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Schedule 1 of this press release contains a complete reconciliation of GAAP measures to non-GAAP measures. Schedule 2 of this press release provides total current estimates of costs and expenses related to the
"Our third quarter results have positioned
2020 Net Operating Earnings per Share, Capital Guidance Initiated
In 2020,
For 2019,
Continued
As part of the SMS work, enhanced risk management processes have been introduced at each operating company. Our SMS team has completed its first set of asset risk analysis, which will help inform the company's maintenance priorities and investment decisions. The team has also introduced a Corrective Action Program (CAP) which offers a simple way for employees and contractors to report safety concerns and provides a systematic process to review, prioritize, address and track progress to reduce risk. The tool, accessible online and via phone and mobile devices, is available across the gas segment and supporting corporate functions.
"Safety is our foundational commitment and drives all of our actions," Hamrock said. "Through SMS, we're increasing our rigor to identify risks and taking actions intended to keep our employees, contractors, customers and communities safe."
In addition to SMS implementation, safety enhancements to the company's low-pressure gas distribution systems remain a priority. Teams have completed installation of all automatic shut-off devices in
On
Columbia Gas of Massachusetts Update: National Transportation Safety Board Investigation and Merrimack Valley Restoration Completed
On
In mid-August,
As announced in September, the company has begun service line verifications, which involve inspections of gas service lines abandoned as part of the fall 2018 recovery work. These verifications, as required by the DPU, will confirm (and correct if necessary) that the work on the abandoned service lines was executed consistent with legal requirements and in compliance with
Third Quarter 2019 and Recent Business Highlights
Gas Distribution Operations
Columbia Gas of Maryland's base rate case request remains pending before theMaryland Public Service Commission . Filed inMay 2019 , the request seeks to support continued replacement of aging pipelines and adoption of pipeline safety upgrades. If approved as filed, the request would increase annual revenues by approximately$3.7 million , including$1.2 million of current infrastructure tracker revenue. A commission order is expected by the end of 2019, with new rates effective inJanuary 2020 .- On
August 28, 2019 thePublic Utilities Commission of Ohio (PUCO) approvedColumbia Gas of Ohio's application for the first annual adjustment to its Capital Expenditure Program (CEP) rider. The CEP rider, which was first approved by the PUCO in 2018, allows the company to recover capital investments and related deferred expenses that are not recovered through its infrastructure modernization tracker. The approved application allows the company to begin recovering approximately$121.7 million of capital invested in 2018. New rates became effective inSeptember 2019 . Northern Indiana Public Service Company (NIPSCO) continues to execute on its long-term gas infrastructure modernization program. The company's latest tracker update request, covering$12.4 million in incremental capital investments made betweenJuly 2018 andApril 2019 , was approved by theIndiana Utility Regulatory Commission (IURC) onOctober 16, 2019 , with new rates effective inNovember 2019 .
Electric Operations
- NIPSCO on
October 1, 2019 announced the opening of its next round of request for proposals (RFP) to consider potential resources to meet the future electric needs of its customers. The RFP is consistent with NIPSCO's 2018 Integrated Resource Plan, which calls for the retirement of nearly 80 percent of its remaining coal-fired generation by 2023, and all coal generation to be retired by 2028, to be replaced by lower-cost, cleaner options. NIPSCO is considering all sources in the RFP process, which closes onNovember 20, 2019 . - On
August 7, 2019 , the IURC approved the joint venture and ownership agreement for Rosewater, one of three wind projects that NIPSCO announced inFebruary 2019 . The IURC in June approved Power Purchase Agreement applications for the other two projects --Jordan Creek and Roaming Bison. OnOctober 22, 2019 , NIPSCO filed an application with the IURC for approval of a fourth wind project, Indiana Crossroads, a joint venture withEDP Renewables North America LLC , which will have an aggregate nameplate capacity of 302 megawatts. It is expected to be in operation in the fourth quarter of 2021. - NIPSCO's electric base rate case remains pending before the IURC. A partial settlement agreement filed on
April 26, 2019 addresses the revenue requirement, federal tax reform and changes to the company's depreciation schedules related to the early retirements of coal fired generation called for in the IRP. If approved as filed, the settlement would establish a return on equity of 9.9%. The hearing concluded in August, and an IURC order is anticipated in the fourth quarter of 2019, with new rates effective in the first quarter of 2020. - NIPSCO continues to execute on its seven-year electric infrastructure modernization program, which includes enhancements to its electric transmission and distribution system designed to further improve system safety and reliability. The program, originally approved by the IURC in 2016, represents approximately
$1.2 billion of electric infrastructure investments expected to be made through 2022. The company's latest tracker update request, covering$131.1 million in incremental capital investments made fromDecember 2018 throughJune 2019 , remains pending before the IURC. An order is expected in the fourth quarter of 2019, with rates effective inJanuary 2020 .
