluating the impact of this legislation to our renewable projects with potential to drive increased value to customers as part of our expansion of renewable projects and generation transition strategy. We will analyze opportunities to leverage the IRA on a project-by-project basis in consideration of several factors, both quantitative and qualitative, to enable project success and ensure value for the customer and company. For additional information, see "Results and Discussion of Segment Operations - Electric Operations," in this Management's Discussion.

~~Summary~~In 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 timeline to retire the Michigan City Generating Station by the end of 2028. The 2021 Plan calls for the 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 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 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 also expected to occur by the end of 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 given the responses to our Request for Proposal issued in August 2022.

NIPSCO Minority Equity Interest Sale: On June 17, 2023, NiSource and our wholly-owned subsidiary, NIPSCO Holdings II, entered into the BIP Purchase Agreement with an affiliate of BIP, pursuant to which BIP will acquire an indirect 19.9 percent equity interest in NIPSCO. Refer to Note 16, "Other Commitments and Contingencies - D. Other Matters," in the Notes to the Condensed Consolidated Financial ~~Results~~Statements (unaudited) for more information on this transaction.

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

On a consolidated basis, NiSource reported income from continuing operations of $14.0 million, or $0.04 per basic share for the three months ended September 30, 2017, compared to $23.7 million, or $0.07 per basic share for the same period in 2016. The decrease in income from continuing 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 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 decrease

Table of Contents

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

NiSource Inc.

Transformation: Our enterprise-wide transformation roadmap focuses on operational excellence, safety, operation and maintenance management, and unlocking efficiencies. We have formally launched several initiatives that will enable us to streamline work and improve logistics company-wide. These efforts will include investments in proven technologies backed with standardized processes that will change the way we plan, schedule, and execute work in the field and how we engage and provide service to our customers. Taken together, all the initiatives under the Enterprise-wide Transformation Roadmap will prioritize safety and continue to optimize our long-term growth profile.

~~in income from continuing operations during 2017 was due primarily~~Economic Environment: We are monitoring risks related to ~~a loss on early extinguishment~~increasing order and delivery lead times for construction and other materials, increasing risk of ~~long-term debt, partially offset by increased operating income, as discussed below.~~

~~NiSource's operating income for the nine months ended September 30, 2017 was $640.6 million compared to $633.3 million for the same period in 2016. The higher operating income was primarily~~unavailability of materials due to ~~increased net revenues from new rates from base-rate proceedings~~global shortages in raw materials, and ~~infrastructure replacement programs, along with increased rates from incremental capital spend on electric transmission projects at NIPSCO, partially offset by unfavorable effects~~risk of weather. The increase in net revenues was partially offset by increased operating expenses due to higher employee and administrative expenses, increased outside service costs, higher material and supplies expenses and increased environmental costs. Additionally, depreciation expense and other taxes increased relative to 2016. These increases in operating expenses were partially offset by decreased ~~amortization expense.~~

~~Other Income (Deductions), net~~

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

~~Other income (deductions), net reduced income by $362.5 million in~~availability of materials. We continue to see increasing prices associated with certain materials and supplies. To the ~~nine months ended September 30, 2017 compared to a reduction in income~~extent that delays occur or our costs increase, our business operations, results of ~~$263.4 million in the prior year. This change is due primarily to a loss on early extinguishment of long-term debt of $111.5 million which was incurred in 2017. Refer to Note 12, "Long-Term Debt,"in the Notes to Condensed Consolidated Financial Statements (unaudited) for~~operations, cash flows, and financial condition could be materially adversely affected. For more information on ~~the early extinguishment of long-term debt.~~

~~Income Taxes~~

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

~~Capital Investment.~~ In 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 existingour 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~~strategy, see "Results and Discussion of Segment ~~Operations”~~Operations - Electric Operations," in this Management's Discussion. Additionally, for more information on global availability of materials for our renewable projects, see "Results and ~~“Liquidity~~Discussion of Segment Operations - Electric Operations - Electric Supply and ~~Capital Resources.”~~Generation Transition."

~~Regulatory Developments~~We are faced with increased 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 a competitive and attractive appeal for potential recruits. With a focus on workforce planning, we are evaluating our future talent footprint by creating flexible work arrangements where possible 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.

~~During~~After decreasing for the ~~quarter ended September 30, 2017, NiSource continued to move forward~~first three months of 2023, the market price of natural gas has stabilized at low levels with very little volatility. Changes in gas prices do not have a material impact on ~~core infrastructure~~our results of operations. For more information on our commodity price impacts, see "Results and ~~environmental investment programs supported by complementary regulatory and customer initiatives across all seven states~~Discussion of ~~its operating area. The discussion below summarizes significant regulatory developments that transpired during the third quarter of 2017:~~

Segment Operations - Gas Distribution Operations," and "Market Risk Disclosures."

~~NIPSCO filed a gas base~~

Due to rising interest rates, we experienced higher interest expense for the three and six months periods ended June 30, 2023 compared to the same periods in 2022 associated with short-term borrowings. We continue to evaluate our financing plan to manage interest expense and exposure to rates. For more information on interest 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 expected in the second half of 2018.

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,risk, see "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

~~covers replacement~~A summary of ~~priority mainline pipe~~our consolidated financial results for the three 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 throughsix months ended June 30, ~~2017, was filed on August 31, 2017. An order is expected in the fourth quarter of 2017.~~2023 and 2022 are presented below:

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.


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except per share amounts)	2023		2022		Favorable (Unfavorable)		2023		2022		Favorable (Unfavorable)
Operating Revenues	$	1,090.0	$	1,183.2	$	(93.2)	$	3,056.0	$	3,056.5	$	(0.5)
Operating Expenses
Cost of energy	251.9		383.7		131.8		1,017.0		1,090.4		73.4
Other Operating Expenses	669.2		656.2		(13.0)		1,339.1		1,222.5		(116.6)
Total Operating Expenses	921.1		1,039.9		118.8		2,356.1		2,312.9		(43.2)
Operating Income	168.9		143.3		25.6		699.9		743.6		(43.7)
Total Other Deductions, Net	(108.5)		(75.5)		(33.0)		(215.9)		(148.3)		(67.6)
Income Taxes	14.1		12.0		(2.1)		99.9		108.2		8.3


Net Income	46.3		55.8		(9.5)		384.1		487.1		(103.0)
Net loss attributable to noncontrolling interest	(12.5)		(11.2)		1.3		(7.7)		(6.7)		1.0
Net Income Attributable to NiSource	58.8		67.0		(8.2)		391.8		493.8		(102.0)
Preferred dividends	(18.9)		(13.8)		(5.1)		(32.7)		(27.6)		(5.1)
Net Income Available to Common Shareholders	39.9		53.2		(13.3)		359.1		466.2		(107.1)
Earnings Per Share
Basic Earnings Per Share	$	0.10	$	0.13	$	(0.03)	$	0.87	$	1.15	$	(0.28)
Diluted Earnings Per Share	$	0.09	$	0.12	$	(0.03)	$	0.80	$	1.06	$	(0.26)

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

~~Table of Contents~~

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

~~NiSource Inc.~~

~~Gas Distribution Operations~~

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

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

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

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

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

Net revenues are calculated as gross revenues less the associated cost of sales (excluding depreciation and amortization). Cost of sales at the Gas Distribution Operations segment is principally comprised of the cost of natural gas used while providing transportation and distribution services to its customers. The majority of the cost of ~~sales~~energy in both segments are tracked costs that are passed through directly to the customer, resulting in an equal and offsetting amount reflected in ~~gross~~operating revenues.

~~Comparability~~The decrease in net income available to common shareholders during the three months ended June 30, 2023 was primarily due to decreased revenue related to weather and increased other deductions, partially offset by higher revenues from outcomes of ~~line item~~gas base rate proceedings and regulatory capital programs.

The decrease in net income available to common shareholders during the six months ended June 30, 2023 was primarily due to an insurance settlement related to the Greater Lawrence Incident received in 2022 and increased other deductions.

The increase in preferred dividends during the three and six months ended June 30, 2023 was due primarily to the inclusion of $6.2 million of preferred redemption premium, offset by a shortened dividend accrual period due to the early redemption of Series A Preferred Stock in the second quarter 2023. See Note 5, "Equity," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information.

