NISOURCE INC.

Current report

Our construction of the Contract Assets involves significant risks. Construction delays, cost overruns or performance issues with the Contract Assets could reduce our returns under the Data Center Contract and could require us to obtain additional financing. Any further development of generation and transmission assets in connection with future data center contracts is expected to be subject to similar risks.

Current report

We expect to construct, through GenCo, 400 MW of new battery storage and a new power generation facility consisting of two 1,300 MW combined-cycle, natural gas-fired turbines, which are expected to reach commercial operation between 2028 and 2032, as well as related transmission and distribution assets (which will be constructed by NIPSCO). In addition, in order to perform under any further data center contracts, we expect that we will need to develop additional generation and transmission assets. Our return under the Data Center Contract will be, and our return under future data center contract is expected to be, affected by our ability to construct, develop and place into service these assets on time or at all and consistent with initial cost estimates, as well as the performance of these assets once constructed and placed into service.

Current report

We have not previously constructed generation assets of the type and scale contemplated by the Data Center Contract. Although we have engaged reputable EPC contractors to manage the construction of these new assets, our ability to complete the construction in a timely manner and within budget is contingent upon many variables and subject to substantial risks. These variables include, but are not limited to, the receipt, timing and terms of required regulatory approvals, including approvals from the IURC and FERC; the ability of key suppliers and contractors to timely satisfy their obligations under existing or future contracts and in compliance with the terms of such contracts, including the EPC Contracts and equipment supply contracts we have already entered into; the impact of new tariffs, if any, inflation and other trade or economic factors that may impact the cost of supplies and services; changes in law or regulation, including environmental compliance requirements; the availability of and ability of our contractors to hire and retain qualified labor and the cost of such labor; the impact of public health emergencies or natural disasters or other severe weather events; capital market conditions, including the availability of credit and our ability to obtain financing on acceptable terms (as discussed below); charges allocated to us by MISO with respect to these assets; and the impact of public involvement, intervention or litigation. In addition, our ability to complete construction of any additional generation and transmission assets developed to support future data center contracts will be subject to all or most of the foregoing risks.

Current report

Under the Data Center Contract, if the Contract Assets are delivered into service late or do not achieve certain other performance-related milestones, Customer is entitled to liquidated damages, which would be offset against NIPSCO’s billings to Customer and reduce the rate of return earned under the Data Center Contract. In addition, our actual costs to construct the Contract Assets may exceed the budget contemplated by the Data Center Contract, which could result from delays in construction or from other factors. Any such cost overruns will need to be funded initially by us, either through our cash flows from operating activities or additional debt or equity financing. Although our EPC contracts provide certain protections against cost overruns under those contracts, and any excess costs not recoverable through the EPC contracts are to be shared by us and Customer, any recoveries from our EPC contractors and/or Customer would occur over an extended period of time. The need for us to fund these expenses in the first instance may reduce our ability to use our operating cash flows for other purposes or may require us to obtain additional debt or equity financing, which may not be available on favorable terms or at all. These costs, if incurred, could negatively impact our return under the Data Center Contract or adversely affect our future results and financial condition. In addition, we expect that construction delays, performance shortfalls or cost overruns in connection with construction of generation and transmission assets supporting any future data center contracts could similarly have a negative effect on our return under such contracts and our financial condition.

Current report

We will be required to obtain significant additional financing in order to construct the Contract Assets and any generation or transmission assets we develop to support future data center contracts. Such financing may not be available on favorable terms, if at all.

Current report

In order to finance the construction of the Contract Assets, as well as any generation and transmission assets we develop to support future data center contracts, we expect to incur significant additional long-term debt and issue additional equity in NiSource, in addition to the financing we otherwise would seek to support investments in our existing businesses and refinance existing indebtedness. The LLC Agreement and Amended LLC Agreement will allow for additional capital contributions from affiliates of Blackstone to NIPSCO Holdings II and Generation Holdings II in connection with such Blackstone affiliates’ minority interest investments in those entities. In addition, we may consider other funding sources, structures, or partnerships as market conditions and strategic considerations evolve. The amount of additional long-term debt or NiSource equity needed to support construction of the Contract Assets and any generation and transmission assets to support future data center contracts could increase, potentially significantly, from our current expectations if we experience construction delays or cost overruns.

