NiSource Reports Increased Earnings, Margins Over 2012

5 Nov

Gazzette Staff

MERRILLVILLE, Ind., Oct. 31, 2013 /PRNewswire/ -- NiSource Inc. (NYSE: NI) today
announced net operating earnings from continuing operations (non-GAAP) of $57.1
million, or $0.18 per share, for the three months ended September 30, 2013, compared
with $12.2 million, or $0.04 per share for the third quarter of 2012. Operating
earnings for the third quarter of 2013 (non-GAAP) were $183.7 million compared to
$124.2 million in 2012.

On a GAAP basis, NiSource reported income from continuing operations for the three
months ended September 30, 2013, of $49.5 million, or $0.16 per share, compared with
$16.6 million, or $0.05 per share, in the same period a year ago. Operating income
was $176.4 million for the third quarter of 2013, compared with $131.5 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 2013 reflect the company's $340 million forward sale equity
issuance completed on September 10, 2012, which added approximately 24 million
common shares outstanding. NiSource's third quarter 2012 results reflect the costs
associated with Columbia Gas Transmission's comprehensive infrastructure
modernization settlement with customers.

"As demonstrated by our results to date in 2013, we continue to generate sustainable
shareholder and customer value through our team's consistent execution of NiSource's
expansive, infrastructure-focused investment and growth strategy," President and
Chief Executive Officer Robert C. Skaggs, Jr. said. "This focus on execution has
placed us in a solid position to deliver net operating earnings squarely within our
guidance range of $1.50 to $1.60 per share for the year (non-GAAP)."

Skaggs noted that NiSource's operating units are delivering on an enhanced capital
investment program totaling approximately $2 billion in 2013. NiSource continues to
focus those investments on earnings-accretive infrastructure replacement and
modernization programs.

Modernization programs on track; continued progress on midstream projects

NiSource's Columbia Pipeline Group (CPG) continues to make steady progress on its
long-term infrastructure modernization program, as well as a series of midstream and
core growth initiatives tied to NiSource's strong asset position in the Utica and
Marcellus Shale production regions.

Columbia Gas Transmission is on track to complete the first year of investments
under its system modernization settlement, which became effective earlier this year.
As provided in the settlement, the company will make a tracker filing reflecting
first-year investments of approximately $300 million with the Federal Energy
Regulatory Commission (FERC) by the end of this year. Recovery of 2013 program
investments is anticipated to begin in February 2014. The modernization settlement
covers the initial five years of a 10-15 year program totaling $4-5 billion.

On September 30, 2013, Pennant Midstream, LLC announced the construction of an
approximately $60 million, 38-mile natural gas liquids pipeline in eastern Ohio. The
line will connect the Hickory Bend Cryogenic Processing Plant in New Middletown,
Ohio, to the UEO Kensington facility near Kensington in Columbiana County. Initial
capacity is expected to deliver up to approximately 90,000 barrels a day, starting
in the third quarter of 2014. NiSource Midstream Services, LLC operates Pennant
Midstream, which is jointly owned by Harvest Pipeline (an affiliate of Hilcorp
Energy Company) and NiSource Midstream. NiSource owns a 50 percent interest in
Pennant and is responsible for the same portion of the investment.

Pennant Midstream's Hickory Bend Project remains on schedule, with the majority of
the facilities to be operational by the end of this year. The $320 million project
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.

Millennium Pipeline is on track with development of an approximately $45 million new
compressor facility in Delaware County, New York. The project, which will increase
the pipeline's delivery capacity to 850,000 dekatherms per day, is expected to be in
service by April 1, 2014. NiSource owns a 47.5 percent interest in Millennium and is
responsible for the same percentage of the investment.

CPG's core marketing projects include more than $550 million of investments,
including the West Side Expansion Project, the East Side Expansion Project and the
Warren County Project, among others, remain on track and will add more than 1
billion cubic feet of capacity when completed over the next two years.

"Our CPG team is delivering on all fronts; from the systematic modernization of our
core system to customer and stakeholder-focused development of new midstream and
market-driven growth initiatives," Skaggs said. "These efforts are strengthening the
services we provide to our customers, assuring the continued reliability of our
system and providing a much-needed foundation for the ongoing development of shale
energy supplies."

