NI - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the NiSource Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session [Operator Instructions].

I would now like to hand the conference over to your speaker today, Mr. Randy Hulen, Vice President of Investor Relations and Treasurer. Sir. ahead, go Please

Randy Hulen

good XXXX and investor and NiSource to third quarter call. morning, Skyler, welcome everyone the Thanks,

Joining me of financing drivers today the provide and to Donald an are NiSource's plans. third Joe Hamrock, Chief review our as Officer. Chief quarter Financial update of The well performance on and purpose financial this XXXX is Brown, presentation for Executive as Officer; growth operations,

call to are our your Slides Following open prepared call nisource.com. we'll for available the on remarks, today's questions.

actual our over and statements. Joe MD&A floor a in just statements cause some expressed the during reminder, the to such periodic those to Risk is from forward-looking. in will quick turning Information sections Factors Before subject that to SEC made Donald, the included and are could These and of uncertainties the filings. statements of differ risks risks this be results materially concerning and uncertainties presentation

on non-GAAP statements to this the relate of some made Additionally, recording measures.

most financial comparable measure segment at supplemental For additional refer including measures, directly the GAAP nisource.com. reconciliation available information full and our of slides information, to and please these schedules the on a

all turn the Joe. like out of to With over to the I'd call that way,

Joe Hamrock

and everyone, morning, for Good you Randy. Thanks, us. joining thank

results. of their on relentless financial NiSource long-term Our continue teams customer our safety core satisfaction modernization that focus while enhance our reliability driving commitments programs and utility our and safety and

approval of joint wind Indiana made our second in project Rosewater on electric with progress the We've Crossroads. the significant and strategy of wind also the generation project venture a filing Indiana

XXXX guidance for positioned through meet the financial to for and commitments we're execution quarter today has initiating NiSource Our third XXXX. our

net in Consistent billion which fourth $X.XX earnings let's key per in to XXXX. $X.X turn There's third through range our of we deliver growth our the share much summarizes $X.X commitments, quarter. capital long-term quarter non-GAAP to investments $X.XX to accomplishments and expect to billion to to of Slide and operating the make so X early with cover,

As per and to by grow our through billion $X.X we've earnings X% expect annually make year stated to investments $X non-GAAP dividend of and each to to XXXX. share capital before, we X% billion

XXXX net share XXXX. per $X.XX in Our operating earnings non-GAAP versus third quarter were $X.XX

quarter emphasize XXXX. will NiSource minutes for few remains per the well the that drivers I deliver net earnings will a positioned but in guidance share $X.XX $X.XX our Donald for range to address operating to within

to $X.X billion expect in investments billion We the initial our for $X.X to slightly XXXX, in forecast capital complete above year.

or making foundational accelerated safety on solid of SMS. our to commitment including Management Safety implementation progress System We're a

developed in the potential safety, is SMS assessment and SMS for framework, by continual and with approach Institute. pipeline identifying American comprehensive aligned operators the risks operational mitigating managing Our Petroleum a improvement is emphasizing to proactively.

work, SMS Distribution our enhanced our of each have introduced companies. risk been at Gas of management part As processes

which risk. This systematic address to has reduce is set across a The completed business track for concerns also team program decisions. our contractors SMS Corrective in analysis Our offers asset to way of which introduced support help its provides safety employees team has inform process risk priorities will progress Action our maintenance functions. report gas or first review, and CAP, investment and available our Program simple prioritize, a and corporate and a to and

gas is and cause. system, level shut additional high breakers natural of the designed the including across and more these Massachusetts in of this to SMS too Distribution devices senses our a than or operating to operate the an to immediately like down control provide an year, addition installed Teams implementation, priority. footprint remain These device completing automatic too When In it pressure have automatic regardless enhancements shutoff that NiSource installation protection. XXXX all to circuit safety the is low-pressure Gas to devices systems Virginia. of shutoff devices low,

electronic also teams use all new regulator this into and our to information station lines. our sensing Our systems. add mapped We details X,XXX of control nearly have mapping or low-pressure located

independent to month, driving Safety risk, long-term roadmap Shafer is safety and assuring this expertise directly safety. Chief NiSource we is view structured accountable Chuck risk Earlier all function a companies. providing analysis named Chuck an and emphasis me, our to position across multiyear and created He outlook newly oversight for to of Reporting source on Officer. and the leading reduce of provide safety centralized in expertise to rigorous

continues the XXXX to by for XX% replacement The to be second to our our strategy for by Our by plan, all nearly and issued electric lower-cost retired be of XXXX which integrated We've RFP remaining resource request capacity. replaced proposals Indiana. cleaner our retirement consistent XXXX advance of for generation coal options. generation is calls in with coal-fired generation