Current report

External factors such as inflation, monetary policy or other market conditions could impact our cost of borrowing and could make it more difficult to obtain the financing that is required to construct the Contract Assets on favorable terms, or at all. The issuance of additional debt could negatively impact our credit ratings and overall cost of capital, which could in turn adversely affect our future results and liquidity. In addition, an economic downturn or uncertainty, market turmoil, changes in interest rates, changes in tax policy, challenges faced by financial institutions, or a change in investor sentiment toward us or the utilities industry or the cloud-computing, artificial intelligence and data center industry generally could adversely affect our ability to raise the necessary capital. Reduced access to capital markets, increased borrowing costs, and/or lower equity valuation levels could jeopardize our ability to complete construction of the Contract Assets on-time and within budget, and could reduce future earnings per share and cash flows. In addition, any rise in interest rates may lead to higher borrowing costs, which may adversely impact reported earnings, cost of capital and capital holdings.

Current report

Pursuit of our partnership with Customer creates significant opportunity costs and reduces our strategic and financial flexibility in the near term.

Current report

We expect to incur significant indebtedness to fund our construction of the Contract Assets. Doing so will reduce our ability to incur further indebtedness to pursue other strategic opportunities, such as partnerships with other large data center customers or strategic mergers and acquisitions, while at the same time maintaining our investment grade credit ratings, which may require us to rely to a greater degree on equity financing in connection with future data center contracts and also may increase our reliance on equity financing for future investments in our existing traditionally regulated utility business, each of which could lead to substantial dilution of our existing shareholders. In addition, our credit rating agencies consider the percentage of our business comprised of traditionally regulated utility operations in their analysis of our credit quality.

Current report

In addition to these factors relating to our financing and credit ratings, our partnership with Customer is expected to employ a significant amount of our existing excess transmission infrastructure, which will limit our ability to use these assets for other opportunities, including additional data center opportunities. Furthermore, effectively overseeing the construction and financing of the Contract Assets will require significant time and attention of our management, which could detract from their oversight of our existing business and ability to pursue other strategic opportunities.

Current report

The return structure and risk profile of Data Center Contract and related development of the Contract Assets differ from those of NIPSCO’s traditionally regulated utility operations. Any future data center contracts we enter into are expected to have a comparable structure and risk profile.

Current report

NIPSCO’s and GenCo’s operations under the Data Center Contract will be, and under future data center contracts are expected to be, regulated by the IURC in a different way from the regulatory mechanisms applicable to NIPSCO’s historical operations, which could affect the manner in which we recover our investment costs and earn a return on our investment. NIPSCO’s electric utility rates historically have been determined and approved in regulatory proceedings with the IURC based on an analysis of NIPSCO’s costs to provide utility service and a return on, and recovery of, NIPSCO’s investment in the utility business. Through the IURC rate-making process, retail rates may be adjusted over time, and NIPSCO may request additional revenue, in order to cover ongoing costs and investment and earn an adequate return.

