NiSource Inc (NI) Q2 2021 Earnings Call Transcript | The Motley Fool


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NiSource Inc (NYSE:NI)
Q2 2021 Earnings Call
Aug 4, 2021, 11:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good morning. My name is R.J., and I will be your conference operator today. At this time, I would like to welcome everyone to the NiSource Second Quarter 2021 Investor Call. [Operator Instructions] I would like to turn the call over to Chris Turnure, Director of Investor Relations. Please go ahead.

Christopher TurnureDirector of Investor Relations

Good morning, and welcome to the NiSource Second Quarter 2021 Investor Call. Joining me today are Joe Hamrock, our Chief Executive Officer; Donald Brown, our Chief Financial Officer; Shawn Anderson, our Chief Strategy and Risk Officer; and Randy Hulen, our VP of Investor Relations and Treasurer. The purpose of this presentation is to review NiSource’s financial performance for the second quarter of 2021 as well as provide an update on our operations and growth drivers. Following our prepared remarks, we’ll open the call to your questions. slides for today’s call are available on Before turning the call over to Joe, Donald and Shawn, just a quick reminder. Some of the statements made during this presentation will be forward looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. Information concerning such risks and uncertainties is included in the MD&A and Risk Factors sections of our periodic SEC filings. Additionally, some of the statements made on this call relate to non-GAAP measures. For additional information on the most directly comparable GAAP measure and a reconciliation of these measures, please refer to the supplemental slides and segment information included in our full financial schedules available at With all of that out of the way, I’d like to turn the call over to Joe.

Joseph J. HamrockPresident, Chief Executive Officer and Director

Thanks, Chris. Good morning, everyone, and thank you for joining us. Hopefully, you’ve all had a chance to read our second quarter earnings release, which we issued earlier today. We made significant progress in our generation transition and the current renewable replacement plan, with Indiana Commission approval now received for all of our joint venture renewable projects. In addition, we have received more than 180 proposals in our 2021 integrated resource plan, or IRP process, which will inform our generation replacement strategy in Indiana beyond 2023. We continue to expect that our infrastructure programs and generation investments will drive compound annual growth of 7% to 9% in diluted net operating earnings per share from 2021 through 2024, while reducing greenhouse gas emissions 90% by 2030 compared to 2005 levels. Let’s turn now to slide three and take a closer look at our key takeaways. In the second quarter, we delivered non-GAAP diluted net operating earnings of $0.13 per share. Results reflect safety and modernization investments, COVID impacts, and they reflect the profile of our business without Columbia Gas of Massachusetts. We are reaffirming our earnings guidance and long term financial commitments. We expect 2021 earnings of $1.32 to $1.36 per share in non-GAAP diluted net operating earnings. We continue to expect annual growth, safety and modernization investments of $1.9 to $2.2 billion, plus approximately $2 billion in renewables and associated transmission investments through 2023. NiSource expects to grow its diluted net operating earnings per share by 7% to 9% on a compound annual growth rate basis from 2021 through 2024, including near-term annual growth of 5% to 7% through 2023.

As I mentioned, the Indiana Utility Regulatory Commission has approved 13 of our 14 proposed renewable energy projects and the new RFP for electric capacity and energy associated with NIPSCO’s 2021 IRP, that is currently underway, has drawn strong engagement from the vendor community. In other parts of our business, we filed rate cases in Ohio, Kentucky and Maryland during the quarter, in addition to the case filed during the first quarter in Pennsylvania, where we are in advanced settlement discussions. Safety advancements continue across NiSource, guided by our implementation of the industry’s safety management system, which serves as our core operating model. Recent advancements include the accelerated integration of contractors into our safety plans and deployment of Picarro advanced leak detection technology in two more states. Our environmental performance targets represent another vital commitment. I’m pleased to say that we remain on target. We expect to reduce total greenhouse gas emissions 90% by 2030 from 2005 levels. That includes a 50% reduction in methane emissions from gas mains and services by 2025. On that commitment, NiSource has already achieved an estimated 39% reduction in pipeline methane emissions compared to 2005 levels.

Our infrastructure replacement programs are driving these improvements. Also, last year, more than one million of our customers participated in our energy efficiency programs. On that note, let’s look at some NiSource utilities highlights for the second quarter, starting with our gas operations on slide nine. The Ohio rate case is one of three new rate cases filed in the second quarter. We are requesting an annual revenue increase of approximately $221 million, net of the trackers being rolled into base rates. Pending a decision from the PUCO, new rates would be effective in mid-2022. In Kentucky, we filed a request for an approximately $27 million annual revenue increase net of trackers. And in Maryland, we filed a case on May 14, once again, net of trackers, requesting about a $5 million annual revenue increase. New rates are proposed to go into effect in December of this year. In Pennsylvania, we filed a case just before the end of the first quarter, requesting an annual increase in revenue of approximately $98 million. Now let’s look at our electric operations on slide 10. I’ll touch on NIPSCO’s electric TDSIC plan. We filed a new five year plan in June. The $1.6 billion plan includes newly identified projects aimed at enhancing service and reliability for customers as well as some previously identified projects. We expect to receive an order from the IURC in December of this year. The other items on this slide relate to our transition out of coal generation, and I’ll turn it over to Shawn Anderson to give more detail.

Shawn AndersonSenior Vice President and Chief Strategy and Risk Officer

Thank you, Joe. We continue to be encouraged by the strong progress advancing our renewable generation projects stemming from NIPSCO’s 2018 IRP. Over the course of the last three months, eight renewables projects informed by the 2018 IRP preferred pathway received approval from the Indiana Utility Regulatory Commission. This brings NIPSCO to the verge of an important milestone with 13 of 14 renewables projects approved to advance and replace the retiring capacity of the Schahfer generating station. Importantly, this includes all joint venture projects and leaves Crossroads II Wind, a power purchase agreement, as the only project to waiting approval. Combining these new generating facilities with a number of transmission projects to support system reliability across the new footprint, NiSource continues to track toward approximately $2 billion of renewable generation investments through 2023. We are excited these projects will produce clean, reliable power for our communities, while saving NIPSCO customers approximately $4 billion over the long term. While the commercial and regulatory processes have advanced to support the preferred pathway for the 2018 IRP, NIPSCO’s 2021 IRP process is well underway and continues to track within its time line. As noted in…


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