For additional information on operating ~~results may also be impacted by regulatory, tax~~income variance drivers see "Results and ~~depreciation trackers (other than those~~Discussion of Segment Operations" for ~~cost of sales) that allow~~Gas and Electric Operations in this Management's Discussion.

Other Deductions, net

The change in Other deductions, net for the ~~recovery~~three and six months ended June 30, 2023 compared to the same period in ~~rates of certain~~2022 is primarily driven by higher long-term and short-term debt interest in 2023 and higher non-service pension costs. ~~Therefore, increases~~See Note 14, "Long-Term Debt," Note 15, "Short-Term Borrowings," and Note 12, "Pension and Other Postemployment Benefits," in ~~these tracked operating expenses are offset by increases~~the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information.

Income Taxes

Refer to Note 11, "Income Taxes," in ~~net revenues and have essentially no impact~~the Notes to the Condensed Consolidated Financial Statements (unaudited) for information on income ~~from continuing operations.~~taxes and the change in the effective tax rate.

We continue to monitor risks related to the implementation of any final or proposed tax regulations related to the IRA.

On April 14, 2023, the IRS issued Revenue Procedure 2023-15 which provides a safe harbor method of accounting that taxpayers may use to determine whether expenses to repair, maintain, replace, or improve linear property and non-linear natural

Table of Contents

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

NiSource Inc.

gas transmission and distribution property must be capitalized as improvements or are allowable as deductions. We continue to analyze the provisions of the safe harbor method of accounting which we expect to adopt.

RESULTS AND DISCUSSION OF SEGMENT OPERATIONS

Presentation of Segment Information

Table of Contents

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

NiSource Inc.

Gas Distribution Operations

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

~~For~~Financial and operational data for the ~~third quarter of 2017,~~ Gas Distribution Operations ~~reported an~~segment for the three and six months ended June 30, 2023 and 2022 are presented below.


	Three Months Ended June 30,								Six Months Ended June 30,
(in millions)	2023			2022			Favorable (Unfavorable)		2023			2022			Favorable (Unfavorable)
Operating Revenues	$	695.9		$	744.3		$	(48.4)	$	2,200.3		$	2,184.1		$	16.2
Operating Expenses
Cost of energy	148.3			253.4			105.1		751.0			842.5			91.5
Operation and maintenance	262.8			259.8			(3.0)		548.5			537.1			(11.4)
Depreciation and amortization	115.6			102.2			(13.4)		225.7			202.9			(22.8)

Gain on sale of fixed assets and impairments, net	—			—			—		—			(105.0)			(105.0)
Other taxes	53.8			48.3			(5.5)		112.8			115.2			2.4
Total Operating Expenses	580.5			663.7			83.2		1,638.0			1,592.7			(45.3)
Operating Income	$	115.4		$	80.6		$	34.8	$	562.3		$	591.4		$	(29.1)
Revenues
Residential	$	450.7		$	462.8		$	(12.1)	$	1,476.0		$	1,440.4		$	35.6
Commercial	152.6			161.3			(8.7)		518.5			518.8			(0.3)
Industrial	51.2			48.3			2.9		123.2			116.4			6.8
Off-System	22.9			59.1			(36.2)		40.1			77.8			(37.7)
Other	18.5			12.8			5.7		42.5			30.7			11.8
Total	$	695.9		$	744.3		$	(48.4)	$	2,200.3		$	2,184.1		$	16.2
Sales and Transportation (MMDth)
Residential	29.6			33.3			(3.7)		133.2			156.2			(23.0)
Commercial	27.9			28.5			(0.6)		96.3			108.4			(12.1)
Industrial	125.4			114.9			10.5		258.0			250.0			8.0
Off-System	11.2			8.3			2.9		18.6			12.6			6.0
Other	—			—			—		0.2			0.2			—
Total	194.1			185.0			9.1		506.3			527.4			(21.1)
Heating Degree Days	518			565			(47)		2,857			3,406			(549)
Normal Heating Degree Days	544			544			—		3,368			3,368			—
% Colder (Warmer) than Normal	(5)		%	4		%			(15)		%	1		%
% Warmer than prior year	(8)		%						(16)		%
Gas Distribution Customers
Residential									2,987,375			2,962,126			25,249
Commercial									252,904			252,591			313
Industrial									4,798			4,883			(85)
Other									3			5			(2)
Total									3,245,080			3,219,605			25,475

Comparability of operation and maintenance expenses, depreciation and amortization, and other taxes may be impacted by regulatory, depreciation, and tax trackers that allow for the recovery in rates of certain costs.

Table of Contents

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

NiSource Inc.

Gas Distribution Operations

The underlying reasons for changes in our operating ~~loss of $23.7 million, versus operating income of $4.3 million in the comparable 2016 period.~~

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

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

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

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

~~Operating expenses were $48.6 million higher for the third quarter of 2017~~six months ended June 30, 2023 compared to the same ~~period~~periods in ~~2016. This change was primarily driven by:~~2022 are presented below.

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

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

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

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

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

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

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

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

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

~~Partially offset by:~~

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

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

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

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

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

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

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

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


	Favorable (Unfavorable)
Changes in Operating Revenues (in millions)	Three Months Ended June 30, 2023 vs 2022		Six Months Ended June 30, 2023 vs 2022
New rates from base rate proceedings and regulatory capital programs	$	60.5	$	143.1
(Decreased) increased customer usage	(3.2)		0.5


The effects of weather in 2023 compared to 2022	(5.4)		(38.7)


Other	4.8		11.2
Change in operating revenues (before cost of energy and other tracked items)	$	56.7	$	116.1
Operating revenues offset in operating expense
Lower cost of energy billed to customers	(105.1)		(91.5)
Reduction in gross receipts tax, offset in operating expenses	(3.3)		(9.6)
Higher tracker deferrals within operation and maintenance, depreciation, and tax	3.3		1.2
Total change in operating revenues	$	(48.4)	$	16.2

Weather

In general, ~~NiSource calculates~~we calculate the weather-related revenue variance based on changing customer demand driven by weather variance from normal heating degree ~~days. NiSource's~~days, net of weather normalization mechanisms. Our composite heating degree days reported do not directly correlate to the weather-related dollar impact on the results of Gas Distribution Operations. Heating degree days experienced during different times of the year or in different operating locations may have more or less impact on volume and dollars depending on when and where they occur. When the detailed results are combined for reporting, there may be weather-related dollar impacts on operations when there is not an apparent or significant change in ~~the~~our aggregated ~~NiSource~~ composite heating degree day comparison.

~~Table of Contents~~Throughput

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

~~NiSource Inc.~~

~~Gas Distribution Operations~~

~~Weather~~The decrease in ~~the Gas Distribution Operations service territories~~total volumes for the ~~third quarter of 2017 was about 12% warmer than normal and about 127% colder than 2016, leading to increased net revenues of $0.2 million for the quarter~~three months ended ~~September~~June 30, ~~2017~~2023, compared to ~~2016.~~

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

~~Throughput~~

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

~~Total volumes sold and transported for the nine months ended September 30, 2017 were 682.8 MMDth, compared to 705.2 MMDth for 2016. This 3% decrease~~2022, is primarily attributable to the effects of warmer ~~weather in 2017.~~weather.

~~Economic Conditions~~Commodity Price Impact

Cost of energy for the Gas Distribution Operations segment is principally comprised of the cost of natural gas used while providing transportation and distribution services to customers. All ~~NiSource~~of our Gas Distribution Operations companies have state-approved recovery mechanisms that provide a means for full recovery of prudently incurred gas costs. ~~Gas~~These are tracked costs that are ~~treated as pass-through costs~~passed through directly to the customer, and ~~have no impact on~~ the ~~net revenues recorded in the period. The~~ gas costs included in revenues are matched with the gas cost expense recorded in the ~~period and the~~period. The difference is recorded on the Condensed Consolidated Balance Sheets (unaudited) as under-recovered or over-recovered gas cost to be included in future customer billings.

~~At NIPSCO, sales~~ Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and customer billings are adjusted for amounts related to under and over-recovered purchased gas costs from prior periods per regulatory order. These amounts are primarily reflected in the “Other” gross revenues statistic provided at the beginning of this segment discussion. The adjustments to other gross revenues for the quarter ended September 30, 2017 and 2016 were a revenue decrease of $0.3 million and a revenue increase of $4.4 million, respectively. The adjustments to other gross revenues for the nine months ended September 30, 2017 and 2016 were a revenue decrease of $29.3 million and a revenue increase of $15.2 million, respectively.have essentially no impact on net income.

