UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2021~~2022

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-16189

NiSource Inc.

(Exact name of registrant as specified in its charter)


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

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

(877) 647-5990

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading
Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, par value $0.01 per share

NYSE

Depositary Shares, each representing a 1/1,000th ownership interest in a share of 6.50% Series B

~~NI PR B~~

~~NYSE~~

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.)

Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and ~~“emerging~~"emerging growth ~~company”~~company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ¨ Emerging growth company ☐ Non-accelerated filer ¨ Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Stock, $0.01 Par Value: ~~392,217,046~~405,798,111 shares outstanding at April 26, ~~2021.~~2022.

NISOURCE INC.

FORM 10-Q QUARTERLY REPORT

FOR THE QUARTER ENDED MARCH 31, ~~2021~~2022

Table of Contents


			Page

	Defined Terms		3

PART I	FINANCIAL INFORMATION

	Item 1.	Financial Statements - unaudited

		Condensed Statements of Consolidated Income (unaudited)	7

		Condensed Statements of Consolidated Comprehensive Income ~~(Loss)~~ (unaudited)	8

		Condensed Consolidated Balance Sheets (unaudited)	9

		Condensed Statements of Consolidated Cash Flows (unaudited)	11

		Condensed Statements of Consolidated Equity (unaudited)	12

		Notes to Condensed Consolidated Financial Statements (unaudited)	14

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3533

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5253

	Item 4.	Controls and Procedures	5253

PART II	OTHER INFORMATION

	Item 1.	Legal Proceedings	5354

	Item 1A.	Risk Factors	5354

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5455

	Item 3.	Defaults Upon Senior Securities	5455

	Item 4.	Mine Safety Disclosures	5455

	Item 5.	Other Information	5455

	Item 6.	Exhibits	5556

	Signature		5657


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

NiSource Subsidiaries ~~Affiliates~~ and ~~Former Subsidiaries~~Affiliates
Columbia of Kentucky			Columbia Gas of Kentucky, Inc.
Columbia of Maryland			Columbia Gas of Maryland, Inc.
Columbia of Massachusetts			Bay State Gas Company
Columbia of Ohio			Columbia Gas of Ohio, Inc.
Columbia of Pennsylvania			Columbia Gas of Pennsylvania, Inc.
Columbia of Virginia			Columbia Gas of Virginia, Inc.
NIPSCO			Northern Indiana Public Service Company LLC
NiSource ("we," "us" or "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

Abbreviations and Other
ACE			Affordable Clean Energy
AFUDC			Allowance for funds used during construction

AOCI			Accumulated Other Comprehensive Income (Loss)
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
ATM			At-the-market
BTA			Build-transfer agreement


CCRs			Coal Combustion Residuals
CEP			Capital Expenditure Program
CERCLA			Comprehensive Environmental Response Compensation and Liability Act (also known as Superfund)
Corporate Units			Series A Corporate Units
COVID-19 ("the COVID-19 pandemic" or "the pandemic")			Novel Coronavirus 2019 and its variants, including the Delta and Omicron variants, and any other variant that may emerge

DSIC			Distribution System Improvement Charge
DPU			Department of Public Utilities

EPA			United States Environmental Protection Agency
EPS			Earnings per share
Equity Units			Series A Equity Units
FAC			Fuel adjustment clause
FASB			Financial Accounting Standards Board

FMCA			Federally Mandated Cost Adjustment
GAAP			Generally Accepted Accounting Principles
GCA			Gas cost adjustment
GHG			Greenhouse gases
GWh			Gigawatt hours
~~HLBV~~			~~Hypothetical Liquidation at Book Value~~
IRP			Infrastructure Replacement Program

IURC			Indiana Utility Regulatory Commission
LIBOR			London InterBank Offered Rate


DEFINED TERMS
LIFO			Last In, First Out
~~MA DOR~~LIHEAP			~~Massachusetts Department of Revenue~~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


~~DEFINED TERMS~~
MGP			Manufactured Gas Plant
MISO			Midcontinent Independent System Operator
MMDth			Million dekatherms
MW			Megawatts
MWh			Megawatt hours
NTSB			National Transportation Safety Board
NYMEX			New York Mercantile Exchange
OPEB			Other ~~Postretirement~~Postemployment Benefits


PHMSA			Pipeline and Hazardous Materials Safety Administration
PPA			Power Purchase Agreement
~~PSC~~			~~Public Service Commission~~

~~PUC~~PUCO			Public Utilities Commission of Ohio

~~RCRA~~			~~Resource Conservation and Recovery Act~~
~~RFP~~RNG			~~Request for proposals~~Renewable Natural Gas

SAVE			Steps to Advance Virginia's Energy Plan
Scope 1 GHG Emissions			Direct emissions from sources owned or controlled by us (e.g., emissions from our combustion of fuel, vehicles, and process emissions and fugitive emissions)
SEC			Securities and Exchange Commission
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~~
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
U.S. Attorney's Office			U.S. Attorney's Office for the District of Massachusetts

VIE			Variable Interest Entity

Note regarding forward-looking statements

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Investors and prospective investors should understand that many factors govern whether any forward-looking statement contained herein will be or can be realized. Any one of those factors could cause actual results to differ materially from those projected. These forward-looking statements include, but are not limited to, statements concerning our plans, strategies, objectives, expected performance, expenditures, recovery of expenditures through rates, stated on either a consolidated or segment basis, and any and all underlying assumptions and other statements that are other than statements of historical fact. Expressions of future goals and expectations and similar expressions, including "may," "will," "should," "could," "would," "aims," "seeks," "expects," "plans," "anticipates," "intends," "believes," "estimates," "predicts," "potential," "targets," "forecast," and "continue," reflecting something other than historical fact are intended to identify forward-looking statements. All forward-looking statements are based on assumptions that management believes to be reasonable; however, there can be no assurance that actual results will not differ materially.

Factors that could cause actual results to differ materially from the projections, forecasts, estimates and expectations discussed in this Quarterly Report on Form 10-Q include, among other things, our ability to execute our business plan or growth strategy, including utility infrastructure investments; potential incidents and other operating risks associated with our business; our ability to adapt to, and manage costs related to, advances in technology; impacts related to our aging infrastructure; our ability to obtain sufficient insurance coverage and whether such coverage will protect us against significant losses; the success of our

electric generation strategy; construction risks and natural gas costs and supply risks; fluctuations in demand from residential and commercial customers; fluctuations in the price of energy commodities and related transportation costs or an inability to obtain an adequate, reliable and cost-effective fuel supply to meet customer demands; the attraction and retention of a qualified, diverse workforce and ability to maintain good labor relations; our ability to manage new initiatives and organizational changes; the actions of activist stockholders; the performance of third-party suppliers and service providers; potential ~~cyber-attacks;~~cybersecurity attacks; increased requirements and costs related to cybersecurity; any damage to our reputation; any remaining liabilities or impact related to the sale of the Massachusetts Business; the impacts of natural disasters, potential terrorist attacks or other catastrophic events; the physical impacts of climate change and ~~extreme weather conditions;~~the transition to a lower carbon future; our ability to manage the financial and operational risks related to achieving our carbon emission reduction goals; our debt obligations; any changes to our credit rating or the credit rating of certain of our subsidiaries; any adverse effects related to our equity units; adverse economic and capital

market conditions or increases in interest rates; inflation; economic regulation and the impact of regulatory rate reviews; our ability to obtain expected financial or regulatory outcomes; continuing and potential future impacts from the COVID-19 pandemic; economic conditions in certain industries; the reliability of customers and suppliers to fulfill their payment and contractual obligations; the ability of our subsidiaries to generate cash; pension funding obligations; potential impairments of goodwill; changes in the method for determining LIBOR and the potential replacement of the LIBOR benchmark interest rate; the outcome of legal and regulatory proceedings, investigations, incidents, claims and litigation; potential remaining liabilities related to the Greater Lawrence Incident; compliance with the agreements entered into with the U.S. ~~Attorney’s~~Attorney's Office to settle the U.S. ~~Attorney’s Office’s~~Attorney's Office's investigation relating to the Greater Lawrence Incident; compliance with applicable laws, regulations and tariffs; compliance with environmental laws and the costs of associated liabilities; changes in taxation; other matters in the ~~“Risk Factors”~~"Risk Factors" section of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020;~~2021, and matters related to our ~~Equity Units~~electric generation transition as set forth in the "Risk Factors" section of this Quarterly Report on Form 10-Q, many of which risks are beyond our control. In addition, the relative contributions to profitability by each business segment, and the assumptions underlying the forward-looking statements relating thereto, may change over time.

All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to, and expressly disclaim any such obligation to, update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events or changes to the future results over time or otherwise, except as required by law.


Index			Page
Condensed Statements of Consolidated Income (unaudited)			7
Condensed Statements of Consolidated Comprehensive Income ~~(Loss)~~ (unaudited)			8
Condensed Consolidated Balance Sheets (unaudited)			9
Condensed Statements of Consolidated Cash Flows (unaudited)			11
Condensed Statements of Consolidated Equity (unaudited)			12
Notes to Condensed Consolidated Financial Statements (unaudited)			14
1. Basis of Accounting Presentation			14
2. Recent Accounting Pronouncements			1514
3. Revenue Recognition			1514
4. Earnings Per Share			1817
5. Equity			18
6. Gas in Storage			19
~~7. Property, Plant and Equipment~~			19

7. 8. Regulatory Matters			20
8. 9. Risk Management Activities			20
9. ~~10.~~ Fair Value			22
~~11. Transfers of Financial Assets~~			24
~~12. Goodwill~~10.			25
~~13.~~ Income Taxes			25
11. ~~14.~~ Pension and Other Postretirement Benefits			25
~~15.~~ 12. Variable Interest Entities			26
13. ~~16.~~ Long-Term Debt			27
14. Short-Term Borrowings			27
15. ~~17.~~ Other Commitments and Contingencies			28
16. ~~18.~~ Accumulated Other Comprehensive Loss			31
17. Other, Net			31
18. Business Segment Information			31
19. Subsequent Event			32
~~19. Other, Net~~			33
~~20. Business Segment Information~~			33
~~21. Subsequent Event~~			34

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS

NiSource Inc.

Condensed Statements of Consolidated Income (unaudited)


		Three Months Ended March 31,				Three Months Ended March 31,
(in millions, except per share amounts)	(in millions, except per share amounts)	2021		2020			(in millions, except per share amounts)	2022		2021
Operating Revenues	Operating Revenues						Operating Revenues
Customer revenues	Customer revenues	$	1,506.5	$	1,525.9		Customer revenues	$	1,840.3	$	1,506.5
Other revenues	Other revenues	39.1		79.6			Other revenues	33.0		39.1
Total Operating Revenues	Total Operating Revenues	1,545.6		1,605.5			Total Operating Revenues	1,873.3		1,545.6
Operating Expenses	Operating Expenses						Operating Expenses
Cost of energy	Cost of energy	476.8		462.4			Cost of energy	706.7		476.8
Operation and maintenance	Operation and maintenance	361.5		444.6			Operation and maintenance	394.3		361.5
Depreciation and amortization	Depreciation and amortization	185.0		184.3			Depreciation and amortization	192.7		185.0
Loss on sale of assets, net		8.1		280.1
Loss (gain) on sale of assets, net							Loss (gain) on sale of assets, net	(105.0)		8.1
Other taxes	Other taxes	81.0		85.9			Other taxes	84.3		81.0
Total Operating Expenses	Total Operating Expenses	1,112.4		1,457.3			Total Operating Expenses	1,273.0		1,112.4

Operating Income	Operating Income	433.2		148.2			Operating Income	600.3		433.2
Other Income (Deductions)	Other Income (Deductions)						Other Income (Deductions)
Interest expense, net	Interest expense, net	(84.6)		(92.9)			Interest expense, net	(83.7)		(84.6)
Other, net	Other, net	10.5		5.4			Other, net	10.9		10.5

Total Other Deductions, Net	Total Other Deductions, Net	(74.1)		(87.5)			Total Other Deductions, Net	(72.8)		(74.1)

Income before Income Taxes	Income before Income Taxes	359.1		60.7			Income before Income Taxes	527.5		359.1
Income Taxes	Income Taxes	62.6		(14.9)			Income Taxes	96.2		62.6

Net Income	Net Income	296.5		75.6			Net Income	431.3		296.5
Net income attributable to noncontrolling interest	Net income attributable to noncontrolling interest	1.0		0			Net income attributable to noncontrolling interest	4.5		1.0
Net Income attributable to NiSource		295.5		75.6
Net Income Attributable to NiSource							Net Income Attributable to NiSource	426.8		295.5
Preferred dividends	Preferred dividends	(13.8)		(13.8)			Preferred dividends	(13.8)		(13.8)
Net Income Available to Common Shareholders	Net Income Available to Common Shareholders	281.7		61.8			Net Income Available to Common Shareholders	413.0		281.7
Earnings Per Share	Earnings Per Share						Earnings Per Share

Basic Earnings Per Share	Basic Earnings Per Share	$	0.72	$	0.16		Basic Earnings Per Share	$	1.02	$	0.72

Diluted Earnings Per Share	Diluted Earnings Per Share	$	0.72	$	0.16		Diluted Earnings Per Share	$	0.94	$	0.72

Basic Average Common Shares Outstanding	Basic Average Common Shares Outstanding	392.7		383.1			Basic Average Common Shares Outstanding	406.0		392.7
Diluted Average Common Shares	Diluted Average Common Shares	393.9		384.1			Diluted Average Common Shares	441.4		393.9

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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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


		Three Months Ended March 31,				Three Months Ended March 31,
(in millions, net of taxes)	(in millions, net of taxes)	2021		2020			(in millions, net of taxes)	2022		2021
Net Income	Net Income	$	296.5	$	75.6		Net Income	$	431.3	$	296.5
Other comprehensive income (loss):
Other comprehensive income:							Other comprehensive income:
Net unrealized loss on available-for-sale debt securities(1)	Net unrealized loss on available-for-sale debt securities(1)	(2.5)		(5.4)			Net unrealized loss on available-for-sale debt securities(1)	(5.7)		(2.5)
Net unrealized gain (loss) on cash flow hedges(2)		84.6		(133.3)
Net unrealized gain on cash flow hedges(2)							Net unrealized gain on cash flow hedges(2)	47.0		84.6
Unrecognized pension and OPEB benefit (costs)(3)	Unrecognized pension and OPEB benefit (costs)(3)	(0.9)		0.7			Unrecognized pension and OPEB benefit (costs)(3)	0.1		(0.9)
Total other comprehensive income (loss)		81.2		(138.0)
Comprehensive Income (Loss)		$	377.7	$	(62.4)
Total other comprehensive income							Total other comprehensive income	41.4		81.2
Comprehensive Income							Comprehensive Income	$	472.7	$	377.7

(1)Net unrealized loss on available-for-sale debt securities, net of ~~$0.7~~$1.5 million and ~~$1.4~~$0.7 million tax benefit in the first quarter of ~~2021~~2022 and ~~2020,~~2021, respectively.

(2)Net unrealized gain ~~(loss)~~ on cash flow hedges, net of $21.3 million and $28.0 million tax expense ~~and $44.1 million tax benefit~~ in the first quarter of ~~2021~~2022 and ~~2020,~~2021, respectively.

(3)Unrecognized pension and OPEB benefit, ~~(costs),~~ net of zero and $0.9 million tax expense ~~and $0.3 million tax benefit~~ in the first quarter of ~~2021~~2022 and ~~2020,~~2021, respectively.

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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Condensed Consolidated Balance Sheets (unaudited)


(in millions)	(in millions)	March 31, 2021		December 31, 2020		(in millions)	March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Property, Plant and Equipment	Property, Plant and Equipment					Property, Plant and Equipment
Plant	Plant	$	24,524.7	$	24,179.9	Plant	$	25,538.3	$	25,171.3
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(7,688.0)		(7,560.4)		Accumulated depreciation and amortization	(7,417.6)		(7,289.5)

Net Property, Plant and Equipment(1)	Net Property, Plant and Equipment(1)	16,836.7		16,619.5		Net Property, Plant and Equipment(1)	18,120.7		17,881.8
Investments and Other Assets	Investments and Other Assets					Investments and Other Assets

Available-for-sale debt securities (amortized cost of $163.8 and $163.9, allowance for credit losses of $0.3 and $0.5, respectively)		167.9		170.9
Unconsolidated affiliates						Unconsolidated affiliates	0.8		0.8
Available-for-sale debt securities (amortized cost of $161.7 and $169.3, allowance for credit losses of $0.6 and $0.2, respectively)						Available-for-sale debt securities (amortized cost of $161.7 and $169.3, allowance for credit losses of $0.6 and $0.2, respectively)	156.7		171.8
Other investments	Other investments	81.5		81.1		Other investments	82.4		87.1
Total Investments and Other Assets	Total Investments and Other Assets	249.4		252.0		Total Investments and Other Assets	239.9		259.7
Current Assets	Current Assets					Current Assets
Cash and cash equivalents	Cash and cash equivalents	89.1		116.5		Cash and cash equivalents	114.5		84.2
Restricted cash	Restricted cash	7.6		9.1		Restricted cash	15.9		10.7
Accounts receivable	Accounts receivable	848.4		843.6		Accounts receivable	989.6		849.1
Allowance for credit losses	Allowance for credit losses	(53.9)		(52.3)		Allowance for credit losses	(28.5)		(23.5)
Accounts receivable, net	Accounts receivable, net	794.5		791.3		Accounts receivable, net	961.1		825.6
Gas inventory	Gas inventory	48.1		191.2		Gas inventory	74.8		327.4
Materials and supplies, at average cost	Materials and supplies, at average cost	145.6		141.5		Materials and supplies, at average cost	146.9		139.1
Electric production fuel, at average cost	Electric production fuel, at average cost	52.5		68.4		Electric production fuel, at average cost	41.5		32.2
Exchange gas receivable	Exchange gas receivable	53.7		34.1		Exchange gas receivable	98.6		99.6

Regulatory assets	Regulatory assets	188.9		135.7		Regulatory assets	154.7		206.2
Deferred property taxes		104.2		85.6

Prepayments and other	Prepayments and other	109.3		86.0		Prepayments and other	263.9		195.8
Total Current Assets(1)	Total Current Assets(1)	1,593.5		1,659.4		Total Current Assets(1)	1,871.9		1,920.8
Other Assets	Other Assets					Other Assets
Regulatory assets	Regulatory assets	1,791.3		1,794.8		Regulatory assets	2,276.3		2,286.0
Goodwill	Goodwill	1,485.9		1,485.9		Goodwill	1,485.9		1,485.9

Deferred charges and other	Deferred charges and other	237.7		228.9		Deferred charges and other	370.8		322.7
Total Other Assets	Total Other Assets	3,514.9		3,509.6		Total Other Assets	4,133.0		4,094.6
Total Assets	Total Assets	$	22,194.5	$	22,040.5	Total Assets	$	24,365.5	$	24,156.9

(1)Includes ~~$174.2~~$690.4 million and ~~$175.6~~$695.9 million at March 31, 2022 and December 31, 2021, respectively, of net property, plant and equipment assets and ~~$4.2~~$27.4 million and ~~$1.7~~$14.3 million at March 31, 2022 and December 31, 2021, respectively, of current assets of a consolidated ~~VIE as of March 31, 2021 and December 31, 2020~~VIEs that may be used only to settle obligations of the consolidated ~~VIE.~~VIEs. Refer to Note 1512, "Variable Interest Entities" for additional information.

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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Condensed Consolidated Balance Sheets (unaudited) (continued)


(in millions, except share amounts)	(in millions, except share amounts)	March 31, 2021		December 31, 2020		(in millions, except share amounts)	March 31, 2022		December 31, 2021
CAPITALIZATION AND LIABILITIES	CAPITALIZATION AND LIABILITIES					CAPITALIZATION AND LIABILITIES
Capitalization	Capitalization					Capitalization
Stockholders’ Equity	Stockholders’ Equity					Stockholders’ Equity
Common stock - $0.01 par value, 600,000,000 shares authorized; 392,129,866 and 391,760,051 shares outstanding, respectively		$	3.9	$	3.9
Preferred stock - $0.01 par value, 20,000,000 shares authorized; 440,000 shares outstanding		880.0		880.0
Common stock - $0.01 par value, 600,000,000 shares authorized; 405,734,408 and 405,303,023 shares outstanding, respectively						Common stock - $0.01 par value, 600,000,000 shares authorized; 405,734,408 and 405,303,023 shares outstanding, respectively	$	4.1	$	4.1
Preferred stock - $0.01 par value, 20,000,000 shares authorized; 1,302,500 shares outstanding						Preferred stock - $0.01 par value, 20,000,000 shares authorized; 1,302,500 shares outstanding	1,546.5		1,546.5
Treasury stock	Treasury stock	(99.9)		(99.9)		Treasury stock	(99.9)		(99.9)
Additional paid-in capital	Additional paid-in capital	6,892.9		6,890.1		Additional paid-in capital	7,208.9		7,204.3
Retained deficit	Retained deficit	(1,669.8)		(1,765.2)		Retained deficit	(1,372.3)		(1,580.9)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(75.5)		(156.7)		Accumulated other comprehensive loss	(85.4)		(126.8)
Total NiSource Stockholders’ Equity	Total NiSource Stockholders’ Equity	5,931.6		5,752.2		Total NiSource Stockholders’ Equity	7,201.9		6,947.3
Noncontrolling interest in consolidated subsidiaries	Noncontrolling interest in consolidated subsidiaries	94.1		85.6		Noncontrolling interest in consolidated subsidiaries	329.5		325.6
Total Stockholders' Equity		6,025.7		5,837.8
Total Equity						Total Equity	7,531.4		7,272.9
Long-term debt, excluding amounts due within one year	Long-term debt, excluding amounts due within one year	9,202.3		9,219.8		Long-term debt, excluding amounts due within one year	9,179.8		9,183.4
Total Capitalization	Total Capitalization	15,228.0		15,057.6		Total Capitalization	16,711.2		16,456.3
Current Liabilities	Current Liabilities					Current Liabilities
Current portion of long-term debt	Current portion of long-term debt	44.4		23.3		Current portion of long-term debt	57.9		58.1
Short-term borrowings	Short-term borrowings	520.0		503.0		Short-term borrowings	520.0		560.0
Accounts payable	Accounts payable	554.9		589.0		Accounts payable	628.5		697.8
Dividends payable - common stock	Dividends payable - common stock	86.3		0		Dividends payable - common stock	95.3		—
Dividends payable - preferred stock	Dividends payable - preferred stock	19.4		0		Dividends payable - preferred stock	19.4		—
Customer deposits and credits	Customer deposits and credits	146.7		243.3		Customer deposits and credits	155.2		237.9
Taxes accrued	Taxes accrued	301.5		244.1		Taxes accrued	313.5		277.1
Interest accrued	Interest accrued	94.6		104.7		Interest accrued	94.3		105.5

Exchange gas payable	Exchange gas payable	25.5		48.5		Exchange gas payable	37.8		107.7
Regulatory liabilities	Regulatory liabilities	169.6		161.3		Regulatory liabilities	229.1		137.4

Accrued compensation and employee benefits	Accrued compensation and employee benefits	131.2		141.8		Accrued compensation and employee benefits	130.5		182.7

Other accruals	Other accruals	164.7		220.4		Other accruals	313.1		382.0
Total Current Liabilities(1)	Total Current Liabilities(1)	2,258.8		2,279.4		Total Current Liabilities(1)	2,594.6		2,746.2
Other Liabilities	Other Liabilities					Other Liabilities

Deferred income taxes	Deferred income taxes	1,573.6		1,470.6		Deferred income taxes	1,789.8		1,659.4

Accrued liability for postretirement and postemployment benefits	Accrued liability for postretirement and postemployment benefits	328.9		336.1		Accrued liability for postretirement and postemployment benefits	285.3		292.5
Regulatory liabilities	Regulatory liabilities	1,881.0		1,904.2		Regulatory liabilities	1,843.1		1,842.6
Asset retirement obligations	Asset retirement obligations	479.7		477.1		Asset retirement obligations	472.0		469.7
Other noncurrent liabilities	Other noncurrent liabilities	444.5		515.5		Other noncurrent liabilities	669.5		690.2
Total Other Liabilities(1)	Total Other Liabilities(1)	4,707.7		4,703.5		Total Other Liabilities(1)	5,059.7		4,954.4
Commitments and Contingencies (Refer to Note 17, "Other Commitments and Contingencies")
Commitments and Contingencies (Refer to Note 15, "Other Commitments and Contingencies")						Commitments and Contingencies (Refer to Note 15, "Other Commitments and Contingencies")
Total Capitalization and Liabilities	Total Capitalization and Liabilities	$	22,194.5	$	22,040.5	Total Capitalization and Liabilities	$	24,365.5	$	24,156.9

(1)Includes $16.7 million and $10.0 million at March 31, 2022 and December 31, 2021, respectively, of current liabilities and $20.6 million and $20.5 million at March 31, 2022 and December 31, 2021, respectively, of other liabilities of consolidated VIEs that creditors do not have recourse to our general credit. Refer to Note 12, "Variable Interest Entities," for additional information.

