By Amanda Durish Cook

NiSource lost money last quarter as the company continues to face costs stemming from a string of gas pipeline explosions in three Massachusetts cities last year.

The Indiana-based parent of Northern Indiana Public Service Co. meanwhile continued to replace its coal plants with wind and solar resources.

NiSource reported a net operating loss just short of $2 million, compared with earnings of $35 million ($0.10/share) a year earlier.

Speaking to analysts Wednesday, NiSource CFO Donald Brown attributed the loss to higher financing costs and increased safety-related spending in response to last year’s string of gas explosions in three Massachusetts communities.

NiSource said it has dedicated $1 billion to stepped-up safety protocols after the explosions, which killed a teenager, injured 21 other people and destroyed multiple buildings in Lawrence, North Andover and Andover. The blasts occurred as the company’s Columbia Gas subsidiary was replacing cast iron pipelines with plastic lines.

“We expect to recover a substantial portion of our Greater Lawrence incident costs through the $800 million of casualty insurance coverage and $300 million of property insurance in place at the time of the event,” Brown said. He noted the company started submitting claims in December 2018 and has collected casualty insurance recoveries of $670 million through September — and expects to collect the remaining $130 million early next year.

In July, NiSource resolved multiple class-action lawsuits brought by business owners and residents for $143 million. The utility has also settled two other lawsuits brought by the communities and the victim’s family.

Columbia Gas last month experienced a second major gas leak in Lawrence as it continued rebuilding pipelines. The Massachusetts Department of Public Utilities has since placed a moratorium on the company’s nonemergency work and has opened an investigation into possible safety violations.

NiSource CEO Joe Hamrock said the company is working to win back the public’s trust and has added a chief safety officer, instituted a safety management system based on a framework for pipeline operators from the American Petroleum Institute, and installed safety improvements on its low-pressure gas distribution systems.

“Teams have installed more than 1,000 automatic shutoff devices across the NiSource footprint this year, including completing all installation of these devices in Massachusetts and Virginia,” Hamrock said.

He said NiSource will continue to factor the financial impacts of the leaks into its 2020 guidance, “but on a fairly moderate basis.”

NIPSCO Update

NIPSCO issued three requests for proposals for replacement capacity on Oct. 1, including for 2,300 MW of solar generation and solar paired with storage, and 300 MW of wind generation and wind paired with storage. The utility is also requesting an unspecified amount of thermal or other capacity resources. The RFP window closes Nov. 20.

The RFPs come in response to a forecasted capacity need by 2023 as the utility gradually phases out its coal fleet. NIPSCO pledged in its 2018 integrated resource plan to cut 80% of its remaining coal-fired generation by 2023 and all coal by 2028. That translates into retiring its 1,625-MW R.M. Schahfer coal plant in 2023 and the 469-MW Michigan City coal plant in 2028.

NIPSCO last quarter also received approval from the Indiana Utility Regulatory Commission for a certificate of need for the 102-MW Rosewater wind project in northwestern Indiana. NiSource and Texas-based EDP Renewables also filed with the IURC to build the 302-MW Indiana Crossroads wind farm, also in northwestern Indiana.

Hamrock also said NIPSCO expects to hike electric rates by about $11/month for an average residential customer beginning in January 2020, with a rate case order due from the IURC by the end of the year.