in in rates The concluded XXXX. application Commission and Crossroads. has joint a we Regulatory new expect the Indiana agreement project recently in approved a IURC with CPCN for in an our the our Utility rate January base joint filed electric August hearing wind quarter for effective venture case order we venture wind Indiana Rosewater The and project, fourth second

urgent to a NTSB final NTSB, Transportation in week month, Last XXXX now investigation last Massachusetts. The report Valley. in issued its Merrimack also Turning September National the Safety or the event of Board our now urgent made NiSource to two deemed year. had in has such closed as responses November The open to XXXX and four NTSB last these recommendations our acceptable. issued recommendations safety recommendations

replacement investigation the its in we included complete, completed our of XX. Utilities Merrimack all to commitment our NTSB impacted event announced and that the Department restoration customer In mid-August, completed own our by and response. September by Public the fulfilled This efforts the have the Massachusetts of restoration incident work investigations the now of equipment preparedness in emergency Valley. With

affected by fall irrigation and our impacted lawns, the repaired communities. work, construction walkways, outdoor throughout also areas residential roads state We including XXXX driveways systems,

providing A dedicated impacted providing support appliances place, equipment. with assisting processing and on team repair customers, to heating claims remains in support and

were recovery part inspections compliance lines gas service involves required work by Greater and abandoned, as as Public confirming process a lines the Massachusetts in procedures are verification legal Utilities verifications consistent which Lawrence. service These XXXX in and protocols. September, with of with in requirements abandoned announced Department that our of As fall the we launched the of

As of line initial we that the we find verifications immediately. requirements, by the situation XXX set didn't meet We deadline those October completed correcting are abandonments any service XX. the required of

second X,XXX and complete is be verifications XX. of The set approximately to well expected by underway November

to safe active led system year-end. in their and the abandoned Columbia in as Valley and are late about verifications will affected yesterday, that service by approximately lose therefore X,XXX lines have an gas connected on not in are which we service And planning know gas verify of being These are trust done own the in to lines the Merrimack announced communities many events to remaining We not customers. our whether to service Gas Massachusetts homes. worried customers recent are they're the disrupt

Nick to of Massachusetts, loss month, judgment companies, largest times. responsibility Massachusetts. at challenging of gas Columbia in who country's experience Stavropoulos KeySpan and National as part me. help has Gas our we named and brought as PG&E, experienced directly And safety and we safety trust, the security. comprehensive take Chief rebuild Earlier leader the led several for to of We focus including relentless has through and that Grid us reporting Safety these confidence to this Nick knows efforts in an Advisor

will Donald? over like call in to turn performance detail. to more financial discuss who I'd our Donald, Now, the

Donald Brown

good Thanks, morning Joe, and everyone.

or third of million per were performance compared X, due by loss a in XXXX. higher results safety-related share Looking The $X.XX about operating biggest had financial spending $X compared which we million at our drivers impact costs. operating quarter non-GAAP to $X.XX to long-term per net $XX of non-GAAP from earnings modernization share slide quarter increased and were net the infrastructure about financing period net a of higher for same or of investment, ago year our third our the offset revenues, to

operating net us in which guidance earnings are achieving of $X.XX track Our to plans, on XXXX per puts line share. XXXX our with our to $X.XX year-to-date

financing incident to to Lawrence expenses. like Greater plan, address liquidity and turning Before I'd our

from earnings Our slide has is total unchanged which on estimate, remained QX release. detailed our X

the service work completion, restoration Going forward line any to nearing verification to the continue not and work adjustments complete estimate. with expect significant future the we

and incur fines excludes a we However, as potential reminder amounts may any this estimate penalties. for

million to we portion costs Also time property insurance recoveries insurance Lawrence for of insurance in event. place in million $XXX We the next a the recover of of through as early million previously substantial incident $XXX December XXth the and casualty casualty of claims September we at submitting our Greater have year. $XXX started collect expect XXXX coverage remaining of the collected through expect stated, to million and and $XXX

XX $XXX that miles also the with for million insurer $XXX we investment in filed pipe replacing made the the to capital the loss proof property following We of our full event. of of cost have million

quarterly we'll updates insurance continue moves recovery process the on progress. provide our As forward, to