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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Condensed Statements of Consolidated Cash Flows (unaudited)


Three Months Ended March 31, (in millions)	2022		2021
Operating Activities
Net Income	$	431.3	$	296.5
Adjustments to Reconcile Net Income to Net Cash from Operating Activities:

Depreciation and amortization	192.7		185.0
Deferred income taxes and investment tax credits	87.2		55.2



Loss (gain) on sale of assets	(105.0)		8.1
Other adjustments	8.0		3.5
Changes in Assets and Liabilities:










Components of working capital	(42.4)		(89.3)
Regulatory assets/liabilities	24.9		8.4


Deferred charges and other noncurrent assets	(7.4)		(10.7)
Other noncurrent liabilities	(9.5)		(8.4)

Net Cash Flows from Operating Activities	579.8		448.3
Investing Activities
Capital expenditures	(450.1)		(367.0)
Insurance recoveries	105.0		—




Payment to renewable generation asset developer	—		(7.4)
Other investing activities	(25.3)		(27.4)

Net Cash Flows used for Investing Activities	(370.4)		(401.8)
Financing Activities

Repayments of finance lease obligations	(7.3)		(5.9)


Change in short-term borrowings, net (maturity ≤ 90 days)	(40.0)		17.0
Issuance of common stock, net of issuance costs	2.8		2.8

Equity costs, premiums and other debt related costs	(8.9)		(2.5)
Contributions from noncontrolling interest	—		7.5
Distributions to noncontrolling interest	(0.6)		—

Dividends paid - common stock	(95.3)		(86.2)
Dividends paid - preferred stock	(8.1)		(8.1)
Contract liability payment	(16.5)		—

Net Cash Flows used for Financing Activities	(173.9)		(75.4)
Change in cash, cash equivalents and restricted cash	35.5		(28.9)
Cash, cash equivalents and restricted cash at beginning of period	94.9		125.6
Cash, Cash Equivalents and Restricted Cash at End of Period	$	130.4	$	96.7

Three Months Ended March 31, (in millions)
2021 2020
Operating Activities
Net Income $ 296.5 $ 75.6
Adjustments to Reconcile Net Income to Net Cash from Operating Activities:
Depreciation and amortization 185.0 184.3
Deferred income taxes and investment tax credits 55.2 (19.9)
Loss on sale of assets 8.1 280.2
Other adjustments 3.5 7.9
Changes in Assets and Liabilities:
Components of working capital (89.3) (147.1)
Regulatory assets/liabilities 8.4 12.9
Deferred charges and other noncurrent assets (10.7) (12.1)
Other noncurrent liabilities (8.4) (11.9)
Net Cash Flows from Operating Activities 448.3 369.9
Investing Activities
Capital expenditures (367.0) (452.1)
Cost of removal (26.9) (34.5)
Purchases of available-for-sale securities (16.6) (43.5)
Sales of available-for-sale securities 16.9 45.4
Payment to renewable generation asset developer (7.4) 0
Other investing activities (0.8) 0.1
Net Cash Flows used for Investing Activities (401.8) (484.6)
Financing Activities
Repayments of long-term debt and finance lease obligations (5.9) (4.1)
Issuance of short-term debt (maturity > 90 days) 0 500.0
Change in short-term borrowings, net (maturity ≤ 90 days) 17.0 (226.8)
Issuance of common stock, net of issuance costs 2.8 3.7
Equity costs, premiums and other debt related costs (2.5) (5.1)
Contributions from non-controlling interest, net of issuance costs 7.5 0
Dividends paid - common stock (86.2) (80.3)
Dividends paid - preferred stock (8.1) (8.1)
Net Cash Flows (used for) from Financing Activities (75.4) 179.3
Change in cash, cash equivalents and restricted cash (28.9) 64.6
Cash, cash equivalents and restricted cash at beginning of period 125.6 148.4
Cash, Cash Equivalents and Restricted Cash at End of Period $ 96.7 $ 213.0
Reconciliation to Balance Sheet


Three Months Ended March 31,(in millions)			2022
Cash and cash equivalents			114.5
Restricted Cash			15.9
Total Cash, Cash Equivalents and Restricted Cash			130.4

Supplemental Disclosures of Cash Flow Information


Three Months Ended March 31, (in millions)	Three Months Ended March 31, (in millions)	2021		2020		Three Months Ended March 31, (in millions)	2022		2021
Non-cash transactions:	Non-cash transactions:					Non-cash transactions:
Capital expenditures included in current liabilities	Capital expenditures included in current liabilities	$	155.6	$	150.5	Capital expenditures included in current liabilities	$	183.4	$	155.6
Dividends declared but not paid	Dividends declared but not paid	105.7		99.8		Dividends declared but not paid	114.7		105.7

Assets recorded for asset retirement obligations		0		69.8

Obligation to developer at formation of joint venture	Obligation to developer at formation of joint venture	$	6.0	$	0	Obligation to developer at formation of joint venture	$	—	$	6.0

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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Condensed Statements of Consolidated Equity (unaudited)


(in millions)																	(in millions)	Common Stock		Preferred Stock(1)		Treasury Stock		Additional Paid-In Capital		Retained Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interest in Consolidated Subsidiaries		Total
Balance as of January 1, 2022																	Balance as of January 1, 2022	$	4.1	$	1,546.5	$	(99.9)	$	7,204.3	$	(1,580.9)	$	(126.8)	$	325.6	$	7,272.9
Comprehensive Income:																	Comprehensive Income:
Net income																	Net income	—		—		—		—		426.8		—		4.5		431.3
Other comprehensive income, net of tax																	Other comprehensive income, net of tax	—		—		—		—		—		41.4		—		41.4
Dividends:																	Dividends:
Common stock ($0.47 per share)																	Common stock ($0.47 per share)	—		—		—		—		(190.7)		—		—		(190.7)
Preferred stock (See Note 5)																	Preferred stock (See Note 5)	—		—		—		—		(27.5)		—		—		(27.5)
Distributions to noncontrolling interests																	Distributions to noncontrolling interests	—		—		—		—		—		—		(0.6)		(0.6)

Stock issuances:																	Stock issuances:

Employee stock purchase plan																	Employee stock purchase plan	—		—		—		1.2		—		—		—		1.2
Long-term incentive plan																	Long-term incentive plan	—		—		—		0.9		—		—		—		0.9
401(k) and profit sharing																	401(k) and profit sharing	—		—		—		2.5		—		—		—		2.5

Balance as of March 31, 2022																	Balance as of March 31, 2022	$	4.1	$	1,546.5	$	(99.9)	$	7,208.9	$	(1,372.3)	$	(85.4)	$	329.5	$	7,531.4

(in millions)	Common Stock		Preferred Stock(1)		Treasury Stock		Additional Paid-In Capital		Retained Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interest in Consolidated Subsidiaries		Total
Balance as of January 1, 2021	$	3.9	$	880.0	$	(99.9)	$	6,890.1	$	(1,765.2)	$	(156.7)	$	85.6	$	5,837.8
Comprehensive Income:
Net income	0		0		0		0		295.5		0		1.0		296.5
Other comprehensive income, net of tax	0		0		0		0		0		81.2		0		81.2
Dividends:
Common stock ($0.44 per share)	0		0		0		0		(172.6)		0		0		(172.6)
Preferred stock (See Note 5)	0		0		0		0		(27.5)		0		0		(27.5)
Contribution from noncontrolling interest	0		0		0		0		0		0		7.5		7.5

Stock issuances:

Employee stock purchase plan	0		0		0		1.3		0		0		0		1.3
Long-term incentive plan	0		0		0		(0.5)		0		0		0		(0.5)
401(k) and profit sharing	0		0		0		2.3		0		0		0		2.3
ATM program	0		0		0		(0.3)		0		0		0		(0.3)
Balance as of March 31, 2021	$	3.9	$	880.0	$	(99.9)	$	6,892.9	$	(1,669.8)	$	(75.5)	$	94.1	$	6,025.7

(1)Series A, Series B, and Series BC shares have an aggregate liquidation preference of $400M, $500M, and ~~$500M,~~$863M, respectively. See Note 5, "Equity" for additional information.


(in millions)																	(in millions)	Common Stock		Preferred Stock(1)		Treasury Stock		Additional Paid-In Capital		Retained Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interest in Consolidated Subsidiaries		Total
Balance as of January 1, 2021																	Balance as of January 1, 2021	$	3.9	$	880.0	$	(99.9)	$	6,890.1	$	(1,765.2)	$	(156.7)	$	85.6	$	5,837.8
Comprehensive Income:																	Comprehensive Income:
Net income																	Net income	—		—		—		—		295.5		—		1.0		296.5
Other comprehensive income, net of tax																	Other comprehensive income, net of tax	—		—		—		—		—		81.2		—		81.2
Dividends:																	Dividends:
Common stock ($0.44 per share)																	Common stock ($0.44 per share)	—		—		—		—		(172.6)		—		—		(172.6)
Preferred stock (See Note 5)																	Preferred stock (See Note 5)	—		—		—		—		(27.5)		—		—		(27.5)
Contribution from noncontrolling interest																	Contribution from noncontrolling interest	—		—		—		—		—		—		7.5		7.5
Stock issuances:																	Stock issuances:

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

(in millions)	Common Stock		Preferred Stock(1)		Treasury Stock		Additional Paid-In Capital		Retained Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interest in Consolidated Subsidiaries		Total
Balance as of January 1, 2020	$	3.8	$	880.0	$	(99.9)	$	6,666.2	$	(1,370.8)	$	(92.6)	$	0	$	5,986.7
Comprehensive Income:
Net income	0		0		0		0		75.6		0		0		75.6
Other comprehensive loss, net of tax	0		0		0		0		0		(138.0)		0		(138.0)
Dividends:
Common stock ($0.42 per share)	0		0		0		0		(160.7)		0		0		(160.7)
Preferred stock (See Note 5)	0		0		0		0		(27.5)		0		0		(27.5)

Stock issuances:

Employee stock purchase plan	0		0		0		1.3		0		0		0		1.3
Long-term incentive plan	0		0		0		(0.5)		0		0		0		(0.5)
401(k) and profit sharing	0		0		0		4.5		0		0		0		4.5

Balance as of March 31, 2020	$	3.8	$	880.0	$	(99.9)	$	6,671.5	$	(1,483.4)	$	(230.6)	$	0	$	5,741.4

(1)Series A and Series B shares have an aggregate liquidation preference of $400M and $500M, respectively. See Note 5, "Equity" for additional information.

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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Condensed Statements of Consolidated Equity (unaudited) (continued)


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

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

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

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

Employee stock purchase plan	Employee stock purchase plan	0	55	0	55	Employee stock purchase plan	—	55	—	55
Long-term incentive plan	Long-term incentive plan	0	212	0	212	Long-term incentive plan	—	212	—	212
401(k) and profit sharing	401(k) and profit sharing	0	103	0	103	401(k) and profit sharing	—	103	—	103

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

		Preferred	Common
Shares (in thousands)		Shares	Shares	Treasury	Outstanding
Balance as of January 1, 2020		440	386,099	(3,963)	382,136
Issued:

Employee stock purchase plan		0	46	0	46
Long-term incentive plan		0	347	0	347
401(k) and profit sharing		0	165	0	165

Balance as of March 31, 2020		440	386,657	(3,963)	382,694

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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

1. Basis of Accounting Presentation

Our accompanying Condensed Consolidated Financial Statements (unaudited) reflect all normal recurring adjustments that are necessary, in the opinion of management, to present fairly the results of operations in accordance with GAAP in the United States of America. The accompanying financial statements include the accounts of us, our majority-owned subsidiaries, and VIEs of which we are the primary beneficiary after the elimination of all intercompany accounts and transactions.

The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021. Income for interim periods may not be indicative of results for the calendar year due to weather variations and other factors.

The Condensed Consolidated Financial Statements (unaudited) have been prepared pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made in this Quarterly Report on Form 10-Q are adequate to make the information herein not misleading.

~~Table of Contents~~

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

~~NiSource Inc.~~

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

2. Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements

We are currently evaluating the impact of certain ASUs on our Condensed Consolidated Financial Statements (unaudited) and Notes to Condensed Consolidated Financial Statements (unaudited), which are described below:


~~Standard~~In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and in January 2021, the FASB issuedASU 2021-01, Reference Rate Reform (Topic 848): Scope. These pronouncements provide temporary optional expedients and exceptions for applying GAAP principles to contract modifications and hedging relationships to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. These pronouncements are effective upon issuance on March 12, 2020, and will apply through December 31, 2022. We have evaluated the temporary expedients and options available under this guidance and identified the financial instruments to which the expedients could be applied, if deemed necessary. As of March 31, 2022, we have not applied any expedients or options available under these ASUs. In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This pronouncement requires certain annual disclosures for transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy to other accounting guidance. This pronouncement is applicable for financial statements issued for annual periods beginning after December 15, 2021. We are currently evaluating the impact of adoption, if any, on the Notes to the Consolidated Financial Statements.	~~Description~~	~~Effective Date~~	~~Effect on the financial statements or other significant matters~~
~~ASU 2020-04,~~ ~~Reference Rate Reform~~ ~~(Topic 848):~~ ~~Facilitation of the~~ ~~Effects of Reference~~ ~~Rate Reform on~~ ~~Financial Statement~~	This pronouncement provides temporary optional expedients and exceptions for applying GAAP principles to contract modifications and hedging relationships to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates.	Upon issuance on March 12, 2020, and will apply though December 31, 2022.	We continue to evaluate the temporary expedients and options available under this guidance, and the effects of this pronouncement on our Condensed Consolidated Financial Statements (unaudited) and Notes to Condensed Consolidated Financial Statements (unaudited). We are currently identifying and evaluating contracts that may be impacted. As of March 31, 2021, we have not applied any expedients and options available under this ASU.
~~ASU 2021-01,~~ ~~Reference Rate Reform (Topic 848): Scope~~
~~ASU 2020-06,~~ Debt with Conversion and Other Options (Subtopic 470-20) and Derivative and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity	This pronouncement simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity. Specifically, the ASU "simplifies accounting for convertible instruments by removing major separation models required under current GAAP." In addition, the ASU "removes certain settlement conditions that are required for equity contracts to qualify for it" and "simplifies the diluted earnings per share (EPS) calculations in certain areas."	~~Annual period beginning after December 15, 2021, and interim periods within those fiscal years.~~	We continue to evaluate the effects of this pronouncement on our Condensed Consolidated Financial Statements (unaudited) and Notes to Condensed Consolidated Financial Statements (unaudited) as it pertains to any relevant future activity. We expect to adopt this ASU on its effective date.

Recently Adopted Accounting Pronouncements


~~Standard~~In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivative and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. This pronouncement amends the guidance for entities that issue convertible instruments and/or contracts indexed to and potentially settled in an entity's own equity. The pronouncement eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. Additionally, the pronouncement amends the guidance for the derivatives scope exception for contracts in an entity's own equity. Further, this pronouncement only impacts the denominator in the calculation of diluted EPS for our Equity Units as we are required to assume share settlement of the remaining purchase contract payment balance when applying the if-converted method. Moreover, we are required to utilize the average share price for the period instead of the end of period price. We adopted this pronouncement using the modified retrospective method as of January 1, 2022.			~~Adoption~~
~~ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~			This pronouncement simplifies the accounting for income taxes by eliminating certain exceptions to the general principles in ASC 740, income taxes. It also improves consistency of application for other areas of the guidance by clarifying and amending existing guidance. We adopted the amendments of this pronouncement as of January 1, 2021 with no material impact to the Condensed Consolidated Financial Statements (unaudited).

3. Revenue Recognition

Revenue Disaggregation and Reconciliation. We disaggregate revenue from contracts with customers based upon reportable segment, as well as by customer class. ~~As our revenues are primarily earned over a period of time and we do not earn a material amount of revenues at a point in time, revenues are not disaggregated as such below.~~ The Gas Distribution Operations segment provides natural gas service and transportation for residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, and Indiana. ~~We completed the sale of the Massachusetts Business on October 9, 2020.~~ The Electric Operations segment provides electric service in 20 counties in the northern part of Indiana.

1514

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

The tables below reconcile revenue disaggregation by customer class to segment revenue, as well as to revenues reflected on the Condensed Statements of Consolidated Income (unaudited) ~~for the three months ended March 31, 2021 and March 31, 2020:~~:


Three Months Ended March 31, 2021 (in millions)		Gas Distribution Operations		Electric Operations		Corporate and Other(2)		Total
Three Months Ended March 31, 2022 (in millions)										Three Months Ended March 31, 2022 (in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other(2)		Total
Customer Revenues(1)	Customer Revenues(1)									Customer Revenues(1)
Residential	Residential	$	773.5	$	129.2	$	0	$	902.7	Residential	$	976.9	$	138.5	$	—	$	1,115.4
Commercial	Commercial	271.4		122.9		0		394.3		Commercial	356.5		134.5		—		491.0
Industrial	Industrial	57.9		122.9		0		180.8		Industrial	67.8		129.8		—		197.6
Off-system	Off-system	14.4		0		0		14.4		Off-system	18.7		—		—		18.7
Miscellaneous	Miscellaneous	9.9		4.2		0.2		14.3		Miscellaneous	14.0		3.6		—		17.6
Total Customer Revenues	Total Customer Revenues	$	1,127.1	$	379.2	$	0.2	$	1,506.5	Total Customer Revenues	$	1,433.9	$	406.4	$	—	$	1,840.3
Other Revenues	Other Revenues	8.7		23.3		7.1		39.1		Other Revenues	2.8		23.7		6.5		33.0
Total Operating Revenues	Total Operating Revenues	$	1,135.8	$	402.5	$	7.3	$	1,545.6	Total Operating Revenues	$	1,436.7	$	430.1	$	6.5	$	1,873.3

(1)Customer revenue amounts exclude intersegment revenues. See Note ~~20,~~18, "Business Segment Information," for discussion of intersegment revenues.

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


Three Months Ended March 31, 2020 (in millions)		Gas Distribution Operations		Electric Operations		Corporate and Other		Total
Three Months Ended March 31, 2021 (in millions)										Three Months Ended March 31, 2021 (in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other(2)		Total
Customer Revenues(1)	Customer Revenues(1)									Customer Revenues(1)
Residential	Residential	$	796.5	$	119.2	$	0	$	915.7	Residential	$	773.5	$	129.2	$	—	$	902.7
Commercial	Commercial	269.4		120.2		0		389.6		Commercial	271.4		122.9		—		394.3
Industrial	Industrial	74.2		109.1		0		183.3		Industrial	57.9		122.9		—		180.8
Off-system	Off-system	18.7		0		0		18.7		Off-system	14.4		—		—		14.4
Miscellaneous	Miscellaneous	12.5		5.9		0.2		18.6		Miscellaneous	9.9		4.2		0.2		14.3
Total Customer Revenues	Total Customer Revenues	$	1,171.3	$	354.4	$	0.2	$	1,525.9	Total Customer Revenues	$	1,127.1	$	379.2	$	0.2	$	1,506.5
Other Revenues	Other Revenues	56.7		22.9		0		79.6		Other Revenues	8.7		23.3		7.1		39.1
Total Operating Revenues	Total Operating Revenues	$	1,228.0	$	377.3	$	0.2	$	1,605.5	Total Operating Revenues	$	1,135.8	$	402.5	$	7.3	$	1,545.6

(1)Customer revenue amounts exclude intersegment revenues. See Note ~~20,~~18, "Business Segment Information," for discussion of intersegment revenues.

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

Customer Accounts Receivable. Accounts receivable on our Condensed Consolidated Balance Sheets (unaudited) includes both billed and unbilled amounts, as well as certain amounts that are not related to customer revenues. Unbilled amounts of accounts receivable relate to a portion of a customer’s consumption of gas or electricity from the date of the last cycle billing through the last day of the month (balance sheet date). Factors taken into consideration when estimating unbilled revenue include historical usage, customer rates and weather. A significant portion of our operations are subject to seasonal fluctuations in sales. During the heating season, primarily from November through March, revenues and receivables from gas sales are more significant than in other months. The opening and closing balances of customer receivables for the three months ended March 31, ~~2021~~2022 are presented in the table below. We had no significant contract assets or liabilities during the period. Additionally, we have not incurred any significant costs to obtain or fulfill contracts.

(in millions) Customer Accounts Receivable, Billed (less reserve) Customer Accounts Receivable, Unbilled (less reserve)
Balance as of December 31, 2020 $ 400.0 $ 327.2
Balance as of March 31, 2021 507.4 244.3
Increase (Decrease) $ 107.4 $ (82.9)


(in millions)	Customer Accounts Receivable, Billed (less reserve)		Customer Accounts Receivable, Unbilled (less reserve)
Balance as of December 31, 2021	$	459.6	$	337.0
Balance as of March 31, 2022	642.7		293.5

Utility revenues are billed to customers monthly on a cycle basis. We expect that substantially all customer accounts receivable will be collected following customer billing, as this revenue consists primarily of periodic, tariff-based billings for service and usage. We maintain common utility credit risk mitigation practices, including requiring deposits and actively pursuing collection of past due amounts. Our regulated operations also utilize certain regulatory mechanisms that facilitate recovery of bad debt costs within tariff-based rates, which provides further evidence of collectibility. In connection with the COVID-19 pandemic, certain state regulatory commissions instituted regulatory moratoriums that impacted our ability to pursue our

1615

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

~~standard credit risk mitigation practices. Following the issuance of these moratoriums, certain of our regulated operations have been authorized to recognize a regulatory asset for~~ bad debt costs above levels currently in rates. We have reinstated our common credit mitigation practices where moratoriums have expired (see Note 8, "Regulatory Matters," for additional information on regulatory moratoriums and regulatory assets).within tariff-based rates, which provides further evidence of collectibility. It is probable that substantially all of the consideration to which we are entitled from customers will be collected upon satisfaction of performance obligations.

Allowance for Credit Losses. To evaluate for expected credit losses, customer account receivables are pooled based on similar risk characteristics, such as customer type, geography, payment terms, and related macro-economic risks. Expected credit losses are established using a model that considers historical collections experience, current information, and reasonable and supportable forecasts. ~~Relevant and reliable internal~~Internal and external inputs are used in ~~the~~our credit model ~~include,~~including, but ~~are~~ not limited to, energy consumption trends, revenue projections, actual charge-offs data, recoveries data, ~~shut-off orders executed data,~~shut-offs, customer delinquencies, and final bill data. We continuously evaluate available ~~reasonable and supportable~~ information relevant to assessing collectability of current and future receivables. We evaluate creditworthiness of specific customers periodically or ~~when required by~~following changes in facts and circumstances. When we become aware of a specific commercial or industrial customer's inability to pay, an allowance for expected credit losses is recorded for the relevant amount. We also monitor other circumstances that could affect our overall expected credit ~~losses; these include,~~losses including, but ~~are~~ not limited to, creditworthiness of overall population in service territories, adverse conditions impacting an industry sector, and current economic conditions.

At each reporting period, we record expected credit losses ~~using~~to an allowance for credit losses account. When deemed to be uncollectible, customer accounts are written-off. A rollforward of our allowance for credit losses ~~for the three months ended~~as of March 31, 2022 and December 31, 2021 are presented in the table below:


Three Months Ended March 31, 2021 (in millions)		Gas Distribution Operations		Electric Operations		Corporate and Other		Total
Beginning balance		$	41.8	$	9.7	$	0.8	$	52.3
(in millions)										(in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other		Total
Balance as of January 1, 2022										Balance as of January 1, 2022	$	18.9	$	3.8	$	0.8	$	23.5
Current period provisions	Current period provisions	5.9		2.9		0		8.8		Current period provisions	5.8		2.8		—		8.6
Write-offs charged against allowance	Write-offs charged against allowance	(9.0)		(2.4)		0		(11.4)		Write-offs charged against allowance	(7.7)		(1.2)		—		(8.9)
Recoveries of amounts previously written off	Recoveries of amounts previously written off	4.1		0.1		0		4.2		Recoveries of amounts previously written off	5.2		0.1		—		5.3
Ending balance of the allowance for credit losses		$	42.8	$	10.3	$	0.8	$	53.9
Balance as of March 31, 2022										Balance as of March 31, 2022	$	22.2	$	5.5	$	0.8	$	28.5


(in millions)	Gas Distribution Operations		Electric Operations		Corporate and Other		Total
Balance as of January 1, 2021	$	41.8	$	9.7	$	0.8	$	52.3
Current period provisions	5.8		1.4		—		7.2
Write-offs charged against allowance	(46.7)		(7.7)		—		(54.4)
Recoveries of amounts previously written off	18.0		0.4		—		18.4
Balance as of December 31, 2021	$	18.9	$	3.8	$	0.8	$	23.5

In connection with the COVID-19 pandemic, certain state regulatory commissions instituted regulatory moratoriums that impacted our ability to pursue our standard credit risk mitigation practices during 2021. Following the issuance of ~~March~~these moratoriums, certain of our regulated operations have been authorized to recognize a regulatory asset for bad debt costs above levels currently recovered in rates. At December 31, 2021, ~~we have also evaluated~~in addition to our evaluation of the ~~adequacy of our~~ allowance for credit losses in light of the suspension of shut-offs for nonpayment due to the COVID-19 pandemic that remain in effect for certain jurisdictions. Our evaluation included an analysis of customer payment trends in 2020, economic conditions, receivables aging, considerations of past economic downturns and the associated allowance for credit losses and customer account write-offs. In addition,discussed above, we considered benefits available under governmental COVID-19 relief programs, the impact of unemployment benefits initiatives, and flexible payment plans being offered to customers affected by or experiencing hardship as a result of the pandemic, which could help to mitigate the potential for increasing customer account delinquencies. We also considered the on-time bill payment promotion and robust customer marketing strategy for energy assistance programs that we have implemented. Based upon this evaluation, we have concluded that the allowance for credit losses as of December 31, 2021 and March 31, ~~2021~~2022 adequately reflected the collection risk and net realizable value for our receivables. ~~We will continue to monitor changing circumstances and will adjust~~As of December 31, 2021, we resumed our ~~allowance for~~common credit ~~losses accordingly.~~mitigation practices in all jurisdictions as all moratoriums had expired.

