NiSource Financial Model

• Total assets: Approximately $30.0 billion.
• Key asset categories: Property, Plant, and Equipment (Utility Plant) comprises over 75% of total assets. Regulatory Assets are also material, representing deferred costs approved for future recovery.
• Goodwill & intangibles as % of total assets: Minimal (less than 5%).
• Working capital profile:
• Days Sales Outstanding (DSO): 35-45 days.
• Days Inventory Outstanding (DIO): 20-30 days (primarily natural gas in storage).
• Days Payable Outstanding (DPO): 40-50 days.
• Net working capital as % of revenue: Typically negative or neutral.
• Is working capital positive or negative? Often negative, as utilities use customer deposits and payables to fund short-term operations.
• PP&E: Consists of gas distribution pipelines, electric transmission lines, and generation facilities. Useful lives range from 10 to 65 years.
• Right-of-use assets / operating leases: Immaterial compared to owned utility plant.

• Capex as % of revenue: Extremely high, often exceeding 70-80% of revenue due to the capital-intensive nature of utility infrastructure.
• Maintenance capex vs. growth capex: Approximately 30% maintenance, 70% growth (renewables, pipeline replacement, data centres).
• Major capex programmes underway or planned: A $28.0 billion capital plan from 2026 to 2030, including $21.0 billion in base infrastructure and $7.0 billion for GenCo data centre infrastructure.
• Capitalised software / development costs if material: Immaterial.
• M&A pattern: Organic grower. The company recently sold a 19.9% minority stake in GenCo to Blackstone rather than acquiring other businesses.
• Typical acquisition multiple paid: Not applicable.

• Total debt: Approximately $15.4 billion to $15.8 billion.
• Debt/EBITDA ratio: 4.7x to 5.8x.
• Credit rating: BBB+ (S&P).
• Key debt instruments: Senior unsecured notes, junior subordinated notes (hybrids with 50% equity credit), and commercial paper.
• Maturity profile: Well-laddered, with recent issuances extending out to 2055 and 2056.
• Interest rate profile: Predominantly fixed rate.
• Covenants: Standard debt-to-capitalisation limits.
• Share repurchase programme: Inactive. Capital is prioritised for infrastructure investment.
• Dividend policy: Targets a payout ratio of 60-70% of net operating earnings.

• Operating cash flow conversion: Strong, typically 1.5x to 2.0x Net Income due to high non-cash depreciation.
• Free cash flow margin: Deeply negative. The company outspends its operating cash flow to fund its massive rate base growth.
• Major non-cash items that bridge net income to OCF: Depreciation, deferred income taxes, and regulatory asset/liability amortisation.
• Working capital cash flow impact: Seasonal source of cash in the spring, use of cash in the autumn as gas is injected into storage.
• Capex intensity: Massive. The $28.0 billion five-year plan guarantees negative free cash flow, requiring continuous debt and equity market access.
• Cash tax rate vs. GAAP effective tax rate: Cash taxes are minimal due to accelerated depreciation on utility plant investments.

1. Assumptions: Macroeconomic drivers, allowed ROE by jurisdiction, base capital plan, and GenCo data centre capex.
2. Rate_Base_Rollforward: Beginning utility plant, plus capex, less depreciation, yielding ending rate base for both Columbia and NIPSCO.
3. Columbia_Operations: Gas delivery volumes, cost of energy pass-through, O&M expenses, and segment operating income.
4. NIPSCO_Operations: Electric and gas volumes, GenCo data centre load, cost of energy, O&M expenses, and segment operating income.
5. Consolidated_Income_Statement: Aggregation of segments, corporate interest expense, income taxes, and deduction of non-controlling interest (Blackstone's 19.9% GenCo stake).
6. Balance_Sheet: Utility plant, regulatory assets, working capital, long-term debt, and equity.
7. Cash_Flow_Statement: Net income, D&A, working capital changes, capex, debt issuance, and dividend payments.
8. Debt_Schedule: Tranche-by-tranche debt rollforward, calculating interest expense and tracking the FFO/Debt credit metric.
9. Valuation: Dividend Discount Model and Sum-of-the-Parts (SOTP) based on regulated rate base multiples.