X. turning our to and credit Now I'd slide debt on to touch like profile. briefly

August of Following interest, long-term debt. the of was XX-year issuance $XXX XXth debt billion, our September as level billion of notes was $X.X of about total at about million $X.X which X.XX%

net $X.X our weighted capacity we X.X%. available the about average facility was receivable quarter, under of billion, The weighted and was approximately interest maintained third available our liquidity credit program. and of maturity years securitization of approximately accounts and of average long-term debt cash consisting rate At XX end our the

investment to current grade investment ratings. Our all committed credit agencies from our grade rating ratings are three major and maintaining we're

which X, our financing I'd for now to to slide long-term plan investments. covers growth like turn our

or plan current $XX from $XXX our and $XX annual $XXX million at-the-market the as $XXX is programs. Our continue well XXXX approximately million range other to and include as equity our Employee million Purchase debt Stock issuance to of in long-term in program, of from equity ATM million to million

infrastructure continues balanced for to predictable ATM approach our investments. financing provide be with our consistent to ongoing Our

recoveries $X.X total event, This approximately driven million financing Lawrence a which is issuance is to leaves block the insurance approximately $XXX estimated expected total offset million $XXX investment estimate are is be now the to equity we cost and expect the by Greater The primary million casualty to change billion. to permanently in million of capital to our that excluding This finance $XXX $XXX change range the is that XXXX. in cost plan need financed. to by that

growth common different needs and to maintain We achieve that X% a profile X% EPS equity is best to our non-GAAP annual to to in approaches financing pursue evaluated several credit this option and XXXX. the issuance incremental to commitment our determined

XXXX believe hybrid issue planning we analysis, preferred equity any in our such than no are common securities security as is hybrid less we equity alternatives In therefore XXXX. longer or to costly

the updated of our with As financing make $X.XX to includes our mentioned plan. grow X% expect in impact to investments to the billion which share in non-GAAP range in of operating XXXX, earnings capital earlier Joe call $X.X share to annually from to per X% net consistent this the XXXX. is per deliver $X forecast billion through operating earnings annual year expect $X.XX by long-term This each we net XXXX and XXXX at through dividends and we to

Joe Now the a I'll infrastructure call regulatory to turn highlights. for investment back few and

Joe Hamrock

you, Thank Donald.

highlights operations request supports on early of let's specific Public to replacement continued remains third of Commission. Now safety aging for request slide X. pipelines of rate before our turn quarter Service gas adoption Filed and XXXX base upgrades. fourth in the case some quarter our pending Maryland Maryland the and from pipeline the In May,

XXXX. the $X.X A would of by current rates expected million XXXX If tracker by with including in revenues is request filed January end $X.X increase revenue. order infrastructure approved as annual million the effect approximately commission in of

recovered its the begin recover to by Expenditure was Public The Ohio, not annual adjustment XXXX, are capital related Capital rider, expenses our which $XXX the deferred approved Utilities allows capital approved allows CEP adjustment in recovery through that modernization August first million approved in and us PUCO In XXXX. The to rider. in us tracker. in to Commission of infrastructure invested approximately Program investments first our

September. New in rates became effective

with our capital Commission XXXX. XXXX. in latest is Regulatory rates gas $XX.X order remains in our fourth update expected of million XXXX November quarter request April covers Utility request in An tracker infrastructure pending. effective investments long-term made Indiana modernization Indiana, In XXXX July program and the incremental The between

month terminate invested in program of last current year $XXX by expected I to a PHMSA end. capital XXXX plan, we a filing approved million would approximately also application notice note IURC our compliance and be to our in that Also between of XXXX. filed Indiana, new covering anticipation plan the

capital request spent rider update a filed our covering filing systems main annual in In to Kentucky, capital accelerated be low-pressure planned $XX safety our application in program, recover we that on replacement work. approximately Included our in enhancement that million investment. will is

IURC venture joint Power X. wind The announced February slide other for Bison. in approved Now Agreement on Operations June applications one August, the approved let's turn the Jordan Purchase three that IURC ownership Roaming agreement projects XXXX. Electric of the and to Rosewater, Creek In in our projects and two NIPSCO for

the will in have capacity filed this of fourth a Indiana earlier the NIPSCO be a expected joint month, It Renewables North And Crossroads, project, EDP an LLC, which fourth with wind XXXX. venture IURC application operation an megawatts. with XXX of aggregate in nameplate is quarter America for to

Consistent As in on NIPSCO which X its all the the proposals needs potential I October Resource earlier, XXXX announced the will of request RFP resources future with we Integrated of opening to consider November for the mentioned to sources its customers. meet second XX. Plan, closes electric consider process,

The diversity changes. the and hearing the base IURC. the rate pending hearing, economical, in transition filed to case. for two we to supply to agreements case, August in Prior electric maintaining and our before which the is in most concluded technology available cleanest electric settlement market goal flexibility partial reliability, mix Our remains while

The federal tax and settlement our to revenue April the approved IRP. our as coal-fired for of related a settlement partial reform XXXX of equity If neutral generation the return in addresses plant allows depreciation X.X%. earnings for our retirement filed, called requirement, is on and early schedules

