NiSource said last week that it intends to sell up to a nearly 20% stake in its Northern Indiana Public Service Co. (NIPSCO) subsidiary to cover the costs of grid modernization and its push to net-zero emissions.
During NiSource’s annual investor day at the New York Stock Exchange on Nov. 7, CEO Lloyd Yates said the company is willing to part with a 19.9% interest in NIPSCO. That will foot the bill for a 2040 net-zero emissions goal and approximately $15 billion in grid and gas infrastructure modernization and clean energy investments over the next five years.
NiSource plans to open the sale in the first quarter next year.
Yates said NiSource will “remain committed” to its NIPSCO operations, but it needs to improve a balance sheet that has been “constrained” for 20 years, forcing the company to issue equity. With a minority sale, Yates said NiSource wouldn’t have to issue equities through 2025.
“Our industry is going through massive change as technologies evolve and as customer expectations evolve, so we’ve refreshed our mission, vision and values,” Yates said. “We’ll need to drive supportive regulatory and legislative policies, favorable stakeholder environments and advances in technologies that are not currently economical to achieve, but we are optimistic.”
Yates said NiSource’s reworked business strategy should “drive a compelling total shareholder return of 9 to 11% annually.” He initiated a strategic business review of the utility when he became CEO in February.
NiSource’s new direction is “well positioned to drive long-term value for all stakeholders,” Yates said. He said the review identified about $30 billion worth of total long-term investment opportunities over the next decade.
“We have a long runway of investment opportunities and the ability to grow over a long-term horizon,” he said. “While the energy transition presents great opportunities, there’s a threat to those who don’t continue to move forward in a way that creates value. The actions we are taking help insulate NiSource from these threats.”
Shawn Anderson, senior vice president of strategy and chief risk officer, said a minority interest sale is NiSource’s best path forward.
“There’s a good precedent in the industry of this type of transaction being completed successfully. And it’s a very efficient means of financing our business,” he said.
Anderson also said affordability will be a focus during NiSource’s energy transition. He said through 2027, the company anticipates “low, single digit” increases in customer bills caused by energy efficiency measures, a disciplined operations and maintenance plan, commodity prices leveling off and an expanded customer base.
NiSource’s extensive natural gas infrastructure is “a critical component” to accelerated decarbonization, Anderson said. It will provide reliable baseload generation and be ideally situated for conversion to renewable natural gas or green hydrogen, he said
NiSource plans to retire its coal generation units by the end of 2030 and thereafter draw on a 51% mix of renewables and 35% natural gas generation. Energy efficiency, demand response and capacity purchases will make up the remainder.
By the end of 2025, NiSource expects to have spent $2.2 billion on renewable generation.
“We’re making the fastest transition away from coal. Seventy-four percent coal to zero in a single decade. A 90% reduction in emissions by 2030, including the 58% reduction we’ve already achieved. And now a goal of net zero by 2040,” Anderson said.
