NiSource Annual Report 2015

FY2015 Annual Report · NiSource

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BUILDING

I N V E S T M E N T - D R I V E N G R O W T H

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N i S o u r c e I n c .
8 0 1 E a s t 8 6 t h A v e n u e
M e r r i l l v i l l e , I N 4 6 4 1 0
w w w . n i s o u r c e . c o m

Electric Operations

Gas Distribution

A Balanced
Regulated
Portfolio

Gas Transmission

& Storage

NiSource Inc. (NYSE: NI) companies provide natural gas, electricity and other products and services
to approximately 3.8 million customers from the Gulf Coast through the Midwest to New England.

Our Growth Strategy focuses on long-term, low-risk infrastructure investments across our balanced
portfolio of rate-regulated businesses.

Gas Distribution
We serve more than 3.3 million residential, commercial and industrial natural gas customers in
Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana and Massachusetts via approximately
59,000 miles of pipeline and related facilities.

Gas Transmission & Storage
We own and operate about 15,000 miles of interstate natural gas pipelines that transport supplies
from production and storage regions to markets across 16 states and the District of Columbia.
We also operate one of the nation’s largest underground natural gas storage systems, with a
total capacity of 640 billion cubic feet (Bcf), capable of delivering 4.8 Bcf of natural gas per day to
our customers.

Electric Operations
Our electric business generates, transmits and distributes electricity to more than
450,000 customers in 20 counties in northern Indiana, and engages in wholesale and transmission
transactions. Our electric supply portfolio includes both traditional and renewable generation
sources, including natural gas, coal and hydroelectric, providing for a total system operating net
capability of 3,322 megawatts (MW).

STOCKHOLDER INFO

This document contains “forward-looking statements.” For a discussion of factors that could cause actual results
to differ materially from those contained in such statements, please see “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in the NiSource Inc. annual report on
Form 10-K included herein.

NiSource Inc. common stock is listed and traded on the New York Stock Exchange under the symbol NI. The shares
are listed in financial stock quotations as NISOURCE. As of Dec. 31, 2010, NiSource Inc. had 32,313 registered
common stockholders.

Anticipated Dividend Record and Payment Dates

NiSource Common Stock

R E C O R D
D A T E
04-29-11
07-29-11
10-31-11
01-31-12

P A Y M E N T
D A T E
05-20-11
08-19-11
11-18-11
02-20-12

Common Stock Dividend Declared
The Board of Directors, effective January 19, 2011, has
declared a quarterly dividend of $0.23 per share,
equivalent to $0.92 per share on an annual basis.

Investor and Financial Information
Financial analysts and investment professionals should
direct written and telephone inquiries to NiSource
Investor Relations at 801 E. 86th Ave.,
Merrillville, IN 46410 or (219) 647-6209.

Copies of NiSource’s financial reports are available by
writing or calling the Investor Relations department at
the address or phone number listed above. The
materials are also available at www.nisource.com.

Stockholder Services
Questions about stockholder accounts, stock
certificates, transfer of shares, dividend payments,
automatic dividend reinvestment and stock purchase
plan, and electronic deposit may be directed to Mellon
Investor Services at the following:

BNY Mellon Shareowner Services
P.O. Box 358015
Pittsburgh, PA 15252-8015
or
480 Washington Boulevard
Jersey City, NJ 07310-1900

(888) 884-7790

TDD for Hearing Impaired
(800) 231-5469

Foreign Stockholders
(201) 680-6578

TDD Foreign Stockholders
(201) 680-6610

www.bnymellon.com/shareowner/equityaccess

On June 10, 2010, NiSource’s Chief Executive Officer submitted to the New York Stock Exchange (“NYSE”) an
annual certification stating that as of that date he was not aware of any violation by the company of the New York
Stock Exchange’s corporate governance listing standards, as required by Section 303A.12(a) of the NYSE’s Listed
Company Manual. NiSource’s Chief Executive Officer and Chief Financial Officer have provided certifications to the
U.S. Securities and Exchange Commission as required by Section 302 of the Sarbanes-Oxley Act of 2002. These
certifications are included as Exhibits 31.1 and 31.2 to the company’s 10-K for the year ended December 31, 2010.

S t o c k h o l d e r I n q u i r i e s
B N Y M e l l o n
S h a r e o w n e r S e r v i c e s

A n a l y s t I n q u i r i e s
I n v e s t o r R e l a t i o n s

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D E A R F E L L O W S T O C K H O L D E R S :

When I wrote to you a year ago, I described a renewed sense of accomplishment, commitment
and optimism at NiSource.