1716

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

4. Earnings Per Share

~~Basic~~The calculations of basic and diluted EPS ~~is computed by dividing net income available to common shareholders by~~are based on the ~~weighted-average~~weighted average number of shares of common stock and potential common stock outstanding during the period. For the purposes of determining diluted EPS, the shares underlying the purchase contracts included within the Equity Units were included in the calculation of potential common stock outstanding for the ~~period. The weighted-average~~three months ended March 31, 2022 using the if-converted method under US GAAP. For the purchase contracts, the number of shares ~~outstanding for~~of our common stock that would be issuable at the end of each reporting period will be reflected in the denominator of our diluted EPS calculation. If the stock price falls below the initial reference price of $24.51, subject to anti-dilution adjustments, the number of shares of our common stock used in calculating diluted EPS will be the maximum number of shares per the contract as described in Note 5, "Equity." Conversely, if the stock price is above the initial reference price of $24.51, subject to anti-dilution adjustments, a variable number of shares of our common stock will be used in calculating diluted EPS. A numerator adjustment was reflected in the calculation of diluted EPS for interest expense incurred in 2022 net of tax, related to the purchase contracts.

We adopted ASU 2020-06 on January 1, 2022, which resulted in additional dilution from our Equity Units by requiring us to assume share settlement of the remaining purchase contract payment balance based on the average share price outstanding during the period. Refer to Note 2, "Recent Accounting Pronouncements," for more information on ASU 2020-06.

The shares underlying the Series C Mandatory Convertible Preferred Stock included within the Equity Units are contingently convertible securities as the conversion is contingent on a successful remarketing as described in Note 5, "Equity." Contingently convertible shares where conversion is not tied to a market price trigger are excluded from the calculation of diluted EPS until such time as the contingency has been resolved under the if-converted method. As of March 31, 2022, the contingency was not resolved and thus no shares were reflected in the denominator in the calculation of diluted EPS for the three months ended March 31, 2022.

Diluted EPS also includes the incremental effects of the various long-term incentive compensation plans and anthe open ATM forward ~~agreement~~agreements during the period under the ~~Treasury Stock Method~~treasury stock method when the impact would be ~~dilutive (See~~dilutive. Refer to Note 5, ~~"Equity").~~ "Equity," for more information on our ATM forward agreements.

The ~~computation~~following table presents the calculation of our basic and diluted ~~average common shares is as follows:~~EPS:

Three Months Ended
March 31,
(in thousands) 2021 2020
Basic average common shares outstanding 392,657 383,062
Dilutive potential common shares:
Shares contingently issuable under employee stock plans 630 845
Shares restricted under employee stock plans 288 207
Forward Agreement 337 0
Diluted Average Common Shares 393,912 384,114


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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

5. Equity

ATM Program and Forward Sale Agreement. On February 22, 2021, we entered into six separate equity distribution agreements pursuant to which we are able to sell up to an aggregate of $750.0 million of our common stock.

On ~~February 23,~~August 9, 2021, under the ATM program, we executed a forward sale agreement, which allows us to issue a fixed number of shares at a price to be settled in the future. From ~~February 24,~~August 9, 2021 to ~~March 17,~~September 1, 2021, wethe forward purchaser under our forward sale agreement borrowed ~~6,672,740~~5,941,598 shares from third parties, which the ~~dealer~~forward purchaser sold, through its affiliated agent, at a weighted average price of ~~$22.48~~$25.25 per share. We may settle ~~this~~the forward sale agreement in shares, cash, or net shares by December 15, ~~2021.~~2022. Had we settled all the shares under the forward sale agreement at March 31, ~~2021,~~2022, we would have received approximately ~~$148.5~~$145.2 million, based on a net price of ~~$22.25~~$24.44 per share.

As of March 31, ~~2021,~~2022, the ATM program (including the impacts of the forward sale agreement discussed above) had approximately ~~$600.0~~$300.0 million of equity available for issuance. The program expires on December 31, 2023.

Preferred Stock. As of March 31, ~~2021,~~2022, we had 20,000,000 shares of preferred stock authorized for issuance, of which ~~440,000~~1,302,500 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 March 31,			March 31	December 31,								Three Months Ended March 31,						March 31,	December 31,
					2021	2020			2021				2020							2022		2021			2022		2021
(in millions except shares and per share amounts)	(in millions except shares and per share amounts)	Liquidation Preference Per Share		Shares	Dividends Declared Per Share		Outstanding		(in millions except shares and per share amounts)		Liquidation Preference Per Share	Shares			Dividends Declared Per Share						Outstanding
5.650% Series A	5.650% Series A	$	1,000.00	400,000	28.25	28.25			$	393.9			$	393.9		5.650% Series A	$	1,000.00	400,000	28.25		28.25			$	393.9	$	393.9
6.500% Series B	6.500% Series B	$	25,000.00	20,000	812.50	812.50			$	486.1			$	486.1		6.500% Series B	$	25,000.00	20,000	812.50		812.50			$	486.1	$	486.1
Series C(1)																Series C(1)	$	1,000.00	862,500	—		—			$	666.5	$	666.5

(1)The Series C Mandatory Convertible Preferred Stock initially will not bear any dividends. We recorded the initial present value of the purchase contract payments as a liability with a corresponding reduction to preferred stock.

In addition, 20,000 shares of Series B–1 Preferred Stock, par value $0.01 per share, were outstanding as of March 31, ~~2021.~~2022. 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.

As of March 31, ~~2021~~2022 and ~~2020,~~2021, Series A Preferred Stock had $6.7 million of cumulative preferred dividends in arrears, or $16.63 per share, and 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. 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. We are accounting for the Corporate Units as a single unit of account.

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


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

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

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

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

The Series C Mandatory Convertible Preferred Stock is expected to be remarketed prior to December 1, 2023, and each share, unless previously converted, will automatically convert to common stock based on a conversion rate on the mandatory conversion date, which is expected to be on or about March 1, 2024. The conversion rate will be determined based on the volume-weighted average share price of our common stock near the conversion date, subject to a minimum and maximum conversion rate. Prior to December 1, 2023, the Series C Mandatory Convertible Preferred Stock will not bear any dividends and the liquidation preference will not accrete. Following a successful remarketing, dividends may become payable on the Series C Mandatory Convertible Preferred Stock and/or the minimum conversion rate of the Series C Mandatory Convertible Preferred Stock may be increased. If no successful remarketing of the Series C Mandatory Convertible Preferred Stock has previously occurred, effective as of December 1, 2023, the conversion rate will be zero, no shares of our common stock will be delivered upon automatic conversion and each share of Series C Mandatory Convertible Preferred Stock will be automatically transferred to us on the mandatory conversion date without any payment of cash or shares of our common stock thereon. In the event of such a remarketing failure, any shares of Series C Mandatory Convertible Preferred Stock held as part of Corporate Units will be automatically delivered to us on December 1, 2023 in full satisfaction of the relevant holder's obligation under the related purchase contracts.

We will pay quarterly contract adjustment payments to holders of the Equity Units at the rate of 7.75% per year on the stated amount of $100 per Equity Unit. The contract adjustment payments are payable in cash, shares of our common stock or a combination thereof, at our election. The payment of contract adjustment payments may also be deferred until the purchase contract settlement date, December 1, 2023, at our election. As of March 31, 2022, no contract adjustment payments have been deferred with quarterly cash payments being remitted to the holders. As of March 31, 2022 and December 31, 2021 the purchase contract liability was $113.3 million and $129.4 million, respectively. Purchase contract payments are recorded against this liability. Accretion of the purchase contract liability is recorded as interest expense. Cash payments of $16.7 million and zero were made during the three months ended March 31, 2022 and March 31, 2021, respectively.

Refer to Note 4,"Earnings Per Share," for additional information regarding our application of diluted EPS to the Equity Units. Under the terms of the Equity Units, assuming no anti-dilution or other adjustments such as a fundamental change, the maximum number of shares of common stock we will issue under the purchase contracts is 35.2 million and maximum number of shares of common stock we will issue under the Series C Mandatory Convertible Preferred Stock is 35.2 million. Had we settled the remaining purchase contract payment balance in shares at March 31, 2022, we would have issued approximately 4.0 million shares.

6. Gas in Storage

We use both the LIFO inventory methodology and the weighted-average cost methodology to value natural gas in storage. Gas Distribution Operations prices natural gas storage injections at the average of the costs of natural gas supply purchased during the year. For interim periods, the difference between current projected replacement cost and the LIFO cost for quantities of gas temporarily withdrawn from storage is recorded as a temporary LIFO liquidation credit or debit within the Condensed Consolidated Balance Sheets (unaudited). Due to seasonality requirements, we expect interim variances in LIFO layers to be replenished by year end. We had a temporary LIFO liquidation debit of ~~$22.3~~$12.7 million and 0zero as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, for certain gas distribution companies recorded within ~~“Prepayments~~"Prepayments and ~~other,”~~other" on the Condensed Consolidated Balance Sheets (unaudited).

~~7. Property, Plant and Equipment~~

In 2020, the MISO approved NIPSCO's plan to retire the R.M. Schahfer Generating Station in 2023. The December 2019 NIPSCO electric rate case order included approval to create a regulatory asset upon the retirement of the R.M. Schahfer Generating Station. The order allows for the recovery of and on the net book value of the station by the end of 2032.

In connection with the MISO's approval of NIPSCO's planned retirement of the R.M. Schahfer Generating Station, we recorded plant retirement-related charges during 2020 comprised of write downs of certain capital projects that have been cancelled and materials and supplies inventory balances deemed obsolete due to the planned retirement. As more information becomes available, the retirement date of the R.M. Schahfer Generating Station will be finalized, and additional plant retirement-related charges may be incurred. An immaterial amount of plant retirement-related charges were included within "Operation and maintenance" in the Condensed Statement of Consolidated Income (unaudited) during the three months ended March 31, 2021. On March 11, 2021, NIPSCO submitted modified Attachment Y Notices to MISO requesting an updated retirement date for two of the four coal fired units at R.M. Schahfer Generating Station. The two units are now expected to be retired by the end of 2021, with the remaining two units still scheduled to be retired in 2023. At retirement, the net book value of the retired units will be reclassified from "Net Property, Plant and Equipment", to current and long-term “Regulatory Assets.” The total net book value of R.M. Schahfer Generating Station's coal units and other associated plant was $861.6 million at March 31, 2021.

On April 28, 2021, in response to a Motion filed by certain parties in NIPSCO's quarterly FAC proceeding, the IURC created a sub-docket proceeding in order to receive additional information related to the planned retirements of Units 14 and 15 by the end of 2021 and any resulting cost impacts to customers. NIPSCO does not anticipate that the sub-docket proceeding will impact the planned timing of end of year 2021 for the unit retirements.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

8.7. Regulatory Matters

NIPSCO change in accounting estimate

As part of the NIPSCO Gas Settlement and Stipulation Agreement filed on March 2, 2022, NIPSCO Gas has agreed to change the depreciation methodology for its calculation of deprecation rates, which will reduce depreciation expense and subsequent revenues and cash flows once new rates become effective, subject to approval by the IURC.

Columbia of Ohio regulatory filing update

On Wednesday, April 6, 2022, the PUCO Staff issued its Staff Report in Columbia of Ohio's base rate case, filed on June 21, 2021, which was filed in conjunction with applications for an alternative rate plan, approval of certain deferral authority, and updates to certain riders. Columbia of Ohio's application requested a rate increase approximating a 21.3% or $221.4 million increase in revenue per year. The Staff Report recommended a rate increase of 4.0% - 6.3% or $35.2 million to $57.6 million increase in revenue per year. The Staff recommended adjustments include, but are not limited to, plant assets, COVID-19 deferrals and environmental remediation costs. We are currently reviewing the Staff's recommendations and will file our written objections to the Staff report on May 6, 2022.

Regulatory ~~Filings~~deferral related to renewable energy investments

In ~~response to COVID-19,~~accordance with the accounting principles of ASC 980, we ~~received approvals~~recognize a regulatory liability or ~~directives~~asset for amounts representing the timing difference between the profit earned from the joint ventures and the amount included in regulated rates to recover our approved investments in consolidated joint ventures. The amounts recorded in income will ultimately reflect the amount allowed in regulated rates to recover our investments over the useful life of the projects. The offset to the regulatory ~~commissions~~liability or asset associated with our renewable investments included in regulated rates is recorded in "Depreciation expense" on the Condensed Statements of Consolidated Income (unaudited). We recorded a credit to depreciation expense in the ~~states in which we operate. The ongoing impacts~~amount of ~~these approvals or directives are described in~~$2.9 million and zero for the ~~table below:~~


~~Jurisdiction~~	~~Moratorium in Place?~~	~~Regulatory Asset balance as of March 31, 2021~~ ~~(in millions)~~		~~Deferred COVID-19 Costs~~
~~Columbia of Ohio~~	No	$	~~2.0~~	~~Incremental operation and maintenance expenses~~
~~NIPSCO~~	No	$	~~12.0~~	~~Incremental bad debt expense and the costs to implement the requirements of the COVID-19 related order~~
~~Columbia of Pennsylvania~~	No	$	~~7.1~~	~~Incremental bad debt expense incurred since March 13, 2020 above levels currently in rates~~
~~Columbia of Virginia~~	~~Yes~~	$	~~0.1~~	~~Incremental incurred costs, subject to an earnings test review~~
~~Columbia of Maryland~~	No	$	~~1.1~~	Incremental costs (including incremental bad debt expense) incurred to ensure that customers have essential utility service during the state of emergency in Maryland. Such incremental costs must be offset by any benefit received in connection with the pandemic

Onthree months ended March ~~11,~~31, 2022 and March 31, 2021, the Pennsylvania PUC adopted an order, which lifted its prior pandemic-related moratorium on service terminations for non-payments of utility bills beginning April 1, 2021. Pursuant to that order, Pennsylvania utilities are required to offer payment plans on billing arrearages, with the length of such payment plans depending on customers' income levels. The longest such payment plan would be a minimum of five years for residential customers with incomes below 250% of the Federal Poverty Level.

~~For Columbia of Virginia, the currently effective legislative and regulatory directives~~respectively, related to the ~~COVID-19 pandemic require utilities to offer payment plans between 6 and 24 months, and suspend service disconnections and late payment fees for customers. These directives will remain~~regulatory deferral of income (loss) associated with our joint ventures, which is not included in place until the Governor determines that the economic and public health conditions have improved such that the prohibition does not need to be in place, or until at least 60 days after such declared state of emergency ends, whichever is sooner.current rates.

9.8. Risk Management Activities

We are exposed to certain risks relating to our ongoing business ~~operations,~~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 our derivatives are presented on the Condensed Consolidated Balance Sheets (unaudited) as shown below:

(in millions) March 31, 2021 December 31, 2020
Risk Management Assets - Current(1)
Interest rate risk programs $ 0 $ 0
Commodity price risk programs 1.0 10.4
Total $ 1.0 $ 10.4
Risk Management Assets - Noncurrent(2)
Interest rate risk programs $ 0 $ 0
Commodity price risk programs 3.2 2.8
Total $ 3.2 $ 2.8
Risk Management Liabilities - Current(3)
Interest rate risk programs $ 17.1 $ 70.9
Commodity price risk programs 5.0 7.3
Total $ 22.1 $ 78.2
Risk Management Liabilities - Noncurrent(4)
Interest rate risk programs $ 40.6 $ 99.5
Commodity price risk programs 38.3 45.1
Total $ 78.9 $ 144.6


	March 31, 2022				December 31, 2021
(in millions)	Assets		Liabilities		Assets		Liabilities
Current(1)
Derivatives designated as hedging instruments	$	—	$	68.1	$	—	$	136.4
Derivatives not designated as hedging instruments	39.5		1.2		10.6		0.4
Total	$	39.5	$	69.3	$	10.6	$	136.8
Noncurrent(2)
Derivatives designated as hedging instruments	$	—	$	—	$	—	$	—
Derivatives not designated as hedging instruments	47.6		1.8		13.8		7.4
Total	$	47.6	$	1.8	$	13.8	$	7.4

(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" ~~on the Condensed Consolidated Balance Sheets (unaudited).~~

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

~~(4)Presented in~~and "Other noncurrent liabilities", respectively, on the Condensed Consolidated Balance Sheets (unaudited).

Derivatives Not Designated as Hedging Instruments

Commodity ~~Price Risk Management~~

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. We purchase natural gas for sale and delivery to 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 our utility subsidiaries offer programs ~~to certain customers~~ whereby variability in the market price of gas is assumed by the respective

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

utility. The objective of our commodity price risk programs is to mitigate the gas cost variability, for us or on behalf of our customers, associated with natural gas purchases or sales by economically hedging the various gas cost components using a combination of futures, options, forwards or other derivative contracts. At March 31, 2022 and December 31, 2021, we had 117.2 MMDth and 124.5 MMDth, respectively, of net energy derivative volumes outstanding related to our natural gas hedges.

NIPSCO has received IURC approval to lock in a fixed price for its natural gas customers using long-term forward purchase ~~instruments. The term of these~~ instruments ~~may range from~~ ~~five~~ ~~to 10 years~~ and is limited to 20% of ~~NIPSCO’s~~NIPSCO's average annual GCA purchase volume. ~~Gains~~As of March 31, 2022, the remaining terms of these instruments range from one to five years.

All gains and losses on these derivative contracts are deferred as regulatory liabilities or assets and are remitted to or collected from customers through NIPSCO’s quarterly GCA mechanism. These instruments are not designated as accounting hedges.

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


(in millions)	March 31, 2022		December 31, 2021
Regulatory Assets
Losses on commodity price risk programs	$	1.1	$	9.6
Regulatory Liabilities
Gains on commodity price risk programs	111.9		34.2

Derivatives Designated as Hedging Instruments

Interest ~~Rate Risk Management~~

rate risk management. As of March 31, ~~2021,~~2022, we have two forward-starting interest rate swaps with an aggregate notional value totaling $500.0 million to hedge the variability in cash flows attributable to changes in the benchmark interest rate ~~during the periods from the effective dates of the swaps to the anticipated dates of~~associated with forecasted debt ~~issuances, which are expected to take place by 2024.~~issuances. These interest rate swaps are designated as cash flow hedges.

Cash flow hedges included in "Accumulated other comprehensive loss" on the Condensed Consolidated Balance Sheets (unaudited) were:

(in millions)

AOCI(1)

Amounts Expected to be Reclassified to Earnings During the Next 12 Months(1)

Maximum Term

Interest Rate

47.0

0.3

368 months

(1) All amounts are net of tax.

The actual amounts reclassified from Accumulated other comprehensive loss to Net Income can differ from the estimate above due to market rate changes.

The gains and losses related to these swaps are recorded to ~~AOCI~~AOCI. Upon issuance, we amortize the gains and ~~will be recognized~~losses over the life of the debt associated with these swaps as we recognize interest expense. These amounts are immaterial for the three months ended March 31, 2022 and 2021 and are recorded in "Interest expense, net" ~~concurrently with the recognition of interest expense~~ on the ~~associated debt, once issued.~~ Condensed Statements of Consolidated Income (unaudited).

If it becomes probable that a hedged forecasted transaction will no longer occur, the accumulated gains or losses on the derivative will be recognized currently in "Other, net" in the Condensed Statements of Consolidated Income (unaudited).

There were 0no amounts excluded from effectiveness testing for derivatives in cash flow hedging relationships at March 31, ~~2021~~2022 and December 31, ~~2020.~~2021.

Our derivative instruments measured at fair value as of March 31, 2022 and December 31, 2021 do not contain any credit-risk-related contingent features. Cash flows for derivative financial instruments are generally classified in cash flows from operating activities.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

~~Our derivative instruments measured at fair value as of March 31, 2021 and December 31, 2020 do not contain any credit-risk-related contingent features.~~

~~10.~~9. Fair Value

A. Fair Value Measurements

Recurring Fair Value Measurements

The following tables present financial assets and liabilities measured and recorded at fair value on our Condensed Consolidated Balance Sheets (unaudited) on a recurring basis and their level within the fair value hierarchy as of March 31, ~~2021~~2022 and December 31, ~~2020:~~2021:


Recurring Fair Value Measurements March 31, 2021 (in millions)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of March 31, 2021
Recurring Fair Value Measurements March 31, 2022 (in millions)										Recurring Fair Value Measurements March 31, 2022 (in millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of March 31, 2022
Assets	Assets									Assets

Risk management assets	Risk management assets	$	0	$	4.2	$	0	$	4.2	Risk management assets	$	—	$	87.1	$	—	$	87.1

Available-for-sale debt securities	Available-for-sale debt securities	0		167.9		0		167.9		Available-for-sale debt securities	—		156.7		—		156.7
Total	Total	$	0	$	172.1	$	0	$	172.1	Total	$	—	$	243.8	$	—	$	243.8
Liabilities	Liabilities									Liabilities

Risk management liabilities	Risk management liabilities	$	0	$	101.0	$	0	$	101.0	Risk management liabilities	$	—	$	71.1	$	—	$	71.1
Total	Total	$	0	$	101.0	$	0	$	101.0	Total	$	—	$	71.1	$	—	$	71.1


Recurring Fair Value Measurements December 31, 2020 (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, 2020
Recurring Fair Value Measurements December 31, 2021 (in millions)										Recurring Fair Value Measurements December 31, 2021 (in millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2021
Assets	Assets									Assets

Risk management assets	Risk management assets	$	0	$	13.2	$	0	$	13.2	Risk management assets	$	—	$	24.4	$	—	$	24.4

Available-for-sale debt securities	Available-for-sale debt securities	0		170.9		0		170.9		Available-for-sale debt securities	—		171.8		—		171.8
Total	Total	$	0	$	184.1	$	0	$	184.1	Total	$	—	$	196.2	$	—	$	196.2
Liabilities	Liabilities									Liabilities

Risk management liabilities	Risk management liabilities	$	0	$	222.8	$	0	$	222.8	Risk management liabilities	$	—	$	144.2	$	—	$	144.2
Total	Total	$	0	$	222.8	$	0	$	222.8	Total	$	—	$	144.2	$	—	$	144.2

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

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, and options. In certain instances, these instruments may utilize models to measure fair value. We use a similar model to value similar instruments. Valuation models utilize various inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability and market-corroborated inputs, (i.e., inputs derived principally from or corroborated by observable market data by correlation or other means). Where observable inputs are available for substantially the full term of the asset or liability, the instrument is categorized within Level 2.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

Level 3- Certain derivatives trade in less active markets with a lower availability of pricing information and models may be utilized in the valuation. When such inputs have a significant impact on the measurement of fair value, the instrument is categorized within Level 3.

Credit risk is considered in the fair value calculation of derivative instruments that are not exchange-traded. Credit exposures are adjusted to reflect collateral agreements ~~which~~that reduce exposures. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, there were 0no material transfers

~~Table of Contents~~

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

~~NiSource Inc.~~

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

between fair value hierarchies. Additionally, there were no changes in the method or significant assumptions used to estimate the fair value of our financial instruments.

Credit risk is considered in the fair value calculation of each of our forward-starting interest rate swaps, as described in Note 9,8, "Risk Management Activities." As they are based on observable data and valuations of similar instruments, the hedges are categorized within Level 2 of the fair value hierarchy. There was no exchange of premium at the initial date of the swaps, and we can settle the contracts at any time.

NIPSCO has entered into long-term forward natural gas purchase instruments to lock in a fixed price for its natural gas customers. 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 ~~9, “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 our wholly owned insurance company. 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.

Our available-for-sale debt securities impairments are recognized periodically using an allowance approach. At each reporting date, we ~~quantitatively~~utilize a quantitative and ~~qualitatively~~qualitative review process to assess the impairment of available-for-sale debt securities ~~for impairment.~~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 ~~intend~~will be required to ~~hold,~~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 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 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 ~~the credit losses~~certain amounts recorded in the allowance for credit losses are deemed uncollectible, the allowance on the uncollectible portion iswill 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 ~~are~~will be recognized immediately in earnings. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we recorded ~~$0.3~~$0.6 million and ~~$0.5~~$0.2 million, respectively, as an allowance for credit losses on available-for-sale debt securities as a result of the analysis described above. Continuous credit monitoring and portfolio credit balancing mitigates our risk of credit losses on our available-for-sale debt securities.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

The amortized cost, gross unrealized gains and losses, allowance for credit losses, and fair value of available-for-sale securities at March 31, ~~2021~~2022 and December 31, ~~2020~~2021 were:


March 31, 2021 (in millions)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses(1)		Allowance for Credit Losses		Fair Value
March 31, 2022 (in millions)												March 31, 2022 (in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses(1)		Allowance for Credit Losses		Fair Value
Available-for-sale debt securities	Available-for-sale debt securities											Available-for-sale debt securities
U.S. Treasury debt securities	U.S. Treasury debt securities	$	37.1	$	0.2	$	(0.3)	$	0	$	37.0	U.S. Treasury debt securities	$	47.0	$	—	$	(1.8)	$	—	$	45.2
Corporate/Other debt securities	Corporate/Other debt securities	126.7		5.3		(0.8)		(0.3)		130.9		Corporate/Other debt securities	114.7		0.7		(3.3)		(0.6)		111.5
Total	Total	$	163.8	$	5.5	$	(1.1)	$	(0.3)	$	167.9	Total	$	161.7	$	0.7	$	(5.1)	$	(0.6)	$	156.7

December 31, 2020 (in millions)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses(2)		Allowance for Credit Losses		Fair Value
December 31, 2021 (in millions)												December 31, 2021 (in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses(2)		Allowance for Credit Losses		Fair Value
Available-for-sale debt securities	Available-for-sale debt securities											Available-for-sale debt securities
U.S. Treasury debt securities	U.S. Treasury debt securities	$	33.7	$	0.3	$	0	$	0	$	34.0	U.S. Treasury debt securities	$	52.8	$	0.1	$	(0.4)	$	—	$	52.5
Corporate/Other debt securities	Corporate/Other debt securities	130.2		7.7		(0.5)		(0.5)		136.9		Corporate/Other debt securities	116.5		3.7		(0.7)		(0.2)		119.3
Total	Total	$	163.9	$	8.0	$	(0.5)	$	(0.5)	$	170.9	Total	$	169.3	$	3.8	$	(1.1)	$	(0.2)	$	171.8

(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 ~~$22.1~~$43.7 million and ~~$25.7~~$65.1 million, respectively, at March 31, ~~2021.~~2022.