1. "Ending Rate Base = Beginning Rate Base + Capital Expenditures - Depreciation"
2. "Columbia Revenue = (Average Columbia Rate Base x Allowed Return) + Columbia Cost of Energy + Columbia O&M + Columbia D&A"
3. "NIPSCO Revenue = (Average NIPSCO Rate Base x Allowed Return) + NIPSCO Cost of Energy + NIPSCO O&M + NIPSCO D&A"
4. "Consolidated Cost of Energy = Columbia Cost of Energy + NIPSCO Cost of Energy" (Must equal the revenue pass-through exactly).
5. "GenCo Net Income = GenCo Operating Income - GenCo Interest Expense - GenCo Taxes"
6. "Non-Controlling Interest Deduction = GenCo Net Income x 19.9%"
7. "Net Income Available to Common Shareholders = Consolidated Net Income - Preferred Dividends - Non-Controlling Interest Deduction"
8. "Funds From Operations (FFO) = Net Income + D&A + Deferred Taxes"
9. "FFO to Debt Ratio = FFO / Total Debt"
10. "Dividends Paid = Net Income Available to Common Shareholders x Target Payout Ratio"

The Assumptions sheet dictates the capex spend, which feeds the Rate_Base_Rollforward. The calculated rate base feeds the revenue lines on the Columbia_Operations and NIPSCO_Operations sheets. Segment operating income flows to the Consolidated_Income_Statement. The massive capex from the rollforward creates a cash deficit on the Cash_Flow_Statement, which triggers new debt issuance on the Debt_Schedule. The new debt generates interest expense, which flows back to the Consolidated_Income_Statement, creating a circular reference that must be managed with a toggle.

• Revenues, Assets, and Equity are positive.
• Expenses (O&M, D&A, Interest, Taxes) are entered as positive numbers in their respective schedules but subtracted in aggregation formulas.
• Capital Expenditures are negative on the Cash Flow Statement.
• Debt issuance is positive on the Cash Flow Statement; debt repayment is negative.
• Dividends paid are negative on the Cash Flow Statement.

• Mismodelling the fuel pass-through mechanism. An increase in natural gas prices will spike revenue and COGS, but operating income must remain completely unaffected.
• Failing to deduct the 19.9% non-controlling interest for Blackstone's stake in GenCo, which will artificially inflate Net Income Available to Common Shareholders.
• Ignoring regulatory lag. Capital expenditures do not immediately generate revenue; they only earn a return once approved in a rate case or via a rider.
• Treating the $7.0 billion data centre capex as standard utility rate base. The Amazon contract has specific return profiles that differ from traditional residential rate base.
• Miscalculating the FFO/Debt ratio. Rating agencies include specific adjustments for hybrid securities (like the 2056 junior subordinated notes, which get 50% equity credit).
• Overestimating free cash flow. Utilities almost never generate positive free cash flow during heavy investment cycles; the model must force debt/equity issuance to balance the sheet.
• Applying a standard DCF. Unlevered free cash flow is negative for the foreseeable future. A Dividend Discount Model or Rate Base Multiple approach is required.
• Forgetting to model preferred stock dividends before calculating EPS.

• "Consolidated Cost of Energy expense must exactly equal the Cost of Energy revenue pass-through in every period."
• "Total Capital Expenditures for the 2026-2030 period must sum to approximately $28.0 billion."
• "Consolidated Rate Base growth should calculate to 8-10% annually."
• "FFO/Debt must remain above 14.0% to align with S&P BBB+ rating requirements; flag if it drops below this threshold."
• "Non-Controlling Interest must equal exactly 19.9% of GenCo's net income."
• "Adjusted EPS growth should fall within the management guidance range of 8-9% CAGR from 2026 to 2033."
• "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period."
• "Dividend payout ratio must remain between 60% and 70% of adjusted net income."

• SEC EDGAR: NiSource 10-K and 10-Q filings.
• Investor Relations: NiSource Q4 2024 and Q3/Q4 2025 Earnings Presentations.
• Key peers for benchmarking: CenterPoint Energy (CNP), CMS Energy (CMS), WEC Energy Group (WEC), Atmos Energy (ATO).
• Industry data sources: S&P Global Market Intelligence for rate case decisions and allowed ROE tracking.
• Consensus estimates: Bloomberg or FactSet for EPS and rate base growth validation.

• NiSource Inc. 2024 and 2025 Annual Reports on Form 10-K (SEC EDGAR).
• NiSource Q4 2024 Earnings Press Release and Call Transcript (February 2025).
• NiSource Q3 2025 Earnings Presentation and Press Release detailing the $28B capex plan and GenCo formation (October 2025).
• NiSource Q4 2025 Earnings Press Release (February 2026).
• S&P Global Ratings: NiSource Inc. Proposed Fixed-to-Fixed Reset Rate Junior Subordinated Notes Due 2056 Rated 'BBB-' (November 2025).