NIPSCO files long-term gas system investment plan; executes on major environmental,
transmission projects

During the third quarter, Northern Indiana Public Service Company (NIPSCO) continued
to advance an agenda of customer service, reliability and long-term growth and
modernization initiatives.

In line with legislation passed earlier this year to support a variety of long-term
infrastructure investments, NIPSCO filed a seven-year natural gas infrastructure
modernization and expansion plan with the Indiana Utility Regulatory Commission
(IURC) on October 3, 2013. The legislation provides for the timely recovery of
related investments through deferrals and tracking mechanisms. The natural gas plan
outlines a program of qualifying system modernization projects, with anticipated
investment opportunities of approximately $700 million. NIPSCO's seven-year electric
infrastructure modernization plan, filed in July with outlined investments of
approximately $1 billion, remains under review by the IURC. The company anticipates
making its initial electric and natural gas investments in early-to-mid 2014.

NIPSCO extended its 2010 natural gas customer rate settlement through 2020 following
the August 28 IURC approval of an agreement reached earlier this year with the
Indiana Office of Utility Consumer Counselor and other key customer stakeholders.

Work continues on NIPSCO's two electric transmission projects in northern Indiana,
which support new jobs, enhance system reliability and offer environmental benefits.
For the first project, called Reynolds-Topeka, NIPSCO recently selected the route
and is in discussions with landowners and communities along the line's path.
Together the projects will involve an investment by NIPSCO of approximately $500
million.

NIPSCO also is executing on an approximately $250 million flue gas desulfurization
(FGD) project at NIPSCO's Michigan City generating station. The project, scheduled
for completion by the end of 2015, follows the approximately $500 million FGD
project at NIPSCO's Schahfer generating station, which will be placed into service
in the fourth quarter of this year and in late 2014. All FGD projects remain on
schedule and are on budget.

Also on the environmental front, on October 10, 2013, the IURC issued an order
approving NIPSCO's capital projects and associated cost recovery for investments to
support compliance with the Environmental Protection Agency's Mercury and Air Toxics
Standards (MATS) rule. The investments are expected to reach approximately $60
million over the next three years.

"Our NIPSCO team is delivering on a broad agenda of initiatives that will strengthen
its core natural gas and electric system, while enhancing service and providing a
platform for economic growth and development across northern Indiana," Skaggs said.
"NIPSCO is positioned to provide sustainable value for its customers, northern
Indiana's economy and NiSource shareholders for years to come."
Modernizing natural gas distribution infrastructure and services

NiSource Gas Distribution (NGD) companies continue to deliver strong results by
aligning their long-term, $10 billion infrastructure replacement and enhancement
programs with a variety of complementary customer programs and regulatory
initiatives.

NGD's capital program, including infrastructure replacement and enhancement
initiatives, is on track to achieve a record investment level of approximately $765
million in 2013. This investment supports the company's commitment to delivering
safe, reliable services to customers and solid financial performance for
shareholders.

Progress continues on a Columbia Gas of Kentucky base rate case filed in May with
the Kentucky Public Service Commission. The case seeks an annual revenue increase of
$16.6 million. It also supports the company's ongoing infrastructure investment
plans. A decision is expected with rates in effect by early 2014.

Columbia Gas of Massachusetts' base rate case remains on schedule with the
Massachusetts Department of Public Utilities. The case, which seeks increased annual
revenues of approximately $30 million, is designed to support the company's expanded
infrastructure modernization and replacement plans with investment recovery. A
decision is expected with rates in effect by March 2014.

On September 23, 2013, Columbia Gas of Maryland received a final order from the
Maryland Public Service Commission on its base rate case. In addition to
implementing a revenue normalization adjustment mechanism for residential customers,
the order approved an annual revenue increase of $3.6 million. Rates went into
effect September 25, 2013.

"Our team continues to set the standard for disciplined project execution, paired
with a foundational commitment to customer value and stakeholder engagement," Skaggs
noted.

Affirming 2013 earnings guidance, financing strength

Skaggs said NiSource remains on track to deliver net operating earnings in line with
its full-year outlook of $1.50 to $1.60 per share (non-GAAP).

