Renewing Commitment
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RENEWING OUR COMMITMENT > 2019 INTEGRATED ANNUAL REPORT MESSAGE FROM OUR CEO: DURING 2019 WE THE CONTINUED TO ADAPT, ENERGY DRIVEN BY OUR GOAL OF RANKING AMONG WORLD IS THE COUNTRY’S CHANGING PREMIER REGULATED GAS AND ELECTRIC R APIDLY. COMPANIES. SAFETY IS FOUNDATIONAL made substantial progress on enhancing our emergency preparedness and response In all our efforts, safety leadership remains capabilities, which was the subject of a our foundational commitment. We are September 2019 NTSB recommendation. advancing that commitment with accelerated While safety is our No. 1 priority, we’re implementation of a Safety Management also working to regain the trust of all our System, or SMS, across our company. stakeholders following that tragic event. Through SMS – aligned with a framework developed for pipeline operators by the Reflecting this commitment, we have American Petroleum Institute – we are completed our restoration efforts in Andover, increasing our rigor in identifying risks Lawrence and North Andover, Massachusetts, and taking action to keep our customers, including replacing all affected customer communities, employees and contractors safe. equipment and restoring outdoor areas REBUILDING TRUST disturbed by our 2018 construction work. Further, a dedicated team remains in place We reached a milestone last fall when to provide continued support to affected the National Transportation Safety Board customers. And we have made safety (NTSB) issued its final report on the enhancements to low-pressure gas systems September 2018 event in the Merrimack across our seven states. Valley of Massachusetts, and accepted our responses to its last two remaining urgent We also announced in February 2020 that safety recommendations (the other two we have agreed to sell Columbia Gas of were accepted in July 2019). And we’ve Massachusetts (CMA) to Eversource Energy, SERVING NEARLY 4 MILLION NATURAL GAS AND ELECTRIC CUSTOMERS ACROSS SEVEN STATES UNDER OUR COLUMBIA GAS AND NIPSCO BRANDS. A NiSource Company New England’s largest energy delivery company. program that we began in 2016. This included We believe this transaction will create the right enhancements to our electric transmission and next chapter for the customers and communities distribution system designed to further improve that CMA serves throughout the state, as well system safety and reliability. These strategies as its dedicated employees. (For additional were supported by the successful conclusion information, please see the article on page 16.) of our electric base rate case, which also contained elements that reduce our risk profile. TRANSFORMING OUR ELECTRIC BUSINESS SUPPORTING SUSTAINABILITY We made significant progress in 2019 on In September 2019, NiSource was named transforming our electric business. We have to the Dow Jones Sustainability North America three wind projects in progress in Indiana Index for the sixth consecutive year. We are and are actively seeking additional renewable one of three U.S. multi-utility companies on the resources to replace our coal-fired generating list, which acknowledges advancements we capacity, all of which is scheduled to be retired continue to make in our sustainability strategy. by 2028. From a base year of 2005, these initiatives are expected to drive a 90 percent This includes aggressive greenhouse gas reduction in NiSource’s greenhouse gas reduction targets and executing against more emissions by 2030, and to save customers than $30 billion of long-term infrastructure more than $4 billion over 30 years. and safety investments over 20 years. We are committed to delivering energy safely, reliably We also continued to execute on our seven- and in an environmentally responsible and year electric infrastructure modernization sustainable way. LONG-TERM GROWTH establish a 5 to 7 percent long-term FOR INVESTORS growth rate for both net operating earnings per share (non-GAAP) and our dividend, NiSource results in 2019 met our financial with 2021 as the base year. This new long- commitments to investors. We delivered term guidance is expected to be extended full-year non-GAAP net operating earnings beyond 2022 to include significant per share of $1.32*, near the top of our investments related to our electric guidance range for the year. We made generation strategy. $1.9 billion in capital infrastructure and safety investments in our gas and electric systems, while maintaining our current CONTINUOUS LEARNING investment-grade credit ratings and AND IMPROVEMENT executing on our regulatory plan. MINDSET Due to the expected closing of the CMA We are committed to continually improving transaction later this year, we have the safety, reliability and environmental withdrawn our 2020 net operating