Certain Gas Distribution Operations companies continue to offer choice opportunities, where customers can choose to purchase gas from a third-party supplier, through regulatory initiatives in their respective jurisdictions. ~~These programs serve to further reduce NiSource's exposure to gas prices.~~

Table of Contents

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

NiSource Inc.

~~Electric~~Gas Distribution Operations

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017 2016 2017 vs. 2016 2017 2016 2017 vs. 2016
Net Revenues
Sales revenues $ 486.0
$ 465.8
$ 20.2
$ 1,366.1
$ 1,249.8
$ 116.3
Less: Cost of sales (excluding depreciation and amortization) 139.0
142.0
(3.0 ) 400.9
380.0
20.9
Net Revenues 347.0
323.8
23.2
965.2
869.8
95.4
Operating Expenses

Operation and maintenance 136.7
127.6
9.1
422.1
372.1
50.0
Depreciation and amortization 69.8
66.9
2.9
212.0
202.8
9.2
Other taxes 16.1
16.5
(0.4 ) 44.8
43.4
1.4
Total Operating Expenses 222.6
211.0
11.6
678.9
618.3
60.6
Operating Income $ 124.4
$ 112.8
$ 11.6
$ 286.3
$ 251.5
$ 34.8
Revenues

Residential $ 138.0
$ 145.1
$ (7.1 ) $ 363.7
$ 346.1
$ 17.6
Commercial 134.6
127.1
7.5
379.0
336.2
42.8
Industrial 171.5
155.8
15.7
531.4
469.4
62.0
Wholesale 3.7
3.7
—
9.0
8.8
0.2
Other 38.2
34.1
4.1
83.0
89.3
(6.3 )
Total $ 486.0
$ 465.8
$ 20.2
$ 1,366.1
$ 1,249.8
$ 116.3
Sales (Gigawatt Hours)

Residential 1,002.3
1,147.5
(145.2 ) 2,523.9
2,744.9
(221.0 )
Commercial 1,042.7
1,102.8
(60.1 ) 2,868.1
2,954.8
(86.7 )
Industrial 2,390.9
2,356.3
34.6
7,192.7
7,072.2
120.5
Wholesale 6.1
2.3
3.8
28.0
3.6
24.4
Other 31.2
39.7
(8.5 ) 96.3
104.8
(8.5 )
Total 4,473.2
4,648.6
(175.4 ) 12,709.0
12,880.3
(171.3 )
Cooling Degree Days 540
681
(141 ) 765
966
(201 )
Normal Cooling Degree Days 570
570

745
799

% Warmer (Colder) than Normal (5 )% 19 %

3 % 21 %

Electric Customers
Residential 407,998
405,895
2,103
Commercial 55,912
55,418
494
Industrial 2,311
2,341
(30 )
Wholesale 740
742
(2 )
Other 2
2
—
Total 466,963
464,398
2,565

Net revenues are calculated as gross revenues less the associated cost of sales (excluding depreciation and amortization). Cost of sales at the Electric Operations segment is principally comprised of the cost of coal, related handling costs, natural gas purchasedThe underlying reasons for changes in our operating expenses for the ~~internal generation of electricity at NIPSCO~~three and ~~the cost of power purchased from third-party generators of electricity. The majority of the cost of sales are tracked costs that are passed through directly~~six months ended June 30, 2023 compared to the ~~customer resulting~~same periods in ~~an equal and offsetting amount reflected in gross revenues.~~2022 are presented below.

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


	Favorable (Unfavorable)
Changes in Operating Expenses (in millions)	Three Months Ended June 30, 2023 vs 2022		Six Months Ended June 30, 2023 vs 2022

Higher employee and administrative related expenses	$	(7.4)	$	(3.3)
Lower materials and supplies expense	3.4		4.7

Property insurance settlement related to the Greater Lawrence Incident received in 2022	—		(105.0)
Higher depreciation and amortization expense	(14.6)		(24.4)
Higher property tax	(8.2)		(9.8)
Lower environmental expenses	4.8		5.4
Impacts from Columbia of Ohio's rate case	(2.5)		(5.1)

Lower outside services expenses	4.3		3.0

Other	(1.7)		(10.7)
Change in operating expenses (before cost of energy and other tracked items)	$	(21.9)	$	(145.2)
Operating expenses offset in operating revenue
Lower cost of energy billed to customers	105.1		91.5
Reduction in gross receipts tax, offset in operating revenues	3.3		9.6
Higher tracker deferrals within operation and maintenance, depreciation, and tax	(3.3)		(1.2)
Total change in operating expense	$	83.2	$	(45.3)

Table of Contents

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

NiSource Inc.

Electric Operations

~~Three~~Financial and operational data for the Electric Operations segment for the three and six months ended ~~September~~June 30, ~~2017 vs. September 30, 2016 Operating Income~~2023 and 2022 are presented below.

~~For the third quarter~~


	Three Months Ended June 30,								Six Months Ended June 30,
(in millions)	2023			2022			Favorable (Unfavorable)		2023			2022			Favorable (Unfavorable)

Operating Revenues	$	397.1		$	437.3		$	(40.2)	$	861.8		$	867.6		$	(5.8)


Operating Expenses
Cost of energy	103.7			130.4			26.7		266.1			248.0			(18.1)
Operation and maintenance	127.2			124.2			(3.0)		252.5			240.8			(11.7)
Depreciation and amortization	106.8			96.0			(10.8)		192.7			178.9			(13.8)
Gain on sale of assets	(0.1)			—			0.1		(0.1)			—			0.1
Other taxes	9.9			14.1			4.2		19.1			28.1			9.0
Total Operating Expenses	347.5			364.7			17.2		730.3			695.8			(34.5)
Operating Income	$	49.6		$	72.6		$	(23.0)	$	131.5		$	171.8		$	(40.3)
Revenues
Residential	$	122.8		$	137.1		$	(14.3)	$	273.2		$	275.6		$	(2.4)
Commercial	130.1			134.7			(4.6)		281.0			269.2			11.8
Industrial	112.9			138.9			(26.0)		247.3			268.9			(21.6)
Wholesale	7.5			3.9			3.6		10.1			6.5			3.6
Other	23.8			22.7			1.1		50.2			47.4			2.8
Total	$	397.1		$	437.3		$	(40.2)	$	861.8		$	867.6		$	(5.8)
Sales (GWh)
Residential	739.8			845.4			(105.6)		1,505.9			1,664.6			(158.7)
Commercial	876.5			915.3			(38.8)		1,732.7			1,800.6			(67.9)
Industrial	1,993.9			1,994.7			(0.8)		3,931.6			4,002.5			(70.9)
Wholesale	0.7			27.7			(27.0)		0.7			32.1			(31.4)
Other	17.8			24.5			(6.7)		40.6			49.6			(9.0)
Total	3,628.7			3,807.6			(178.9)		7,211.5			7,549.4			(337.9)
Cooling Degree Days	206			342			(136)		206			342			(136)
Normal Cooling Degree Days	247			247			—		247			247			—
% (Colder) Warmer than Normal	(17)		%	38		%			(17)		%	38		%
% (Colder) than 2022	(40)		%						(40)		%
Electric Customers
Residential									425,404			423,365			2,039
Commercial									58,490			58,156			334
Industrial									2,129			2,133			(4)
Wholesale									708			712			(4)
Other									3			3			—
Total									486,734			484,369			2,365

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

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

~~New rates from base-rate proceedings of $22.4 million.~~

~~Increased rates from incremental capital spend on electric transmission projects of $7.4 million.~~

~~Higher~~operation and maintenance expenses and depreciation and amortization may be impacted by regulatory and depreciation trackers ~~which are offset in expense, of $5.4 million.~~

~~Partially offset by:~~

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

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

The underlying reasons for changes in our operating revenues for the three and six months ended June 30, 2023 compared to the same ~~period~~periods in ~~2016. This change was primarily driven by:~~2022 are presented below.