With regard to liquidity, NiSource issued $500 million of 30-year debt at attractive
rates on October 10, 2013. In addition, the company increased its revolving credit
facility by $500 million to $2 billion, and extended the facility's term by an
additional 16 months to September 2018. These efforts serve to support NiSource's
infrastructure investments while extending the company's debt maturity profile and
lowering borrowing costs. As of the end of the third quarter, NiSource maintained
net available liquidity of approximately $1.4 billion.

There will likely be differences between net operating earnings and GAAP earnings.
Due to the unpredictability of weather and other factors, NiSource is continuing its
practice of not providing GAAP earnings guidance.

Third Quarter 2013 Operating Earnings - Segment Results (non-GAAP)

NiSource's consolidated operating earnings (non-GAAP) for the three months ended
September 30, 2013, were $183.7 million, compared to $124.2 million for the same
period in 2012. Refer to Schedule 2 for the items included in 2013 and 2012 GAAP
operating income but excluded from operating earnings.

Operating earnings for NiSource's business segments for the three months ended
September 30, 2013, are discussed below.

Columbia Pipeline Group Operations reported operating earnings of $98.7 million for
the three months ended September 30, 2013, compared with operating earnings of $38.8
million for the prior year period. Net revenues, excluding the impact of trackers,
increased by $67.8 million primarily as a result of Columbia Transmission's 2012
customer settlement related to its comprehensive infrastructure modernization
program.

Operating expenses, excluding the impact of trackers, increased by $10.4 million
primarily due to higher depreciation and amortization as a result of the 2012
Columbia Transmission customer settlement and software data conversion costs,
partially offset by a gain on the sale of storage base gas and decreased outside
services.

Equity earnings increased by $2.5 million primarily from increased earnings at
Millennium Pipeline.

Electric Operations reported operating earnings of $90.5 million for the three
months ended September 30, 2013, compared with operating earnings of $77.8 million
for the prior year period. Net revenues, excluding the impact of trackers, increased
by $11.6 million due primarily to an increase in environmental investment cost
recovery and higher industrial and commercial margins. This increase was partially
offset by the final reconciliation of the revenue credit in 2012 and lower
residential margins.

Operating expenses, excluding the impact of trackers, decreased by $1.1 million due
primarily to lower storm damage costs and decreased electric generation costs. These
decreases were partially offset by higher employee and administrative expenses.

Gas Distribution Operations reported operating earnings loss of $0.5 million for the
three months ended September 30, 2013, compared with operating earnings of $9.7
million for the prior year period. Net revenues, excluding the impact of trackers,
increased by $12.0 million primarily attributable to increases in regulatory and
service programs, including the impact of the implementation of new rates under
Columbia Gas of Ohio's approved infrastructure replacement program and the rate
settlement at Columbia Gas of Pennsylvania.

Operating expenses, excluding the impact of trackers, increased by $22.2 million due
primarily to higher environmental costs, increased outside services, higher
depreciation as a result of increased capital expenditures placed in service, and
increased employee and administrative costs.

Corporate and Other Operations reported an operating earnings loss of $5.0 million
for the three months ended September 30, 2013, compared to an operating earnings
loss of $2.1 million for the comparable prior period. The reduction in earnings is
primarily attributable to higher outside services costs.

Other Items

Interest expense decreased by $4.2 million due to the maturity of long-term debt in
November 2012 and March 2013 and increased allowance for funds used during
construction (AFUDC) balances. These decreases were partially offset by the issuance
of long-term debt in April 2013.

Other, net reflected income of $4.7 million compared to income of $2.2 million in
2012.

The effective tax rate of net operating earnings was 32.6 percent compared to 34.1
percent for the same period last year.

Nine Month Period 2013 Operating Earnings - Segment Results (non-GAAP)

NiSource's consolidated operating earnings (non-GAAP) for the nine months ended
September 30, 2013, were $806.3 million, compared to $757.1 million for the same
period in 2012. Refer to Schedule 2 for the items included in 2013 and 2012 GAAP
operating income but excluded from operating earnings.
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