Current report

In contrast, the terms of the Data Center Contract were, and the terms of any future data center contracts will be, determined by commercial negotiation with Customer. In the case of the Data Center Contract, these terms include the charges that we receive from Customer, which are designed to allow us to recover the costs that we incur to construct and operate the Contract Assets and earn a return, and provisions that may result in adjustments to those charges such as, among other factors, those relating to certain liquidated damages that we may owe Customer in the event of construction delays or capacity shortfalls and the parties’ responsibility to share cost overruns, among other provisions. These terms do not guarantee a specific overall rate of return, and the overall return we earn under the Data Center Contract may ultimately be lower than that of NIPSCO’s traditional utility operations. The IURC will not regulate the commercial terms of the Data Center Contract and is not expected to regulate the commercial terms of any future data center contracts; however, the IURC is expected to maintain oversight under the Data Center Contract and any future data center contracts to ensure NIPSCO provides reliable service to Customer and any future data center customers at just and reasonable rates. In order to recover our investment costs and earn our return under the Data Center Contract and any future data center contracts, our subsidiaries must efficiently perform their own obligations and must look to the Customer or future customers (or, if applicable, any parent guarantor) to perform its obligations, rather than the IURC making use of its traditional rate-making process. In addition, under the Data Center Contract, NIPSCO has direct contractual obligations to the Customer to, among other things, construct the Contract Assets and deliver committed electric capacity in fixed amounts by certain dates. We expect our subsidiaries to have similar contractual obligations to customers in connection with any future data center contracts. If disputes arise with data center customers, including the Customer, regarding provisions of a data center contract, including the Data Center Contract, or payments to be made or actions to be taken thereunder, we may be significantly disadvantaged as a result of, among other factors, the significance of such contracts to us and the greater resources (financial and otherwise) available to the relevant customer. Any dispute or litigation with a data center customer, including the Customer, could create significant demands on the attention of management and result in significant costs to us.

Current report

In addition, the IURC, through its review and approval of the Data Center Contract and PPA between NIPSCO and GenCo, will have ultimate authority over the implementation of these agreements. In this context, we will need to continuously assess the applicability of ASC Topic 980 over the life of the Data Center Contract. It is possible that significant construction overruns, capacity shortfalls or other events that could result in NIPSCO or GenCo owing liquidated damages could either preclude ongoing application of ASC Topic 980 or result in an immediate disallowance and impairment of the Contract Assets. In addition, early termination of the Data Center Contract, could result in such impairment and discontinuation of application of ASC Topic 980, unless the Contract Assets can be used to support new or existing customers. If we incur significant costs that we are not able to recover from Customer (for example, greater than expected purchases of market capacity or operations and maintenance costs significantly exceeding those contemplated by the Data Center Contract), this also could discontinue the application of ASC Topic 980 to the Data Center Contract and the Contract Assets. We expect any future data center contracts will be subject to comparable risks.

Current report

Our partnership with Customer exposes us to significant customer concentration risk.

Current report

Customer will be a significant customer of our electric utility operations. For example, the generating capacity of the Contract Assets, when fully delivered into service, is expected to be approximately equivalent to the generating capacity of all NIPSCO’s existing generating assets. However, Customer has the right to terminate the Data Center Contract for convenience following certain notice periods. If Customer terminates or defaults under the Data Center Contract or elects not to renew the Data Center Contract after the initial term, we may not be able to replace Customer’s demand or otherwise fully utilize the assets constructed in connection with the Data Center Contract. We also may not receive the same level of return with respect to any alternative use.

Current report

In addition, Customer has a one-time option (exercisable no later than March 31, 2029) to halve committed capacity under the Data Center Contract to 1,200 MW commencing January 31, 2032. If Customer elects to reduce the committed capacity under the Data Center Contract or to terminate the Data Center Contract during its initial term, we will not receive the full earnings we expect to receive over the life of the Data Center Contract. Although the Data Center Contract provides for reimbursement for our investment in the Contract Assets and related expenses in the event of a reduction in the committed capacity or early termination, the amount of any reimbursement is capped under the Data Center Contract, with the amount of the caps being based on cost estimates determined as of signing. Furthermore, our ability to collect any reimbursable amounts will depend upon the willingness and ability of the Customer or its parent guarantor to satisfy their payment obligations under the Data Center Contract and related guarantee. Accordingly, we may not be able to recover our full investment, which may adversely affect our future results and financial condition.

Current report

Any of the above outcomes could adversely affect our future results, financial conditions and results of operations. Termination of the Data Center Contract during its initial term or exercise by Customer of its one-time option to reduce capacity also may cause us reputational harm, which could, among other things, negatively affect our ability to source and execute contracts with additional data center customers.