~~Higher regulatory and depreciation trackers, which are offset in net revenues,~~

Table of ~~$5.4 million.~~Contents

~~Increased employee and administrative expenses of $4.0 million.~~ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

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

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

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

~~New rates from base-rate proceedings of $64.5 million.~~

~~Higher regulatory and depreciation trackers, which are offset in expense, of $25.8 million.~~

~~Increased rates from incremental capital spend on electric transmission projects of $18.2 million.~~

~~Partially offset by:~~

~~The effects of cooler weather of $17.3 million.~~

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

~~Higher regulatory and depreciation trackers, which are offset in net revenues, of $25.8 million.~~

~~Increased outside service costs of $13.9 million, primarily due to vegetation management activities and generation-related maintenance.~~

~~Higher employee and administrative expenses of $8.3 million.~~

~~Increased materials and supplies expenses of $8.0 million driven by generation-related maintenance and increased chemical usage.~~

~~Higher gross receipts taxes of $5.0 million driven by higher revenues.~~

~~Partially offset by:~~

~~Decreased amortization expense of $10.8 million.~~


	Favorable (Unfavorable)
Changes in Operating Revenues (in millions)	Three Months Ended June 30, 2023 vs 2022		Six Months Ended June 30, 2023 vs 2022
Reduced fuel handling costs	$	1.4	$	1.0

New rates from regulatory capital and DSM programs	1.5		5.5
PPA revenue from renewable JV projects, fully offset by JV operating expenses and noncontrolling interest net income (loss)	2.8		3.4
Decreased customer usage	(7.8)		(16.1)

The effects of weather in 2023 compared to 2022	(8.8)		(10.8)

2022 FAC refund	8.0		8.0
Other	(6.0)		(7.3)
Change in operating revenues (before cost of energy and other tracked items)	$	(8.9)	$	(16.3)
Operating revenues offset in operating expense
(Lower) higher cost of energy billed to customers	(26.7)		18.1
Reduction in gross receipts tax, offset in operating expenses	(5.6)		(11.5)
Higher tracker deferrals within operation and maintenance, depreciation and tax	1.0		3.9
Total change in operating revenues	$	(40.2)	$	(5.8)

Weather

In general, ~~NiSource calculates~~we calculate the weather-related revenue variance based on changing customer demand driven by weather variance from normal heating or cooling degree days. ~~NiSource's~~Our composite heating or cooling degree days reported do not directly correlate to the weather-related dollar impact on the results of Electric Operations. Heating or cooling degree days experienced during different times of the year may have more or less impact on volume and dollars depending on when they occur. When the detailed results are combined for reporting, there may be weather-related dollar impacts on operations when there is not an apparent or significant change in ~~the~~our aggregated ~~NiSource~~ composite heating or cooling degree day comparison.

~~Table of Contents~~Sales

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

~~NiSource Inc.~~

~~Electric Operations~~

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

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

~~Sales~~

~~Electric Operations sales for the third quarter of 2017 were 4,473.2 gwh, a decrease of 175.4 gwh~~2023 compared to the same period in ~~2016. The 4% decrease is~~2022 was primarily attributable to decreased usage by industrial and residential ~~sales from~~customers.

Commodity Price Impact

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

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

~~Economic Conditions~~

generators of electricity. NIPSCO has a state-approved recovery mechanism that provides a means for full recovery of prudently incurred ~~fuel costs. Fuel~~ costs of energy. The majority of these costs of energy are ~~treated as pass-through~~passed through directly to the customer, and the costs ~~and have no impact on~~of energy included in operating revenues are matched with the ~~net revenues~~cost of energy expense recorded in the period. The ~~fuel costs included in revenues are matched with the fuel cost expense recorded in the period and the~~ difference is recorded on the Condensed Consolidated Balance Sheets (unaudited) as under-recovered or over-recovered fuel cost to be included in future customer billings.

~~At NIPSCO, sales~~ Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and customer billings are adjusted for amounts related to under and over-recovered purchased fuel costs from prior periods per regulatory order. These amounts are primarily reflected in the “Other” gross revenues statistic provided at the beginning of this segment discussion. The adjustments to other gross revenues for the quarter ended September 30, 2017 and 2016 were a revenue increase of $7.8 million and $16.1 million, respectively. The adjustments to other gross revenues for the nine months ended September 30, 2017 and 2016 were a revenue increase of $6.9 million and $34.5 million, respectively.have essentially no impact on net income.

~~Electric Supply~~

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

NiSource and NIPSCO committed to the retirement of the Bailly Generating Station units in connection with the filing of the 2016 Integrated Resource Plan, pending approval by the MISO. In the fourth quarter of 2016, the MISO approved NIPSCO's plan to retire the Bailly Generating Station units by May 31, 2018.

In 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, voluntary employee severance benefits and write downs of certain materials and supplies inventory balances. Refer to Note 14-D, "Other Matters," in the Notes to Condensed Consolidated Financial Statements (unaudited) for information.

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

NiSource ~~with a stable outlook.~~Inc.

Certain ~~NiSource~~of our subsidiaries have agreements that contain ~~“ratings triggers”~~''ratings triggers'' that require increased collateral if our credit rating or the credit ratings of ~~NiSource or~~ certain of ~~its~~our subsidiaries are below investment grade. These agreements are primarily for insurance purposes and for the physical purchase or sale of power. As of ~~September~~June 30, ~~2017,~~2023, the collateral requirement that would be required in the event of a downgrade below the ratings trigger levels would amount to approximately ~~$42.9~~$88.6 million. In addition to agreements with ratings triggers, there are other agreements that contain ~~“adequate assurance”~~''adequate assurance'' or ~~“material~~''material adverse ~~change”~~change'' provisions that could necessitate additional credit support such as letters of credit and cash collateral to transact business.

Equity. ~~NiSource has a shelf registration statement on file with the SEC that authorizes NiSource to issue an indeterminate amount of common stock and preferred stock, as well as other securities. The~~Our authorized capital stock ~~of NiSource~~ consists of ~~420,000,000~~620,000,000 shares, $0.01 par value, of which ~~400,000,000~~600,000,000 are common stock and 20,000,000 are preferred stock. As of ~~September~~June 30, ~~2017, 336,691,078~~2023, 413,148,513 shares of common stock ~~were outstanding. NiSource has no~~and 902,500 shares of preferred stock ~~outstanding as of September 30, 2017.~~were outstanding.

~~Table of Contents~~

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

~~NiSource Inc.~~

Contractual Obligations. ~~Aside from~~A summary of contractual obligations is included in the ~~previously referenced~~Company's Annual Report on Form 10-K for the year ended December 31, 2022. Except for our March and June 2023 debt issuances, ~~and repayments of long-term debt,~~ there were no additional material changes ~~recorded~~from year-end during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023. Refer to ~~NiSource’s contractual obligations as of December 31, 2016.~~Note 14, "Long-Term Debt," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information regarding the debt issuances.

Guarantees, Indemnities and Other Off Balance Sheet ~~Arrangements~~

~~As a part~~Arrangements. 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.

Refer to Note ~~14, “Other~~16, "Other Commitments and Contingencies,”" in the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information about such arrangements.

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

NiSource Inc.

Regulatory, Environmental and Safety Matters

Cost Recovery and Trackers

Comparability of our 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 subject to approved regulatory tracker mechanisms generally lead to increased regulatory assets, which ultimately result in a corresponding increase in operating revenues and, therefore, have essentially no impact on total operating income results. Certain approved regulatory tracker mechanisms allow for abbreviated regulatory proceedings in order for the operating companies to quickly implement revised rates and recover associated costs.

A portion of the Gas Distribution Operations revenue is related to the recovery of gas costs, the review and recovery of which occurs through standard regulatory proceedings. All states in our operating area require periodic review of actual gas procurement activity to determine prudence and to confirm the recovery of prudently incurred energy commodity costs supplied to customers.

We recognize that energy efficiency reduces emissions, conserves natural resources and saves our customers money. Our gas distribution companies offer programs such as energy efficiency upgrades, home checkups and weatherization services. The increased efficiency of natural gas appliances and improvements in home building codes and standards contributes to a long-term trend of declining average use per customer. While we are looking to expand offerings so the energy efficiency programs can benefit as many customers as possible, our Gas Distribution Operations have pursued changes in rate design to more effectively match recoveries with costs incurred. Columbia of Ohio has adopted a straight fixed variable rate design that closely links the recovery of fixed costs with fixed charges. Columbia of Maryland and Columbia of Virginia have regulatory approval for weather and revenue normalization adjustments for certain customer classes, which adjust monthly revenues that exceed or fall short of approved levels. Columbia of Pennsylvania continues to operate its pilot residential weather normalization adjustment and also has a fixed customer charge. This weather normalization adjustment only adjusts revenues when actual weather compared to normal varies by more than 3%. Columbia of Kentucky incorporates a weather normalization adjustment for certain customer classes and also has a fixed customer charge. In a prior gas base rate proceeding, NIPSCO implemented a higher fixed customer charge for residential and small customer classes moving toward recovering more of its fixed costs through a fixed recovery charge, but has no weather or usage protection mechanism.

