NiSource Inc

Good morning. My name is Julie and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2021 MySource earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. Chris Turner, you may begin your conference.

Good morning and welcome to the NYSOR's third quarter 2021 investor call. Joining me today are Joe Hamrock, our chief executive officer, Donald Brown, our chief financial officer, Sean Anderson, our chief strategy and risk officer, and Randy Hewlin, our VP of investor relations and treasurer. The purpose of this presentation is to review NYSource's financial performance for the third quarter of 2021, as well as provide an update on our operations and growth drivers. Following our prepared remarks, we'll open the call to your questions. Slides for today's call are available on NYSource.com. Before turning the call over to Joe, Donald, and Sean, just a quick reminder. Some of the statements made during this presentation will be forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. Information concerning such risks and uncertainties is included in the MD&A risk factors sections of our periodic SEC filings. Additionally, some of the statements made on this call relate to non-GAAP measures. For additional information on the most directly comparable GAAP measure and a reconciliation of these measures, please refer to the supplemental slides and segment information, including our full financial schedules, available on NYSource.com. With all of that out of the way, I'd like to turn the call over to Joe.

Thanks, Chris. Good morning, everyone, and thank you for joining us. Hopefully you've all had a chance to read our third quarter earnings release, which we issued earlier today. Strong execution of NYSource's significant renewable energy investments continues to be the highlight of our foundation for future growth. And we continue to expect that our core infrastructure programs and renewable generation investments will drive industry-leading compound annual growth of 7 to 9 percent in diluted net operating earnings per share through 2024. growth driven by our commitments to safety, reliability, customer affordability, and sustainability. As we begin to refine our outlook for longer-term growth, the preferred path from NIPSCO's 2021 Integrated Resource Plan identifies additional investment opportunities while advancing the retirement of remaining coal-fired generation between 2026 and 2028. And it supports our plan to reduce greenhouse gas emissions 90% by 2030. Let's turn now to slide three and take a closer look at our key takeaways. We are updating our guidance for 2021 to target the top end of the range of $1.32 to $1.36 per share in non-GAAP diluted net operating earnings, or NOEPS. We are also initiating guidance for 2022 of $1.42 to $1.48, and that is consistent with our 5% to 7% near-term growth commitment. Our long-term diluted NOEPS guidance of 7% to 9% through 2024 is now based on the expected top end of our 2021 guidance range. And we reaffirm 5% to 7% growth in 2023. As I mentioned a moment ago, the preferred plan from NIPSCO's 2021 IRP advances our plans to retire remaining coal-fired generation between 2026 and 2028 as we shift to lower cost clean and reliable generation. Investments of up to $750 million will be required to replace retiring coal-fired generation. The NPSCO portion of this investment will be better understood following further evaluation of the proposals we solicited associated with the IRP. Our regulatory execution progresses with a proposed order approving a settlement in Pennsylvania, a settlement filed in Kentucky, and a proposed order in Maryland. In addition, we filed a gas rate case in Indiana in September. We achieved non-GAAP diluted NOEPS of 11 cents in the third quarter of 2021 versus 9 cents in 2020. Now let's look at some NYSource utilities highlights for the third quarter, starting with our GAAP operations on slide 9. The Columbia Gas of Ohio rate case continues to progress. Net of the trackers being rolled into base rates, the filing requests an annual revenue increase of approximately $221 million. Pending a decision next year from the Public Utilities Commission of Ohio, new rates would be effective in mid-2022. NIPSCO filed a gas rate case on September 29th requesting a revenue increase of $115 million annually. The case is focused on infrastructure modernization and providing safe, reliable service while remaining in compliance with state and federal safety requirements. In Pennsylvania, an administrative law judge issued a proposed order recommending that the Pennsylvania Public Utility Commission approve a settlement in our rate case. The settlement would increase revenue by $58.5 million with new rates effective December 29th of this year. The adjusted rates will help to continue investments in infrastructure upgrades, system reliability, and maintenance enhancements. We expect the Commission's final order by mid-December. In Kentucky, we have filed a proposed settlement of our rate case. The settlement includes an overall increase in revenues of $18.6 million to support continued investments in safety and replacing aging infrastructure. Columbia Gas of Maryland received a proposed order from an administrative law judge on Friday recommending an increase of approximately $2.56 million in revenues as compared to our request of approximately $4.8 million. We expect a final order from the Maryland Public Service Commission in December. Before we move on, I'd like to note that Columbia Gas of Ohio, our largest LDC, is ranked number one in the Midwest region in J.D. Power's 2021 Gas Utility Business Customer Satisfaction Study. Also, congratulations to our customer experience team for the successful launch of the Columbia Gas and NIPSCO mobile apps. They're an important step forward in building our connected digital customer experience. Let's now turn to our electric operations on slide 10. NIPSCO's Electric T-Disc Plan is pending before the Indiana Utility Regulatory Commission, or IURC. This is a five-year, $1.6 billion proposal that would replace the previous plan, which NIPSCO filed in April to terminate. The pending plan includes newly identified projects aimed at enhancing service and reliability for customers, as well as some previously identified projects. The other items on this slide relate to our renewable generation strategy, and I'll turn it over to Sean Anderson to give more detail. Thank you, Joe.