In is fourth settlement reached with group, to the anticipated IURC industrial new implementing we structure related new in order in XXXX. a resolves of which with many May, industrial issues effective service quarter rates customers. for a XXXX An January the

enhancements infrastructure to reliability. continue and on improve transmission electric modernization includes which our safety We seven-year distribution to electric further our and to program, designed system system execute

IURC TDSIC be infrastructure to of electric billion approved represents through XXXX. The program $X.X approximately investment expected made

XXXX made capital XXXX XXXX Our through latest December tracker quarter expected pending before January is the incremental investments in fourth in effective An June update request rates covering the in order $XXX.X million IURC. from with XXXX. remains

key Dow NiSource was were named the We quarter, North takeaways our on list, gas includes highlight the year. reflects of couple long-term I'd against sixth multi-utility executing to for revisiting the $XX of Before to a like the consecutive Sustainability advancements and America sustainability for Index more In September, milestones. of make one three companies aggressive to than which our greenhouse continue investments. it reductions U.S. on billion and strategy, infrastructure we Jones

way. an Customers our to and alike and responsible expect reliably in investors environmentally companies deliver safely, energy sustainable and

it, And on of climate on published continue XXXX We you which to I read to August. if you delivering encourage all we report, our focus on dimensions. these in haven't seen nisource.com

Climate-Related recommendations around our natural a that including risk or incorporates disclose strategy, report Disclosures lines by The Financial an projected from methane climate result the gas reduction XX% Task reduction opportunities. XX% and emissions greenhouse mains project distribution Force and metrics developing a addressing approach to climate-related from and change of emissions on TCFD taken in industry-leading management, governance, by risks XXXX, to gas in XXXX. in plans by service We've

reiterate a earnings deliver I'll investments portion long-term commitment in turn capital net share XXXX $X.XX in to of per and growth to billion. to range few we the call, $X.XX non-GAAP Consistent with of our to $X.X $X.X Q&A of expect and operating make billion key we the to the share Before takeaways.

remains well $X.XX range NiSource our XXXX. per operating deliver to earnings share $X.XX net positioned for to within guidance

year. to for We investments our expect above in to $X.X capital $X.X in the slightly XXXX, initial billion forecast billion complete

through financing X% earnings and is the expect Inclusive ratings. dividend we we our share investment-grade to intact plan to to growth current XXXX. net And to annually of investment-driven grow long-term adjustments plans, our expect by Our and made both credit per our resilient. X% to continue maintain operating

accelerated to taking foundation that And commitment do SMS to system. advancing and SMS, all contractors, Through safety our enhancements across customers on employees, footprint. our the and to implementation execute and our we're seven-state risks to safe. for that Safety increasing we're our identify our rigor continue we we with low-pressure remains keep communities action

fourth projects capacity. issued to and second replace our one identify Our approved sources three electric wind with additional is generation the and the proposed advancing to strategy coal RFP

and track electric issues base IURC this in with and is Our quarter. hearing order contested complete case rate the on place an on settlements partial expected

Valley phase and milestones Significant the been achieved issuing its from Merrimack recovery the with of second the event report, in the restoration our NTSB have completed. final

confidence fall's community. work to in continue trust rebuild last safety working leader, We quality construction an work assure to the and we diligently to gas Massachusetts. of in brought knows who We're the and experience

Thank NiSource. questions. take of you in ready now to all and your today interest support for for and your Skyler? ongoing participating We're

Operator

first Julien Our comes Instructions] [Operator question Dumoulin-Smith of Bank from with America.

Your open. now is line

Julien Dumoulin-Smith

Hey, good to you. morning

Joe Hamrock

Julien. morning, Good

Donald Brown

morning. Good

Julien Dumoulin-Smith

Hey, howdy.

things So off. perhaps kick just to

How gas a capital this year the you We'd prospectively to even talking kind cadence the on through you CapEx gas spend with XXXX XXXX. it. good think billion been think talk be know relative to or billion over that of the do trend guys $X.X holistically? you through safety about How is? to longer-term about effort bit $X.X how front. have the of on further safety the that potential think continue curious Just do I you about period meshes guidance

Donald Brown

good because capital and of We a There's We're that certainly long-term state approach. each make of And at process. still on the both seen think the guidance $X.X that the We we've the will $X the changes guidance Julien change SMS change of early in that in our we it I focus the on gas level, Thanks, on significant there. won't there. investments investments, components haven't but billion side. billion lot morning. that got necessarily to look

project a in tracker which billion of had to that's growth next runs significant projects. in Central the got some through couple One we've significant program. of Ohio couple really where looping at the $X When over you years a we've look Ohio a increase

next over in couple real our years increase that guidance. that's So you'll of the the see