A portion of the Electric Operations 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, which is updated quarterly to reflect actual costs incurred to supply electricity to customers.

While increased efficiency of electric appliances and improvements in home building codes and standards has similarly impacted the average use per electric customer in recent years, NIPSCO expects future growth in per customer usage as a result of increasing electric applications. Further growth is anticipated as electric vehicles become more prevalent. These ongoing changes in use of electricity will likely lead to development of innovative rate designs, and NIPSCO will continue efforts to design rates that increase the certainty of recovery of fixed costs.

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

NiSource Inc.

Regulatory, Environmental and Safety Matters

Rate Case Actions

The following table describes current rate case actions as applicable in each of our jurisdictions net of tracker impacts:


(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)	11.20	%	None specified		$	82.2	$	44.5	March 18, 2022	Approved December 8, 2022	December 2022
Columbia of Maryland	10.85	%	9.65	%	$	5.8	$	3.5	May 13, 2022	Approved November 17, 2022	December 2022
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		$	40.5	$	25.8	April 29, 2022	Approved May 15, 2023	October 2022
Columbia of Ohio	10.95	%	9.60	%	$	221.4	$	68.3	June 30, 2021	Approved January 26, 2023	March 2023
NIPSCO - Gas(4)	10.50	%	9.85	%	$	109.7	$	71.8	September 29, 2021	Approved July 27, 2022	September 2022
NIPSCO - Electric	10.80	%	9.75	%	$	21.4	$	(53.5)	October 31, 2018	Approved December 4, 2019	January 2020
Active Rate Cases
NIPSCO - Electric(5)	10.40	%	In process		$	291.8	In process		September 19, 2022	Order Expected Q3 2023	September 2023
Columbia of Maryland(6)	10.95	%	In process		$	6.8	In process		May 12, 2023	Order Expected Q4 2023	December 2023

(1)No approved ROE is identified for this matter since the approved revenue increase is the result of a black box settlement under which parties agree upon the amount of increase.

(2)The approved ROE for natural gas capital riders (e.g.,SMRP) is 9.275%.

(3)Columbia of Virginia's rate case resulted in a black box settlement, representing a settlement to a specific revenue increase but not a specified ROE. The settlement provides use of a 9.70% ROE for future SAVE and filings other than base rates.

(4)New rates are implemented in 2 steps, with implementation of Step 1 rates in September 2022. The Step 2 rates were filed on February 21, 2023, with rates effective March 2023.

(5) If the pending settlement is approved, new rates will be implemented in 2 steps, with implementation of Step 1 rates to be effective in September 2023 and Step 2 rates to be effective in March 2024. In addition to the requested incremental revenue of $291.8 million, an additional request was made for $103.2 million for costs associated with a new Variable Cost Tracker (VCT) bringing the total requested incremental revenue to $395.0 million. A settlement agreement was filed on March 10, 2023, with supporting testimony filed on March 17, 2023, reflecting incremental revenue of $261.9 million plus an additional $29.9 million for recovery of costs associated with a new Environmental Cost Tracker (replacing the VCT). The evidentiary hearing occurred in April 2023 with an anticipated final order August 2023.

(6) The requested incremental revenue has increased to $7.5M after updating for actual information in the June 30, 2023 Supplemental Filing.

PHMSA Regulations

On December 27, 2020, the Protecting Our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act of 2020 was signed into law, reauthorizing funding for federal pipeline safety programs through September 30, 2023. Among other things, the PIPES Act requires that PHMSA revise the pipeline safety regulations to require operators to update, as needed, their existing distribution integrity management plans, emergency response plans, and operation and maintenance plans. The PIPES Act also requires PHMSA to adopt new requirements for managing records and updating, as necessary, existing district regulator stations to eliminate common modes of failure that can lead to overpressurization. PHMSA must also require that operators implement and utilize advanced leak detection and repair technologies that enable the location and categorization of all leaks that are hazardous, or potentially hazardous, to human safety or the environment.

In May 2023, PHMSA proposed numerous regulatory revisions under the PIPES Act of 2020 to minimize methane emissions and improve public safety. Under these proposed revisions, NiSource's subsidiaries would be required to detect and repair an increased number of gas leaks, reduce the time to repair leaks, increase leak survey frequency, and expand its existing advanced leak detection program. We are unable to estimate impacts of these proposed revisions on our business at this time.

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

NiSource Inc.

Regulatory, Environmental and Safety Matters

CCR Regulation

In May 2023, EPA proposed changes to the CCR regulations for inactive surface impoundments at inactive facilities, referred to as “legacy CCR surface impoundments”. EPA is also proposing to extend a subset of requirements in the CCR regulations to areas not previously subject to the CCR regulations, referred to as “CCR management units”. NIPSCO potentially has CCR areas that could become subject to the proposed changes. NIPSCO is reviewing the proposed rule but we cannot estimate impacts on our business at this time.

Climate Change Issues

Physical Climate Risks. Increased frequency of severe and extreme weather events associated with climate change could materially impact our facilities, energy sales, and results of operations. We are unable to predict these events. However, we perform ongoing assessments of physical risk, including physical climate risk, to our business. More extreme and volatile temperatures, increased storm intensity and flooding, and more volatile precipitation leading to changes in lake and river levels are among the weather events that are most likely to impact our business. Efforts to mitigate these physical risks continue to be implemented on an ongoing basis.

Transition Climate Risks. Future legislative and regulatory programs, at both the federal and state levels, could significantly limit allowed GHG emissions or impose a cost or tax on GHG emissions. Revised or additional future GHG legislation and/or regulation related to the generation of electricity or the extraction, production, distribution, transmission, storage and end use of natural gas could materially impact our gas supply, financial position, financial results and cash flows.

Regarding federal policies, we continue to monitor the implementation of any final and proposed climate change-related legislation and regulations, including the Infrastructure Investment and Jobs Act, signed into law in November 2021; the IRA, signed into law in August 2022; and the EPA's proposed methane regulations for the oil and natural gas industry, but we cannot predict their impact on our business at this time. We have identified potential opportunities associated with the Infrastructure Investment and Jobs Act and the IRA and are evaluating how they may align with our strategy going forward. The energy-related provisions of the Infrastructure Investment and Jobs Act include new federal funding for power grid infrastructure and resiliency investments, new and existing energy efficiency and weatherization programs, electric vehicle infrastructure for public chargers and additional LIHEAP funding over the next five years. The IRA contains climate and energy provisions, including funding to decarbonize the electric sector.

In February 2021, the United States rejoined the Paris Agreement, an international treaty through which parties set nationally determined contributions to reduce GHG emissions, build resilience, and adapt to the impacts of climate change. Subsequently, the Biden Administration released a target for the United States to achieve a 50%-52% GHG reduction from 2005 levels by 2030, which supports the President's goals to create a carbon-free power sector by 2035 and net zero emissions economy no later than 2050. There are many pathways to reach these goals.

On June 30, 2022, the Supreme Court of the United States ruled for the petitioners in West Virginia v. EPA, which examined the authority of the EPA to regulate GHG emissions from the power sector. We will continue to evaluate this matter, but we remain committed to our previously stated carbon reduction goals.

In May 2023, EPA released a package of proposed regulatory actions to reduce carbon dioxide emissions from new natural gas-fired electric generating units (EGUs), existing natural gas-fired EGUs, and existing coal-fired EGUs. We are reviewing the potential impacts of the proposed rules but we are unable to estimate impacts on our business at this time.