Our team had successfully navigated the turbulent economy and withstood the highly
stressed capital markets. We had executed against a highly visible and demanding core
business strategy. And we were poised to address critical priorities that would move our
company another step closer to our aspiration of
becoming North America’s Premier Regulated
Energy Company.

BUILDING

NiSource, I noted, was building momentum.

M O M E N T U M

A year later, despite an environment that remains challenging and an agenda no less
aggressive, I am happy to report that your company has maintained that momentum
and then some.

Here are just a few of your company’s notable 2010 accomplishments:

• NiSource generated a total shareholder return (TSR) of nearly 21 percent for
2010, outperforming the Dow Jones and Standard and Poor’s utility averages
and the market as a whole – a strong encore to the company’s 2009 TSR of
approximately 49 percent.

• We materially strengthened our financial profile and positioned NiSource to
fund a deep inventory of revenue-generating infrastructure modernization
and growth investments.

“Your company is indeed
Building Investment-Driven
Growth for 2011 and beyond.”
Robert C. Skaggs, Jr., President and CEO

NiSource Inc.

STOCK PRICE

P E R F O R M A N C E

NYSE: NI

• Our three business units once again produced
solid results – generating earnings in line with
our increased guidance and building on an
established track record of meeting or
exceeding our financial commitments.

• We continued to deliver tangible results from
our balanced business plan – successfully
executing landmark regulatory, infrastructure
investment and customer service initiatives.

• And we remained true to our core

commitments to preserve a stable, investment
grade credit rating and maintain our attractive,
secure dividend.

As you will see throughout this year’s annual
report, 2010 was a year in which your NiSource
team continued building confidence, financial
strength, and a record of consistent execution.
Your company is indeed Building Investment-
Driven Growth for 2011 and beyond.

BUILDING

During 2010, NiSource’s earnings per share
(non-GAAP) increased 14 percent over 2009
levels. We also further strengthened the
company’s financial profile during 2010 through
a series of actions specifically designed to
enable us to fund an attractive inventory of low-
risk, infrastructure investment opportunities.

In September, we completed a $400 million
forward equity offering. This offering aligns with
– and strongly supports – our annual capital
investment program, which I am pleased to note
is targeted at up to $1.1 billion for 2011.

In addition, we successfully tendered nearly
$275 million in high-cost debt and concurrently
executed an attractive 30-year debt offering of
$250 million – actions that will reduce our 2011
interest expense by approximately $10 million
and extend the maturity of our debt portfolio.

With the successful completion of the forward
equity offering and other key elements of our
financial strategy, we are now well-positioned to
take advantage of the deep inventory of

investment opportunities available across all three of NiSource’s business units – investments that
will enable us to grow earnings and shareholder value on a sustainable basis.

POWERING

Across our company, NiSource teams are focused on providing exceptional customer service
and reliability, developing collaborative stakeholder relationships and advancing key
commercial, regulatory and infrastructure investment programs.

I would venture to say, however, that nowhere have these efforts been more critical than
in Indiana, where our teams embarked on a comprehensive strategy we refer to as
Powering Indiana – an integrated series of initiatives designed to engage customers and
community leaders; improve performance and reliability; modernize customer programs
and rate designs; and restore the earnings of Northern Indiana Public Service Company
(NIPSCO).

During 2010, those efforts produced tangible
results, starting with the unanimous
settlement of NIPSCO’s natural gas rate case –
the company’s first in 20 years. The
settlement, which the Indiana Utility
Regulatory Commission (IURC) approved in November, resulted in an overall
rate decrease for customers while enhancing NIPSCO’s operating earnings. It
also reflected rate design improvements and continued our strong support for
low-income assistance, energy efficiency and conservation.

BUILDING

R E L A T I O N S H I P S

By year-end, the Indiana team significantly advanced its regulatory agenda
with the filing of a new NIPSCO electric rate case with the IURC.

A COMPELLING
INVESTMENT

• A balanced, diverse portfolio of

regulated businesses

• Highly predictable revenue streams

• A substantial, highly visible inventory

of growth investments

• A secure, attractive dividend and
stable investment grade credit

• Disciplined operational, commercial,
regulatory and financial execution

NiSource Inc.