Julien Dumoulin-Smith

for and can reaffirming to against if equity longer-term or if the in you about perceive I the range that X% equity I outlook. item financing X% longer-term then reason. I other there's to mitigate think incremental of how here perhaps, do curious, discrete the perhaps that a impact understand is of dilutive XXXX, it. the you otherwise Got whether with understand ask a But against puts would the And some be here. you might onwards this respect the XXXX items incremental I CAGR? EPS in takes

- Donald Brown

next we see for one you as as are look the When the portion the also into that trackers. out but charts at investments our going on we our plan the there's that Yes. infrastructure and investments in plan certainly long-term, significant year, of a long-term there build of

And so and we're to million we've back outlined equity $XXX the that getting pretty on $XXX of really next investments support quick year. million returns those does that for

gas So meet infrastructure on to program, we've and in levers our investment and the got overall certainly continued that but think safety we're ability our plan confident business. in the with operating commitments those

Julien Dumoulin-Smith

it. leave guys. there. Got it I’ll you, Thank

Donald Brown

Julien. Thanks,

Operator

Our next question Guggenheim Partners. with comes from Shar Pourreza

now is line open. Your

Shar Pourreza

morning, good guys. Hey,

Joe Hamrock

Shar. morning, Good

Shar Pourreza

with Good we that? moratorium of sort or updates? the second do long-term see on quick formal -- morning. of, Can on non-emergency I there, the just work you status real leak the you can started? -- saw gas any investigations have sort is project? Is you restoration Massachusetts, just in with any impact sticking touch And think the that's

Joe Hamrock

topic on. Yes, to an thanks Shar. That's update important

community some consequences, we as confidence did and damage struck and the that indeed state. but in has or and the have gas to concerns any erosion of in not significant across property So trust result noted leak it any

confidence our was to that moratorium know as part leak restore and as last agree aligned of rebuild. the we are work you to the a DPU year relates we done with it relating the that That with restore to and efforts comprehensive trust. So on is

at the that we we've trust lines taken way restoring are in and not September. our continuing that efforts itself there throughout focused the and and abandoned the to were rebuild to verify look service in confidence. But comprehensive on any related are leak a So hard

for work We're service helps of with the abandonment operations to the and confident investigations, but verification also through a work with The right build and don't would to state. implemented resources assurance to as we line for trust ultimately marshal be begin be to rebuild the on that's the that two across It that the DPU the confidence audit that certainly will optimistic work have remaining we of that an goal. on now, path lifted. phases and the moratorium the DPU We we gives to moratorium itself us line but does be things. and our a that to expect service that date opportunity safe

of a factoring we terms In are impact, basis. moderate XXXX in impacts our fairly into on some guidance, but long-term

the in degree CMA impact modernization suspension expect relatively work guidance. other to modest to a That's work the GSEP have capital XXXX. on offset allocation a We impact our inside of and the an It's in states. with

through to and adjusting we it's steps So it. these DPU. something navigating the that's with as go we're exactly Yes through

Shar Pourreza

Can timing? then is doesn't the around -- on this And just case. you timing. It Are of, still assuming we just moratorium or get going rate seem to a the sort like, impact sense first quarter?

a are GRC to expecting file So I you the guess first quarter? in still

Joe Hamrock

No.

We a filing. haven't date for set

what we've year take that we'd is consistently next at look think at start I that. look we'd early a to said

the One incident. last through into response year the and have need of steps investigations. we two We the into number the noted with on the work including announced incident earlier to the DPU. They the call investigations to a as other we

an those we of through DPU important part activity. with so rate And as the contemplate overall working will future the process be case

Shar Pourreza

SMS just caller. on a question the Got from the it. then And follow-up on lastly prior

You guys it's are preliminary. --

SMS program? we cost early a get Do sense as you basis to maybe in shape how that a on very the as model the of You're further profile and go-forward look the O&M process. into you have that can on

Donald Brown

we've our we'll in process roll gas year lower and say look and part out increases the states. mean, segment across We're comes the we next forward of a and our the this really gas we I'd as drive higher procedures real that or procedures Yes. But over our year that certainly those and change startup some for the X% expect apply is will seven gas going process segment. would cost the -- X% I in rigor grow seen see the so. segment. that to at costs versus -- it's O&M to increased practices that and that certainly the overall

Shar Pourreza

Got it.

this. Okay. I Thanks will pass guys.