We also continue to monitor the implementation of any final and proposed state policy. The Virginia Clean Economy Act was signed into law in 2020. While the Act does not establish any new mandates on Columbia of Virginia, certain natural gas customers may, over the long-term, reduce their use of natural gas to meet the 100% renewable electricity requirement. Columbia of Virginia will continue to monitor this matter, but we cannot predict its final impact on our business at this time. Separately, the Virginia Energy Innovation Act, enacted into law in April 2022, and effective July 1, 2022, allows natural gas utilities to supply alternative forms of gas that meet certain standards and reduce emissions intensity. The Act also provides that the costs of enhanced leak detection and repair may be added to a utility’s plan to identify proposed eligible infrastructure replacement projects and related cost recovery mechanisms, known as the SAVE Plan. Furthermore, under the Act, utilities can recover eligible biogas supply infrastructure costs on an ongoing basis. The provisions of these laws may provide opportunities for Columbia of Virginia as it participates in the transition to a lower carbon future.

The Climate Solutions Now Act of 2022 requires Maryland to reduce GHG emissions by 60% by 2031 (from 2006 levels), and it requires the state to reach net zero emissions by 2045. The Maryland Department of the Environment is required to adopt a

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

NiSource Inc.

Regulatory, Environmental and Safety Matters

plan to achieve the 2031 goal by December 2023, and it is required to adopt a plan for the net zero goal by 2030. The Act also enacts a state policy to move to broader electrification of both existing buildings and new construction, and requires the Public Service Commission to complete a study assessing the capacity of gas and electric distribution systems to successfully serve customers under a transition to a highly electrified building sector. In May 2023, the Maryland Department of the Environment issued draft Building Energy Performance Standards, which would require net-zero direct greenhouse gas emissions from large buildings by 2040. Columbia of Maryland is advocating for compliance pathways that use RNG, hydrogen, and emissions offsets. Columbia of Maryland will continue to monitor this matter, but we cannot predict its final impact on our business at this time.

NIPSCO, Columbia of Maryland, Columbia of Pennsylvania, Columbia of Virginia and Columbia of Kentucky each filed petitions to implement the Green Path Rider, which will be a voluntary rider that allows customers to opt in and offset either 50% or 100% of their natural gas related emissions. To reduce the emissions, the utilities will purchase RNG attributes and carbon offsets to match the usage for customers opting into the program. The program was approved by the IURC at NIPSCO in November 2022 with a January 2023 start date. After reaching settlement with other parties in September 2022, NIPSCO agreed to add a third tier to offset 25% of customer usage. Columbia of Maryland’s filing was denied by the PUC in January 2023. Columbia of Virginia received a final order in May 2023, approving the Green Path Rider and will start enrolling customers in September 2023. Columbia of Pennsylvania filed a Joint Petition for Nonunanimous Settlement with the Bureau of Investigation and Enforcement (I&E) and the Office of Small Business Advocate (OSBA) in March 2023, in support of the Commission’s adoption of the Green Path Rider. Columbia of Pennsylvania received an order in June 2023 that rejected the settlement agreement and denied implementation of the Green Path Rider. The filing for Columbia of Kentucky is still being evaluated. Additionally, NIPSCO has a voluntary Green Power Rider program in place that allows customers to designate a portion or all their monthly electric usage to come from power generated by renewable energy sources.

Net-Zero Goal. In response to these transition risks and opportunities, on November 7, 2022, we announced a goal of net-zero greenhouse gas emissions by 2040 covering both Scope 1 and Scope 2 emissions ("Net-Zero Goal"). Our Net-Zero Goal builds on greenhouse gas emission reductions achieved to-date and demonstrates that continued execution of our long-term business plan will drive further greenhouse gas emission reductions. We remain on track to achieve previously announced interim greenhouse gas emission reduction targets by reducing fugitive methane emissions from main and service lines by 50 percent from 2005 levels by 2025 and reducing Scope 1 greenhouse gas emissions from company-wide operations by 90 percent from 2005 levels by 2030. We plan to achieve our Net-Zero Goal primarily through continuation and enhancement of existing programs, such as retiring and replacing coal-fired electric generation with low- or zero-emission electric generation, ongoing pipe replacement and modernization programs, and deployment of advanced leak-detection technologies. In addition, we plan to advance other low- or zero-emission energy resources and technologies, such as hydrogen, renewable natural gas, and/or deployment of carbon capture and utilization technologies, if and when these become technologically and economically feasible. Carbon offsets and renewable energy credits may also be used to support achievement of our Net-Zero Goal. As of the end of 2022, we had reduced Scope 1 GHG emissions by approximately 67% from 2005 levels.

Our greenhouse gas emissions projections, including achieving a Net-Zero Goal, are subject to various assumptions that involve risks and uncertainties. Achievement of our Net-Zero Goal by 2040 will require supportive regulatory and legislative policies, favorable stakeholder environments and advancement of technologies that are not currently economical to deploy. Should such regulatory and legislative policies, stakeholder environments or technologies fail to materialize, our actual results or ability to achieve our Net-Zero Goal, including by 2040, may differ materially.

As discussed above in this Management's Discussion within "Results and Discussion of Segment Operations - Electric Operations," NIPSCO continues to execute on an electric generation transition consistent with the preferred pathways identified in its 2018 and 2021 Integrated Resource Plans. Additionally, as discussed above in this Management's Discussion within "Liquidity and Capital Resources - Regulatory Capital Programs," our natural gas distribution companies are lowering methane emissions by replacing aging infrastructure, which also increases safety and reliability for customers and communities.

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

NiSource Inc.

Market Risk Disclosures

Risk is an inherent part of ~~NiSource’s~~our businesses. The extent to which ~~NiSource~~we properly and effectively ~~identifies, assesses, monitors~~identify, assess, monitor and ~~manages~~manage each of the various types of risk involved in ~~its~~our businesses is critical to ~~its~~our profitability. ~~NiSource seeks~~We seek to identify, assess, monitor and manage, in accordance with defined policies and procedures, the following principal market risks that are involved in ~~NiSource’s~~our businesses: commodity price risk, interest rate risk and credit risk. ~~Risk management at NiSource is~~We manage risk through a multi-faceted process with oversight by the Risk Management Committee that requires constant communication, judgment and knowledge of specialized products and markets. ~~NiSource’s~~Our senior management takes an active role in the risk management process and has developed policies and procedures that require specific administrative and business functions to assist in the identification, assessment and control of various risks. These may include, but are not limited to market, operational, financial, compliance and strategic risk types. In recognition of the increasingly varied and complex nature of the energy business, ~~NiSource’s~~our risk management process, policies and procedures continue to evolve and are subject to ongoing review and modification.

Commodity Price Risk

~~NiSource is exposed to~~Our Gas and Electric Operations have commodity price risk ~~as a result~~primarily related to the purchases of ~~its subsidiaries’ operations involving~~ natural gas and power. To manage this market risk, ~~NiSource’s~~our subsidiaries use derivatives, including commodity futures contracts, swaps, forwards and options. ~~NiSource does~~We do not participate in speculative energy trading activity.

Commodity price risk resulting from derivative activities at ~~NiSource’s~~our rate-regulated subsidiaries is limited and does not bear signification exposure to earnings risk, since ~~regulations~~our current regulatory mechanisms allow recovery of prudently incurred purchased power, fuel and gas costs through the ~~ratemaking~~rate-making process, including gains or losses on these derivative instruments. These changes are included in the GCA and FAC regulatory rate-recovery mechanisms. If ~~states should explore additional regulatory reform,~~these mechanisms were to be adjusted or eliminated, these subsidiaries may begin providing services without the benefit of the traditional ~~ratemaking~~rate-making process and may be more exposed to commodity price risk. For additional information, see "Results and Discussion of Segment Operations" in this Management's Discussion.

~~NiSource~~Our subsidiaries are required to make cash margin deposits with their brokers to cover actual and potential losses in the value of outstanding exchange traded derivative contracts. The amount of these deposits, some of which isare reflected in ~~NiSource’s~~our restricted cash balance, may fluctuate significantly during periods of high volatility in the energy commodity markets.

Refer to Note 6,8, "Risk Management Activities," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for further information on ~~NiSource's~~our commodity price risk assets and liabilities as of ~~September~~June 30, ~~2017 or~~2023 and December 31, ~~2016.~~2022.

