NiSource, Inc Annual Report 2019 Form 10-K (NYSE:NI) Published: February 20th, 2019 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-16189 NiSource Inc. (Exact name of registrant as specified in its charter) Delaware 35-2108964 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 801 East 86th Avenue Merrillville, Indiana 46410 (Address of principal executive offices) (Zip Code) (877) 647-5990 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each Name of each exchange on which class registered Common Stock New York Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yesþ No ¨ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes¨ No þ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12-b-2 of the Exchange Act. Large accelerated filer þ Accelerated filer ¨ Emerging growth company ¨ Non-accelerated filer ¨ Smaller reporting company ¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No þ The aggregate market value of the registrant's common stock, par value $0.01 per share (the "Common Stock") held by non- affiliates was approximately $9,506,346,286 based upon the June 29, 2018, closing price of $26.28 on the New York Stock Exchange. There were 372,494,365 shares of Common Stock outstanding as of February 12, 2019. Documents Incorporated by Reference Part III of this report incorporates by reference specific portions of the Registrant’s Notice of Annual Meeting and Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 7, 2019. CONTENTS Page No. Defined Terms 3 Part I Item 1. Business 6 Item 1A. Risk Factors 9 Item 1B. Unresolved Staff Comments 19 Item 2. Properties 19 Item 3. Legal Proceedings 19 Item 4. Mine Safety Disclosures 19 Supplemental Item. Executive Officers of the Registrant 20 Part II Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases Item 5. 21 of Equity Securities Item 6. Selected Financial Data 23 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 25 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 44 Item 8. Financial Statements and Supplementary Data 45 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 115 Item 9A. Controls and Procedures 115 Item 9B. Other Information 115 Part III Item 10. Directors, Executive Officers and Corporate Governance 116 Item 11. Executive Compensation 116 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Item 12. 116 Matters Item 13. Certain Relationships and Related Transactions, and Director Independence 116 Item 14. Principal Accounting Fees and Services 116 Part IV Item 15. Exhibits, Financial Statement Schedules 117 Signatures 122 DEFINED TERMS The following is a list of abbreviations or acronyms that are used in this report: NiSource Subsidiaries, Affiliates and Former Subsidiaries Capital Markets (former subsidiary) NiSource Capital Markets, Inc. Columbia (former subsidiary) Columbia Energy Group Columbia of Kentucky Columbia Gas of Kentucky, Inc. Columbia of Maryland Columbia Gas of Maryland, Inc. Columbia of Massachusetts Bay State Gas Company Columbia of Ohio Columbia Gas of Ohio, Inc. Columbia of Pennsylvania Columbia Gas of Pennsylvania, Inc. Columbia of Virginia Columbia Gas of Virginia, Inc. Company NiSource Inc. and its subsidiaries, unless otherwise indicated by the context CPG (former subsidiary) Columbia Pipeline Group, Inc. NIPSCO Northern Indiana Public Service Company LLC NiSource ("we," "us" or "our") NiSource Inc. NiSource Corporate Services NiSource Corporate Services Company NiSource Finance (former subsidiary) NiSource Finance Corporation Abbreviations ACE Affordable clean energy AFUDC Allowance for funds used during construction AMR Automatic meter reading AMRP Accelerated Main Replacement Program AOCI Accumulated Other Comprehensive Income ASC Accounting Standards Codification ASU Accounting Standards Update ATM At-the-market Board Board of Directors BTA Build-transfer agreement CAA Clean Air Act CAP Compliance Assurance Process CCGT Combined Cycle Gas Turbine CCRs Coal Combustion Residuals CEP Capital Expenditure Program CERCLA Comprehensive Environmental Response Compensation and Liability Act (also known as Superfund) CO2 Carbon dioxide CPP Clean Power Plan DPU Department of Public Utilities DSIC Distribution System Investment Charge DSM Demand Side Management ECT Environmental Cost Tracker EERM Environmental Expense Recovery Mechanism EGUs Electric Utility Steam Generating Units DEFINED TERMS ELG Effluence limitations guidelines EPA United States Environmental Protection Agency EPS Earnings per share FAC Fuel adjustment clause FASB Financial Accounting Standards Board FERC Federal Energy Regulatory Commission FMCA Federally Mandated Cost Adjustment FTRs Financial Transmission Rights GAAP Generally Accepted Accounting Principles GCA Gas cost adjustment GCR Gas cost recovery GHG Greenhouse gas GSEP Gas System Enhancement Program GWh Gigawatt hours IRIS Infrastructure Replacement and Improvement Surcharge IRP Infrastructure Replacement Program IRS Internal Revenue Service IURC Indiana Utility Regulatory Commission LDCs Local distribution companies LIBOR London inter-bank offered rate LIFO Last-in, first-out MGP Manufactured Gas Plant MISO Midcontinent Independent System Operator Mizuho Mizuho Corporate Bank Ltd. MMDth Million dekatherms MW Megawatts MWh Megawatt hours NOL Net Operating Loss NTSB National Transportation Safety Board NYMEX The New York Mercantile Exchange NYSE The New York Stock Exchange OPEB Other Postretirement and Postemployment Benefits PCB Polychlorinated biphenyls PHMSA U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration PISCC Post-in-service carrying charges PPA Purchase plan agreement PSC Public Service Commission PTC Production Tax Credits PUC Public Utility Commission PUCO Public Utilities Commission of Ohio RCRA Resource Conservation and Recovery Act ROU Right of use SAB Staff accounting bulletin SAVE Steps to Advance Virginia's Energy Plan DEFINED TERMS Separation The separation of our natural gas pipeline, midstream and storage business from our natural gas and electric utility business accomplished through a pro rata distribution to holders of our outstanding common stock of all the outstanding shares of common stock of CPG. The separation was completed on July 1, 2015. SEC Securities and Exchange Commission STRIDE Strategic Infrastructure Development and Enhancement Sugar Creek Sugar Creek electric generating plant TCJA Tax Cuts and Jobs Act of 2017 TDSIC Transmission, Distribution and Storage System Improvement Charge VIE Variable Interest Entity VSCC Virginia State Corporation Commission WCE Whiting Clean Energy Note regarding forward-looking statements This Annual Report on Form 10-K contains “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Investors and prospective investors should understand that many factors govern whether any forward-looking statement contained herein will be or can be realized. Any one of those factors could cause actual results to differ materially from those projected.