earnings performance of our systems, service per share (non-GAAP) guidance of $1.36 quality for customers and our employee to $1.40. However, we still expect to make experience, all with a goal of delivering capital investments of $1.8 to $1.9 billion increasing value for all of our stakeholders. this year, and we expect we will no longer need a block equity issuance in 2020. I want to thank our Board of Directors, management team and the entire The long-term growth opportunity for NiSource team for their dedication our remaining operating companies and hard work that contributed to the is unchanged. As a result, following company’s success in 2019, and look completion of the CMA transaction, forward to working together energetically we expect to initiate 2021 net operating to further deliver on our commitments in earnings per share guidance and *Net operating earnings per share (non-GAAP); for a reconciliation to GAAP, see Schedule 1 on page 26. See also Regulation G statement on the inside back cover. JOE HAMROCK President and CEO NiSource Inc. March 13, 2020 BOARD OF SENIOR DIRECTORS MANAGEMENT TEAM Kevin T. Kabat Chairman of the Board, NiSource, Retired Joseph Hamrock Vice Chairman and CEO, Fifth Third Bancorp President and Chief Executive Officer Peter A. Altabef Donald E. Brown Chairman and CEO, Unisys Corporation Executive Vice President and Chief Financial Officer Theodore H. Bunting, Jr. Carrie J. Hightman Retired Group Vice President, Utility Executive Vice President and Chief Legal Officer Operations, Entergy Corporation Violet G. Sistovaris Eric L. Butler Executive Vice President and President, NIPSCO President and CEO, Aswani-Butler Investment Associates and Retired Executive Vice Pablo A. Vegas President, Union Pacific Corporation Executive Vice President and President, Gas Utilities Aristides S. Candris Chuck Shafer Retired President and CEO, Senior Vice President and Chief Safety Officer Westinghouse Electric Company Suzanne K. Surface Wayne S. DeVeydt Chief Services Officer Executive Chairman of the Board, Ken Keener Surgery Partners, Inc. Senior Vice President and Chief Human Resources Officer Joseph Hamrock Peter T. Disser President and CEO, NiSource Inc. Vice President, Internal Audit Deborah A. Henretta Partner, G100 Companies and Retired Group SENIOR MANAGEMENT TEAM Vice President, Procter & Gamble Co. WORKFORCE STATS (As of March 1, 2020) Deborah A. P. Hersman 9 Total Chief Safety Officer, Waymo LLC and Former Chair, National Transportation 67% Men, 33% Women, 22% Minorities Safety Board (NTSB) Michael E. Jesanis Managing Director, HotZero LLC and Retired President and CEO, National Grid USA QUALITY REVIEW BOARD Carolyn Y. Woo Ray LaHood Retired President and CEO, Catholic Relief Quality Review Board Chair Services Former Secretary, U.S. Dept. of Transportation John Durham BOARD OF DIRECTORS Retired Director, ENERCON Services WORKFORCE STATS Gary Harland (As of March 1, 2020) President, Work Management Inc. 11 Total Cynthia Quarterman Former Administrator, Pipeline and Hazardous 73% Men, 27% Women, 27% Minorities Materials Safety Administration John Cox President and CEO, Safety Operating Systems Jeff Wiese Vice President, TRC Companies CHAIRMAN’S LETTER: REFLECTING on my first year as Chairman of the NiSource Board of Directors, it has been a year of sharp focus on the continuing recovery from the tragic September 2018 event in the Merrimack Valley of Massachusetts. We worked diligently to rebuild the three impacted communities and support our customers in the valley and beyond. In addition, we executed a robust capital investment program while maintaining a focus on the things that matter most to all of our stakeholders – safety, service reliability, sustainability and long-term value for our shareholders. We have a highly skilled Board of Directors and senior management team armed with the knowledge and diversity of business experience needed to make sound strategic decisions on behalf of all our constituents. It has been a privilege to work with them in overcoming challenges and driving toward our goal of being a premier regulated gas and electric company. Our most critical priority in 2019 was to advance our culture of safety to protect our customers, communities, employees and contractors – and this will endure as our top priority. Central to that is our accelerated Safety Management System (SMS) implementation, which has led to enhanced risk management processes for our gas and electric operations. We also were pleased to welcome Deborah Hersman to the Board. She is an experienced safety executive, having served as Chair of the National Transportation Safety Board and CEO of the National Safety Council. Her perspective is invaluable as we continue to improve our safety performance. Our core commitment to safety is an