Interest Rate Risk

~~NiSource is~~We are exposed to interest rate risk as a result of changes in interest rates on borrowings under ~~its~~our revolving credit agreement, commercial paper program, term credit agreement and accounts receivable programs, ~~and term loan,~~ which have interest rates that are indexed to short-term market interest rates. Based upon average borrowings and debt obligations subject to fluctuations in short-term market interest rates, an increase (or decrease) in short-term interest rates of 100 basis points (1%) would have increased (or decreased) interest expense by ~~$3.7~~$3.1 million and ~~$12.6~~$7.6 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~$3.0~~$1.2 million and ~~$6.8~~$2.7 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2022, respectively. ~~NiSource is~~We are also exposed to interest rate risk as a result of changes in benchmark rates that can influence the interest rates of future long-term debt issuances. From time to time we may enter into forward interest rate instruments to lock in long term interest costs and/ or rates.

Refer to Note 6,8, "Risk Management Activities," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for further information on ~~NiSource's~~our interest rate risk assets and liabilities as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016.~~

~~Table of Contents~~

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

~~NiSource Inc.~~

2022.

Credit Risk

Due to the nature of the industry, credit risk is embedded in many of ~~NiSource’s~~our business activities. ~~NiSource’s~~Our extension of credit is governed by a Corporate Credit Risk Policy. In addition, Risk Management Committee guidelines are in place which document management approval levels for credit limits, evaluation of creditworthiness, and credit risk mitigation efforts. Exposures to credit risks are monitored by the risk management function, which is independent of commercial operations. Credit risk arises due to the possibility that a customer, supplier or counterparty will not be able or willing to fulfill its obligations on a transaction on or before the settlement date. For derivative-related contracts, credit risk arises when counterparties are obligated to deliver or purchase defined commodity units of gas or power to ~~NiSource~~us at a future date per execution of contractual terms and conditions. Exposure to credit risk is measured in terms of both current obligations and the market value of forward positions net of any posted collateral such as cash and letters of credit.

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

NiSource ~~closely monitors~~Inc.

We evaluate the financial status of ~~its banking credit providers. NiSource evaluates the financial status of its~~our banking partners through the use of market-based metrics such as credit default swap pricing levels, and also through traditional credit ratings provided by major credit rating agencies.

Other Information

Critical Accounting ~~Policies~~Estimates

~~Pension and Other Postretirement Benefits.~~ ~~On January 1, 2017, NiSource changed the method used to estimate the service and interest components~~A summary of ~~net periodic benefit cost for pension and other postretirement benefits. This change, compared to the previous method, resulted in a decrease~~our critical accounting estimates is included in the ~~actuarially-determined service and interest cost components. Historically, NiSource estimated service and interest costs utilizing a single weighted-average discount rate derived from~~Company's Annual Report on Form 10-K for the yield curve used to measure the benefit obligation at the beginning of the period. 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. NiSource believes the new approach provides a more precise measurement of service and interest costs by aligning the timing of the plan’s liability cash flows to the corresponding spot rates on the yield curve. The benefit obligations measured under this approach are unchanged. NiSource accounted for this change as a prospective change in accounting estimate. For further information on NiSource’s pension and other postretirement benefits, see Note 11, “Pension and Other Postretirement Benefits,” in the Notes to Condensed Consolidated Financial Statements (unaudited).

year ended December 31, 2022. There were no ~~additional significant~~material changes ~~to critical accounting policies for the period ended September~~made as of June 30, ~~2017.~~2023.

Recently Issued Accounting Pronouncements

Refer to Note 2, "Recent Accounting Pronouncements," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information about recently issued and adopted accounting pronouncements.

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NiSource Inc.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~NiSource Inc.~~



~~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		4558

			Item 4.	Controls and Procedures		4558

PART II			OTHER INFORMATION

			Item 1.	Legal Proceedings		4659

			Item 1A.	Risk Factors		4659

			Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		4659

			Item 3.	Defaults Upon Senior Securities		4659

			Item 4.	Mine Safety Disclosures		4659

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

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

	~~Signature~~		48


	Item 5.
~~DEFINED TERMS~~Other Information	59

	Item 6.	Exhibits	60

	Signature		61


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

NiSource Subsidiaries and Affiliates ~~and Former Subsidiaries~~(not exhaustive)
~~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 or the Company~~NIPSCO Holdings I		~~NiSource Inc.~~NIPSCO Holdings I LLC
~~NiSource Finance~~NIPSCO Holdings II		~~NiSource Finance Corp.~~NIPSCO Holdings II LLC
NiSource ("we," "us" or "our")		NiSource Inc.
Rosewater		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
Indiana Crossroads Solar		Indiana Crossroads Solar Generation LLC and its wholly owned subsidiary, Meadow Lake Solar Park LLC
Dunn's Bridge I		Dunn's Bridge I Solar Generation LLC and its wholly owned subsidiary, Dunn's Bridge Solar Center, 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~~BIP		~~Clean Air Act~~Blackstone Infrastructure Partners L.P
~~CCRs~~BTA		Build-transfer agreement


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~~		~~Demand Side Management~~
~~ECR~~EGUs		~~Environmental Cost Recovery~~
~~ECT~~	~~Environmental Cost Tracker~~
~~EGUs~~	Electric Utility Generating Units
~~ELG~~EPA		~~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~~FERC		Federal Energy Regulatory Commission
FMCA		Federally Mandated Cost Adjustment
GAAP		Generally Accepted Accounting Principles


DEFINED TERMS
GCA		Gas cost adjustment
~~GCR~~GHG		~~Gas cost recovery~~Greenhouse gases
~~GHG~~GWh		~~Greenhouse gases~~Gigawatt hours
~~GSEP~~		~~Gas System Enhancement Program~~
~~gwh~~IRA		~~Gigawatt hours~~Inflation Reduction Act of 2022
~~IBM~~IRP		~~International Business Machines Corporation~~
~~IRP~~	Infrastructure Replacement Program


IURC		Indiana Utility Regulatory Commission
JV		Joint Venture
LIBOR		London InterBank Offered Rate
LIFO		Last In, First Out
LIHEAP		Low Income Heating Energy Assistance Programs
Massachusetts Business		All of the assets sold to, and liabilities assumed by, Eversource pursuant to the Asset Purchase Agreement
MGP		Manufactured Gas Plant
MISO		Midcontinent Independent System Operator
MMDth		Million dekatherms
MW		Megawatts
MWh		Megawatt hours

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
ROU		Right of use
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)
Scope 2 GHG Emissions		Indirect emissions from sources owned or controlled by us
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
SMS		Safety Management System
SOFR		Secured Overnight Financing Rate
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~~

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, 2023		December 31, 2022
ASSETS
Property, Plant and Equipment
Plant	$	29,135.4	$	27,551.3
Accumulated depreciation and amortization	(7,960.2)		(7,708.7)


Net Property, Plant and Equipment(1)	21,175.2		19,842.6
Investments and Other Assets
Unconsolidated affiliates	3.8		1.6
Available-for-sale debt securities (amortized cost of $168.8 and $166.7, allowance for credit losses of $0.7 and $0.9, respectively)	154.9		151.6
Other investments	78.5		71.0
Total Investments and Other Assets	237.2		224.2
Current Assets
Cash and cash equivalents	151.3		40.8
Restricted cash	39.8		34.6
Accounts receivable	631.4		1,065.8
Allowance for credit losses	(27.8)		(23.9)
Accounts receivable, net	603.6		1,041.9
Gas inventory	214.3		531.7
Materials and supplies, at average cost	180.1		151.4
Electric production fuel, at average cost	68.3		68.8
Exchange gas receivable	43.1		128.1

Regulatory assets	200.3		233.2

Deposits to renewable generation asset developer	137.4		143.8
Prepayments and other	218.7		210.0
Total Current Assets(1)	1,856.9		2,584.3
Other Assets
Regulatory assets	2,300.2		2,347.6
Goodwill	1,485.9		1,485.9

Deferred charges and other	288.3		252.0
Total Other Assets	4,074.4		4,085.5
Total Assets	$	27,343.7	$	26,736.6


Six Months Ended June 30,(in millions)			2023
Cash and cash equivalents			151.3
Restricted Cash			39.8
Total Cash, Cash Equivalents and Restricted Cash			191.1