Current report

Many factors, including those outside our and Customer’s control, could cause Customer to exercise its one-time option to reduce the committee capacity under the Data Center Contract or terminate the Data Center Contract during the initial term. Such factors include, for example: (i) construction delays, cost overruns or capacity shortfalls that occur in connection with our construction of the Contract Assets, (ii) similar problems that Customer may encounter in connection with constructing its data centers, (iii) any decrease or lessening of current cloud-computing or artificial intelligence demand trends or a change in the current supportive legal and regulatory environment (in Northern Indiana or elsewhere) with respect to cloud-computing or artificial intelligence, as well as other factors, which could negatively impact the demand for data centers, (iv) technological or other advances impacting the design and operation of data centers, which could reduce the amount of electricity needed to power data centers and (v) competing energy technologies could become a preferred source of energy for powering data centers.

Current report

Any future data center contracts our subsidiaries enter into may contain termination and/or capacity reduction provisions and related reimbursement comparable to the Data Center Contract, exposing us to risks comparable to those described above (the significance of which will be affected by the relative size of any such contract and the costs we incur to develop resources supporting such contract).

Current report

In addition, as a result of the Data Center Contract, and any further agreements we may sign with data center companies, our stock price may experience increased volatility as a result of factors outside our control. For example, our stock price may be negatively affected as a result of any actual or perceived slowdown in the adoption of artificial intelligence technology, the regulation or proposed regulation of such technology, or actual or perceived changes in the strategic or financial position of our data center customers.

Current report

The long-term MISO capacity accreditation of capacity resources is uncertain. If the capacity resources that we construct to serve Customer or any future data center customers lose accreditation, we would need to construct additional generation assets to fulfill our obligations to such customers.

Current report

In recent years, MISO has implemented new capacity accreditation rules and continues to put forth new plans and proposals relating to its accreditation requirements. Recent MISO accreditation changes have affected both natural gas and battery storage generation resources, but battery storage has been more significantly impacted. It is possible that, under future MISO rules, the capacity accreditation for the capacity resources we construct to serve Customer will be eliminated or reduced, in which case we would need to replace or supplement the accredited generation capacity we are planning to build in order to fulfill our obligations to Customer under the Data Center Contract. This additional investment would be funded initially by us. Although under the terms of the Data Center Contract the costs of this additional investment would be shared by us and Customer, our recovery from Customer would occur over an extended period of time. We expect that we would need to obtain significant additional debt and equity financing to fund these investments, which may not be available on favorable terms or at all. These costs, if incurred, could negatively impact our return under the Data Center Contract or adversely affect our future results and financial condition. In addition, these activities would be subject to the construction and financing-related risks described above. Any generation assets we develop to support future data center contracts will be subject to similar risks relating to MISO accreditation, which, depending on the terms of our future data center contracts, may expose us to risks similar to those described above or additional risks.

Current report

Minority Equity Interest Sale

Current report

On October 28, 2025, NiSource issued a 19.9% indirect equity interest in NiSource’s wholly-owned subsidiary GenCo to BIP Orion Holdco L.P. and BIP Orion Holdco II L.P., affiliates of Blackstone (collectively, “Investor”), in exchange for $35.2 million. On October 28, 2025, simultaneously with issuance of the 19.9% indirect equity interest in GenCo, Investor, Generation Holdings I, Generation Holdings II and NiSource entered into an Amended and Restated Limited Liability Company Agreement of Generation Holdings II (the “LLC Agreement”).