(2)Fair value of U.S. Treasury debt securities and Corporate/Other debt securities in an unrealized loss position without an allowance for credit losses is $0$36.2 million and ~~$13.2~~$35.4 million, respectively, at December 31, ~~2020.~~2021.

The cost of maturities sold is based upon specific identification. Realized gains and losses on available-for-sale securities were immaterial for the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021.

~~Table of Contents~~

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

~~NiSource Inc.~~

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

~~The cost of maturities sold is based upon specific identification.~~ At March 31, ~~2021,~~2022, approximately ~~$6.2~~$5.4 million of U.S. Treasury debt securities and approximately ~~$3.9~~$6.9 million of Corporate/Other debt securities have maturities of less than a year.

There are 0no material items in the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis as of March 31, ~~2021~~2022 and December 31, ~~2020.~~2021.

Non-recurring Fair Value Measurements

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

~~In March~~Purchase Contract Liability. At April 19, 2021, we ~~reached an agreement with Eversource regarding~~recorded the ~~final~~ purchase ~~price, including net working capital adjustments to the October 9, 2020 purchase price. The working capital amounts were measured~~contract liability at fair value ~~less costs~~using a 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 fair value hierarchy. Refer to ~~sell.~~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. 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. As of March 31, ~~2021,~~2022, there was no change in the method or significant assumptions used to estimate the fair value of long-term debt.

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

(in millions)
Carrying
Amount as of
March 31, 2021
Estimated Fair
Value as of
March 31, 2021
Carrying
Amount as of
Dec. 31, 2020 Estimated Fair
Value as of
Dec. 31, 2020
Long-term debt (including current portion) $ 9,246.7 $ 10,178.0 $ 9,243.1 $ 11,034.2

~~11. Transfers of Financial Assets~~

Columbia of Ohio, NIPSCO and Columbia of Pennsylvania each maintain a receivables agreement whereby they transfer their customer accounts receivables to third-party financial institutions through wholly owned and consolidated special purpose entities. The 3 agreements expire between August 2021 and May 2022 and may be further extended if mutually agreed to by the parties thereto.

All receivables transferred to third parties are valued at face value, which approximates fair value due to their short-term nature. The amount of the undivided percentage ownership interest in the accounts receivables transferred is determined in part by required loss reserves under the agreements.

Transfers of accounts receivable are accounted for as secured borrowings resulting in the recognition of short-term borrowings on the Condensed Consolidated Balance Sheets (unaudited). As of March 31, 2021, the maximum amount of debt that could be recognized related to our accounts receivable programs is $510.0 million.

The following table reflects the gross receivables balance and net receivables transferred, as well as short-term borrowings related to the securitization transactions as of March 31, 2021 and December 31, 2020:

(in millions) March 31, 2021 December 31, 2020
Gross receivables $ 630.8 $ 607.7
Less: Receivables not transferred 630.8 607.7
Net receivables transferred $ 0 $ 0
Short-term debt due to asset securitization $ 0 $ 0

For the three months ended March 31, 2021 and 2020, 0 and $106.2 million, respectively, was recorded as cash flows from financing activities related to the change in short-term borrowings due to securitization transactions. Fees associated with the securitization transactions were $0.4 million and $0.7 million for the three months ended March 31, 2021 and 2020,

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

~~respectively. Columbia~~The carrying amount and estimated fair values of ~~Ohio, NIPSCO and Columbia of Pennsylvania remain responsible for collecting on the receivables securitized, and the receivables cannot be transferred to another party.~~these financial instruments were as follows:


(in millions)	Carrying Amount as of March 31, 2022		Estimated Fair Value as of March 31, 2022		Carrying Amount as of Dec. 31, 2021		Estimated Fair Value as of Dec. 31, 2021
Long-term debt (including current portion)	$	9,237.7	$	9,202.0	$	9,241.5	$	10,415.7

~~12.Goodwill~~

~~The following presents our goodwill balance allocated by segment as of March 31, 2021:~~

(in millions) Gas Distribution Operations Electric Operations Corporate and Other Total
Goodwill $ 1,485.9 $ 0 $ 0 $ 1,485.9

For our annual goodwill impairment analysis performed as of May 1, 2020, we completed a quantitative "step 1" fair value measurement of our reporting units with a goodwill balance. This analysis incorporated the latest available income statement and cash flow projections, including significant, identifiable impacts of COVID-19 on the operations of each of our goodwill reporting units. We also incorporated other significant inputs to our fair value calculations, including discount rate and market multiples, to reflect current market conditions. The step 1 analysis performed indicated that the fair value of each reporting unit that is allocated goodwill significantly exceeded its carrying value. As a result, no impairment charge was recorded as of the May 1, 2020 test date.

~~13.~~10. Income Taxes

Our interim effective tax rates reflect the estimated annual effective tax rates for ~~2021~~2022 and ~~2020,~~2021, adjusted for tax expense associated with certain discrete items. The effective tax rates for the three months ended March 31, 2022 and 2021 were 18.2% and ~~2020 were~~ 17.4% ~~and (24.5)%~~, respectively. These effective tax rates differ from the federal statutory tax rate of 21% primarily due to increased amortization of excess deferred federal income tax liabilities, as specified in the TCJA, tax credits, state income taxes and other permanent book-to-tax differences. These adjustments have a relative impact on the effective tax rate proportionally to pretax income or loss.

The increase in the three month effective tax rate of ~~41.9%~~0.8% in ~~2021~~2022 compared to ~~2020~~2021 is primarily attributed to athe tax effect of the discrete item in 2022 related to the pre-tax book ~~loss~~income recorded for the ~~classification as held for sale~~Columbia of ~~the~~ Massachusetts ~~Business tax effected at statutory tax rates in 2020~~insurance proceeds, offset by ~~an increase in~~increased amortization of excess deferred federal income tax liabilities, lower state income taxes, and increased deduction for AFUDC ~~equity.~~equity in 2022.

There were 0no material changes recorded in ~~2021~~2022 to our uncertain tax positions recorded as of December 31, ~~2020.~~2021.

~~14.~~11. Pension and Other ~~Postretirement~~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’~~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’~~employees' years of service. We determined that, for certain rate-regulated subsidiaries, the future recovery of postretirement benefit costs is probable, and we record regulatory assets and liabilities for amounts that would otherwise have been recorded to expense or accumulated other comprehensive loss. Current rates of rate-regulated companies include postretirement benefit costs, including amortization of the regulatory assets and liabilities that arose prior to inclusion of these costs in rates. For most plans, cash contributions are remitted to grantor trusts.

For the three months ended March 31, ~~2021,~~2022, we contributed ~~$0.7~~$0.6 million to our pension plans and $5.1 million to our ~~other postretirement benefit~~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’~~plans' actuarially determined net periodic benefit cost for the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:


		Pension Benefits				Other Postretirement Benefits					Pension Benefits				OPEB
Three Months Ended March 31, (in millions)	Three Months Ended March 31, (in millions)	2021		2020		2021		2020		Three Months Ended March 31, (in millions)	2022		2021		2022		2021
Components of Net Periodic Benefit (Income) Cost(1)	Components of Net Periodic Benefit (Income) Cost(1)									Components of Net Periodic Benefit (Income) Cost(1)
Service cost	Service cost	$	7.6	$	8.0	$	1.5	$	1.6	Service cost	$	7.1	$	7.6	$	1.6	$	1.5
Interest cost	Interest cost	7.7		13.5		2.5		3.9		Interest cost	9.4		7.7		3.0		2.5
Expected return on assets	Expected return on assets	(25.8)		(28.4)		(3.8)		(3.6)		Expected return on assets	(22.9)		(25.8)		(4.0)		(3.8)
Amortization of prior service credit	Amortization of prior service credit	0		0.2		(0.6)		(0.5)		Amortization of prior service credit	—		—		(0.6)		(0.6)
Recognized actuarial loss	Recognized actuarial loss	5.3		8.7		1.2		1.3		Recognized actuarial loss	4.5		5.3		0.7		1.2
Settlement loss	Settlement loss	3.3		0		0		0		Settlement loss	—		3.3		—		—
Total Net Periodic Benefit (Income) Cost	Total Net Periodic Benefit (Income) Cost	$	(1.9)	$	2.0	$	0.8	$	2.7	Total Net Periodic Benefit (Income) Cost	$	(1.9)	$	(1.9)	$	0.7	$	0.8

(1)The service cost component and all non-service cost components of net periodic benefit (income) cost are presented in "Operation and maintenance" and "Other, ~~net",~~net," respectively, on the Condensed Statements of Consolidated Income (unaudited).

~~During the first quarter~~

Table of 2021, one of our qualified pension plans met the requirement for settlement accounting. A settlement charge of $3.3 million was recorded during the first quarter of 2021. As a result of the settlement, the pension plan was remeasured, resulting in a decreaseContents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Notes to the net pension asset of $5.8 million, a net increase to regulatory assets of $2.1 million, and a net debit to accumulated other comprehensive loss of $0.4 million. Net periodic pension benefit cost for 2021 increased by $4.0 million as a result of the interim remeasurement.Condensed Consolidated Financial Statements (unaudited) (continued)

The following table provides the key assumptions that were used to calculate the pension benefit obligation and the net periodic benefit cost at the interim remeasurement date for the plan that triggered settlement accounting:


	~~February 28, 2021~~
~~Weighted-average Assumption to Determine Benefit Obligation~~
~~Discount rate~~	~~2.57~~	%
~~Weighted-average Assumptions to Determine Net Periodic Benefit Costs for the period ended~~
~~Discount rate - service cost~~	~~2.81~~	%
~~Discount rate - interest cost~~	~~1.57~~	%
~~Expected return on assets~~	~~4.80~~	%

~~15.~~12. Variable Interest Entities

A VIE is an entity in which the controlling interest is determined through means other than a majority voting interest. ~~The primary beneficiary of a VIE is the business enterprise which has the power to direct the activities~~We control decisions that ~~most significantly impact the VIE’s economic performance. Also, the primary beneficiary either absorbs a significant amount of the VIE’s losses or has the right to receive benefits that could be~~are significant to ~~the VIE. We consider these qualitative elements in determining whether~~Rosewater and Indiana Crossroads Wind's ongoing operations and economic results. Therefore, we have concluded that we are the primary beneficiary ~~of a VIE,~~ and ~~we consolidate those VIEs for which we are determined to be the primary beneficiary.~~have consolidated both.

~~Rosewater (a joint venture) owns and operates 102 MW of nameplate capacity wind generation assets.~~ Members of the respective joint ~~venture~~ventures are NIPSCO (who is the managing member) and a tax equity ~~partner.~~partners. Earnings, tax attributes and cash flows are allocated to both NIPSCO and the tax equity partner in varying percentages by category and over the life of the partnership. Once the tax equity partner has earned their negotiated rate of return and we have reached the agreed upon contractual date, NIPSCO has the option to purchase at fair market value from the tax equity partner the remaining interest in the ~~aforementioned~~respective joint venture. NIPSCO has an obligation to purchase, through a PPA at established market rates, 100% of the electricity generated by ~~Rosewater.~~the joint ventures.

~~As the managing member~~Rosewater

Rosewater owns and operates 102 MW of Rosewater, we control decisions that are significant to its ongoing operations and economic results. Therefore, we have concluded that we are the primary beneficiary of Rosewater and have consolidated Rosewater even though we own less than 100% of the total equity membership interest.

~~Table of Contents~~

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

~~NiSource Inc.~~

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

We have determined that the use of HLBV accounting is reasonable and appropriate in order to attribute income and loss to the noncontrolling interest held by the tax equity partner. HLBV accounting was selected as the allocation of Rosewater's economic results to members differ from the members' relative ownership percentages. Using the HLBV method, our earnings are calculated based on how the partnership would distribute its cash if it were to hypothetically sell all of its assets for their carrying amounts and liquidate at each reporting period. Under HLBV, we calculate the liquidation value allocable to each partner at the beginning and end of each period based on the contractual terms of the related entity's operating agreement and adjust our income for the period to reflect the change in our associated book value.

~~In March 2021, in exchange for additional respective membership interests in Rosewater,~~nameplate capacity wind generation assets. NIPSCO ~~contributed $0.1 million in cash,~~ and the tax equity partner ~~contributed $7.5~~have made total contributions of $170.1 million, ~~in cash, the second of two contractual cash contributions for each partner,~~ per the equity capital contribution agreement. NIPSCO and the tax equity partner contributed cash and NIPSCO also assumed an ~~additional~~ obligation of $6.0 million to the developer, which comes due in 2023 and is included in "Other noncurrent liabilities" in the Condensed Consolidated Balance Sheets (unaudited). From the contributed funds, Rosewater paid $7.4 million to the developer of the wind generation ~~assets.~~assets representing the remaining economic interest, which comes due in 2023. The developer of the facility is not a partner in the joint venture for federal income tax purposes and does not receive any share of earnings, tax attributes, or cash flows of Rosewater. ~~With asset construction now complete,~~

Indiana Crossroads Wind

Indiana Crossroads Wind owns and operates 302 MW of nameplate capacity wind generation assets. NIPSCO and the tax equity partner have made total ~~cash~~ contributions of ~~$0.8~~$511.8 million, per the equity capital contribution agreement. NIPSCO and ~~$93.6 million, respectively,~~the tax equity partner contributed cash and NIPSCO ~~has~~also assumed an obligation to the developer of ~~$75.7 million, totaling contributions~~the wind generation assets representing the remaining economic interest, which comes due in 2023. The developer of ~~$170.1 million~~the facility is not a partner in the joint venture for ~~both partners.~~ federal income tax purposes and does not receive any share of earnings, tax attributes, or cash flows of Indiana Crossroads Wind.

The following table displays the Noncontrolling interest in consolidated subsidiaries included in the Condensed Consolidated Balance Sheets (unaudited):



(in millions)	March 31, 2022		December 31, 2021
Rosewater	$	88.8	$	88.2
Indiana Crossroads Wind	240.7		237.4
Total	$	329.5	$	325.6

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


	Three Months Ended March 31,
(in millions)	2022		2021
Rosewater	$	1.1	$	1.0
Indiana Crossroads Wind	3.4		—
Total	$	4.5	$	1.0

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

~~At March 31, 2021 and December 31, 2020, $170.0 million and $156.4 million, respectively, in net assets (as detailed in the table below) related~~

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

Notes to ~~Rosewater and the non-controlling interest attributable to the unrelated tax equity partner of $94.1 million and $85.6 million, respectively, were included in the~~ Condensed Consolidated ~~Balance Sheets~~Financial Statements (unaudited). For the quarters ended March 31, 2021 and 2020, $1.0 million and 0 were allocated to the tax equity partner and is included in "Net income attributable to non-controlling interest" on the Condensed Statements of Consolidated Income. (continued)

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


(in millions)	(in millions)	March 31, 2021		December 31, 2020		(in millions)	March 31, 2022				December 31, 2021
							Rosewater		Indiana Crossroads Wind		Rosewater		Indiana Crossroads Wind
Net Property, Plant and Equipment	Net Property, Plant and Equipment	$	174.2	$	175.6	Net Property, Plant and Equipment	$	168.7	$	521.7	$	170.1	$	525.8
Current assets	Current assets	4.2		1.7		Current assets	8.8		18.6		6.2		8.1

Total assets(1)	Total assets(1)	$	178.4	$	177.3	Total assets(1)	177.5		540.3		176.3		533.9
Current liabilities	Current liabilities	$	2.8	$	15.3	Current liabilities	4.3		12.4		2.5		7.5
Asset retirement obligations	Asset retirement obligations	5.5		5.5		Asset retirement obligations	5.7		14.9		5.7		14.8
Other noncurrent liabilities		0.1		0.1

Total liabilities	Total liabilities	$	8.4	$	20.9	Total liabilities	$	10.0	$	27.3	$	8.2	$	22.3

(1)The assets of Rosewater and Indiana Crossroads represent assets of a consolidated VIE that can be used only to settle obligations of the respective consolidated VIE. The creditors of the liabilities of Rosewater and Indiana Crossroads do not have recourse, to the general credit of the primary beneficiary.

~~16.~~13. Long-Term Debt

On April 1, 2022, we repaid $20.0 million of 7.99% medium term notes at maturity. The remaining $29.0 million of 7.99% medium term notes outstanding March 31, 2022 and December 31, 2021 are expected to be repaid in May 2027 at maturity.

14. Short-Term Borrowings

We generate short-term borrowings ~~from our revolving credit facility, commercial paper program and accounts receivable transfer programs. Each of these borrowing~~through several sources, is described in further detail below.

Revolving Credit Facility. We maintain a revolving credit facility to fund ongoing working capital requirements, including the provision of liquidity support for our commercial paper program, provide for issuance of letters of credit and also for general corporate purposes. Our revolving credit facility has a program limit of $1.85 billion and is comprised of a syndicate of ~~banks led by Barclays.~~banks. On February 18, 2022, we extended the termination date of our revolving credit facility to February 18, 2027. We had 0no outstanding borrowings under this facility as of March 31, ~~2021~~2022 and December 31, ~~2020.~~2021.

Commercial Paper Program. Our 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.~~billion. We had ~~$520.0~~$165.0 million and $560.0 million of commercial paper outstanding with weighted-average interest rates of 0.75% and 0.24% as of March 31, ~~2021~~2022 and ~~$503.0 million of commercial paper outstanding as of~~ December 31, ~~2020.~~2021, respectively.

~~Refer~~Accounts Receivable Transfer Programs. Columbia of Ohio, NIPSCO and Columbia of Pennsylvania each maintain a receivables agreement whereby they may transfer their customer accounts receivables to ~~Note 11, "Transfers~~third-party financial institutions through wholly owned and consolidated special purpose entities. The 3 agreements expire between June 2022 and October 2022 and may be further extended if mutually agreed to by the parties thereto.

All receivables transferred to third parties are valued at face value, which approximates fair value due to their short-term nature. The amount of ~~Financial Assets,"~~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 ~~additional information~~as secured borrowings resulting in the recognition of short-term borrowings on the Condensed Consolidated Balance Sheets (unaudited). As of March 31, 2022, the maximum amount of debt that could be recognized related to our accounts receivable programs is $480.0 million.

We had $355.0 million and zero short-term borrowings related to the securitization transactions as of March 31, 2022 and December 31, 2021.

For the three months ended March 31, 2022 and 2021, $355.0 million and zero, respectively, were recorded as cash flows from financing activities related to the change in short-term borrowings due to securitization transactions. For the accounts receivable transfer ~~programs.~~programs, we pay used facility fees for amounts borrowed, unused commitment fees for amounts not borrowed, and upfront renewal fees. Fees associated with the securitization transactions were $0.3 million and $0.4 million for the three months ended March 31, 2022 and 2021, respectively. Columbia of Ohio, NIPSCO and Columbia of Pennsylvania remain responsible for collecting on the receivables securitized, and the receivables cannot be transferred to another party.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

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

(in millions) March 31,
2021 December 31,
2020
Commercial paper weighted-average interest rate of 0.19% and 0.27% at March 31, 2021 and December 31, 2020, respectively 520.0 503.0
Total Short-Term Borrowings $ 520.0 $ 503.0

Items listed above are presented net in the Condensed Statements of Consolidated Cash Flows (unaudited) as their maturities are less than 90 days.

~~17.~~15. Other Commitments and Contingencies

A. Guarantees and Indemnities. We and certain of our subsidiaries enter into various agreements providing financial or performance assurance to third parties on behalf of certain 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 March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had issued stand-by letters of credit of ~~$15.2 million.~~$14.4 million and $18.9 million, respectively.

We provide guarantees related to our future performance under BTAs for our renewable generation projects. At March 31, ~~2021,~~2022, our guarantees for ~~the Rosewater and Indiana Crossroads~~ BTAs totaled ~~$34.0~~$485.2 million. The amount of each guaranty will fluctuate upon the completion of the various steps outlined in each BTA. See ~~“- D.~~''- E. Other Matters - Generation Transition,”'' below for more information.

B. Legal Proceedings. On September 13, 2018, a series of fires and explosions occurred in Lawrence, Andover, and North Andover, Massachusetts related to the delivery of natural gas by Columbia of Massachusetts (the "Greater Lawrence Incident"). The Greater Lawrence Incident resulted in one fatality and a number of injuries, damaged multiple homes and businesses, and caused the temporary evacuation of significant portions of each municipality. The Massachusetts Governor’s Office declared a state of emergency, authorizing the Massachusetts DPU to order another utility company to coordinate the restoration of utility services in Lawrence, Andover and North Andover. The incident resulted in the interruption of gas for approximately 7,500 gas meters, the majority of which served residences and approximately 700 of which served businesses, and the interruption of other utility service more broadly in the area. Columbia of Massachusetts replaced the cast iron and bare steel gas pipeline system in the affected area and restored service. See “- D. Other Matters - Greater Lawrence Pipeline Replacement” below for more information. On September 1, 2020, the Massachusetts Governor terminated the state of emergency declared following the Greater Lawrence Incident.

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

~~NTSB Investigation. As previously disclosed, the NTSB concluded its investigation into the Greater Lawrence Incident. On November 24, 2020, the NTSB closed NiSource’s one remaining open safety recommendation.~~

U.S. Department of Justice Investigation. On February 26, 2020, the Company and Columbia of Massachusetts entered into agreements with the U.S. ~~Attorney’s~~Attorney's Office to resolve the U.S. ~~Attorney’s Office’s~~Attorney's Office's investigation relating to the Greater Lawrence Incident. Columbia of Massachusetts agreed to plead guilty in the United States District Court for the District of Massachusetts (the ~~“Court”~~''Court'') to violating the Natural Gas Pipeline Safety Act (the ~~“Plea Agreement”~~''Plea Agreement''), and the Company entered into a Deferred Prosecution Agreement (the ~~“DPA”~~''DPA'').

~~Table of Contents~~

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

~~NiSource Inc.~~

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

On March 9, 2020, Columbia of Massachusetts entered its guilty plea pursuant to the Plea ~~Agreement, which the Court accepted. Subsequently, Columbia of Massachusetts and the U.S. Attorney’s Office modified the Plea~~ Agreement. ~~On June 23, 2020, the~~The Court sentenced Columbia of Massachusetts on June 23, 2020, in accordance with the terms of the ~~modified~~Plea Agreement (as modified). On June 23, 2021, the Court terminated Columbia of Massachusetts' period of probation under the Plea Agreement, which marked the completion of all terms of the Plea Agreement.

Under the modified Plea Agreement, Columbia of Massachusetts is subject to the following terms, among others: (i) a criminal fine in the amount of $53,030,116, which has been paid; (ii) a three year probationary period that will terminate early upon a sale of Columbia of Massachusetts or a sale of its gas distribution business to a qualified third-party buyer consistent with certain requirements, but in no event before the end of the one-year mandatory period of probation; (iii) compliance with each of the NTSB recommendations stemming from the Greater Lawrence Incident; and (iv) employment of an in-house monitor until the end of the term of probation or until the sale of Columbia of Massachusetts or its gas distribution business, whichever is earlier. On October 13, 2020, the Court, upon agreement of the U.S. Attorney's Office and Columbia Gas of Massachusetts, modified the terms of probation by ending the term of the in-house monitor.

Under the DPA, the U.S. ~~Attorney’s~~Attorney's Office agreed to defer prosecution of the Company in connection with the Greater Lawrence Incident for a three-year period (which three-year period may be extended for twelve (12) months upon the U.S. Attorney’s ~~Office’s~~Office's determination of a breach of the DPA) subject to certain obligations of the Company, including, but not limited to, the following: (i) the Company will use reasonable best efforts to sell Columbia of Massachusetts or Columbia of Massachusetts’ gas distribution business to a qualified third-party buyer consistent with certain requirements, and, upon the completion of any such sale, the Company will cease and desist any and all gas pipeline and distribution activities in the District of Massachusetts; (ii) the Company will forfeit and pay, within 30 days of the later of the sale becoming final or the date on which post-closing adjustments to the purchase price are finally determined in accordance with theCompany's agreement, to sell Columbia of Massachusetts or its gas distribution business, a fine equal to the total amount of the profit or gain, if any, from any sale of Columbia of Massachusetts or its gas distribution business, with the amount of profit or gain determined as provided in the DPA; and (iii) the Company agrees as to each of the Company’s subsidiaries involved in the distribution of gas through pipeline facilities in Massachusetts, Indiana, Ohio, Pennsylvania, Maryland, Kentucky and Virginia to implement and adhere to each of the recommendations from the NTSB stemming from the Greater Lawrence Incident. Pursuant to the DPA, if the Company complies with all of its obligations under the DPA, ~~including, but not limited to those identified above,~~ the U.S. Attorney’s Office will not file any criminal charges against the Company related to the Greater Lawrence Incident. If Columbia of Massachusetts withdraws its plea for any reason, if the Court rejects any aspect of the Plea Agreement, or if Columbia of Massachusetts should fail to perform an obligation under the Plea Agreement prior to the sale of Columbia of Massachusetts or its gas distribution business, the U.S. Attorney's Office may, at its sole option, render the DPA null and void. The sale of the Massachusetts Business was completed on October 9, 2020. The Company was not required to forfeit or pay any funds because the Company did not realize a profit or gain from the sale as provided in the DPA.

Private Actions. Various lawsuits, including several purported class action lawsuits, ~~have been~~were filed by various affected residents or businesses in Massachusetts state courts against the Company and/or Columbia of Massachusetts in connection with the Greater Lawrence Incident.