(in millions)	Common Stock		Preferred Stock(1)		Treasury Stock		Additional Paid-In Capital		Retained Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interest in Consolidated Subsidiaries(2)		Total
Balance as of April 1, 2023	$	4.2	$	1,546.5	$	(99.9)	$	7,372.9	$	(1,114.8)	$	(34.7)	$	329.5	$	8,003.7
Comprehensive Income:
Net income (loss)	—		—		—		—		58.8		—		(12.5)		46.3
Other comprehensive income, net of tax	—		—		—		—		—		(1.1)		—		(1.1)
Dividends:
Common stock ($0.25 per share)	—		—		—		—		(103.4)		—		—		(103.4)
Preferred stock (See Note 5)	—		—		—		—		(8.2)		—		—		(8.2)
Preferred stock redemption	—		(393.9)		—		—		—		—		—		(393.9)
Preferred stock redemption premium	—		—		—		—		(6.2)		—		—		(6.2)
Contributions from noncontrolling interest	—		—		—		—		—		—		28.7		28.7
Distributions to noncontrolling interests	—		—		—		—		—		—		(4.7)		(4.7)

Stock issuances:


Employee stock purchase plan	—		—		—		1.5		—		—		—		1.5
Long-term incentive plan	—		—		—		6.2		—		—		—		6.2
401(k) and profit sharing	—		—		—		2.5		—		—		—		2.5

Balance as of June 30, 2023	$	4.2	$	1,152.6	$	(99.9)	$	7,383.1	$	(1,173.8)	$	(35.8)	$	341.0	$	7,571.4
(1) See Note 5, "Equity," for additional information. (2) Contributions from noncontrolling interest is net of commitment and consulting fees and other legal costs related to the mechanical completion closing of Dunn's Bridge I of $2.7 million

(in millions)	Common Stock		Preferred Stock(1)		Treasury Stock		Additional Paid-In Capital		Retained Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interest in Consolidated Subsidiaries(2)		Total
Balance as of January 1, 2023	$	4.2	$	1,546.5	$	(99.9)	$	7,375.3	$	(1,213.6)	$	(37.1)	$	326.4	$	7,901.8
Comprehensive Income:
Net income (loss)	—		—		—		—		391.8		—		(7.7)		384.1
Other comprehensive income, net of tax	—		—		—		—		—		1.3		—		1.3
Dividends:
Common stock ($0.75 per share)	—		—		—		—		(310.1)		—		—		(310.1)
Preferred stock (See Note 5)	—		—		—		—		(35.7)		—		—		(35.7)
Preferred stock redemption	—		(393.9)		—		—		—		—		—		(393.9)
Preferred stock redemption premium	—		—		—		—		(6.2)		—		—		(6.2)
Contributions from noncontrolling interest	—		—		—		—		—		—		32.3		32.3
Distributions to noncontrolling interests	—		—		—		—		—		—		(10.0)		(10.0)


Stock issuances:


Employee stock purchase plan	—		—		—		2.8		—		—		—		2.8
Long-term incentive plan	—		—		—		(0.1)		—		—		—		(0.1)
401(k) and profit sharing	—		—		—		5.1		—		—		—		5.1

Balance as of June 30, 2023	$	4.2	$	1,152.6	$	(99.9)	$	7,383.1	$	(1,173.8)	$	(35.8)	$	341.0	$	7,571.4
(1) See Note 5, "Equity," for additional information. (2) Contributions from noncontrolling interest is net of commitment and consulting fees and other legal costs related to the mechanical completion closing of Dunn's Bridge I of $2.7 million


	Preferred	Common
Shares (in thousands)	Shares	Shares	Treasury	Outstanding
Balance as of April 1, 2023	1,303	416,946	(3,963)	412,983
Issued:


Employee stock purchase plan	—	53	—	53
Long-term incentive plan	—	26	—	26
401(k) and profit sharing	—	87	—	87

Redeemed:
Preferred Stock	(400)			—
Balance as of June 30, 2023	903	417,112	(3,963)	413,149

	Preferred	Common
Shares (in thousands)	Shares	Shares	Treasury	Outstanding
Balance as of January 1, 2023	1,303	416,106	(3,963)	412,143
Issued:


Employee stock purchase plan	—	101	—	101
Long-term incentive plan	—	721	—	721
401(k) and profit sharing	—	184	—	184

Redeemed:	—	—	—	—
Preferred Stock	(400)	—	—	—
Balance as of June 30, 2023	903	417,112	(3,963)	413,149

	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


Three Months Ended June 30, 2023 (in millions)	Gas Distribution Operations(2)		Electric Operations(3)		Corporate and Other		Total
Customer Revenues(1)
Residential	$	450.6	$	122.8	$	—	$	573.4
Commercial	152.1		130.1		—		282.2
Industrial	51.1		112.6		—		163.7
Off-system	22.9		—		—		22.9
Miscellaneous	11.7		13.3		—		25.0
Total Customer Revenues	$	688.4	$	378.8	$	—	$	1,067.2
Other Revenues	4.4		18.2		0.2		22.8
Total Operating Revenues	$	692.8	$	397.0	$	0.2	$	1,090.0



	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,									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


(in millions)
Company	Program	Incremental Revenue		Incremental Capital Investment		Investment Period	Costs Covered(1)	Rates Effective
Columbia of Ohio	IRP - 2023	$	38.4	$	316.3	1/22-12/22	Replacement of (1) hazardous service lines, (2) cast iron, wrought iron, uncoated steel, and bare steel pipe.	May 2023
Columbia of Ohio	CEP - 2023	$	31.0	$	265.6	1/22-12/22	Assets not included in the IRP.	September 2023
NIPSCO - Gas	TDSIC 6	$	(2.5)	$	149.8	1/22-2/23	New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.	September 2023
NIPSCO - Gas(2)(3)	FMCA 2	$	4.2	$	38.2	4/22-9/22	Project costs to comply with federal mandates.	April 2023
NIPSCO - Gas(3)	FMCA 1	$	(4.0)	$	13.4	10/22-3/23	Project costs to comply with federal mandates.	October 2023
Columbia of Virginia(4)	SAVE - 2023	$	4.5	$	45.9	1/23-12/23	Replacement projects that (1) enhance system safety or reliability, or (2) reduce, or potentially reduce, greenhouse gas emissions.	January 2023
Columbia of Kentucky	SMRP - 2023	$	1.6	$	41.6	1/23-12/23	Replacement of mains and inclusion of system safety investments.	January 2023
Columbia of Maryland(5)	STRIDE - 2023	$	1.3	$	18.0	1/23-12/23	Pipeline upgrades designed to improve public safety or infrastructure reliability.	January 2023
NIPSCO - Electric	TDSIC - 2	$	6.6	$	143.5	2/22-7/22	New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.	February 2023
NIPSCO - Electric(6)	TDSIC - 3	$	45.6	$	130.2	8/22-1/23	New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.	August 2023



~~(4.1)~~(3.1)			~~Form~~ Certificate of ~~3.490% Notes due 2027~~Amendment of Amended and Restated Certificate of Incorporation of NiSource Inc. dated May 23, 2023 (incorporated by reference to Exhibit 3.1 to the NiSource Inc. Form 8-K filed on May 24, 2023).

(3.2)			Certificate of Elimination of the Company with respect to the Series A Preferred Stock, dated June 16, 2023 (incorporated by reference to Exhibit 3.1 to the NiSource Inc. Form 8-K filed on June 16, 2023).

(4.1)			Form of 5.250% Notes due 2028 (incorporated by reference to Exhibit 4.1 to the NiSource Inc. Form 8-K filed on ~~May 17, 2017)~~March 24, 2023).

(4.2)			Form of ~~4.375%~~5.400% Notes due ~~2047~~2033 (incorporated by reference to Exhibit 4.2 to the NiSource Inc. Form 8-K filed on ~~May 17, 2017)~~June 9, 2023).

~~(4.3)~~(10.1)			~~Form~~Purchase and Sale Agreement, dated as of ~~3.950% Notes due 2048~~June 17, 2023, among NiSource Inc., as the Parent, NIPSCO Holdings II LLC, as the Company, and BIP BLUE BUYER L.L.C., as the Investor (incorporated by reference to Exhibit ~~4.1~~10.1 to the NiSource Inc. Form 8-K filed on ~~September 8, 2017)~~June 20, 2023).

~~(12)~~(10.2)			~~Ratio~~Amendment No. 1 to the Purchase and Sale Agreement, dated as of ~~Earnings to Fixed Charges.~~July 6, 2023, among NiSource Inc., as the Parent, NIPSCO Holdings II LLC, as the Company, and BIP BLUE BUYER L.L.C., as the Investor.*

(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. Schedules and similar attachments to this Exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the U.S. Securities and Exchange Commission (the “SEC”) upon request.

**			Exhibit filed herewith.