Donald Brown

Shar. Thanks,

Operator

Sachs. [Operator Instructions] Goldman from question with Our next comes Insoo Kim

now Your is open. line

Insoo Kim

In comment the the Are fourth equity into any regards assume the issuance, Thank potential thoughts forward could quarter guidance? we head weighted you or to doing should when count that XXXX? we potentially And average timing maybe you that year on you. this you're what thinking XXXX XXXX? of providing for give a in as about EPS then related to share

Donald Brown

that some got hit next timing we've So, end rating flexibility year it that the the need sure We on agency targets. credit by our to of make of equity. we

So, including timing we'll looking haven't how that determined do forwards. or or we decided at the

year flexibility it expect are and looking you don't got those what most But certainly of our some the that makes the--? meet targets. sense. all we've are need we But have -- trying the you the would to as next until we're things to at and Randy determine end

Randy Hulen

to for I that done in the add really average activities as under a as of closes average basis. weighted is this forward December most won't today that going year, about to where on count largely the share think share because count year we've a weighted this Yes, it's share far the of the count that be

Insoo Kim

$X.XX some the assuming when giving $X.XX? at that's share embedded count to not the you're you're just million So, $XXX the that in to XXXX point that in million clarify necessarily $XXX to

Donald Brown

will for It be year's absolutely. embedded next guidance,

Insoo Kim

Okay.

that. safe guess to the the I'm of And the how part spreading year I'm then you're be midpoint? midpoint that's assumption of getting if So, assuming probably across that that relatively I would a if

Donald Brown

take can You that certainly approach.

Insoo Kim

Got it.

guys that a Indiana Indiana into plan growth JV round from lot storage. the with the and/or megawatt farm. filing assume part you more wind the solar base wind filing the of XXXX? October in Crossroads Just where partial ownership part that of your that from kind Crossroads last just XXX you're of that and was separate of growth Indiana I made for Was RFPs in away the of

satisfy And for that then RFPs, that timeframe the the energy would the capacity satisfy XXXX for the current necessary reductions? it of when round coal that comes and to does -- the the --

Joe Hamrock

Let XXXX that Crossroads It's just me the solution Rosewater take the earlier Indiana megawatts. The Crossroads filing mirrors replacement. that XXX the was we megawatts, part XXX with we capacity pioneered project. is last overall for made the The piece of Rosewater first. the model

know do Rosewater approved have IURC, letter pending ruling we at by and IRS. support As the you FERC, private the from

So, think it your to the good with from follow in Crossroads not project RFP. we to got It last have that year. model from to new we first RFP a follows consistent place with question is and the it's related the

Most of current the CapEx this beyond guidance. is

of most projects what So, we're beyond these with XXXX. talking about falls

to extend us guidance would forecast new position next now in we sometime the expect our into put So, to early XXXX. beyond that's year RFP have out should our and planning next a which year

time, XXXX lay out projects up gross beyond how these to CapEx that XXXX. of the better current and we'll overall much and be any for at And come a position RFP out in our beyond guidance set that

Insoo Kim

very Thank Understood. you much.

Joe Hamrock

you. Thank

Operator

Fleishman question comes Research. Wolfe our with Steve And next from

now open. is Your line

Steve Fleishman

you. Thank hi. Yes,

Just in goes like that to in year at year equity guys hey or end -- the average the through that's something XXXX, assuming it the you're -- -- just wanted that? XXXX guidance it's of the additional the kind clarify of not

Donald Brown

Let me clarify.

But say the year. until that don't equity. the I not it the of is would what We of end have timing need we determined

at it end of certainly us it year. or do the the to some year flexibility gives the during So,

Steve Fleishman

you way, -- that Is it's earlier ask much to guidance range fair? guidance XXXX, range it for different move end? it than do the the in right not a And maybe at Okay. really in if going year to

Donald Brown

fair. That's

Steve Fleishman

the few all is decided reviewing you things and come equity of terms this on little like be in overly conclusion? you and just just just could then do clarity to And more -- how to months a that Okay. Because conservative been you ago a why maybe you've to preferreds decision. give or hybrids back did

Donald Brown

preferred our for price, us equity Just overall and both -- versus that what our don't seeing issuance the from equity debt. cost to XXX% what lower for credit to of been and stock the to expectations of equity. cost you agencies appears subordinated since And get looking costs notes the subordinated current the the preferred is we're the at those issue

Steve Fleishman

And to insurance from any might get you gauge Okay. property when insurers the is on there the decision, then on decision that? a way

Donald Brown

It's still early.

So late filed The July NTSB with came property in the report we insurer. out in September.

we do report the the have insurer access the claim. can and that really that their so the at now the process just they And on started to due with they pipe diligence

any but don't at filed for. we certainly that have our recover going in process we this to so to seek the to go recovery all point through And plan,

Steve Fleishman

Do recovery you Massachusetts plan? though in in your have

Donald Brown

you do What of…. In Recovery? terms mean?