On ~~July 26, 2019,~~March 12, 2020, the Company, Columbia of Massachusetts and NiSource Corporate Services Company, a subsidiary of the Company, entered into a term sheet with the class action plaintiffs under which they agreed to settle the class action claims in connection with the Greater Lawrence Incident. Columbia of Massachusetts agreed to pay $143 million into a settlement fund to compensate the settlement class and the settlement class agreed to release Columbia of Massachusetts and affiliates from all claims arising out of or related to the Greater Lawrence Incident. The following claims are not covered under the proposed settlement because they are not part of the consolidated class action: (1) physical bodily injury and wrongful death; (2) insurance subrogation, whether equitable, contractual or otherwise; and (3) claims arising out of appliances that are subject to the Massachusetts DPU orders. Emotional distress and similar claims are covered under the proposed settlement unless they are secondary to a physical bodily injury. The settlement class is defined under the term sheet as all persons and businesses in the three municipalities of Lawrence, Andover and North Andover, Massachusetts, subject to certain limited exceptions. The motion for preliminary approval and the settlement documents were filed on September 25, 2019. The preliminary approval court hearing was held on October 7, 2019 and the court issued an order granting preliminary approval of the settlement on October 11, 2019. The Court granted final approval of the settlement ~~on March 12, 2020.~~

of the consolidated class action. With respect to claims not included in the consolidated class action, many of the asserted wrongful death and bodily injury claims have settled, and we continue to discuss potential settlements with remaining claimants. The outcomes and impacts of such private actions are uncertain at this time.

Shareholder Derivative Lawsuit. On April 28, 2020, a shareholder derivative lawsuit was filed by the City of Detroit Police and Fire Retirement System in the United States District Court for the District of Delaware against certain of the ~~Company’s~~Company's current and former directors, alleging state-law claims for breaches of fiduciary duty with respect to the pipeline safety

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ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

~~current and former directors, alleging state-law claims for breaches of fiduciary duty with respect to the pipeline safety~~ management systems relating to the distribution of natural gas prior to the Greater Lawrence Incident and also including federal-law claims related to our proxy statement disclosures regarding our safety systems. The remedies sought included damages for the alleged breaches of fiduciary duty, corporate governance reforms, and restitution of any unjust enrichment. The defendants filed a motion to dismiss the lawsuit and oral argument was held on March 2, 2021. On March 9, 2021, the district court granted the ~~defendants’~~defendants' motion to dismiss. It dismissed the federal-law claims with prejudice for failure to state a claim on which relief can be granted and declined to exercise jurisdiction over the state-law claims, which were dismissed without prejudice.

Following the dismissal of the federal court action, on April 29, 2021, the same plaintiff filed a shareholder derivative lawsuit in the Delaware Court of Chancery against certain of our current and former directors. The new complaint ~~alleges~~alleged a single count for breach of fiduciary duty, and no longer ~~alleges~~alleged disclosure violations or breaches of federal securities laws. The complaint ~~relates~~related to substantially the same matters as those alleged in the dismissed federal derivative complaint. The remedies sought ~~include~~included damages for the alleged breaches of fiduciary duty, corporate governance reforms, and restitution of compensation by the individual defendants. ~~The case is at~~On May 19, 2021, the defendants filed a motion to dismiss the lawsuit, and on July 2, 2021, they filed their opening brief in support of the motion. On August 26, 2021, rather than respond to the defendants' motion to dismiss and opening brief, the plaintiff filed an ~~early stage,~~amended complaint. Like the original complaint in the Delaware Court of Chancery, the amended complaint alleges a single count for breach of fiduciary duty, based on substantially similar allegations, and seeks substantially similar remedies. On September 10, 2021, the defendants filed a ~~schedule has not yet been entered.~~motion to dismiss. Briefing on the defendants' motion to dismiss was completed on January 10, 2022, and oral argument on the defendants' motion to dismiss took place on February 3, 2022. Because of the preliminary nature of this lawsuit, we are not able to estimate a loss or range of loss, if any, that may be incurred in connection with this matter at this time.

~~Financial Impact.~~Other Claims and Proceedings. Since the Greater Lawrence Incident, we have recorded expenses of approximately $1,040 million for third-party claims and fines, penalties and settlements associated with government investigations. These costs do not include the capital cost of the pipeline replacement. Refer to " - D. Other Matters - Greater Lawrence Incident Restoration," and "- Greater Lawrence Incident Pipeline Replacement," for additional information.

The process for estimating costs associated with third-party claims relating to the Greater Lawrence Incident requires management to exercise significant judgment based on a number of assumptions and subjective factors. As more information becomes known, management’s estimates and assumptions regarding the financial impact of the Greater Lawrence Incident may change.

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

Due to the inherent uncertainty of litigation, there can be no assurance that the ~~outcome or~~ resolution of any particular claim, proceeding or investigation ~~related to the Greater Lawrence Incident or otherwise~~ would not have a material adverse effect on our results of operations, financial position or liquidity. ~~Certain matters in connection with the Greater Lawrence Incident have had or may have a material impact as described above.~~ If one or more ~~of such additional or~~ other matters were decided against us, the effects could be material to our results of operations in the period in which we would be required to record or adjust the related liability and could also be material to our cash flows in the periods that we would be required to pay such liability.

C. Other Greater Lawrence Incident Matters. In connection with the Greater Lawrence Incident, Columbia of Massachusetts, in cooperation with the Massachusetts Governor’s office, replaced the entire affected pipeline system. We invested approximately $258 million of capital spend for the pipeline replacement; this work was completed in 2019. We maintain property insurance for gas pipelines and other applicable property. Columbia of Massachusetts filed a proof of loss with its property insurer for the pipeline replacement. In January 2020, we filed a lawsuit against the property insurer, seeking payment of our property claim. On October 27, 2021, NiSource and the property insurer filed cross motions for summary judgment, each asking the court to determine whether there was coverage under the policy. After the cross motions for summary judgment were fully briefed, we reached an agreement to settle the coverage dispute for $105.0 million. After settlement payment was made, NiSource and its property insurer stipulated to the dismissal of the lawsuit on March 16, 2022.

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

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had recorded a liability of ~~$90.6~~$91.3 million and ~~$92.6~~$91.1 million, respectively, to cover environmental remediation at various sites. ~~The current portion of this~~This liability is included in "Other accruals" and "Other noncurrent liabilities" in the Condensed Consolidated Balance Sheets (unaudited). ~~The noncurrent portion is included in "Other noncurrent liabilities."~~ 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 laws and regulations, the nature and extent of impact and the method of remediation. These ~~expenditures are not currently estimable at some sites. We periodically adjust our liability as information is collected and estimates become more refined.~~

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ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

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

CERCLA. Our subsidiaries are potentially responsible parties at waste disposal sites under the CERCLA ~~(commonly known as Superfund)~~ and similar state laws. 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. ~~These liabilities are~~At this time, NIPSCO cannot estimate the full cost of remediating properties that have not yet been investigated, but it is possible that the future costs could be material to the Condensed Consolidated Financial Statements (unaudited).

MGP. We maintain a program to identify and investigate former MGP sites where Gas Distribution Operations subsidiaries or predecessors may have liability. The program has identified 5453 such sites where liability is probable. Remedial actions at many of these sites are being overseen by state or federal environmental agencies through consent agreements or voluntary remediation agreements.

We utilize a probabilistic model to estimate our future remediation costs related to MGP sites. The model was prepared with the assistance of a third party and incorporates our experience and general industry experience with remediating MGP sites. We complete an annual refresh of the model in the second quarter of each fiscal year. No material changes to the estimated future remediation costs were noted as a result of the refresh completed as of June 30, ~~2020.~~2021. Our total estimated liability related to the facilities subject to remediation was ~~$84.3~~$84.8 million and ~~$85.0~~$85.1 million at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The liability represents our best estimate of the probable cost to remediate the MGP sites. We believe that it is reasonably possible that remediation costs could vary by as much as ~~$20~~$17 million in addition to the costs noted above. Remediation costs are estimated based on the best available information, applicable remediation standards at the balance sheet date and experience with similar facilities.

CCRs. ~~On April 17, 2015,~~We are in compliance with the ~~EPA issued a~~EPA's final rule for the regulation of CCRs. The rule regulates CCRs under the RCRA Subtitle D, which determines them to be nonhazardous. The rule is implemented in phases and requires increased groundwater monitoring, reporting, recordkeeping and posting of related information to the Internet. The rule also establishes requirements related to CCR management and disposal. The rule allows NIPSCO to continue its byproduct beneficial use program.

~~To comply with the rule, NIPSCO completed capital expenditures in 2019 to modify its infrastructure and manage~~ CCRs. The CCR rule also resulted in revisions to previously recorded legal obligations associated with the retirement of certain NIPSCO facilities. The actual asset retirement costs related to the CCR rule may vary substantially from the estimates used to record the increased asset retirement obligation due to the uncertainty about the requirements that will be established by environmental authorities, compliance strategies that will be used and the preliminary nature of available data used to estimate costs. As allowed by the rule, NIPSCO will continue to collect data over time to determine the specific compliance solutions and associated costs and, as a result, the actual costs may vary. NIPSCO will also continue to work with the EPA and the Indiana Department of Environmental Management to obtain administrative approvals associated with the CCR rule. In the event that the approvals are not obtained, future operations could be impacted. We ~~believe~~cannot estimate the ~~possibility of such an outcome is remote.~~likelihood that the agencies will deny approvals or the financial impact on us if these approvals are not obtained.

E. Other Matters.

Generation Transition. NIPSCO has executed several PPAs to purchase 100% of the output from renewable generation facilities at a fixed price per MWh. Each facility supplying the energy will have an associated nameplate capacity, and payments under the PPAs will not begin until the associated generation facility is constructed by the owner/seller. NIPSCO has also executed several BTAs with developers to construct renewable generation facilities. NIPSCO's purchase ~~requirement~~obligation under ~~the BTAs~~each respective BTA is dependent on satisfactory approval of the BTA by the IURC, successful execution by NIPSCO of an agreement with a tax equity partner and timely completion of construction. NIPSCO has received IURC approval for all of its BTAs and PPAs. NIPSCO and the tax equity partner are obligated to make cash contributions to the ~~partnership~~joint venture that acquires the project at the date construction is substantially complete. Certain agreements require NIPSCO to make partial payments upon the developer's completion of significant construction milestones. Once the tax equity partner has earned ~~their~~its negotiated rate of return and we have reached the agreed upon contractual date, NIPSCO has the option to purchase at fair market value from the tax equity partner the remaining interest in the ~~aforementioned~~ joint venture.

~~Greater Lawrence Incident Restoration~~. In addition to the amounts estimated for third-party claims and fines, penalties and settlements associated with government investigations described above, we have recorded expenses for other incident-related costs. Such costs include certain consulting costs, legal costs, vendor costs, claims center costs, labor and related expenses incurred in connection with the incident, and insurance-related loss surcharges. These costs were immaterial for the three months ended March 31, 2021.

~~Greater Lawrence Pipeline Replacement~~. In connection with the Greater Lawrence Incident, Columbia of Massachusetts, in cooperation with the Massachusetts Governor’s office, replaced the entire affected pipeline system. We invested approximately $258 million of capital spend for the pipeline replacement; this work was completed in 2019. We maintain property insurance

~~Table of Contents~~

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

~~NiSource Inc.~~

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

for gas pipelines and other applicable property. Columbia of Massachusetts has filed a proof of loss with its property insurer for the pipeline replacement. In January 2020, we filed a lawsuit against the property insurer, seeking payment of our property claim. We are currently unable to predict the timing or amount of any insurance recovery under the property policy.

~~State Income Taxes Related to Greater Lawrence Incident Expenses~~. As of December 31, 2018, expenses related to the Greater Lawrence Incident were $1,023 million. In the fourth quarter of 2019, we filed an application for Alternative Apportionment with the MA DOR to request an allocable approach to these expenses for purposes of Massachusetts state income taxes, which, if approved, would result in a state deferred tax asset of approximately$50 million, net. The MA DOR issued a denial during the first quarter of 2020. We filed an application for abatement in the second quarter of 2020, which resulted in a denial from the MA DOR in April 2021. We have 60 days to submit an appeal for this decision.

~~One-Time Employee Separation Benefits.~~ On August 5, 2020, we commenced a voluntary separation program for certain employees. Expense for the voluntary separation program was predominantly recognized in the third quarter of 2020, when the employees accepted the offer, absent a retention period. In addition, we have continued to evaluate our organizational structure under the auspices of NiSource Next, which has resulted in additional separations under our existing severance policies. For employees that have a retention period, expense will be recognized over the remaining service period. The total estimated severance expense for employees is approximately $40 million, with $38.1 million incurred to date. A rollforward of the one-time employee separation benefits accrual for the three months ended March 31, 2021 is presented below:

(in millions)
Balance as of
January 1, 2021
Changes Attributable to Costs Incurred(1)
Costs Paid Adjustments
Balance as of
March 31, 2021(2)
One-time Employee Separation Benefits 11.1 4.6 (8.4) 0 7.3

~~(1)This activity is presented within "Operation and maintenance" in our Condensed Statements of Consolidated Income (unaudited).~~

~~(2)This activity is presented within "Accrued compensation and employee benefits" in our Condensed Consolidated Balance Sheets (unaudited).~~

~~18. Accumulated Other Comprehensive Loss~~

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

(in millions)
Gains and Losses on Securities(1)
Gains and Losses on Cash Flow Hedges(1)
Pension and OPEB Items(1)
Accumulated
Other
Comprehensive
Loss(1)
Balance as of January 1, 2021 $ 6.0 $ (147.9) $ (14.8) $ (156.7)
Other comprehensive income (loss) before reclassifications (2.2) 84.6 (1.4) 81.0
Amounts reclassified from accumulated other comprehensive income (loss) (0.3) 0 0.5 0.2
Net current-period other comprehensive income (loss) (2.5) 84.6 (0.9) 81.2
Balance as of March 31, 2021 $ 3.5 $ (63.3) $ (15.7) $ (75.5)
(1)All amounts are net of tax. Amounts in parentheses indicate debits.

(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, 2020 $ 3.3 $ (77.2) $ (18.7) $ (92.6)
Other comprehensive income (loss) before reclassifications (5.2) (133.3) 0.4 (138.1)
Amounts reclassified from accumulated other comprehensive income (loss) (0.2) 0 0.3 0.1
Net current-period other comprehensive income (loss) (5.4) (133.3) 0.7 (138.0)
Balance as of March 31, 2020 $ (2.1) $ (210.5) $ (18.0) $ (230.6)
(1)All amounts are net of tax. Amounts in parentheses indicate debits.

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ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

~~19.~~16. Accumulated Other Comprehensive Loss

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


(in millions)	Gains and Losses on Securities(1)		Gains and Losses on Cash Flow Hedges(1)		Pension and OPEB Items(1)		Accumulated Other Comprehensive Loss(1)
Balance as of January 1, 2022	$	2.1	$	(122.5)	$	(6.4)	$	(126.8)
Other comprehensive income (loss) before reclassifications	(5.9)		47.0		—		41.1
Amounts reclassified from accumulated other comprehensive income (loss)	0.2		—		0.1		0.3
Net current-period other comprehensive income (loss)	(5.7)		47.0		0.1		41.4

Balance as of March 31, 2022	$	(3.6)	$	(75.5)	$	(6.3)	$	(85.4)

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


(in millions)	Gains and Losses on Securities(1)		Gains and Losses on Cash Flow Hedges(1)		Pension and OPEB Items(1)		Accumulated Other Comprehensive Loss(1)
Balance as of January 1, 2021	$	6.0	$	(147.9)	$	(14.8)	$	(156.7)
Other comprehensive income (loss) before reclassifications	(2.2)		84.6		(1.4)		81.0
Amounts reclassified from accumulated other comprehensive income (loss)	(0.3)		—		0.5		0.2
Net current-period other comprehensive income (loss)	(2.5)		84.6		(0.9)		81.2

Balance as of March 31, 2021	$	3.5	$	(63.3)	$	(15.7)	$	(75.5)

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

17. Other, Net

Three Months Ended March 31, (in millions)
2021 2020
Interest income $ 0.9 $ 1.7
AFUDC equity 1.5 1.7
Pension and other postretirement non-service benefit 8.5 2.7
Miscellaneous (0.4) (0.7)
Total Other, net $ 10.5 $ 5.4
The following table displays the components of Other, Net included on the Condensed Statements of Consolidated Income (unaudited):


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

Pension and other postretirement non-service benefit	7.6		8.5

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

~~20.~~18. Business Segment Information

~~At March 31, 2021, our~~Our operations are divided into 2 primary reportable segments, the Gas Distribution Operations and the Electric Operations segments. ~~Corporate costs and other activities that~~The remainder of our operations, which are not significant enough on a stand-alone basis to warrant treatment as an operating segment, ~~and that do not fit into one of our two segments~~ are ~~aggregated~~presented as "Corporate and Other" ~~in the disclosures below.~~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 our ~~business~~reportable segments. We use operating income as our primary measurement for each of the reported segments and 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
March 31,
(in millions) 2021 2020
Operating Revenues
Gas Distribution Operations
Unaffiliated $ 1,135.8 $ 1,228.0
Intersegment 3.1 3.0
Total 1,138.9 1,231.0
Electric Operations
Unaffiliated 402.5 377.3
Intersegment 0.2 0.2
Total 402.7 377.5
Corporate and Other
Unaffiliated 7.3 0.2
Intersegment 103.9 106.7
Total 111.2 106.9
Eliminations (107.2) (109.9)
Consolidated Operating Revenues $ 1,545.6 $ 1,605.5
Operating Income (Loss)
Gas Distribution Operations $ 346.9 $ 78.5
Electric Operations 87.9 78.5
Corporate and Other (1.6) (8.8)
Consolidated Operating Income $ 433.2 $ 148.2

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ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.

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

~~21.~~


	Three Months Ended March 31,
(in millions)	2022		2021
Operating Revenues
Gas Distribution Operations
Unaffiliated	$	1,436.7	$	1,135.8
Intersegment	3.1		3.1
Total	1,439.8		1,138.9
Electric Operations
Unaffiliated	430.1		402.5
Intersegment	0.2		0.2
Total	430.3		402.7
Corporate and Other
Unaffiliated	6.5		7.3
Intersegment	113.5		103.9
Total	120.0		111.2
Eliminations	(116.8)		(107.2)
Consolidated Operating Revenues	$	1,873.3	$	1,545.6
Operating Income (Loss)
Gas Distribution Operations	$	510.8	$	346.9
Electric Operations	99.2		87.9
Corporate and Other	(9.7)		(1.6)
Consolidated Operating Income	$	600.3	$	433.2

19. Subsequent Event

OnIn April ~~19, 2021, we completed~~2022, Dunn's Bridge I reached a construction milestone under the ~~sale of 8.625 million Series A Equity Units (“Equity Units”), initially consisting of Series A Corporate Units (“Corporate Units”), each with~~BTA, triggering our obligation to make a ~~stated~~milestone payment to the developer in the amount of ~~$100. The offering generated net proceeds of $835.5 million, after underwriting and estimated issuance expenses.~~ ~~Each Corporate Unit consists of a forward contract to purchase shares of our common stock~~$71.9 million. We made this payment 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. The Mandatory Convertible Preferred Stock initially will not bear any dividends. Total annual distributions of the Corporate Units will be 7.75%, consisting of quarterly contract adjustment payments under the forward contract. We may pay the contract adjustment payments in cash, shares of common stock or a combination of cash and shares of common stock, at our election.April 2022.

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

NiSource Inc.

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

NiSource Inc.

EXECUTIVE SUMMARY

This ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations ("Management’s Discussion") 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 our operations and financial performance and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

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 six states. We generate substantially all of 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 our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 for further discussion of our regulated utility business segments.

Our goal is to develop strategies that benefit all stakeholders as we (i) ~~address changing customer conservation patterns, (ii) align our price structure with our cost structure, and (iii)~~ embark on long-term infrastructure investment and safety programs to better serve our ~~customers.~~customers, (ii) align our tariff structures with our cost structure, and (iii) address changing customer conservation patterns. These strategies focus on improving safety and reliability, enhancing customer service, ~~lowering~~ensuring customer ~~bills~~affordability and reducing emissions while generating sustainable returns. The safety of our customers, communities and employees remains our top priority. The ~~SMS~~Safety Management System ("SMS") is an established operating model within NiSource. With the continued support and advice from our Quality Review Board (a panel of third parties with safety operations expertise engaged by management to advise on safety matters), we are continuing to mature our SMS processes, capabilities and talent as we collaborate within and across industries to enhance safety and reduce operational risk. Additionally, we continue to pursue regulatory and legislative initiatives that will allow residential customers not currently on our system to obtain gas service in a cost effective manner.

Your Energy, Your Future: Our plan to replace ~~all of~~ our coal generation capacity by the end of 2028 with primarily renewable resources, as described in our 2018 Integrated Resource Plan ("2018 Plan"), is well ~~underway. In~~underway, but we are facing challenges as described below. As of March ~~2021,~~31, 2022, we have executed ~~three BTAs~~and received IURC approval for 650 MW solar nameplate capacity and a PPA for 200 MW of wind nameplate capacity. The four projects were selected following a comprehensive review of bids submitted through the RFP process that NIPSCO underwent in late 2019. The projects complement previously executed BTAs and PPAs with a combined nameplate capacity of ~~1,300~~1,950 MW and ~~1,180~~1,380 MW, ~~respectively. NIPSCO will refresh its~~respectively, under the 2018 ~~Integrated Resource Plan in 2021.~~Plan. Further, we have placed three wind projects into service and completed the retirement of R.M. Schahfer Generating Station Units 14 and 15. We anticipate delays on our previously announced solar and storage projects due to several factors, including a recently announced U.S. Department of Commerce investigation. In connection with these delays, we currently expect to retire R.M. Schahfer's remaining two coal units by the end of 2025. For additional information, see "Results and Discussion of Segment ~~Operation~~Operations - Electric Operations," in this Management's ~~Discussion.~~Discussion and Part II, Item 1A. Risk Factors.

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 to occur between 2026 and 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 expected to occur between 2025 and 2028. Final retirement dates for these units, as well as Michigan City, will be subject to MISO approval. We are continuing to evaluate potential projects under the 2021 Plan.

NiSource Next: ~~We have launched a comprehensive, multi-year program designed~~Starting in 2021, we optimized our workforce by redefining roles to ~~deliver long-term safety, sustainable capability enhancements and cost optimization improvements. This program will advance the high priority we place~~sharpen our focus on safety and risk mitigation, further enable our safety management system, and enhance the customer experience. NiSource Next is designed to (i) leverage our current scale, (ii) utilize technology, (iii) define clear roles and accountability with our leaders and employees, and (iv) standardize our processes to focus on operational rigor, ~~quality management~~ and ~~continuous improvement. In the second quarter~~adherence to process and procedures, as well as implemented consistent span of ~~2021,~~control for leadership to increase individual responsibility and clear accountability. Additionally, we began to ~~implement enhanced digital tools associated with our customer experience.~~

~~COVID-19:~~ The safety of our employees and customers, while providing essential services during the COVID-19 pandemic, is paramount. We continue to take a proactive, coordinated approach intended to prevent, mitigate and respond to COVID-19 by utilizing our Incident Command System (ICS). The ICS includes members of our executive council, a medical review professional, and members of functional teams frommake advancements across our ~~company. The ICS monitors state-by-state conditions~~operations to improve safety, operational efficiencies, and ~~determines steps~~customer satisfaction through continued standardization of work processes, the implementation of new mobile technology to ~~conduct~~provide real-time access to information while serving our ~~operations safely for employees~~customers and ~~customers.~~

~~We have implemented procedures designed~~enhanced customer self-service options to ~~protect our employees who work in~~better meet customer expectations. These enhancements set the field and who continue to work in operational and corporate facilities, including social distancing, wearing face coverings, temperature checks and more frequent cleaning of equipment and facilities. We have also implemented work-from-home policies and practices. We continue to limit company vehicle occupancy to one person, where possible, and minimize non-essential work that requires an employee to enter a customer premise when infection rates spike in a county and local agencies elevate risk levels. As local circumstances permit, we are beginning previously delayed work that requires customer interaction. We continue to employ physical and cybersecurity measures to ensure that our operational and support systems remain functional. Our actions to date have mitigated the spread of COVID-19 amongst our employees and principal field contractors. We are also continuously evaluating changes

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NiSource Inc.

foundation for 2022 and beyond, to ~~CDC guidance,~~continue improving safety and ~~updating~~customer experience through analytics and significant technology investments.

Economic Environment: We are monitoring risks related to increasing order and delivery lead times for construction and other materials, increasing risk of unavailability of materials due to global shortages in raw materials, and risk of decreased construction labor productivity in the event of disruptions in the availability of materials. We are also seeing increasing prices associated with certain materials and supplies. To the extent that delays occur or our ~~safety measures accordingly,~~costs increase, our business operations, results of operations, cash flows, and financial condition could be materially adversely affected. For more information on supply chain impacts to our electric generation strategy, see "Results and Discussion of Segment Operations - Electric Operations," in ~~order~~this Management's Discussion and Part II, Item 1A. Risk Factors.

NIPSCO is experiencing a rail service shortage in deliveries of coal, particularly to its Michigan City Generating Station, and the primary rail carrier for that generating station is unable to provide assurance of adequate future service to maintain coal inventory. If the lack of adequate coal deliveries to any of our coal-fired generating facilities continues for an extended period into the summer, inventories could be depleted to a level that prevents the generating station from running, and NIPSCO would need to rely on market purchases of replacement power, which could increase the cost of electricity for NIPSCO's customers.