Additional information for the quarter ended September 30, 2019, is available on the Investors section of NiSource.com, including segment and financial information and our presentation to be discussed at our third quarter 2019 earnings conference call scheduled for
About
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of federal securities laws. 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. Examples of forward-looking statements in this press release include, but are not limited to, statements and expectations regarding
Regulation G Disclosure Statement
This press release includes financial results and guidance for
Schedule 1 - Reconciliation of Consolidated Net Income (Loss) Available to Common Shareholders to Net |
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Operating Earnings (Loss) Available to Common Shareholders (Non-GAAP) (unaudited) |
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Three Months Ended |
Six Months Ended |
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September 30, |
September 30, |
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(in millions, except per share amounts) |
2019 |
2018 |
2019 |
2018 |
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GAAP Net Income (Loss) Available to Common Shareholders |
$ (7.2) |
$ (345.1) |
$ 481.0 |
$ (45.8) |
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Adjustments to Operating Income: |
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Operating Revenues: |
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Weather - compared to normal |
(3.6) |
(11.4) |
(13.0) |
(21.9) |
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Operating Expenses: |
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Plant retirement costs(1) |
- |
- |
- |
3.3 |
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Greater Lawrence Incident(2) |
20.5 |
451.6 |
(179.4) |
451.6 |
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(Gain) Loss on sale of assets and impairments, net |
(0.2) |
0.7 |
(0.1) |
0.4 |
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Total adjustments to operating income |
16.7 |
440.9 |
(192.5) |
433.4 |
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Other Income (Deductions): |
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Greater Lawrence Incident - Charitable Contribution(2) |
- |
10.3 |
- |
10.3 |
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Interest rate swap settlement gain |
- |
- |
- |
(21.2) |
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Loss on early extinguishment of long-term debt |
- |
33.0 |
- |
45.5 |
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Income Taxes: |
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Tax effect of above items(3) |
(11.2) |
(103.8) |
36.6 |
(100.8) |
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Total adjustments to net income (loss) |
5.5 |
380.4 |
(155.9) |
367.2 |
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Net Operating Earnings (Loss) Available to Common Shareholders (Non-GAAP) |
$ (1.7) |
$ 35.3 |
$ 325.1 |
$ 321.4 |
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Basic Average Common Shares Outstanding |
374.1 |
363.9 |
373.8 |
352.1 |
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GAAP Basic Earnings (Loss) Per Share |
$ (0.02) |
$ (0.95) |
$ 1.29 |
$ (0.13) |
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Adjustments to basic earnings (loss) per share |
0.02 |
1.05 |
(0.42) |
1.04 |
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Non-GAAP Basic Net Operating Earnings Per Share |
$ - |
$ 0.10 |
$ 0.87 |
$ 0.91 |
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(1)Represents costs incurred associated with the retirement of Units 7 and 8 at Bailly Generating Station. |
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(2)Represents costs incurred for estimated third-party claims and related other expenses as a result of the Greater Lawrence Incident net of insurance recoveries recorded. |
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(3)Income tax effect is calculated using an adjusted effective tax rate. The adjusted effective tax rate differs from our GAAP effective tax rate due to adjustments for the impact of certain items which management believes are not indicative of our ongoing business performance. Our GAAP results for the three and nine months ended September 30, 2019 include a favorable adjustment to TCJA-related excess deferred income taxes. This activity was adjusted out of our non-GAAP results. |
Schedule 2 - Total Current Estimated Amounts of Costs and Expenses Related to the Greater |
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Lawrence Incident |
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Cost or Expense |
Total Current |
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Capital Cost(2) |
$255 - $260 |
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Incident Related Expenses |
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Third Party Claims-Related Expenses(3)(4) |
$995 - $1,020 |
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Other Expenses(3)(5) |
$430 - $440 |
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Insurance Recoveries(6) |
$670 |
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(1) Total estimated amount includes costs or expenses from the incident through September 30, 2019 and estimated expected expenses in future periods in the aggregate. Amounts shown are estimates made by management based on currently available information. See the footnotes below for additional information. Actual results may differ materially from these estimates as more information becomes available. |
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(2) )Since the Greater Lawrence Incident and through September 30, 2019, we have invested approximately $255 million of capital spend for the pipeline replacement. We estimate this replacement work will cost between $255 million and $260 million. We maintain property insurance for gas pipelines and other applicable property in the approximate amount of $300 million. Columbia Gas of Massachusetts has filed a proof of loss with its property insurer for the full cost of the pipeline replacement. The recovery of any capital investment not reimbursed through insurance will be addressed in a future regulatory proceeding. The outcome of such a proceeding is uncertain. |
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(3) The aggregate amount of third-party liability insurance coverage available for losses arising from the Greater Lawrence Incident is $800 million. Total expenses related to the incident have exceeded the total amount of insurance coverage available under our policies. While a substantial amount of expenses related to the Greater Lawrence Incident have already been recovered from insurance carriers, a few insurers providing liability insurance to the Company or Columbia Gas of Massachusetts continue to review our claim under the terms and conditions of the respective insurance policies. We are not able to estimate the amount of expenses that will not be covered by insurance, but these amounts are material to our financial statements. Certain types of damages, expenses or claimed costs, such as fines or penalties, may be excluded under the policies. |
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(4) Amount includes approximately $995 million of expenses recorded since the Greater Lawrence Incident. These costs include, but are not limited to, personal injury and property damage claims, damage to infrastructure and mutual aid payments to other utilities assisting with the restoration effort. 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, including additional information regarding ongoing investigations, management's estimates and assumptions regarding the financial impact of the Greater Lawrence Incident may change. The increase in estimated total costs related to third-party claims from those disclosed in our Form 10-K for the year ended December 31, 2018 resulted primarily from receiving additional information regarding legal claims and the required scope of the restoration work inside the affected homes. |
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(5) Amount shown includes other incident related expenses of approximately $388 million recorded since the Greater Lawrence Incident. Amount represents certain consulting costs, vendor costs, claims center costs, labor and related expenses incurred in connection with the incident and insurance-related loss surcharges. |
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(6) An amount of $670 million for insurance recoveries has been recorded and collected as of September 30, 2019. We are currently unable to predict the amount and timing of additional future insurance recoveries in excess of the recoveries recorded as of September 30, 2019. |
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SOURCE
Media, Ken Stammen, Corporate Media Relations, (614) 460-5544, kstammen@nisource.com; Investors, Randy Hulen, VP, Investor Relations & Treasurer, (219) 647-5688, rghulen@nisource.com; Sara Macioch, Manager, Investor Relations, (614) 460-4789, smacioch@nisource.com