Steve Fleishman

the property all way not rate recovery? kind some no recovery if of for recovery? just assuming Or rate recover are Like you that, a

Donald Brown

insurance before in from on finish wait the would So made standpoint, Valley. any last an process for to year Merrimack insurance requesting the and year investments type recovery early we we fully this of

So that timing customers. we seek will through matter there on recover how to that

Steve Fleishman

Thank Okay. you. Great.

Donald Brown

Thanks, Steve.

Joe Hamrock

Thank you.

Operator

Turnure question comes with next from Our JPMorgan. Christopher

now open. line Your is

Christopher Turnure

my answered, Joe go Most Don. and of questions but drivers. just I have XXXX to back been morning to Good wanted

release, what cuts of gas any by would I potential major hear But segment. go in guys you me? expense already with X% are drivers there only besides think rate you've other talked you cost reduction mentioned up there about or Massachusetts the kind that Can O&M X% or elsewhere? interest

Donald Brown

I'm sorry. I muted. was

But should about will that the O&M offset the between an segment expect flat. up corporate segment slightly the year-over-year do O&M gas overall be I an will standpoint. that electric be from yes, segment So, and

Christopher Turnure

major Okay. or that rate And missing we then any be of there? relief might other other kind drivers

Donald Brown

if to year. Well, any we determine we're cases which for now through going that planning file would rate next

our file every expect, cases. rate typically would across couple if haven't states, year in but publicly seven announced and the we're we when next a we you As

Christopher Turnure

Thanks That's Okay. guys. all I had.

Donald Brown

Yeah.

Joe Hamrock

Thanks, Chris.

Operator

Our Weinstein comes next Credit from question with Suisse. Michael

now line open. Your is

Michael Weinstein

Hi, guys.

Donald Brown

Good morning, Michael.

Joe Hamrock

Good morning, Michael.

Michael Weinstein

Hey, morning. good

On fair the -- permanent the X% the to are forward? -- say? additional that to other to won't that pre-Lawrence equity going X% extra $X.XX at that this on Would rate going point original there, to the catch based growth result forward are going to of the there expecting guidance XXXX any from that's trajectory be be that's as equity. you be out In forward up we with going of a words,

Donald Brown

year's to X% off it's say XXXX really X% of guidance. I'd Yeah. this

Michael Weinstein

right. Right,

So expected pension -- asset or recoveries forward? recovery that any from out coming acceleration it there's faster than going or -- no insurance doesn't of of

Donald Brown

at guiding No, this to not point. that we're

Michael Weinstein

have. right. Thank All you. all That's great. I Okay,

Donald Brown

Yeah. Thank you.

Operator

question Gordon Greg Evercore next comes with Our ISI. from

line now is open. Your

Greg Gordon

guys You Thank my know questions. have guys, what you Have day. a answered good all you.

Donald Brown

Thank you. See soon. you

Operator

from with ExodusPoint. Levi Our Andrew comes next question

line Your open. is now

Andrew Levi

Hey, you? How guys. are

Donald Brown

Good morning, Andy.

Joe Hamrock

morning. Good

Andrew Levi

Hey, just questions. a few

percent What Mass. earnings of on from Mass? come total Just your

Donald Brown

X%. It's about to X%

Andrew Levi

your is $XXX to million X% million okay. to $X.X out $XXX to CapEx And million budget? -- X%, of billion your CapEx about $XX

Donald Brown

It's in that range.

Andrew Levi

Okay.

stated taken to it's small you of ding total kind had now. quite done as a seems you you're out. put obviously to what far So your really that a and business But as you've of piece there -- be

XX% tracked? you there's feel rest the -- seems your impact on fairly part predictable. this guys it overemphasis what I do earnings which segment of guess a there's not on of So total is Your -- this an business, going forward it the are financial your was

Donald Brown

and on a we're portion to our No, does going meet and good It a NiSource. allow capital yes But and that our understand and other because forward financially some a flexibility does other and forward. I how business standpoint impacts of But that it of overall stakeholders business earnings the going have it I six to is that have is have very concerns that and commitment. from our investors portion and states so of smaller us in is think questions growth smaller earnings also an less earnings our an point impact it Andy.

Andrew Levi

And it until be as not year? Or going again which next not issuance year? of that that issuance, is happen will to equity is the this an timing big issued of far the as

Donald Brown

year. No, XXXX not XXXX in credit coming this than Certainly the do and we targets with will our it's it for definitely expected, issuance. insurance recoveries we're confident so we'll meet that a faster

Andrew Levi

last That's And thing for then Joe. Okay. helpful. the is

or earnings you stock XXXX anywhere ballpark If or think. fairly trading fix past are They're higher they trades consensus or whether to to XXXX The and or thoughts I whatever. XXXX where traded X% electric the whether to at of that lower you of stock it's CEO to plan in how you've look the are kind address between group. they're Could and an from where discount is $X.XX what a guidance that just relative the that? XX% you as regulated the on your kind