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 competitive and attractive appeal for potential recruits. With a focus on workforce planning, we are creating flexible work arrangements where we can, and being anticipatory in evaluating our talent footprint for the future to ensure we have the right people, in the right role, and at the right time. To the extent we are unable to execute on our workforce planning initiatives and experience increased employee and ~~customer safety during this pandemic.~~ contractor costs, our business operations, results of operations, cash flows, and financial condition could be materially adversely affected.

We ~~are following all federal, state,~~have seen an increase in natural gas costs as the spot market for natural gas has substantially increased since the start of 2022. Low levels of gas in storage, continued liquified natural gas demand to ship U.S. supplies to Europe, and ~~local guidelines related~~the slow ramp up in domestic production have contributed to the ~~COVID-19 vaccinations and are encouraging employees~~steep rise in gas commodity costs, which we expect to ~~receive~~have an effect on customer bills through 2022. For the ~~vaccine when it is available to them.~~

Since the beginning of the COVID-19 pandemic, we have been helping our customers navigate this challenging time. We suspended disconnections soon after this outbreak began. While the suspension of disconnections has been lifted in most states, suspensions are likely to continue in others. We plan to continue our payment assistance programs and customer education and awareness of energy assistance programs such as the Low Income Home Energy Assistance Program (LIHEAP) to help customers deal with the impact of the pandemic. Regulatory deferrals for certain costs have been allowed by all of our state regulatory commissions. Costs approved for deferral vary by state. For information on the state specific suspension of disconnections and COVID-19 regulatory filings, see Note 8, "Regulatory Matters," in the Notes to Condensed Consolidated Financial Statements (unaudited).

We continue to monitor how COVID-19 is affecting our workforce, customers, suppliers, operations, financial results and cash flow. The extent of the impact in the future will vary and depend on the duration and severity of the impact on the global, national and local economies. See Note 3, “Revenue Recognition” and Note 8, “Regulatory Matters” for impacts of COVID-19 for the three monthsquarter ended March 31, ~~2021.~~2022, we have not seen this increase have a material impact on our results of operations. For more information on our commodity price impacts, see "Results and Discussion of Segment Operations - Gas Distribution Operations," and " - Market Risk Disclosures."

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

NiSource Inc.

Summary of Consolidated Financial Results

A summary of our consolidated financial results for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 are presented below:


		Three Months Ended March 31,						Three Months Ended March 31,
(in millions, except per share amounts)	(in millions, except per share amounts)	2021		2020		2021 vs. 2020			(in millions, except per share amounts)	2022		2021		Favorable (Unfavorable)
Operating Revenues	Operating Revenues	$	1,545.6	$	1,605.5	$	(59.9)		Operating Revenues	$	1,873.3	$	1,545.6	$	327.7
Operating Expenses	Operating Expenses								Operating Expenses
Cost of energy	Cost of energy	476.8		462.4		14.4			Cost of energy	706.7		476.8		(229.9)
Other Operating Expenses	Other Operating Expenses	635.6		994.9		(359.3)			Other Operating Expenses	566.3		635.6		69.3
Total Operating Expenses	Total Operating Expenses	1,112.4		1,457.3		(344.9)			Total Operating Expenses	1,273.0		1,112.4		(160.6)
Operating Income	Operating Income	433.2		148.2		285.0			Operating Income	600.3		433.2		167.1
Total Other Deductions, net	Total Other Deductions, net	(74.1)		(87.5)		13.4			Total Other Deductions, net	(72.8)		(74.1)		1.3
Income Taxes	Income Taxes	62.6		(14.9)		77.5			Income Taxes	96.2		62.6		(33.6)

Net Income	Net Income	296.5		75.6		220.9			Net Income	431.3		296.5		134.8
Net income attributable to noncontrolling interest	Net income attributable to noncontrolling interest	1.0		—		1.0			Net income attributable to noncontrolling interest	4.5		1.0		(3.5)
Net Income attributable to NiSource		295.5		75.6		219.9
Net Income Attributable to NiSource									Net Income Attributable to NiSource	426.8		295.5		131.3
Preferred dividends	Preferred dividends	(13.8)		(13.8)		—			Preferred dividends	(13.8)		(13.8)		—
Net Income Available to Common Shareholders	Net Income Available to Common Shareholders	281.7		61.8		219.9			Net Income Available to Common Shareholders	413.0		281.7		131.3
Earnings Per Share	Earnings Per Share								Earnings Per Share
Basic Earnings Per Share	Basic Earnings Per Share	$	0.72	$	0.16	$	0.56		Basic Earnings Per Share	$	1.02	$	0.72	$	0.30
Diluted Earnings Per Share	Diluted Earnings Per Share	$	0.72	$	0.16	$	0.56		Diluted Earnings Per Share	$	0.94	$	0.72	$	0.22
Basic Average Common Shares Outstanding		392.7		383.1		9.6
Diluted Average Common Shares		393.9		384.1		9.8

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

~~On a consolidated basis, we reported a~~The increase in net income available to common shareholders of $281.7 million, or $0.72 per diluted share for the three months ended March 31, 2021, compared to a net income available to common shareholders of $61.8 million, or $0.16 per diluted share for the same period in 2020. The increase in incomeduring 2022 was primarily due to ~~the loss on sale~~higher revenues from outcomes of ~~the Massachusetts business in 2020,~~gas base rate proceedings and regulatory capital programs, as well as ~~lower operating expenses offset by lower operating revenues due~~an insurance settlement related to the ~~sale of the Massachusetts business. Additionally, the increase in income was driven by revenue increases from new rates and the effects of colder weather in 2021 compared to 2020 partially~~Greater Lawrence Incident, offset by higher costs of energy and income taxes in ~~2021~~2022 compared to ~~2020 (See "Income Taxes" below).~~ the 2021. For additional information on the insurance settlement see Note 15, "Other Commitments and Contingencies - C. Other Greater Lawrence Incident Matters" in the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information.

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

~~Table of Contents~~

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

~~NiSource Inc.~~

Other Deductions, net

Other deductions, net ~~reduced income by $74.1 million~~ in 2022 is comparable to the ~~first quarter of 2021 compared to a reduction~~same period in ~~income of $87.5 million in the prior year. This change was primarily driven by lower short term debt interest due to lower balances and a lower rate on commercial paper in 2021 compared to 2020.~~2021. See Note ~~16,~~13, "Long-Term Debt," Note 14, "Short-Term Borrowings," and Note 11, "Pension and Other Postretirement Benefits," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information.

Income Taxes

Refer to Note ~~13,~~10, "Income Taxes," in the Notes to Condensed Consolidated Financial Statements (unaudited) for information on income taxes and the change in the effective tax rate.

RESULTS AND DISCUSSION OF SEGMENT OPERATIONS

Presentation of Segment Information

Our operations are divided into two primary reportable segments: Gas Distribution Operations and Electric Operations. ~~We primarily evaluate segment results based on operating income.~~ The remainder of our operations, which are not significant enough on a stand-alone basis to warrant treatment as an operating segment, are presented as "Corporate and Other" within the Notes to the Condensed Consolidated Financial Statements (unaudited) and primarily are comprised of interest expense on holding company debt, and unallocated corporate costs and activities.

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NiSource Inc.

Gas Distribution Operations

Financial and operational data for the Gas Distribution Operations segment for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 are presented below:


		Three Months Ended March 31,								Three Months Ended March 31,
(in millions)	(in millions)	2021			2020			2021 vs. 2020			(in millions)	2022			2021			Favorable (Unfavorable)
Operating Revenues	Operating Revenues	$	1,138.9		$	1,231.0		$	(92.1)		Operating Revenues	$	1,439.8		$	1,138.9		$	300.9
Operating Expenses	Operating Expenses										Operating Expenses
Cost of energy	Cost of energy	379.0			377.4			1.6			Cost of energy	589.1			379.0			(210.1)
Operation and maintenance	Operation and maintenance	248.8			330.1			(81.3)			Operation and maintenance	277.3			248.8			(28.5)
Depreciation and amortization	Depreciation and amortization	92.9			96.5			(3.6)			Depreciation and amortization	100.7			92.9			(7.8)

Loss on sale of fixed assets and impairments, net		8.1			280.2			(272.1)
Loss (gain) on sale of fixed assets and impairments, net											Loss (gain) on sale of fixed assets and impairments, net	(105.0)			8.1			113.1
Other taxes	Other taxes	63.2			68.3			(5.1)			Other taxes	66.9			63.2			(3.7)
Total Operating Expenses	Total Operating Expenses	792.0			1,152.5			(360.5)			Total Operating Expenses	929.0			792.0			(137.0)
Operating Income	Operating Income	$	346.9		$	78.5		$	268.4		Operating Income	$	510.8		$	346.9		$	163.9
Revenues	Revenues										Revenues
Residential	Residential	$	782.3		$	823.3		$	(41.0)		Residential	$	977.6		$	782.3		$	195.3
Commercial	Commercial	272.9			274.0			(1.1)			Commercial	357.5			272.9			84.6
Industrial	Industrial	58.2			74.5			(16.3)			Industrial	68.1			58.2			9.9
Off-System	Off-System	14.4			18.7			(4.3)			Off-System	18.7			14.4			4.3
Other	Other	11.1			40.5			(29.4)			Other	17.9			11.1			6.8
Total	Total	$	1,138.9		$	1,231.0		$	(92.1)		Total	$	1,439.8		$	1,138.9		$	300.9
Sales and Transportation (MMDth)	Sales and Transportation (MMDth)										Sales and Transportation (MMDth)
Residential	Residential	118.4			118.5			(0.1)			Residential	122.9			118.4			4.5
Commercial	Commercial	74.3			73.7			0.6			Commercial	79.9			74.3			5.6
Industrial	Industrial	136.4			146.8			(10.4)			Industrial	135.1			136.4			(1.3)
Off-System	Off-System	5.4			11.2			(5.8)			Off-System	4.3			5.4			(1.1)
Other	Other	0.2			0.2			—			Other	0.2			0.2			—
Total	Total	334.7			350.4			(15.7)			Total	342.4			334.7			7.7
Heating Degree Days	Heating Degree Days	2,703			2,440			263			Heating Degree Days	2,841			2,703			138
Normal Heating Degree Days	Normal Heating Degree Days	2,854			2,897			(43)			Normal Heating Degree Days	2,824			2,854			(30)
% Colder (Warmer) than Normal	% Colder (Warmer) than Normal	(5)		%	(16)		%				% Colder (Warmer) than Normal	1		%	(5)		%
% Colder than 2021											% Colder than 2021	5		%
Gas Distribution Customers	Gas Distribution Customers										Gas Distribution Customers
Residential	Residential	2,965,004			3,233,222			(268,218)			Residential	2,980,965			2,965,004			15,961
Commercial	Commercial	254,188			283,579			(29,391)			Commercial	254,876			254,188			688
Industrial	Industrial	4,965			6,002			(1,037)			Industrial	4,920			4,965			(45)
Other	Other	3			3			—			Other	3			3			—
Total	Total	3,224,160			3,522,806			(298,646)			Total	3,240,764			3,224,160			16,604

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. These are tracked costs that are passed through directly to the customer, resulting in an equal and offsetting amount reflected in operating revenue. In addition, comparabilityComparability 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. ~~Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and have essentially no impact on net income.~~

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

NiSource Inc.

Gas Distribution Operations

~~Three Months Ended March 31, 2021 vs. March 31, 2020 Operating Income~~

~~For the three months ended March 31, 2021, Gas Distribution Operations reported~~The underlying reasons for changes in our operating ~~income of $346.9 million, an increase of $268.4 million from the comparable 2020 period.~~

~~Operating~~ revenues for the three months ended March 31, ~~2021 were $1,138.9 million, a decrease of $92.1 million from~~2022 compared to the same period in ~~2020.~~2021 are presented below.


				Favorable (Unfavorable)
Changes in Operating Revenues (in millions)	~~Favorable (Unfavorable)~~
~~Revenues associated with the Massachusetts Business in 2020~~	$		~~(122.3)~~	Three Months Ended March 31, 2022 vs 2021
New rates from base rate proceedings ~~infrastructure replacement~~and regulatory capital programs ~~and Columbia of Ohio's CEP~~				~~38.0~~61.1
The effects of colder weather in ~~2021~~2022 compared to ~~2020~~2021				10.5
~~15.6~~Higher revenue related to off system sales				2.7
The effects of customer growth				~~3.4~~ 2.3
Higher revenue due to the effects of resuming common credit mitigation practices				1.8
Decreased customer usage				(4.8)
Other				~~(2.1)~~2.7
Change in operating revenues (before cost of energy and other tracked items)				$	~~(67.4)~~76.3
Operating revenues offset in operating expense
~~Higher cost of energy billed to customers~~	~~81.3~~
~~Cost of energy associated with the Massachusetts Business in 2020~~	~~(79.7)~~
~~Operation and maintenance trackers associated with the Massachusetts Business in 2020~~	~~(24.3)~~
~~Lower operation and maintenance, depreciation, and tax trackers~~	~~(2.0)~~
~~Total change in operating revenues~~	$	~~(92.1)~~

~~Operating expenses were $360.5 million lower for the three months ended March 31, 2021 compared to the same period in 2020.~~


~~Changes in Operating Expenses~~ ~~(in millions)~~	~~Favorable (Unfavorable)~~
~~Loss on sale of the Massachusetts Business of $6.9 million in 2021 compared to $280.2 million in 2020~~	$	~~273.3~~
~~Operating expenses associated with the Massachusetts Business in 2020~~	~~65.6~~
~~Lower employee and administrative expenses~~	~~4.9~~
~~Severance and outside services expense related to NiSource Next initiative~~	~~(5.9)~~
~~Higher depreciation and amortization expense primarily due to higher capital expenditures placed in service~~	~~(5.8)~~
~~Other~~	~~3.7~~
~~Change in operating expenses (before cost of energy and other tracked items)~~	$	~~335.8~~
~~Operating expenses offset in operating revenue~~
Higher cost of energy billed to customers			~~(81.3)~~210.1
~~Cost of energy associated with the Massachusetts Business in 2020~~	~~79.7~~
~~Operation and maintenance trackers associated with the Massachusetts Business in 2020~~	~~24.3~~
~~Lower~~Higher tracker deferrals within operation and maintenance, depreciation, and tax ~~trackers~~			~~2.0~~14.5
Total change in operating ~~expense~~revenues			$	~~360.5~~300.9

Weather

In general, we calculate the weather-related revenue variance based on changing customer demand driven by weather variance from normal heating degree 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-~~weather-related dollar impacts on operations when there is not an apparent or significant change in our aggregated composite heating degree day comparison.

Throughput

The increase in total volumes for the three months ended March 31, 2022 compared to the same period in 2021 is primarily attributable to the effects of colder weather.

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 of our Gas Distribution Operations companies have state-approved recovery mechanisms that provide a means for full recovery of prudently incurred gas costs. These are tracked costs that are passed through directly to the customer, and the gas costs included in revenues are matched with the gas cost expense recorded in 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. Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and 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.

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

NiSource Inc.

Gas Distribution Operations

~~related dollar impacts on operations when there is not an apparent or significant change~~The underlying reasons for changes in our ~~aggregated composite heating degree day comparison.~~

~~Weather in the Gas Distribution Operations service territories for the first quarter of 2021 was about 5% warmer than normal and about 11% colder than 2020, leading to increased~~ operating ~~revenues of $16.4 million for the quarter ended March 31, 2021 compared to the same period in 2020.~~

~~Throughput~~

~~Total volumes sold and transported~~expenses for the three months ended March 31, ~~2021 were 334.7 MMDth,~~2022 compared to ~~350.4 MMDth for~~ the same period in ~~2020. This decrease is primarily attributable to the sale of the Massachusetts Business, offset by the effects of colder weather in~~ 2021 ~~compared to 2020.~~are presented below.

~~Commodity Price Impact~~


	Favorable (Unfavorable)
Changes in Operating Expenses (in millions)	Three Months Ended March 31, 2022 vs 2021
Property insurance settlement related to the Greater Lawrence Incident(1)	105.0
The loss on sale and expenses related to the Massachusetts Business in 2021	12.2
Lower NiSource Next program expenses	4.6
Higher employee and administrative related expenses	(12.7)
Higher depreciation and amortization expense	(7.8)
Higher outside services expenses	(5.3)
Higher materials and supplies expense	(3.4)
Other	(5.0)
Change in operating expenses (before cost of energy and other tracked items)	$	87.6
Operating expenses offset in operating revenue
Higher cost of energy billed to customers	(210.1)
Higher tracker deferrals within operation and maintenance, depreciation, and tax	(14.5)
Total change in operating expense	(137.0)

All of our Gas Distribution Operations companies have state-approved recovery mechanisms that provide a means for full recovery of prudently incurred gas costs. Gas costs are treated as pass-through costs(1)See Note 15, ''Other Commitments and ~~have no impact on operating income recorded~~Contingencies,'' in the ~~period. The gas costs included in revenues are matched with the gas cost expense recorded in the period and the difference is recorded on the~~Notes to Condensed Consolidated ~~Balance Sheets~~Financial Statements (unaudited) ~~as under-recovered or over-recovered gas cost to be included in future customer billings.~~for additional information.

~~Columbia of Massachusetts Asset Sale~~

On October 9, 2020, we completed the sale of our Massachusetts Business. In March 2021, we reached an agreement with Eversource regarding the final purchase price, including net working capital adjustments, which resulted in a pre-tax loss for the three months ended March 31, 2021 of $6.9 million. The total loss on the sale as of March 31, 2021 is $419.3 million based on asset and liability balances as of the close of the transaction on October 9, 2020, transaction costs and the final purchase price. The pre-tax loss is presented as "Loss on sale of assets, net" on the Condensed Statements of Consolidated Income (unaudited).

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

NiSource Inc.

Electric Operations

Financial and operational data for the Electric Operations segment for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 are presented below:


		Three Months Ended March 31,						Three Months Ended March 31,
(in millions)	(in millions)	2021		2020		2021 vs. 2020			(in millions)	2022		2021		Favorable (Unfavorable)

Operating Revenues	Operating Revenues	402.7		$	377.5	25.2			Operating Revenues	430.3		$	402.7	$	27.6

Operating Expenses	Operating Expenses								Operating Expenses
Cost of energy	Cost of energy	97.8		85.0		12.8			Cost of energy	117.6		97.8		(19.8)
Operation and maintenance	Operation and maintenance	119.1		120.9		(1.8)			Operation and maintenance	116.6		119.1		2.5
Depreciation and amortization	Depreciation and amortization	83.4		78.9		4.5			Depreciation and amortization	82.9		83.4		0.5

Other taxes	Other taxes	14.5		14.2		0.3			Other taxes	14.0		14.5		0.5
Total Operating Expenses	Total Operating Expenses	314.8		299.0		15.8			Total Operating Expenses	331.1		314.8		(16.3)
Operating Income	Operating Income	$	87.9	$	78.5	$	9.4		Operating Income	$	99.2	$	87.9	$	11.3
Revenues	Revenues								Revenues
Residential	Residential	$	129.2	$	119.2	$	10.0		Residential	$	138.5	$	129.2	$	9.3
Commercial	Commercial	122.9		120.2		2.7			Commercial	134.5		122.9		11.6
Industrial	Industrial	123.1		109.1		14.0			Industrial	130.0		123.1		6.9
Wholesale	Wholesale	3.4		3.2		0.2			Wholesale	2.6		3.4		(0.8)
Other	Other	24.1		25.8		(1.7)			Other	24.7		24.1		0.6
Total	Total	$	402.7	$	377.5	$	25.2		Total	$	430.3	$	402.7	$	27.6
Sales (Gigawatt Hours)
Sales (GWh)									Sales (GWh)
Residential	Residential	804.6		755.5		49.1			Residential	819.2		804.6		14.6
Commercial	Commercial	867.9		878.7		(10.8)			Commercial	885.3		867.9		17.4
Industrial	Industrial	2,063.3		2,071.1		(7.8)			Industrial	2,007.8		2,063.3		(55.5)
Wholesale	Wholesale	32.1		71.4		(39.3)			Wholesale	4.4		32.1		(27.7)
Other	Other	27.3		28.2		(0.9)			Other	25.1		27.3		(2.2)
Total	Total	3,795.2		3,804.9		(9.7)			Total	3,741.8		3,795.2		(53.4)

Electric Customers	Electric Customers								Electric Customers
Residential	Residential	419,582		416,501		3,081			Residential	423,177		419,582		3,595
Commercial	Commercial	57,538		57,150		388			Commercial	58,092		57,538		554
Industrial	Industrial	2,156		2,160		(4)			Industrial	2,135		2,156		(21)
Wholesale	Wholesale	720		725		(5)			Wholesale	712		720		(8)
Other	Other	2		2		—			Other	2		2		—
Total	Total	479,998		476,538		3,460			Total	484,118		479,998		4,120

Cost of energy for the Electric Operations segment is principally comprised of the cost of coal, related handling costs, natural gas purchased for internal generation of electricity at NIPSCO, and the cost of power purchased from third-party generators of electricity. The majority of these are tracked costs that are passed through directly to the customer resulting in an equal and offsetting amount reflected in operating revenue. In addition, comparabilityComparability of operation and maintenance expenses and depreciation and amortization may be impacted by regulatory and depreciation trackers that allow for the recovery in rates of certain costs. ~~Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and have essentially no impact on net income.~~

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

NiSource Inc.

Electric Operations

~~Three Months Ended March 31, 2021 vs. March 31, 2020 Operating Income~~

~~For the three months ended March 31, 2021, Electric Operations reported~~The underlying reasons for changes in our operating ~~income of $87.9 million, an increase of $9.4 million from the comparable 2020 period.~~

~~Operating~~ revenues for the three months ended March 31, ~~2021 were $402.7 million, an increase of $25.2 million from~~2022 compared to the same period in ~~2020.~~2021 are presented below.

Favorable (Unfavorable)

Changes in Operating Revenues (in millions)

~~Favorable (Unfavorable)~~

Three Months Ended March 31, 2021 vs 2021

~~Increased customer usage, primarily driven by residential customers~~

~~4.8~~

~~New rates~~PPA revenue from ~~infrastructure improvement and DSM programs~~renewable joint venture projects

~~2.8~~8.5

The effects of customer growth

~~1.0~~1.3

New rates from regulatory capital and DSM programs

1.1

Decreased fuel handling costs

1.1

Decreased customer usage

(3.2)

Other

1.4

Change in operating revenues (before cost of energy and other tracked items)

~~10.0~~10.2

Operating revenues offset in operating expense

Higher cost of energy billed to customers

~~12.8~~

~~Higher operation and maintenance and depreciation trackers~~

~~2.4~~

~~Total change in operating revenues~~

~~25.2~~

~~Operating expenses were $15.8 million higher for the three months ended March 31, 2021 compared to the same period in 2020.~~


~~Changes in Operating Expenses~~ ~~(in millions)~~	~~Favorable (Unfavorable)~~
~~Higher generation-related maintenance~~	$	~~(4.2)~~
~~Increased depreciation primarily due to additional plant placed in service~~	~~(3.4)~~
~~Severance and outside services expenses related to the NiSource Next initiative~~	~~(2.3)~~
~~Decreased environmental costs~~	~~6.8~~19.8
Lower ~~employee and administrative costs~~	~~4.3~~
~~Other~~	~~(1.8)~~
~~Change in operating expenses (before cost of energy and other tracked items)~~	$	~~(0.6)~~
~~Operating expenses offset in operating revenue~~
~~Higher cost of energy billed to customers~~	~~(12.8)~~
~~Higher~~tracker deferrals within operation and maintenance, depreciation and ~~depreciation trackers~~tax			(2.4)
Total change in operating ~~expense~~revenues			$	~~(15.8)~~27.6

Weather

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

~~Weather~~Sales

The decrease in ~~the Electric Operations’ territories~~total volumes sold for the ~~first quarter of 2021 was about 3% warmer than normal and about 7% cooler than in 2020, which had an immaterial impact on operating revenues for the quarter~~three months ended March 31, ~~2021~~2022 compared to the same period in ~~2020.~~2021 was primarily attributable to decreased usage primarily by industrial customers.

Commodity Price Impact

Cost of energy for the Electric Operations segment is principally comprised of the cost of coal, natural gas purchased for internal generation of electricity at NIPSCO, and the cost of power purchased from generators of electricity. NIPSCO has a state-approved recovery mechanism that provides a means for full recovery of prudently incurred costs of energy. The majority of these costs of energy are passed through directly to the customer, and the costs of energy included in operating revenues are matched with the cost of energy expense recorded in the period. 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. Therefore, increases in these tracked operating expenses are offset by increases in operating revenues and have essentially no impact on net income.

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

NiSource Inc.

Electric Operations

~~Sales~~

~~Electric Operations sales~~The underlying reasons for changes in our operating expenses for the ~~first quarter of 2021 were 3,795.2 GWh, an immaterial decrease~~three months ended March 31, 2022 compared to the same period in ~~2020.~~2021 are presented below.

~~Commodity Price Impact~~


	Favorable (Unfavorable)
Changes in Operating Expenses (in millions)	Three Months Ended March 31, 2022 vs 2021



Lower outside services expenses	$	6.1
Lower depreciation and amortization expense driven by the joint venture depreciation adjustment(1)	3.2
Lower materials and supplies expenses	2.5
Renewable joint venture project expenses	(6.9)
Effects of environmental recoveries in 2021	(5.2)
Other	1.4
Change in operating expenses (before cost of energy and other tracked items)	$	1.1
Operating expenses offset in operating revenue
Higher cost of energy billed to customers	(19.8)
Lower tracker deferrals within operation and maintenance, depreciation and tax	2.4
Total change in operating expense	$	(16.3)

NIPSCO has a state-approved recovery mechanism that provides a means for full recovery of prudently incurred fuel costs. Fuel costs are treated as pass-through costs and have no impact on operating revenues recorded(1)See Note 7, "Regulatory Matters," 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~~Notes to Condensed Consolidated ~~Balance Sheets~~Financial Statements (unaudited) ~~as under-recovered or over-recovered fuel cost to be included in future customer billings.~~for additional information.

