Northern Indiana Public Service Co.’s leadership plan to test their new GenCo spinoff business with a $6 billion to $7 billion grid investment from a large, yet unnamed customer.
NIPSCO secured approval in September from the Indiana Utility Regulatory Commission (IURC) to launch its business model dedicated to building generation quickly to serve data centers and other large loads.
Lloyd Yates, CEO of parent company NiSource, said NIPSCO in September struck its first GenCo agreement with a “large, investment-grade data center customer” that would require two 1,300-MW GE Vernova natural gas turbines, 400 MW of new battery storage and transmission upgrades in northern Indiana.
NIPSCO’s contract with the customer stipulates an initial 15-year term. The utility plans to start constructing generation in 2027 and be able to meet the project’s full demand by 2032.
Yates said GenCo’s first, potential $7 billion investment will allow $1 billion in savings to flow back to existing customers. He said NiSource has “capitalized on emerging data center opportunities” in Indiana.
“The IURC’s approval of GenCo unlocks a unique business model designed to protect existing customers, serve new customers with speed and flexibility and maintain the financial integrity of NIPSCO,” Yates told shareholders at an Oct. 29 earnings call. “The GenCo strategy goes beyond simply providing power. It establishes a framework that strengthens our system, supports local communities and drives long-term sustainable growth for all stakeholders,”
NiSource reported $1.27 billion ($0.19/share) in revenue for the third quarter of 2025.
Yates emphasized NiSource is committed to keeping energy costs “reasonable and predictable” for the rest of its ratepayers.
NiSource Executive Vice President Michael Luhrs said NiSource plans to submit a special contract agreement to the IURC for review before the end of 2025. He said the utility expects a decision in the first half of 2026.
GenCo is exempt from many regulatory reviews typically required to build new generation in Indiana. Instead of the usual public proceeding, IURC would review the proposed contracts and power purchase agreements between NIPSCO and large loads on a case-by-case basis.
Multiple groups argue GenCo’s framework is flawed and is ripe for misconduct.
Clean Grid Alliance said GenCo would enjoy regulatory shortcuts while essentially maintaining the status of an unregulated independent power producer backed by a regulated monopoly. That one-sidedness would distort market competition and also could impede the clean energy transition, the nonprofit argued. It asked why NIPSCO didn’t simply create a new pricing tariff for data center load.
Watchdog group Citizens Action Coalition similarly argued GenCo would benefit shareholders over the public. It also said GenCo’s setup can’t fully isolate large-load investments because if the spinoff business were to lose money, it could affect NiSource’s credit rating.
The Citizens Action Coalition and the Indiana Office of Utility Consumer Counselor have alerted the IURC they plan to appeal its authorization of GenCo.
NIPSCO continues to claim GenCo will sequester investments stemming from large loads from being rolled into its rate base.
On the earnings call, Luhrs said NiSource is limited in the details it can share and called the deal a “breakthrough infrastructure agreement.”
Luhrs said the agreement will require consistent capacity payments of the customer, the “pass-through treatment of certain costs” and termination protections to mitigate risks posed by an early exit of the customer. He said NIPSCO’s proposed generation project and transmission upgrades were “carefully structured” to prioritize affordability “so that growth does not come at the expense of existing customers.”
Luhrs stressed that the contract ensures NIPSCO retail customers won’t be responsible for the infrastructure costs associated with serving the large load. He added NIPSCO would complete the project with “minimal interruption” to existing operations.
“We continue to see strong momentum from large-load customers,” Luhrs said, indicating GenCo will attract more customers.
Minutes after announcing the gas generation additions under GenCo, Yates said NIPSCO remains committed to the energy transition and would close its R.M. Schahfer and Michigan City coal plants by the end of 2025 and at the end of 2028, respectively. NIPSCO has announced plans to build a $644 million natural gas peaker plant at the Schahfer site to supply more demand tied to data center growth.