NYSE: NI

Although filed in November, the preparation and
stakeholder outreach for the case began long
before that – resulting in a proposal that is
balanced and responsive to the needs of the
company, our customers and other
constituencies. Our team continues to be
engaged with stakeholders as the proceeding
moves forward, and we expect the case to be
completed during 2011.

CAPITAL

I N V E S T M E N T ( $ M )

NIPSCO also
announced the
launch of a
$600 million
environmental
investment program
that will strengthen
northern Indiana’s
environmental and
economic profile.
Notably, the six- to
eight-year
investment program
– which is in line
with the company’s
recent New Source
Review settlement
with the EPA – will
build upon NIPSCO’s
environmental
leadership position
in Indiana and
provide the
foundation for the

company’s earnings growth going forward. The
first phase of the program, a major upgrade at
NIPSCO’s Schahfer electric generating station,
received IURC certificate approval in December.

These significant regulatory and environmental
investment initiatives are in addition to our
ongoing tangible improvements in system
reliability, customer programs and services, and
constructive relationships with community
partners and key stakeholders.

With our team’s continued engagement and
singular focus, I am confident we will meet our
goal of enhancing NIPSCO’s overall performance
and restoring our earnings to an appropriate
level by 2012.

LEVERAGING

A centerpiece of NiSource’s long-term growth strategy is the ongoing development and delivery
of new infrastructure projects that capitalize on our core gas transmission and storage assets
and our unparalleled geographic footprint in the prolific Marcellus Shale production area.

During 2010, NiSource Gas Transmission & Storage (NGT&S) completed or neared
completion of more than $150 million in strategic growth projects serving the Marcellus
region – providing market access for more than 500,000 dekatherms of natural gas per day.

From a strategic standpoint, our $80 million Majorsville series of projects, completed in
the third quarter of 2010 on-time and on-budget, serve as the cornerstone of a number of
additional growth projects currently in process across the Marcellus play. These
projects, many yet to deliver a full year’s
earnings run rate, boosted NGT&S revenues by
more than $20 million in 2010.

BUILDING

Looking forward, another key component of
NGT&S’ growth strategy is investing in the
infrastructure needed to serve new gas-fired electric generation markets. Across
the NGT&S footprint, a number of large electric companies are actively engaged
in planning their future generation requirements, many of which are expected to
be based on natural gas. A prime example that we’re targeting to launch later
this year involves an investment to provide 250,000 dekatherms per day of firm
long-term transportation to serve a new large gas-fired generating station.

R E L I A B I L I T Y

A BALANCED
BUSINESS PLAN

Now in its seventh year, NiSource’s
balanced, four-part business plan
continues to deliver solid results from
our low-risk portfolio of regulated
assets. As we move forward, the
fundamental components of that plan
remain unchanged:

• Expansion of our natural gas pipeline

and storage business

• Infrastructure modernization programs
synchronized with regulatory initiatives

• Financial management

• Cost and process management

NiSource Inc.

NYSE: NI

In sum, our NGT&S growth strategy remains
front and center – developing a compelling
inventory of customer-focused, value adding
energy infrastructure projects – designed to
meet increased demand for capacity by virtually
every segment of the industry. These accretive
infrastructure investments – which we expect to
average about $200 million annually – are and
will continue to be a key contributor to our long-
term growth plan.

MODERNIZING

During 2010, our NiSource Gas Distribution
(NGD) teams continued to execute their strategy
of combining long-term infrastructure
modernization programs with complementary
regulatory initiatives.

Hundreds of thousands of customers are
benefiting from this industry-leading strategy,
which includes significant, revenue-producing
facility modernization programs across a
number of our utilities, including Columbia Gas
of Ohio, Columbia Gas of Pennsylvania,
Columbia Gas of Massachusetts and Columbia
Gas of Kentucky. In aggregate, these programs
provide NiSource with an investment
opportunity of nearly $4.4 billion over the next
20 to 25 years.

Our NGD team also continued to target organic
growth opportunities, such as Columbia Gas of
Virginia’s expansion of its system to serve
Dominion Virginia Power’s 580-megawatt gas-
fired Bear Garden power station in Buckingham
County, Va.

Our strategy to synchronize regulatory initiatives
with our infrastructure investment and customer
programs is highlighted by rate cases in Indiana,
Maryland, Pennsylvania and Virginia in 2010. In
total, regulatory and infrastructure projects at
our gas distribution companies contributed
nearly $0.20 to our EPS in 2010.