Electric Supply and Generation Transition

NIPSCO continues to execute on an electric generation transition consistent with the ~~preferred pathway from its~~ 2018 ~~Integrated Resource~~ Plan, which outlines plans to retire ~~all of~~ its remaining coal-fired generation by 2028, to be replaced by lower-cost, reliable and cleaner options. The plan is expected to be a key element of a 90% reduction in NiSource's greenhouse gas emissions by 2030 compared with 2005 levels, and to save NIPSCO electric customers more than $4 billion over 30 years. We expect to have ~~incremental~~ capital investment requirements of approximately $2.0 billion, primarily inbetween 2022 and ~~2023. On March 11, 2021, NIPSCO submitted modified Attachment Y Notices~~2024, with any remainder expected in 2025, to ~~MISO requesting an updated retirement date for~~replace the generation capacity of R.M. Schahfer Generating Station's coal-fired ~~units~~units. We retired R.M. Schahfer Generating Station Units 14 and ~~15. These~~15 on October 1, 2021. The remaining two coal units are ~~now~~currently expected to be retired by the end of ~~2021, with~~2025. See additional discussion in Part II, Item 1A. Risk Factors. See "Expected Project Delays" discussion, below, for anticipated barriers to the station's remaining two units still on track to be retired by 2023. Refer to Note 7, "Property, Plant and Equipment" and Note 17-D, "Other Matters," in the Notes to Condensed Consolidated Financial Statements (unaudited) for further information.success of our electric generation transition.

The current replacement plan primarily includes renewable sources of energy, including wind, solar, and battery storage to be obtained through a combination of NIPSCO ownership and PPAs. NIPSCO has sold, and may in the future sell, renewable energy credits from this generation to third parties because this helps keep our energy more affordable for our customers. NIPSCO has executed several PPAs to purchase 100% of the output from renewable generation facilities at a fixed price per MWh. Each facility supplying the energy will have an associated nameplate capacity, and payments under the PPAs will not begin until the associated generation facility is constructed by the owner/seller. NIPSCO has also executed several BTAs with developers to construct renewable generation facilities. Our current replacement program will be augmented by the Preferred Energy Resource Plan outlined in our 2021 Integrated Resource Plan. See "Executive Summary - Your Energy, Your Future" in this Management's Discussion for additional information.

Table of Contents

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

NiSource Inc.

Electric Operations

Under our current replacement plan, we have placed three wind projects into service, totaling approximately 804 MW of nameplate capacity. The following table summarizes the remaining executed PPAs and BTAs from our generation ~~transition:~~transition that have yet to begin commercial operations. All announced projects have received IURC approval.

Project Name Transaction Type Technology Nameplate Capacity (MW) Storage Capacity (MW) Submitted to IURC IURC Approval Estimated Construction Completion
Jordan Creek 20 year PPA Wind 400 — 02/01/2019 6/05/2019 In Service (12/10/2020)
Rosewater(1)
BTA Wind 100 — 02/01/2019 8/07/2019 In Service (12/29/2020)
Indiana Crossroads(2)
BTA Wind 300 — 10/22/2019 2/19/2020 Q4 2021
Greensboro 20 year PPA Solar & Storage 100 30 7/17/2020 1/27/2021 Q4 2022
Brickyard 20 year PPA Solar 200 — 7/17/2020 1/27/2021 Q4 2022
Cavalry(2)
BTA Solar & Storage 200 60 11/30/2020 5/5/2021 Q4 2023
Dunn's Bridge I(2)
BTA Solar 265 — 11/30/2020 5/5/2021 Q4 2022
Dunn's Bridge II(2)
BTA Solar & Storage 435 75 11/30/2020 5/5/2021 Q4 2023
Green River 20 year PPA Solar 200 — 12/23/2020 5/5/2021 Q2 2023
Gibson 22 year PPA Solar 280 — 01/29/2021 Pending Q2 2023
Fairbanks(2)
BTA Solar 250 — 03/03/2021 Pending Q3 2023
Indiana Crossroads(2)
BTA Solar 200 — 03/19/2021 Pending Q4 2022
Elliot(2)
BTA Solar 200 — 03/31/2021 Pending Q2 2023
Indiana Crossroads II 15 year PPA Wind 200 — 04/30/2021 Pending Q4 2023

Project Name

Transaction Type

Technology

Nameplate Capacity (MW)

Storage Capacity (MW)

Original Targeted Construction Completion

Estimated Construction Completion

Dunn's Bridge I(1)

BTA

Solar

265

—

Q4 2022

2023

Indiana Crossroads(1)

BTA

Solar

200

—

Q4 2022

2023

Dunn's Bridge II(1)

BTA

Solar & Storage

435

Q4 2023

2023 - 2024

Cavalry(1)

BTA

Solar & Storage

200

Q4 2023

2023 - 2024

Fairbanks(1)

BTA

Solar

250

—

Q3 2023

2024 - 2025

Elliott(1)

BTA

Solar

200

—

Q2 2023

2024 - 2025

Indiana Crossroads II

15 year PPA

Wind

204

—

Q4 2023

2023

Brickyard

20 year PPA

Solar

200

—

Q4 2022

2024

Greensboro

20 year PPA

Solar & Storage

100

Q4 2022

2023 - 2024

Gibson

22 year PPA

Solar

280

—

Q2 2023

2024

Green River

20 year PPA

Solar

200

—

Q2 2023

2024

(1)~~Refer to Note 15, "Variable Interest Entities," for additional information.~~

~~(2)~~Ownership of the facility will be transferred to joint ventures whose members include NIPSCO and an unrelated tax equity partner.

Expected Project Delays.Compared to the previously disclosed targeted construction completion dates in our Annual Report on Form 10-K for the year ended December 31, 2021, we estimate delays for most projects to range from six to 18 months, resulting in the majority of our projects, and investment, being in service in 2023 and 2024. We do not currently anticipate any delays to the 2023 in-service date of our outstanding wind energy project. The expected delays and inflationary cost pressures communicated from the developers of our solar and storage projects are primarily due to (i) unavailability of solar panels and other uncertainties related to the pending U.S. Department of Commerce investigation on Antidumping and Countervailing Duties petition filed by a domestic solar manufacturer (the "DOC Investigation"), (ii) the U.S. Department of Homeland Security's June 2021 Withhold Release Order on silica-based products made by Hoshine Silicon Industry Co., Ltd., (iii) Section 201 Tariffs and (iv) persistent general global supply chain and labor availability issues. We are also monitoring potential delays communicated by the developers of our renewable energy projects related to local permitting processes and obtaining interconnection rights. Preliminary findings from the DOC Investigation, including potential tariff amounts, are expected to be released in August 2022, with a final decision expected between January 2023 and March 2023. We have received and are evaluating several notices of possible force majeure from developers in connection with solar panel availability. The resolution of these issues, including the final conclusion of the DOC Investigation will determine what additional costs or delays our solar projects will be subject to as a result of any tariffs imposed. If any of these impacts result in cost increases for certain projects, such potential impacts are expected to result in the need for us to seek additional regulatory review and approvals. Additionally, significant changes to project costs and schedules as a result of these factors could impact the viability of the projects.

We, along with the developers of these generation projects, are continuously evaluating potential impacts to the targeted completion date of each project. Delays to the completion dates of our projects could also include delays in the financial return of certain investments and impact the overall timing of our electric generation transition.Although we are not currently expecting delays to extend the completion dates of our six solar and storage BTA projects beyond the currently planned sunset of investment tax credits at the end of 2025, if such delays occur, they could impact the economic viability of the projects.

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

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

NiSource Inc.

Liquidity and Capital Resources

We continually evaluate the availability of adequate financing to fund our ongoing business operations, working capital and core safety and infrastructure investment programs. Our financing is sourced through cash flow from operations and the issuance of debt and/or equity. External debt financing is provided primarily through the issuance of long-term debt, accounts receivable securitization programs and our $1.5 billion commercial paper program, which is backstopped by our committed revolving credit facility with a total availability from third-party lenders of $1.85 billion. On February 18, 2022, we amended our revolving credit agreement to, among other things, extend its term to February 18, 2027. The commercial paper program and credit facility provide cost-effective, short-term financing until it can be replaced with a balance of long-term debt and equity financing that achieves our desired capital structure. We utilize an ATM equity program that allows us to issue and sell shares of our common stock up to an aggregate issuance of $750.0 million through December 31, 2023. ~~On April 19, 2021, we completed~~As of March 31, 2022, the ATM program (including the impact of the forward sale agreement) had approximately $300.0 million of ~~8.625 million~~equity available for issuance. We also expect to remarket the Series C Mandatory Convertible Preferred stock prior to December 1, 2023, which could result in additional cash proceeds. See Note 5, ''Equity,'' in the Notes to Condensed Consolidated Financial Statements (unaudited) for more information on our ATM program and Equity ~~Units, which provided net proceeds of $835.5 million~~, after underwriting and estimated issuance expenses. We intend to use the net proceeds from the offering for renewable generation investments and general corporate purposes, including additions to working capital and repayment of existing indebtedness.Units.

We believe these sources provide adequate capital to fund our operating activities and capital expenditures in ~~2021~~2022 and beyond.

Greater Lawrence Incident: As discussed in Note ~~17, “Other~~15, ''Other Commitments and Contingencies,”'' in the Notes to the Condensed Consolidated Financial Statements (unaudited), due to the inherent uncertainty of litigation, there can be no assurance that the outcome or resolution of any particular claim related to the Greater Lawrence Incident will not continue to have an adverse impact on our cash flows. Through income generated from operating activities, amounts available under the short-term revolving credit facility, and our ability to access capital markets, we believe we have adequate capital available to settle remaining anticipated claims associated with the Greater Lawrence Incident.

Operating Activities

Net cash from operating activities for the three months ended March 31, ~~2021~~2022 was ~~$448.3~~$579.8 million, an increase of ~~$78.4~~$131.5 million compared to the three months ended March 31, ~~2020.~~2021. This increase was primarily driven by a year over year ~~decrease in net payments~~increased cash inflows related to the ~~Greater Lawrence Incident. During 2021, we paid approximately $6 million compared to $150 million~~collection of payments during the same period in 2020. Additionally, we had decreased compensation and employee benefit payments in 2021 compared to 2020. Offsetting these decreased cash outflows are increases related to the under collection ofunder-recovered gas and fuel costs.

Investing Activities

Net cash used for investing activities for the three months ended March 31, ~~2021~~2022 was ~~$401.8~~$370.4 million, a decrease of ~~$82.8~~$31.4 million compared to the three months ended March 31, ~~2020. This decrease was driven by lower~~2021. Our current year investing activities were comprised of increased capital expenditures related to system growth and reliability, offset by the property insurance settlement related to the Greater Lawrence Incident.

As we evaluate adjustments to renewable generation project timing, the company remains on track to make capital investments totaling approximately $8 billion during the 2022-2024 period. We expect to have capital investment requirements of approximately $2.0 billion, primarily between 2022 and 2024, with any remainder expected in 2025, to replace the generation capacity of R.M. Schahfer Generating Station's coal-fired units. We have flexibility in the timing of other gas and electric infrastructure capital investments that can allow adjustments to compensate for delays in renewable generation projects. These forecasted capital investments and those included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 are subject to continuing review and adjustment. Actual capital expenditures may vary from these estimates. For example, the timing and ultimate cost associated with ~~the Massachusetts Business in 2020~~solar and ~~timing of growth spend. We project total 2021~~battery storage capital expenditures may vary due to ~~be approximately $1.9 to $2.1 billion.~~the U.S. Department of Commerce's investigation into an Antidumping and Countervailing Duties circumvention claim on solar cells and panels supplied from Malaysia, Vietnam, Thailand and Cambodia. For additional information, see "Results and Discussion of Segment Operations - Electric Operations," in this Management's Discussion and Part II, Item 1A. Risk Factors.

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

NiSource Inc.

Regulatory Capital ~~Improvement~~ Programs. We replace pipe and modernize our gas infrastructure to enhance safety and reliability by reducing leaks, which subsequently reduces GHG emissions. In ~~2021,~~2022, we continue to move forward on core infrastructure and environmental investment programs supported by complementary regulatory and customer initiatives across all six states of our operating area.

The following table describes the most recent vintage of our regulatory programs to recover infrastructure replacement and other federally mandated compliance investments currently in rates ~~and those~~or pending commission approval:

(in millions)

Company

Program

Incremental Revenue

Incremental Capital Investment

Investment Period

Costs Covered(1)

Rates
Effective

Company

Program

Incremental Revenue

Incremental Capital Investment

Investment Period

Costs Covered(1)

Rates
Effective

Columbia of Ohio(2)

IRP - 2021

22.2

212.6

1/20-12/20

Replacement of (1) hazardous service lines, (2) cast iron, wrought iron, uncoated steel, and bare steel pipe, (3) natural gas risers prone to failure and (4) installation of AMR devices.

May 2021

Columbia of Ohio(2)

IRP - 2022

25.0

232.9

1/21-12/21

Replacement of (1) hazardous service lines, (2) cast iron, wrought iron, uncoated steel, and bare steel pipe, (3) natural gas risers prone to failure and (4) installation of AMR devices.

May 2022

Columbia of Ohio(2)

CEP - 2021

18.3

179.2

1/20-12/20

Assets not included in the IRP.

September 2021

Columbia of Ohio(2)

CEP - 2022

32.2

253.5

1/21-12/21

Assets not included in the IRP.

September 2022

NIPSCO - Gas

TDSIC 2

1.8

52.3

7/20-12/20

New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.

July 2021

NIPSCO - Gas

TDSIC 4

17.2

77.5

7/21-12/21

New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.

July 2022

NIPSCO - Gas

FMCA 5

1.4

42.3

4/20-9/20

Project costs to comply with federal mandates.

April 2021

NIPSCO - Gas

FMCA 7

0.4

32.8

4/21-9/21

Project costs to comply with federal mandates.

April 2022

Columbia of Pennsylvania(2)

DSIC - Q4 2020

0.8

25.0

9/20-11/20

Eligible project costs including piping, couplings, gas service lines, excess flow valves, risers, meter bars, meters, and other related capitalized cost, to improve the distribution system.

January 2021

Columbia of Virginia(3)

SAVE - 2021

5.2

46.4

1/21-12/21

Replacement projects that (1) enhance system safety or reliability, or (2) reduce, or potentially reduce, greenhouse gas emissions.

January 2021

Columbia of Virginia(3)

SAVE - 2022

4.0

63.0

1/22-12/22

Replacement projects that (1) enhance system safety or reliability, or (2) reduce, or potentially reduce, greenhouse gas emissions.

January 2022

Columbia of Kentucky

SMRP - 2021

2.6

40.0

1/21-12/21

Replacement of mains and inclusion of system safety investments.

May 2021

Columbia of Maryland

STRIDE - 2021

1.3

16.9

1/21-12/21

Pipeline upgrades designed to improve public safety or infrastructure reliability.

January 2021

Columbia of Maryland

STRIDE - 2022

1.3

17.5

1/22-12/22

Pipeline upgrades designed to improve public safety or infrastructure reliability.

January 2022

NIPSCO - Electric(3)(4)

TDSIC - 8

(2.0)

73.5

8/20-1/21

New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.

August 2021

NIPSCO - Electric~~(5)~~(4)

FMCA - 13

(1.2)

—

9/19-2/20

Project costs to comply with federal mandates.

August 2020

NIPSCO - Electric~~(5)~~(4)

TDSIC - 9

0.2

42.7

2/21-5/21

New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.

February 2022

NIPSCO - Electric(5)

TDSIC - 1

10.4

148.5

6/21-1/22

New or replacement projects undertaken for the purpose of safety, reliability, system modernization or economic development.

August 2022

(1)Programs do not include any costs already included in base rates.

(2)~~Effective~~The January ~~23,~~through March 2021 investments included in these filings are also included in the pending Columbia of ~~Pennsylvania's DSIC~~Ohio rate ~~was set~~case. The infrastructure filings will be adjusted to ~~zero due to~~reflect the ~~inclusion of the incremental capital and revenue in base rates following the Pennsylvania PUC's Final Order in the 2020~~final rate ~~case.~~case outcome.

(3)~~Decrease~~Columbia of Virginia filed its application to amend and extend its SAVE program with the Virginia SCC on August 12, 2021, requesting approval of a two-year SAVE program for calendar years 2022-2023 that includes incremental capital investments of $63.0 million and $72.0 million, respectively. The Commission approved the Company's application in ~~incremental revenue is due to lower depreciation expense (pre-2018 base rate case vs post-2018 base rate case).~~its December 6, 2021 Order Approving SAVE Rider.

(4)On April 1, 2021, NIPSCO filed a notice with the IURC that it ~~intends~~intended to terminate its current Electric TDSIC plan effective May 31, 2021. NIPSCO ~~expects to file~~filed the TDSIC-9 petition on September 28, 2021, with capital investment through the plan termination date of May 2021, and received an order on January 26, 2022 approving TDSIC-9.

(5) NIPSCO filed for a new electric TDSIC plan on ~~or soon after~~ June 1, 2021. An order approving NIPSCO's new electric TDSIC plan was received on December 28, 2021. NIPSCO filed its first tracker, TDSIC – 1, on March 30, 2022. An order is expected in July 2022 with rates requested to be effective August 2022.

~~(5)Decrease~~In 2022, NIPSCO filed additional petitions associated with the FMCA program to recover federally mandated compliance investments.

On March 30, 2022, NIPSCO Electric filed a petition with the IURC seeking approval of NIPSCO's federally mandated costs for closure of Michigan City Generating Station's CCR ash ponds. The project includes a total estimated $40.0 million of federally mandated retirement costs. NIPSCO is requesting all associated accounting and ratemaking relief, including establishment of a periodic rate adjustment through the FMCA mechanism. Refer to Note 15, ''Other Commitments and Contingencies - D Environmental Matters,'' in ~~incremental revenue is inclusive~~the Notes to the Condensed Consolidated Financial Statements (unaudited) for further discussion of ~~tracker eligible operations~~the CCRs.

On April 1, 2022, NIPSCO Gas filed a petition with the IURC seeking approval of NIPSCO's federally mandated costs for a Pipeline Safety III Compliance Plan. The federally mandated costs include a total estimated $228.7 million of capital costs as well as $34.1 million of operation and maintenance ~~expense. No eligible capital investments were made during the investment period.~~programs. NIPSCO Gas is requesting all associated accounting and ratemaking relief, including establishment of a periodic rate adjustment mechanism.

Financing Activities

Common Stock, Preferred Stock and ~~Preferred Stock.~~Equity Unit Sale. Refer to Note 5, ~~“Equity,”~~''Equity,'' in the Notes to Condensed Consolidated Financial Statements (unaudited) for information on common and preferred stock activity.

~~Short-term Debt.~~ ~~Refer to Note 16, “Short-Term Borrowings,” in the Notes to Condensed Consolidated Financial Statements (unaudited) for information on short-term debt activity.~~

~~Non-controlling Interest. Refer to Note 15, "Variable Interest Entities," in the Notes to Condensed Consolidated Financial Statements (unaudited) for information on contributions from non-controlling interest activity.~~

~~Net Available Liquidity.~~ ~~As of March 31, 2021, an aggregate of $1,866.0 million of net liquidity was available, including cash and credit available under the revolving credit facility.~~

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

NiSource Inc.

Short-term Debt and Sale of Trade Accounts Receivables. Refer to Note 14, ''Short-Term Borrowings,'' in the Notes to Condensed Consolidated Financial Statements (unaudited) for information on short-term debt activity, including sale of trade accounts receivable.

Noncontrolling Interest. Refer to Note 12, "Variable Interest Entities," in the Notes to Condensed Consolidated Financial Statements (unaudited) for information on contributions from noncontrolling interest activity.

Sources of Liquidity

The following table displays our liquidity position as of March 31, ~~2021~~2022 and December 31, ~~2020:~~2021:


(in millions)	(in millions)	March 31, 2021		December 31, 2020		(in millions)	March 31, 2022		December 31, 2021
Current Liquidity	Current Liquidity					Current Liquidity
Revolving Credit Facility	Revolving Credit Facility	$	1,850.0	$	1,850.0	Revolving Credit Facility	$	1,850.0	$	1,850.0
Accounts Receivable Program(1)		462.1		273.3
Accounts Receivable Programs(1)						Accounts Receivable Programs(1)	480.0		251.2
Less:	Less:					Less:

Commercial Paper	Commercial Paper	520.0		503.0		Commercial Paper	165.0		560.0
Accounts Receivable Program Utilized		—		—
Accounts Receivable Programs Utilized						Accounts Receivable Programs Utilized	355.0		—
Letters of Credit Outstanding Under Credit Facility	Letters of Credit Outstanding Under Credit Facility	15.2		15.2		Letters of Credit Outstanding Under Credit Facility	14.4		18.9
Add:	Add:					Add:
Cash and Cash Equivalents	Cash and Cash Equivalents	89.1		116.5		Cash and Cash Equivalents	114.5		84.2
Net Available Liquidity	Net Available Liquidity	$	1,866.0	$	1,721.6	Net Available Liquidity	$	1,910.1	$	1,606.5

(1)Represents the lesser of the seasonal limit or maximum borrowings supportable by the underlying receivables.

Debt Covenants. We are subject to financial covenants under our revolving credit facility, which require us to maintain a debt to capitalization ratio that does not exceed 70%. As of March 31, ~~2021,~~2022, the ratio was ~~62.2%~~56.4%.

~~Sale of Trade Accounts Receivables.~~ ~~Refer to Note 11, “Transfers of Financial Assets,” in the Notes to Condensed Consolidated Financial Statements (unaudited) for information on the sale of trade accounts receivable.~~

Credit Ratings. The credit rating agencies periodically review our ratings, taking into account factors such as our capital structure and earnings profile. The following table includes our and ~~certain of our subsidiaries'~~NIPSCO's credit ratings and ratings outlook as of March 31, ~~2021.~~2022. There were no changes to the below credit ratings or outlooks since ~~December 31,~~February 2020.

A credit rating is not a recommendation to buy, sell, or hold securities, and may be subject to revision or withdrawal at any time by the assigning rating organization.

S&P

Moody's

Fitch

Rating

Outlook

Rating

Outlook

Rating

Outlook

NiSource

BBB+

Stable

Baa2

Stable

BBB

Stable

NIPSCO

BBB+

Stable

Baa1

Stable

BBB

Stable

~~Columbia of Massachusetts~~

~~BBB+~~

~~Stable~~

~~Baa2~~

~~Stable~~

~~Not rated~~

Commercial Paper

A-2

Stable

P-2

Stable

Certain of our subsidiaries have agreements that contain ~~“ratings triggers”~~''ratings triggers'' that require increased collateral if our credit rating or the credit ratings of certain of our subsidiaries are below investment grade. These agreements are primarily for insurance purposes and for the physical purchase or sale of power. As of March 31, ~~2021,~~2022, the collateral requirement that would be required in the event of a downgrade below the ratings trigger levels would amount to approximately ~~$54.8~~$58.1 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. Our authorized capital stock consists of 620,000,000 shares, $0.01 par value, of which 600,000,000 are common stock and 20,000,000 are preferred stock. As of March 31, ~~2021, 392,129,866~~2022, 405,734,408 shares of common stock and ~~440,000~~1,302,500 shares of preferred stock were outstanding.

Contractual Obligations. A summary of contractual obligations is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. There were no material changes from year-end during the three months ended March 31, ~~2021 to our contractual obligations as~~2022.

Table of ~~December 31, 2020.~~Contents

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

NiSource Inc.

Guarantees, Indemnities and ~~Indemnities.~~Other Off Balance Sheet Arrangements. We and certain of our subsidiaries enter into various agreements providing financial or performance assurance to third parties on behalf of certain subsidiaries as a part of normal business. Such agreements include guarantees and stand-by letters of credit. Refer to Note ~~17, “Other~~15, ''Other Commitments and Contingencies,”'' in the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information ~~on guarantees.~~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 ~~Other~~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 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.

~~A portion of the Electric Operations revenue is related to the recovery of fuel costs to generate power~~We recognize that energy efficiency reduces emissions, conserves natural resources 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.~~

~~Increased~~saves our customers money. Our gas distribution companies offers 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 ~~has contributed~~contributes to a long-term trend of declining average use per customer. While ~~historical rate design at~~we are looking to expand offerings so the distribution level has been structured such that a large portion of cost recovery is based upon throughput rather than in a fixed charge, operating costs are largely incurred on a fixed basis and do not fluctuate due to changes in customer usage. As a result,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. ~~Each of the states in which Gas Distribution Operations operate has different requirements regarding the procedure for establishing changes to rate design.~~

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 during specified heating months.~~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.

~~Rate Case Actions~~

~~The following table describes current rate case actions as applicable in each~~A portion of ~~our jurisdictions net~~the Electric Operations revenue is related to the recovery of ~~tracker impacts:~~

(in millions)
Company Proposed ROE Approved ROE Requested Incremental Revenue Approved Incremental Revenue Filed Status Rates
Effective
Columbia of Pennsylvania(1)
9.86 % 9.86 % $ 76.8 $ 63.5 April 24, 2020 Approved
February 19, 2021 January 2021
Columbia of Pennsylvania 10.95 % In process $ 98.3 In process March 30, 2021 Order Expected Q4 2021 December 2021

~~(1)The 9.86% ROE~~fuel costs to generate power and the ~~$76.8 million requested incremental revenue stated above~~fuel costs related to purchased power. These costs are recovered through a FAC, which is updated quarterly to reflect ~~compromise positions taken by Columbia~~actual costs incurred to supply electricity to customers.