Current report

The LLC Agreement establishes, among other things, governance rights, exit rights, requirements for additional capital contributions, mechanics for distributions, and other arrangements for Generation Holdings II. Specifically, under the terms of the LLC Agreement, Investor will provide up to $1.325 billion in additional capital contributions over a seven-year period, which obligation is backed by an Equity Commitment Letter from Blackstone or an affiliate thereof. Under the LLC Agreement, Investor is entitled to appoint two directors to the board of directors of Generation Holdings II (the “Board”) so long as Investor (together with any approved affiliate) holds at least a 17.5% Percentage Interest (as defined in the LLC Agreement). Investor is expected to appoint two directors to the Board, such that the Board will be comprised of seven directors, two appointed by Investor and five appointed by NiSource. The LLC Agreement also contains certain investor protections, including, among other things, requiring Investor approval for Generation Holdings II to take certain major actions. In addition, the LLC Agreement contains certain terms surrounding transfer rights and other obligations applicable to both Investor and NiSource. Under the LLC Agreement, Generation Holdings II has agreed that, so long as Investor holds a 14.9% or greater Percentage Interest in Generation Holdings II, Generation Holdings II, NIPSCO Holdings II (as defined below) and/or their respective subsidiaries will be the exclusive vehicles for all power, storage and generation requirements for data center customers within NIPSCO’s service territory.

Current report

On October 28, 2025, the members of NIPSCO Holdings II entered into a Third Amended and Restated Limited Liability Company Agreement of NIPSCO Holdings II (the "Amended LLC Agreement"), which, among other changes, increased the amount and time period for additional mandatory capital contributions required to be contributed by Investor by $175 million and seven years, which obligation is backed by an Equity Commitment Letter from Blackstone or an affiliate thereof, and amended certain provisions to facilitate NIPSCO Holdings II and its subsidiaries’ provision of electric service to data center customers (and related activities) and their related contracts and arrangements with Generation Holdings II and its subsidiaries.

Current report

The foregoing descriptions of the LLC Agreement and the Amended LLC Agreement do not purport to be complete and are qualified in their entirety by reference to the terms and conditions of the LLC Agreement and Amended LLC Agreement, which are filed as Exhibits 10.1 and 10.2, respectively, and are incorporated by reference herein.

Previous report

ITEM 1A. RISK FACTORS

Previous report

The impacts of natural disasters, acts of terrorism, acts of war, civil unrest, accidents, public health emergencies or other catastrophic events may disrupt operations and reduce the ability to service customers.

Previous report

A disruption or failure of natural gas distribution systems, or within electric generation, transmission or distribution systems, in the event of a hurricane, tornado, wildfire, flood, or other major weather event, or terrorist attack, acts of war, international military invasions, including the political and economic disruption and uncertainty related to such terrorist attack, acts of war, or international military invasions, civil unrest, accident, public health emergency (e.g. pandemic), or other catastrophic event could cause delays in completing sales, providing services, or performing other critical functions. We have experienced disruptions in the past from tornadoes, hurricanes and remnants of hurricanes and other events of this nature. Also, companies in our industry face a heightened risk of exposure to and have experienced acts of terrorism and vandalism. Our electric and gas physical infrastructure may be targets of physical security threats or terrorist activities that could disrupt our operations. We have increased security given the current environment and may be required by regulators or by the future threat environment to make investments in security that we cannot currently predict. In addition, the supply chain constraints that we are experiencing could impact our ability to timely restore services.

Previous report

Recent escalation with respect to Middle Eastern conflicts, and in particular, the direct involvement of the United States in the conflict involving Iran, may increase the likelihood that facilities within the United States, including natural gas distribution systems or electric generation, transmission or distribution systems that we own or on which we rely, will be targeted by military strikes, acts of terrorism or cyberattacks. In addition, the continuation or further escalation of these or other conflicts could create significant volatility in global capital markets or significantly disrupt the global economy, including disruptions of the global supply chain.

Previous report

The occurrence of such events could materially adversely affect our business, financial position and results of operations. In accordance with customary industry practice, we maintain insurance against some, but not all, of these risks and losses. As a result, the amount and scope of insurance coverage maintained against losses resulting from any such event may not be sufficient to cover such losses or otherwise adequately compensate for any business disruptions that could result.

Previous report

The following table describes any contracts, instructions or written plans for the sale or purchase of NiSource securities that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act that were adopted by our directors and executive officers during the quarter ended June 30, 2025:

Previous report

(1)A trading plan may also expire on such earlier date that all transactions under the trading plan are completed.