NiSource Announces Higher Profit, More Growth

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Merrillville-based NiSource Inc. (NYSE: NI) is reporting second quarter net income of $72.1 million, compared to $68.3 million during the same period the previous year. The company also says it intends to file modernization plans later this year, which will include potential expansion of natural gas services in northern Indiana. July 31, 2013

News Release

MERRILLVILLE, Ind. - NiSource Inc. (NYSE: NI) today announced net operating earnings from continuing operations (non-GAAP) of $72.8 million, or $0.23 per share, for the three months ended June 30, 2013, compared with $64.4 million, or $0.22 per share for the second quarter of 2012. Operating earnings for the second quarter (non-GAAP) were $194.7 million compared to $198.5 million in 2012.

On a GAAP basis, NiSource reported income from continuing operations for the three months ended June 30, 2013, of $72.1 million, or $0.23 per share, compared with $68.3 million, or $0.25 per share in the same period a year ago. Operating income was $193.5 million for the second quarter of 2013, compared with $205.0 million in the year-ago period. Schedules 1 and 2 of this news release contain a reconciliation of net operating earnings and operating earnings to GAAP.

NiSource's results for the quarter reflect its $340 million forward sale equity issuance completed on September 10, 2012, which added approximately 24 million common shares outstanding when compared to the same period last year.

"Through steady, consistent execution on NiSource's infrastructure-focused investment strategy, our team delivered second quarter results solidly in line with our expectations and consistent with our full-year earnings guidance of $1.50 to $1.60 per share (non-GAAP)," President and Chief Executive Officer Robert C. Skaggs, Jr. said. "We continue to deliver on an expanding array of customer, regulatory and growth initiatives across our business units."

Capital investment level enhanced from $1.8 to nearly $2 billion in 2013

Given the inventory of infrastructure investment opportunities available across NiSource's business units, Skaggs noted that the company is increasing its planned 2013 capital program from $1.8 billion to approximately $2 billion. A significant portion of the increased investment will be allocated to tracked infrastructure replacement and modernization programs.

Approximately 75 percent of the company's capital investment remains focused on accretive growth and other revenue-generating investments.

Continued growth from new pipeline projects placed into service; modernization program projects on schedule

NiSource's Columbia Pipeline Group (CPG) business unit results continue to reflect the benefits of market- and supply-driven growth projects placed into service, as the team continues to execute on a comprehensive system modernization program and pursues midstream infrastructure and minerals leasing opportunities linked to its strong asset position in the Utica and Marcellus Shale production regions.

Columbia Gas Transmission (Columbia Transmission) continues to execute against its system modernization settlement approved by the Federal Energy Regulatory Commission in the first quarter. Initial projects in progress include an 18-mile pipeline replacement and compression modernization project in southwest Pennsylvania and a pipeline loop project to increase operational reliability in the Baltimore area. Columbia Transmission's first-year modernization-related tracker filing will be made by the end of this year, with recovery projected to begin in February 2014. The settlement covers the initial five years of a modernization program of $4-$5 billion over 10-15 years.

NiSource Midstream Services commenced long-term gathering service for XTO Energy Inc. on the recently completed Big Pine Gathering System. A separate long-term gathering agreement is in place with PennEnergy, with service scheduled to commence later this year. Pennant Midstream LLC's first phase, the Hickory Bend Project, remains on schedule to be in service by the end of this year. The $300 million project, for which NiSource shares the investment equally with Hilcorp Energy Company, involves the construction of approximately 55 miles of 20- and 24-inch gathering pipeline facilities with an initial capacity of 600 million cubic feet per day, and a cryogenic natural gas liquids processing plant with an initial capacity of 200 million cubic feet per day. An initial phase of the project's gathering system is already in service to support early Utica Shale production from Hilcorp.

Millennium Pipeline placed in service an approximately $45 million compression expansion project, increasing delivery capacity at Millennium's interconnections with Algonquin Gas Transmission to 675,000 dekatherms per day. A second Millennium growth project, also involving a total investment of approximately $45 million, will increase the pipeline's delivery capacity to 850,000 dekatherms per day by the end of 2013. NiSource owns a 47.5 percent interest in Millennium.

Columbia Transmission and Columbia Gulf Transmission are moving forward with engineering and construction to upgrade and modify facilities to support the West Side Expansion project, which is already partially in service. This approximately $200 million project will reverse the flow of gas on parts of the system to transport approximately 500,000 dekatherms per day of Marcellus production to Gulf Coast and southeast markets. The project is scheduled to be fully completed by late 2014. Columbia Transmission's East Side Expansion project, which will transport Marcellus production to markets along the Atlantic seaboard, remains on schedule and is expected to be placed in service during the third quarter of 2015.

Columbia Transmission is in the process of upgrading its existing liquefied natural gas facility in eastern Virginia. The three-phase, three-year project will modernize and upgrade the existing facility at an investment of approximately $30 million. The project's first phase is scheduled to be complete in the fourth quarter of this year.

"Our CPG team continues to advance a broad array of modernization, midstream and growth initiatives to enhance customer service, assure continued system reliability and leverage our unparalleled strategic position in shale production regions," Skaggs said.

NIPSCO files long-term investment plan and continues environmental investments

During the second quarter, Northern Indiana Public Service Company (NIPSCO) continued to advance an agenda of customer service, reliability and landmark long-term growth and modernization initiatives while executing on significant environmental investments.

In line with the recently passed landmark legislation, SB560, which allows for the tracking of a variety of infrastructure investments, NIPSCO prepared and filed a seven-year electric infrastructure modernization plan with the Indiana Utility Regulatory Commission (IURC) on July 19, 2013. The plan, which is projected to have a minimal impact on customer bills, outlines a program of qualifying system modernization projects, with anticipated investment opportunities of more than $1 billion at NIPSCO's core electric transmission and distribution infrastructure. NIPSCO is the first utility in Indiana to file its plan with the IURC and intends to begin implementing its outlined investments in early 2014.

NIPSCO plans to file an infrastructure modernization plan for its gas operations later this year. The plan will address system modernization and expansion to areas of northern Indiana currently not served.

Work continues on NIPSCO's two electric transmission projects in northern Indiana, which support new jobs, enhance system reliability and offer environmental benefits. Together the projects will involve an investment by NIPSCO of approximately $500 million. The first project, called Reynolds-Topeka, recently completed its se