While increased efficiency of ~~Pennsylvania during~~electric appliances and improvements in home building codes and standards has similarly impacted the ~~briefing stages~~average use per electric customer in recent years, NIPSCO expects future growth in per customer usage as a result of ~~its 2020 base~~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 ~~case. In its initial filing on April 24, 2020, Columbia~~designs, and NIPSCO will continue efforts to design rates that increase the certainty of ~~Pennsylvania proposed an ROE~~recovery of 10.95% and requested incremental revenue of $100.4 million. A Final Order from the Pennsylvania PUC was received on February 19, 2021 for rates effective retroactive to January 23, 2021. On March 8, 2021, the Pennsylvania Office of Consumer Advocate filed a Petition for Reconsideration, seeking to have the Pennsylvania PUC modify its February 19 Final Order. On April 15, 2021, the Pennsylvania PUC issued an Opinion and Order denying the Office of Consumer Advocate’s Petition. Parties have 30 days in which to file an appeal.

~~In addition to the rate case actions noted in the table above, Columbia of Kentucky has filed a Notice of Intent to file a base rate case on May 28, 2021 or soon thereafter.~~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 ~~Other~~Safety Matters

~~COVID-19 Regulatory Deferrals~~Rate Case Actions

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

(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 without specifying ratemaking elements to establish the Company's revenue requirement. Pursuant to the ~~cost deferred~~settlement, for purposes of calculating its DSIC, Columbia of Pennsylvania shall use the equity return rate for gas utilities contained in the Pennsylvania Commission’s most recent Quarterly Report on the Earnings of Jurisdictional Utilities, including quarterly updates thereto.

(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 ~~regulatory asset as noted in Note 8, "Regulatory Matters",~~specific revenue increase but not a specified ROE. The settlement provides use of a 9.70% ROE for future SAVE filings.

(4)A proposed Incremental Revenue of $212.3M is reflected in the ~~Notes~~update filed with the PUCO on March 31, 2022.

(5) Proposed new rates would be implemented in 2 steps, with implementation of step 1 rates to ~~Condensed Consolidated Financial Statements (unaudited), certain states have permitted us~~be effective in September 2022 and step 2 rates to ~~track lost late~~be effective in March 2023. A proposed ROE of 9.85% and ~~disconnect fee revenues due~~Incremental Revenue of $71.8M are reflected in the Settlement and Stipulation Agreement filed with the IURC on March 2, 2022.

(6)The revenue request including the SAVE tracker related amount is $58.2 million. Beginning October 2022, interim rates will be billed subject to ~~the pandemic. While these costs do not qualify as regulatory assets under ASC 980, we will consider seeking recovery of these costs in future regulatory proceedings.~~refund, pending a final commission order.

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 ~~O&M~~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 technologies that enable the location and ~~repair programs that meet safety needs and protect the environment, require the use~~categorization of ~~advance leak detection practices and technologies, and require operators to be able to locate and categorize~~ all leaks that are hazardous, or potentially hazardous, to human safety or the ~~environment, or that can become hazardous.~~environment. Natural gas companies, including ~~the Company,~~NiSource and our subsidiaries, may see increased costs depending on how PHMSA implements the new mandates resulting from the PIPES Act.

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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

Climate Change Issues

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.

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. ~~Additionally, rules that require further~~Revised or additional future GHG ~~reductions~~ legislation and/or ~~impose additional requirements for~~regulation related to the generation of electricity or the extraction, production, distribution, transmission, storage and end use of natural gas ~~facilities~~ could materially impact our gas supply, financial position, financial results and cash flows. We continue to monitor the implementation of any final and proposed climate change-related legislation and regulations, including the Infrastructure Investment and Jobs Act, passed in November 2021, and the EPA's proposed methane regulations for the oil and natural gas industry, but we cannot predict their final form or impact on our business at this time. We have identified potential opportunities associated with the Infrastructure Investment and Jobs Act and are evaluating how they may align with our strategy going forward. The energy-related provisions 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.

On July 8, 2019, the EPA published the final ACE rule, which establishes emission guidelines for states to use when developing plans to limit carbon dioxide at coal-fired electric generating units based on heat rate improvement measures. The U.S. Court of Appeals for the D.C. Circuit vacated and remanded the rule on January 19, 2021. On October 29, 2021, the U.S. Supreme Court agreed to review the scope of the EPA's authority to impose ~~additional costs.~~GHG emission standards under the Clean Air Act. We will continue to monitor this matter.

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. We

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 ~~carefully~~continue to monitor ~~all climate-related~~this matter, but we cannot predict its final impact on our business at this time. Separately, the Virginia Energy Innovation Act ("the 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 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 asto 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. Columbia of Maryland will continue to monitor this matter, but we cannot predict its final impact on our business at this time.

In response to these transition risks and opportunities, we continue to actively implement our plans to ~~be coal-free~~reduce Scope 1 GHG emissions by ~~2028~~90% from 2005 levels by 2030, and ~~achieve our 90%~~to significantly reduce methane emissions, a component of Scope 1 GHG ~~reduction target by 2030.~~

~~On July 8, 2019,~~emissions. These plans include the ~~EPA published the final ACE rule, which establishes emission guidelines for states to use when developing plans to limit carbon dioxide at~~retirement of coal-fired electric ~~generating units based on heat rate improvement measures. The U.S. Court~~generation, increased sourcing of ~~Appeals for~~renewable energy, and methane reductions from priority pipeline replacement, traditional leak detection and repair, and deployment of advanced leak detection and repair. As of the ~~D.C. Circuit vacated and remanded the rule on January 19, 2021. NIPSCO will continue to monitor this matter.~~

end of 2021, we had reduced Scope 1 GHG emissions by approximately 58% from 2005 levels.

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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

~~Off-Balance Sheet Arrangements~~Additionally, we are active in several efforts to accelerate the development and demonstration of lower-carbon energy technologies and resources, such as hydrogen and RNG, to enable affordable pathways to economy-wide decarbonization.

~~We, along~~In April 2022, Columbia of Pennsylvania and Columbia of Virginia 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.

As discussed above in this Management's Discussion within "Results and Discussion of Segment Operations - Electric Operations," and Part II, Item 1A. Risk Factors, NIPSCO continues to execute on an electric generation transition consistent with ~~certain of our subsidiaries, enter into various agreements providing financial or performance assurance to third parties on behalf of certain subsidiaries. Such agreements include guarantees~~the preferred pathways identified in its 2018 and ~~stand-by letters of credit.~~

~~Refer to Note 17, “Other Commitments and Contingencies,” in the Notes to Condensed Consolidated Financial Statements (unaudited) for additional information about such arrangements.~~2021 Integrated Resource Plans.

Market Risk Disclosures

Risk is an inherent part of our businesses. The extent to which we properly and effectively identify, assess, monitor and manage each of the various types of risk involved in our businesses is critical to our profitability. We seek to identify, assess, monitor and manage, in accordance with defined policies and procedures, the following principal market risks that are involved in our businesses: commodity price risk, interest rate risk and credit risk. 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. 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, our risk management process, policies and procedures continue to evolve and are subject to ongoing review and modification.

Commodity Price Risk

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

Commodity price risk resulting from derivative activities at 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.

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 are reflected in our restricted cash balance, may fluctuate significantly during periods of high volatility in the energy commodity markets.

Refer to Note 9,8, "Risk Management Activities," in the Notes to Condensed Consolidated Financial Statements (unaudited) for further information on our commodity price risk assets and liabilities as of March 31, ~~2021 or~~2022 and December 31, ~~2020.~~2021.

Interest Rate Risk

We are exposed to interest rate risk as a result of changes in interest rates on borrowings under our revolving credit agreement, commercial paper program and accounts receivable programs, ~~and now-settled 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 ~~$1.2~~$1.5 million and ~~$4.3~~$1.2 million for the three months ended March 31, ~~2021,~~2022 and ~~March 31, 2020,~~2021, respectively. 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 9,8, "Risk Management Activities," in the Notes to Condensed Consolidated Financial Statements (unaudited) for further information on our interest rate risk assets and liabilities as of March 31, ~~2021~~2022 and December 31, ~~2020.~~2021.

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

NiSource Inc.

Credit Risk

Due to the nature of the industry, credit risk is embedded in many of our business activities. 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 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.

We closely monitor the financial status of our banking credit providers. We evaluate the financial status of 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.

Certain individual state regulatory commissions instituted regulatory moratoriums in connection with the COVID-19 pandemic that impacted our ability to pursue our credit risk mitigation practices for customer accounts receivable. Following the issuances of these moratoriums, certain of our regulated operations have been authorized to recognize a regulatory asset for bad debt costs above levels currently in rates. We have reinstated our common credit mitigation practices where moratoriums have expired. Refer to Note 8, "Regulatory Matters" in the Notes to Condensed Consolidated Financial Statements (unaudited) for state-specific regulatory moratoriums.

Other Information

Critical Accounting Estimates

~~Refer to Note 3, "Revenue Recognition,"~~A summary of our critical accounting estimates is included in the ~~Notes to Condensed Consolidated Financial Statements (unaudited)~~Company's Annual Report on Form 10-K for ~~additional information about management judgment used in determining allowance for credit losses.~~

~~Refer to Note 12, "Goodwill,"~~the year ended December 31, 2021. There were no material changes made in the ~~Notes to Condensed Consolidated Financial Statements (unaudited) for additional information about management judgment used in the annual goodwill impairment analysis performed as of May 1, 2020.~~

Refer to Note 15, "Variable Interest Entities," in the Notes to Condensed Consolidated Financial Statements (unaudited) for additional information about management judgement used in determining how to account for our variable interest entity.three months ended March 31, 2022.

Recently Issued Accounting Pronouncements

Refer to Note 2, "Recent Accounting Pronouncements," in the Notes to 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

~~For a discussion regarding quantitative~~Quantitative and qualitative disclosures about market risk ~~see “Management’s~~are reported in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Market Risk Disclosures.”"

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our chief executive officer and our chief financial officer are responsible for evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon that evaluation, our chief executive officer and chief financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that financial information was processed, recorded and reported accurately.

Changes in Internal Controls

There have been no changes in our internal control over financial reporting during the most recently completed quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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NiSource Inc.

PART II

ITEM 1. LEGAL PROCEEDINGS

For a description of our legal proceedings, see Note ~~17-B, "Legal~~15, "Other Commitments and Contingencies" "B-, Legal Proceedings," in the Notes to Condensed Consolidated Financial Statements (unaudited).

ITEM 1A. RISK FACTORS

The risk factors set forth in Part I, Item 1A of the ~~Company’s~~ Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 are supplemented with the following risk ~~factors,~~factor, which should be read in conjunction with the risk factors set forth in the Annual Report on ~~Form 10-K.~~Form-10-K.

Operational Risk ~~Factors Relating to~~

Aspects of the implementation of our ~~Equity Units~~

~~The trading prices for~~electric generation strategy, including the retirement of our ~~Equity Units, initially consisting of Corporate Units, and related treasury~~coal generation units, ~~and mandatory convertible preferred stock,~~ are expected to be ~~affected~~delayed and may not achieve intended results.

Our plan to replace our coal generation capacity by the end of 2028 with primarily renewable resources, as described in our 2018 Plan, is well underway, but we are facing challenges as described below. The 2018 Plan outlined the retirement of R.M. Schahfer Generation Station's four coal units by mid-2023, with a preferred replacement plan including wind, solar, and battery storage projects. The 2021 Plan that we submitted to the IURC calls for the replacement of our remaining coal generation 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 ~~things,~~steps. The precise timing of the ~~trading prices~~retirements will be informed by regulatory and policy changes, our ability to maintain reliability of the system and our ability to secure replacement capacity. For additional information, see below and "Results and Discussion of Segment Operations - Electric Operations," in Management's Discussion and Analysis of Financial Condition and Results of Operations.

Recent developments, including macro supply chain issues and U.S. federal policy actions, have created significant uncertainty around the availability of key input material necessary to develop and place solar projects in service in the U.S.Solar industry supply chain issues include the Antidumping and Countervailing Duties Anti Circumvention Petition filed by a domestic solar manufacturer, the Uyghur Forced Labor Protection Act and Forced Labor Withhold Release Order, Section 201 Tariffs, and general global supply chain and labor availability issues.The most prominent effect of these issues is the significant curtailment of imported solar panels and other key components required to complete utility scale solar projects in the U.S. Any solar panels that are available are priced much higher than previously anticipated and the incremental cost may not be recoverable through customer rates. As a result of the challenges in obtaining solar panels, many solar projects in the U.S. have been delayed or canceled. As we are in the midst of a transition to a solar dominant electric generation portfolio, our projects are subject to the effects of these issues, and there is currently uncertainty around the timing of completion for our portfolio of projects under the 2018 Plan.We have received and are evaluating several notices of possible force majeure from developers in connection with the solar and storage projects. Depending on the outcome of these issues, developers and financing partners could seek to either modify the terms of or abandon the development of solar projects, which could negatively impact the planned in-service dates and cost estimates that have been approved by our regulators.

Our expectation has been that solar energy sources would be one of the primary ways in which we will meet our electric generation capacity and reliability obligations to the MISO market and reliably serve our customers when we retire our coal generation capacity. The high level of uncertainty surrounding the completion of our ~~common stock,~~solar renewable energy projects creates significant risks for us to reliably meet our capacity and energy obligations to MISO and to provide reliable and affordable energy to our customers. Delays to the ~~general level~~completion dates of ~~interest rates and~~ our ~~credit quality.~~

The trading prices of the Equity Units, initially consisting of Corporate Units, which are listed on the New York Stock Exchange, and the related treasury units and mandatory convertible preferred stock in the secondary market,ten approved (or planned) solar projects are expected to ~~be affected by, among other things,~~impact our capacity position and our ability to meet our resource adequacy obligations to MISO. Delays to the ~~trading prices~~completion dates of our ~~common stock,~~projects could also include delays in the ~~general level~~financial return of ~~interest rates~~certain investments and ~~our credit quality. It is impossible to predict whether~~impact the ~~price~~overall timing of our ~~common stock or interest rates will rise or fall. The price~~electric generation transition.Although we are not currently expecting delays to extend the completion dates of our ~~common stock~~six solar and storage BTA projects beyond the currently planned sunset of investment tax credits at the end of 2025, if such delays occur, they could ~~be subject~~impact the viability of the projects.

We are evaluating potential paths to ~~wide fluctuations~~mitigate these risks, including extending operations of the remaining two coal units at Schahfer from the previously planned retirement date of May 2023 to the end of 2025 in order to continue to have sufficient electric generation resources in our portfolio to meet our capacity and reliability obligations. Having additional flexibility in the ~~future in response~~timing of the exact date of the retirement will allow us to ~~many events or factors, including those discussed~~better manage the uncertainty in the risk factors herein and in our Annual Report on Form 10-K for the year ended December 31, 2020, as may be supplemented by subsequently filed Quarterly Reports on Form 10-Q, many of which events and factors are beyond our control. Fluctuations in interest rates may give rise to arbitrage opportunities based upon changes in the relative valuetiming of the common stock underlying the purchase contracts and of the other components of the Equity Units. Any such arbitrage could, in turn, affect the trading prices of the Corporate Units, treasury units, mandatory convertible preferred stock and our common stock.

The fundamental change early settlement right triggered under certain circumstances by a fundamental change and the supermajority rights of the mandatory convertible preferred stock in connection with certain fundamental change transactions jointly could discourage a potential acquirer.

The fundamental change early settlement right with respect to the purchase contracts triggered under certain circumstances by a fundamental change and the supermajority voting rights of the mandatory convertible preferred stock in connection with certain fundamental change transactions jointly could discourage a potential acquirer, including potential acquirers that would otherwise seek a transaction with us that would be attractive to our investors.

Our Equity Units, initially consisting of Corporate Units, and related mandatory convertible preferred stock, and the issuance and sale of common stock in settlement of the purchase contracts and conversion of mandatory convertible preferred stock, may all adversely affect the market pricecompletion of our ~~common stock and will cause dilution~~renewable projects. We currently have a pending application with the EPA to ~~our stockholders.~~

The market price of our common stock is likely to be influenced by our Equity Units, initially consisting of Corporate Units, and related mandatory convertible preferred stock. For example, the market price of our common stock could become more volatile and could be depressed by:

•~~investors’ anticipation of the sale into the market~~continue operation of a ~~substantial number of additional shares of our common stock issued upon settlement of the purchase contracts or conversion of our mandatory convertible preferred stock;~~

•possible sales of our common stock by investors who view our Equity Units, initially consisting of Corporate Units, or related mandatory convertible preferred stock as a more attractive means of equity participation in us than owning shares of our common stock; and

•~~hedging or arbitrage trading activity~~coal ash pond that ~~we expect to develop involving our Equity Units, initially consisting of Corporate Units, or related mandatory convertible preferred stock and our common stock.~~

In addition, we cannot predict the effect that future issuances or sales of our common stock, if any, including those made upon the settlement of the purchase contracts or conversion of the mandatory convertible preferred stock, may have on the market price for our common stock.

is tied

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ITEM 1A. RISK FACTORS

NiSource Inc.

to operation of Schahfer Units 17 and 18. The application is being updated to reflect extending operation of our coal ash pond from 2023 to the end of 2025, with the coal ash pond closing by October 2028. It is difficult to assess the likelihood that the EPA would approve extending the operation of our coal ash pond. In recent proposed EPA actions denying continued operation of coal ash ponds at other utilities, EPA said that coal ash ponds should cease receipt of CCR within 135 days of final EPA action unless certain conditions are demonstrated, such as potential reliability issues. We believe that we can continue to operate the two units to the end of 2025 while still meeting the CCR rule's final October 2028 deadline for pond closure.Extending the operation of the two remaining Schahfer coal units beyond 2025 would require substantial investment in infrastructure to process CCRs without the coal ash pond. We are also evaluating the ability to secure electric capacity from other resources in the event that one or more of our solar projects is not viable.

~~Our Equity Units, initially consisting~~Furthermore, extending operations of ~~Corporate Units,~~the remaining two coal units at Schahfer from the previously planned retirement date of May 2023 may require us to acquire additional emission allowances for compliance with the EPA’s proposed interstate air pollution transport rule, also known as the “Good Neighbor” Plan, which was published in the Federal Register on April 6, 2022. We are currently evaluating the proposed rule. The cost to acquire additional emission allowances may be material.

As noted above, there are inherent risks and uncertainties in executing the projects that were outlined in the 2018 and 2021 Plans, both for what has been already executed and the ~~issuance~~additional capacity still planned to be secured in the future, including changes in market conditions, supply chain disruptions, regulatory approvals, environmental regulations, commodity costs and sale of substantial amounts of common stock, including issuances and sales upon the settlement of the purchase contracts or conversion of the mandatory convertible preferred stock, could adversely affect the market price of our common stock and will cause dilution to our stockholders.

~~Operational Risk~~

~~A cyber-attack on any of our or certain third-party computer systems upon~~customer expectations, which ~~we rely may adversely affect~~are impeding our ability to ~~operate~~achieve intended results and ~~could lead to a loss~~associated timelines. Changes in the cost, availability and supply of generation capacity are affecting the implementation of the results from the 2021 Plan. Advancements in technology in replacement resources may not become commercially available or ~~misuse of confidential and proprietary information or potential liability.~~

We are reliant on technology to run our business, which is dependent upon financial and operational computer systems to process critical information necessary to conduct various elements of our business, includingeconomically feasible as projected in the ~~generation, transmission and distribution of electricity; operation of our gas pipeline facilities;~~2021 Plan and the ~~recording and reporting of commercial and financial transactions to regulators, investors and other stakeholders. In addition to general information and cyber risks~~implementation execution may vary from that all large corporations face (e.g., malware, unauthorized access attempts, phishing attacks, malicious intent by insiders, third-party software vulnerabilities and inadvertent disclosure of sensitive information), the utility industry faces evolving and increasingly complex cybersecurity risks associated with protecting sensitive and confidential customer and employee information, electric grid infrastructure, and natural gas infrastructure. Deployment of new business technologies, along with maintaining legacy technology, represents a large-scale opportunity for attackswhich has been communicated. Our future success will depend, in part, on our information systems and confidential customer and employee information, as well as on the integrity of the energy grid and the natural gas infrastructure. Increasing large-scale corporate attacks in conjunction with more sophisticated threats continue to challenge power and utility companies. Any failure of our computer systems, or those of our customers, suppliers or others with whom we do business, could materially disrupt our ability to ~~operate~~successfully implement our ~~business~~long-term electric generation plans, to offer services that meet customer demands and ~~could result in a financial loss~~evolving industry standards, and ~~possibly do harm~~ to ~~our reputation.~~

Additionally, our information systems experience ongoing, often sophisticated, cyber-attacks by a variety of sources, including foreign sources, with the apparent aim to breach our cyber-defenses. Although we attempt to maintain adequate defenses to these attacks and work through industry groups and trade associations to identify common threats and assess our countermeasures, a security breach of our information systems,recover all, or a ~~security breach~~significant portion of, ~~the information systems of~~any unrecovered investment in obsolete assets.

As noted above, we expect our ~~customers, suppliers or others with whom we do business, could (i) adversely impact~~electric generation strategy to require additional investment to meet our ~~ability~~MISO obligations and may require significant future capital expenditures, operating costs and charges to ~~safely and reliably deliver electricity and natural gas to our customers through our generation, transmission and distribution systems and potentially~~earnings that may negatively impact our ~~compliance with certain mandatory reliability~~financial position, financial results and ~~gas flow standards, (ii) subject us~~cash flows. An inability to ~~reputational~~secure and ~~other harm or liabilities associated with theft or inappropriate release of certain types of information such as system operating information or information, personal or otherwise, relating to~~deliver on renewable projects is negatively impacting our ~~customers or employees, (iii)~~generation transition timeline and may negatively impact our ~~ability to manage our businesses, and/or (iv) subject us to legal~~achievement of decarbonization goals and regulatory proceedings and claims from third parties, in addition to remediation costs, any of which, in turn, could have a material adverse effect on our businesses, cash flows, financial condition, results of operations and/or prospects. Although we do maintain cyber insurance, it is possible that such insurance will not adequately cover any losses or liabilities we may incur as a result of a cybersecurity incident.reputation.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

NiSource Inc.


~~(1.1)~~(10.1)			~~Form of Equity Distribution Agreement (incorporated by reference~~First Amendment to ~~Exhibit~~ ~~1.1~~ of the NiSource Inc. ~~Form 8-K~~2020 Omnibus Incentive Plan. ~~filed on February 22, 2021).~~* **

~~(1.2)~~			~~Form of Master Forward Sale Confirmation (incorporated by reference to~~ ~~Exhibit~~ ~~1.2~~ ~~of the NiSource Inc. Form 8-K~~ ~~filed on February 22, 2021).~~

~~(3.1)~~			~~Certificate of Designations with respect to the Series C Mandatory Convertible Preferred Stock, dated April 19, 2021 (incorporated by reference to~~ ~~Exhibit 3.1 of the NiSource Inc. Form 8-K~~ ~~filed on April 19, 2021).~~

~~(4.1)~~			Purchase Contract and Pledge Agreement, dated April 19, 2021, between NiSource Inc. and U.S. Bank National Association, in its capacity as the purchase contract agent, collateral agent, custodial agent and securities intermediary (incorporated by reference to ~~Exhibit 4.1 of the NiSource Inc. Form 8-K~~ ~~filed on April 19, 2021).~~

~~(4.2)~~			~~Form of Series A Corporate Units Certificate (incorporated by reference listed under Exhibit 4.1 above).~~

~~(4.3)~~			~~Form of Series A Treasury Units Certificate (incorporated by reference listed under Exhibit 4.1 above).~~

~~(4.4)~~			~~Form of Series A Cash Settled Units Certificate (incorporated by reference listed under Exhibit 4.1 above).~~

~~(4.5)~~			~~Form of Series C Mandatory Convertible Preferred Stock Certificate (incorporated by reference listed under Exhibit 3.1 above).~~

(31.1)			Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

(31.2)			Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

(32.1)			Certification of Chief Executive Officer pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).*

(32.2)			Certification of Chief Financial Officer pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).*

(101.INS)			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

(101.SCH)			Inline XBRL Schema Document

(101.CAL)			Inline XBRL Calculation Linkbase Document

(101.LAB)			Inline XBRL Labels Linkbase Document

(101.PRE)			Inline XBRL Presentation Linkbase Document

(101.DEF)			Inline XBRL Definition Linkbase Document

(104)			Cover page Interactive Data File (formatted as inline XBRL, and contained in Exhibit 101.)

*			Exhibit filed herewith.

**			Management contract or compensatory plan or arrangement of NiSource Inc.

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SIGNATURE

NiSource Inc.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NiSource Inc.

(Registrant)

Date:

May ~~5, 2021~~4, 2022

By:

/s/ Gunnar J. Gode

Gunnar J. Gode

Vice President, Chief Accounting Officer and Controller
(Principal Accounting Officer)

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	Three Months Ended
	March 31,
(in thousands)	2021	2020
Basic average common shares outstanding	392,657	383,062
Dilutive potential common shares:

Shares contingently issuable under employee stock plans	630	845
Shares restricted under employee stock plans	288	207
Forward Agreement	337	0
Diluted Average Common Shares	393,912	384,114


(in millions)	Carrying Amount as of March 31, 2021		Estimated Fair Value as of March 31, 2021		Carrying Amount as of Dec. 31, 2020		Estimated Fair Value as of Dec. 31, 2020
Long-term debt (including current portion)	$	9,246.7	$	10,178.0	$	9,243.1	$	11,034.2


(in millions)	Balance as of January 1, 2021	Changes Attributable to Costs Incurred(1)	Costs Paid	Adjustments	Balance as of March 31, 2021(2)
One-time Employee Separation Benefits	11.1	4.6	(8.4)	0	7.3