Joe Hamrock

Yes, thanks, Andy.

next core is guidance. laid this our of resilient. and I on call The think earlier the year business the this some goes that question. We intact looking that investment with for lot of your profile year to value ahead of out a even to and regulatory

work. not our the enhanced investments the here follow if infrastructure activities the work with and and portfolio long our to we've the year the which position trajectory generation future Lawrence I'd of we're see position today add that the in SMS, in we're about a in for that we kind risk if you work impact to incident, of the the plan. than through of well accounted our with and not we're ago supplement aside if Greater and same defined that of were strong, Massachusetts an doing cost then So a generation repositioning pipeline stronger investment talked a we as much say of doing the now well set is foreseeable analytics

driving I a enhanced core execution that becomes strategy go had story risk really much execution and it of always forward. core that as that rigor with we've level analytics So that we and think

Andrew Levi

Okay. Thank clarification then just that. a you for And equity the on timing.

just issued sometime this you're -- Or won't year be to correct? you right? actually saying even far not when as do if until will It even as forward it? year. So reflect you're going that Is next a

Joe Hamrock

Exactly.

year. I to think a forward got we've do this some flexibility

push sense. not, if to needs determined certainly most the but if end will the makes to have haven't of or equity that's next flexibility year we what We

Andrew Levi

Okay. Thank you. Perfect.

Joe Hamrock

Thank you.

Operator

next Fishman from [Operator with question Morningstar Instructions] Our Charles comes Research.

is line Your open. now

Charles Fishman

I Thank comment it. you understood you repeat impose Donald, I a you. don't on to can made? I think

the I was wrong were $X.X next You $XXX Valley, $XXX towards million directed logic it equity I And billion sizing of year Merrimack I said, talking or thought block issuance this got the the suspect million. about you of of cost.

of insurance, what right? the the of You're recovery get assuming equity of $XXX block was million. $XXX that did which driving left issuance I That's million sizing

Donald Brown

and Yes, rating issue to credit for that That's long-term equity we meet need that difference. targets finance our we exactly right. to difference need to

Charles Fishman

of obviously, other and And Valley, driven by with in lot associated you're Merrimack SMS the in other there's Massachusetts Okay. correct? that a events of outside part doing was costs maybe things

Donald Brown

processes nine I'd we make started started say Merrimack it states. was procedures accelerated. we to September. in That's about the event where work to activity months we implement seven all post sure event across certainly Valley the that before accelerated that But and those really mass

Charles Fishman

then increase And gas, was of Okay. CapEx above? in the $XXX work this general that million general year, all the electric SMS -- just or

Donald Brown

XXXX we change I'd low-pressure SMS. not big had the that system was it's say in this in that all states. install seven across the devices the say I'd year, past started we work, to

Charles Fishman

This was just an acceleration of that.

Donald Brown

That's right.

Charles Fishman

Okay.

Donald Brown

a seven big say, change, million I'd but $XXX portion electric. increase. the of So that's across it's kind the states including of That

Charles Fishman

ledge drop past, Last to what XXXX general case. Was XX, slides that far go drop as Or your I think forward that the there? timing -- what Okay. down slide a a it's between with consistent rate where the big Ohio? just XXXX, going for as -- of recovery CapEx. drove driven question, you then show by that in right the and the you that percentage have There's a

Donald Brown

XXXX XXXX, Ohio tracker into capital increases we the the of in the and Ohio, now in other Indiana capital really that or is tracker and is all the as program states. it some as with CEP forward through of well that going have Going just most expense

Charles Fishman

that -- coming then, assume really got then that drove you this change up? project you there big said in was this it And Ohio I that transmission

Donald Brown

right. That's right. That's

Charles Fishman

Okay.

Donald Brown

going we $XXX I the million those is until switch case Greater Yeah and going Lawrence. wouldn't in -- as about that reflected have numbers XXXX the so forward. million is, in to between investment you've $XXX got and you significant forward made, investment think think we to at two XXXX, of look rate difference is the that

Charles Fishman

Okay. very That's Thank you I much. have. all

Donald Brown

Yeah.

Operator

time, call for remarks. back And over to questions. further to Joe showing Hamrock, I'm any like closing at CEO I'd this no the turn

Hamrock Joe

EEI and Thank Conference. at thoughtful the upcoming your And you, thank all to for your seeing We Skyler. look you engagement insightful many of and you today questions. forward for

until engagement. Thank a please safe And it you. make And day. I appreciate continued then support and your

Operator

Ladies conference gentlemen, and call. for concludes participating. Thank this today's you

You disconnect. may now

NiSource (NI) 30 Oct 192019 Q3 Earnings call transcript