That regulatory momentum continues into 2011,
as Columbia Gas of Pennsylvania filed a new

rate case in January with the Pennsylvania Public Utility Commission. The case is expected to be
completed in the fourth quarter of this year.

With each successful initiative, NGD strengthened its established reputation for addressing
complex issues related to energy conservation, progressive rate design and timely recovery of
ongoing infrastructure investments in a disciplined, thoughtful and collaborative fashion.

BUILDING

As you can see, your company is growing shareholder value while meeting the needs of
our customers and other key stakeholders.

Based on the continued success of our balanced business strategy and the extensive
array of growth investment opportunities available across all of our businesses, we
remain confident that NiSource will sustainably grow long-term earnings in the range
of 3 to 5 percent annually. In fact, in the near term – particularly as we execute a
number of regulatory initiatives – our earnings growth may well exceed that longer-
term range. For example, in 2011, we expect net operating earnings to fall within a
range of $1.25 to $1.35 per share (non-GAAP), the mid-point of which represents a
6.3 percent increase over our 2010 net operating earnings.

NISOURCE’S

In closing, I would like to acknowledge our team, our customers and many
business and community partners, and you – our investors – for your

A SIMPLE
TRUTH: DO THE
RIGHT THING

Our growth strategy is grounded in a
simple truth: We make investments that
benefit our customers and the
communities we serve.

That philosophy is best exemplified by our
annual investment in modernizing or
expanding our energy infrastructure, expected
to reach up to $1.1 billion in 2011.

These investments help us provide the safe,
reliable and efficient energy services that our more
than 3.8 million customers depend on.

NiSource Inc.

support and engagement during the past year.
Together, we are building a company we can all
be proud of – one with a unique, compelling and
durable investment proposition:

• A balanced, diverse portfolio of regulated

businesses;

• Highly predictable revenue streams;

• A substantial, highly visible inventory of

growth investments;

• A secure, attractive dividend and stable

investment grade credit; and

• Disciplined operational, commercial,
regulatory and financial execution.

We made significant progress in strengthening
the value of your investment during 2010. As we
continue that momentum into 2011, our core
strategy remains unchanged.

What has changed is our strengthened financial
profile and our enhanced ability to invest in our
businesses – capabilities that will drive
continued growth in 2011 and beyond.

As we move forward, I can assure you that our
approach will remain disciplined and
straightforward – focused on meeting our
customers’ needs, generating value for our
shareholders and Building Investment-Driven
Growth.

Thank you for your continued interest in and
support of NiSource.

M A N A G E M E N T T E A M

R o b e r t C . S k a g g s , J r .
President & Chief Executive Officer

S t e p h e n P. S m i t h
Executive Vice President & Chief Financial Officer

C a r r i e J . H i g h t m a n
Executive Vice President & Chief Legal Officer

C h r i s t o p h e r A . H e l m s
Executive Vice President & Group CEO,
Gas Transmission & Storage

J i m m y D . S t a t o n
Executive Vice President & Group CEO,
Gas Distribution & Northern Indiana Energy

R o b e r t D . C a m p b e l l
Senior Vice President, Human Resources

G l e n L . K e t t e r i n g
Senior Vice President, Corporate Affairs

Robert C. Skaggs, Jr.
President & CEO
NiSource Inc.

V i o l e t G . S i s t o v a r i s
Senior Vice President & Chief Information Officer

L a r r y J . F r a n c i s c o
Vice President, Audit

NYSE: NI

L E T T E R F R O M T H E C H A I R M A N

As Chairman of your Board of Directors, I am pleased to echo the optimism and sense of
accomplishment highlighted in Bob Skaggs’ letter.

With great thoughtfulness, deliberation and discipline, NiSource has executed on its balanced
business plan. The team has improved performance, strengthened key financial metrics and
delivered on fundamental commitments to investors, customers and other important
stakeholders.

With each successive achievement in this “brick-by-brick” approach, NiSource has built
more credibility, greater confidence and a deeper capacity to achieve its vision of
becoming North America’s Premier Regulated Energy Company.

The Board of Directors shares this vision and remains strongly supportive of
management’s plan to move the company forward. We believe NiSource’s
infrastructure-focused investment strategy not
only will create long-term value for
shareholders, but lasting benefits for the many
customers and communities served by the
company.

BUILDING

C O N F I D E N C E

As we look toward NiSource’s future, I would be remiss if I did not acknowledge
the important contributions to this strategy provided by a member of our Board
who is retiring this year. Dennis Foster has contributed more than a decade of
valued service as a member of the NiSource Board, including the last several
years as Chair of the Board’s Audit Committee. In this role, Dennis has
provided steady leadership and has been a strong and effective advocate for
transparency in our company’s accounting and financial reporting. On
behalf of our team, I would like to thank him for his service and wish him
well in his retirement.
(continued)

A SUSTAINABLE
APPROACH

Our vision is to establish a legacy of
sustained economic growth, social
responsibility and environmental
stewardship reflective of a premier
energy company.

• Delivering sustainable economic growth
• Enhancing our stakeholders’ quality of life
• Serving as responsible stewards of natural

and environmental resources

Learn more by reading the NiSource
Sustainability Report, available at
www.nisource.com.

NiSource Inc.

Rest assured, as NiSource’s strategy moves
forward, the Board of Directors will remain
faithful stewards of your investment and
continue to build on our solid track record of
responsible and progressive governance
practices.

We will continue to test and validate key
components of the company’s strategy.

We will advance principles of integrity,
transparency and independence, as embodied in
NiSource’s governance standards and practices.

And we will maintain our strong level of
engagement as NiSource continues the
important work of building long-term
shareholder value.

B O A R D O F D I R E C T O R S

I a n M . R o l l a n d
Chairman of the Board, NiSource Inc.

R i c h a r d A . A b d o o
President, R.A. Abdoo & Co. LLC

D r . S t e v e n C . B e e r i n g
Chairman, National Science Board

Thank you for your continuing support of
OUR company.

D e n n i s E . F o s t e r
Principal, Foster Thoroughbred Investments

Sincerely,

M i c h a e l E . J e s a n i s
Principal, Serrafix

Ian M. Rolland
Chairman of the Board
NiSource Inc.

M a r t y R . K i t t r e l l
Retired Executive Vice President & CFO, Dresser, Inc.

W. L e e N u t t e r
Retired Chairman, President & CEO, Rayonier, Inc.

D e b o r a h S . P a r k e r
President & CEO,
International Business Solutions, Inc.

R o b e r t C . S k a g g s , J r .
President & CEO, NiSource Inc.

R i c h a r d L . T h o m p s o n
Chairman, Lennox International, Inc.

D r . C a r o l y n Y. Wo o
Martin J. Gillen Dean & Ray & Milann Siegfried
Professor of Entrepreneurial Studies,
Mendoza College of Business,
University of Notre Dame

NYSE: NI

Electric Operations

Gas Distribution

A Balanced
Regulated
Portfolio

Gas Transmission

& Storage

NiSource Inc. (NYSE: NI) companies provide natural gas, electricity and other products and services
to approximately 3.8 million customers from the Gulf Coast through the Midwest to New England.

Our Growth Strategy focuses on long-term, low-risk infrastructure investments across our balanced
portfolio of rate-regulated businesses.

STOCKHOLDER INFO

Anticipated Dividend Record and Payment Dates

NiSource Common Stock

R E C O R D
D A T E
04-29-11
07-29-11
10-31-11
01-31-12

P A Y M E N T
D A T E
05-20-11
08-19-11
11-18-11
02-20-12

Common Stock Dividend Declared
The Board of Directors, effective January 19, 2011, has
declared a quarterly dividend of $0.23 per share,
equivalent to $0.92 per share on an annual basis.

BNY Mellon Shareowner Services
P.O. Box 358015
Pittsburgh, PA 15252-8015
or
480 Washington Boulevard
Jersey City, NJ 07310-1900

(888) 884-7790

TDD for Hearing Impaired
(800) 231-5469

Foreign Stockholders
(201) 680-6578

TDD Foreign Stockholders
(201) 680-6610

www.bnymellon.com/shareowner/equityaccess

S t o c k h o l d e r I n q u i r i e s
B N Y M e l l o n
S h a r e o w n e r S e r v i c e s

A n a l y s t I n q u i r i e s
I n v e s t o r R e l a t i o n s

M e d i a I n q u i r i e s
C o m m u n i c a t i o n s

( 8 8 8 ) 8 8 4 - 7 7 9 0

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( 2 1 9 ) 6 4 7 - 5 5 8 1

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BUILDING

I N V E S T M E N T - D R I V E N G R O W T H

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N i S o u r c e I n c .
8 0 1 E a s t 8 6 t h A v e n u e
M e r r i l l v i l l e , I N 4 6 4 1 0
w w w . n i s o u r c e . c o m