NISOURCE INC.

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("Management’s Discussion") includes management’s analysis of past financial results and certain potential factors that may affect future results, potential future risks and approaches that may be used to manage those risks. See "Note regarding forward-looking statements" at the beginning of this report for a list of factors that may cause results to differ materially.

Management's Discussion is designed to provide an understanding of our operations and financial performance and should be read in conjunction with our Condensed Consolidated Financial Statements (unaudited) included in this report and our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

We are an energy holding company under the Public Utility Holding Company Act of 2005 whose utility subsidiaries are fully regulated natural gas and electric utility companies serving customers in six states. We generate substantially all of our operating income through these rate regulated businesses. Our businesses are summarized for financial reporting purposes into two primary reportable segments: Columbia Operations and NIPSCO Operations. Refer to ''Note 16, "Business Segment Information," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for further discussion of our business segments.

Our vision is to be a premier, innovative and trusted energy partner. We exist to deliver safe, reliable energy that drives value to our customers. In order to achieve this goal, we seek to develop strategies that benefit all stakeholders as we (i) support long-term infrastructure investment and safety programs to better serve our customers, (ii) align our tariff structures with our cost structure, and (iii) drive value and enable growth in an evolving energy ecosystem. These strategies focus on improving safety and reliability, enhancing customer experience, pursuing regulatory and legislative initiatives to increase accessibility for customers currently not on our gas and electric service, ensuring customer affordability and reducing emissions while generating sustainable returns. The safety of our customers, communities and employees remains our focus. Serving as a guiding practice for our SMS, NiSource is certified in conformance to the American Petroleum Institute Recommended Practice 1173, which is the foundation to our journey towards operational excellence.

Data Center Contract and Strategy:

Data Center Contract

On September 18, 2025, NIPSCO entered into an agreement (the “Data Center Contract”) with a wholly-owned subsidiary of a large publicly traded company (the “Customer”), under which NIPSCO will provide electricity to Customer’s data centers. Under the Data Center Contract, which is subject to IURC approval, NIPSCO will provide electric service to the Customer pursuant to a capacity commitment beginning in 2027 and increasing annually to 2,400 MW by the end of 2032 and will construct up to 3,000 MW of dispatchable generation to provide such electric service. The Data Center Contract’s initial term ends 15 years after the initial energization of Customer’s initial data center. Starting January 1, 2027, Customer will regularly pay NIPSCO a fixed capacity charge and certain pass-through charges. The Customer’s publicly traded, investment-grade parent company has guaranteed the Customer’s payment obligations. These charges are structured to provide us with a return of our invested capital over the fifteen-year initial term. In addition, the Data Center Contract contains provisions for adjustment of the charges designed to provide us with an unlevered internal rate of return on our invested capital over the initial term within a defined range, which we expect over the life of the Data Center Contract to result in an overall realized return greater than that of NIPSCO’s current electric operations, driven by execution and financing. Our realized return may be impacted by factors such as construction costs, operating performance, financing costs and other variables. NIPSCO will also propose to the IURC a mechanism to pass savings back to retail customer for use of the existing system which is expected to begin in 2027. Refer to Part II, Item 1A, “Risk Factors” for a discussion of certain of these factors and other risks relating to the Data Center Contract.

In order to meet demand under the Data Center Contract, NIPSCO plans to enter into a PPA with GenCo, which is subject to IURC approval and which is expected to contain terms and provisions substantially similar to the Data Center Contract, such that economic benefits (except savings that are expected to be passed to retail customers as described above) and obligations of the Data Center Contract as they relate to the Generation Assets (as defined below) are expected to be borne by GenCo and NiSource, as GenCo’s ultimate parent company, rather than NIPSCO.

GenCo plans to construct 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 (such assets, collectively, the “Generation Assets”). GenCo has entered into engineering, procurement and construction contracts (the “EPC Contracts”), and certain equipment supply contracts, including a contract to acquire turbines, with respect to the construction of the Generation Assets. The aggregate cost of the Generation Assets, together with the cost to develop related transmission infrastructure (collectively, the “Contract Assets”), is currently estimated to be approximately $7 billion. The EPC Contracts provide certain protections against cost overruns, and any excess costs with respect to the EPC Contracts beyond those protections, or arising apart from the EPC Contracts are, unless otherwise agreed by the parties, shared by Customer and NIPSCO (for transmission) and GenCo (for generation). If the Contract Assets are delivered into service late or do not achieve certain performance-related milestones, Customer is entitled to liquidated damages, subject to a cap and offset against the regular charges paid by the Customer.

Either party may terminate the Data Center Contract upon certain defaults or failure to obtain necessary related approvals from the IURC and FERC. Customer may terminate the Data Center Contract for convenience following certain notice periods and also has a one-time option (exercisable no later than March 31, 2029) to halve the committed capacity under the Data Center Contract to 1,200 MW commencing January 31, 2032. If Customer terminates for convenience, exercises its reduction option or defaults, NIPSCO or its affiliates will be reimbursed for investment costs, subject to agreed caps based on cost estimates by year as of signing. NIPSCO’s aggregate liability, including liquidated damages, is subject to a cap.

NIPSCO’s and GenCo’s operations under the Data Center Contract will be regulated by the IURC in a different way from the regulatory mechanisms applicable to NIPSCO’s historical operations. The terms of the Data Center Contract were determined by commercial negotiation with the Customer. These terms include the charges we receive from the Customer and provisions that may result in adjustments to such charges, including those relating to certain liquidated damages that we may owe Customer in the event of construction delays or capacity shortfalls, the parties’ responsibility to share cost overruns, certain changes in law and force majeure events. The IURC will not regulate the commercial terms of the Data Center Contract; however, the IURC will maintain oversight under the Data Center Contract to ensure NIPSCO provides reliable service to the Customer at just and reasonable rates. In order to recover our investment costs and earn our return under the Data Center Contract, our subsidiaries must efficiently perform their own obligations and must look to the Customer (or its 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.

Data Center Strategy

We continue to experience strong demand from potential data center customers in our northern Indiana service territory and are engaged in negotiations with potential counterparties. Through certain of our subsidiaries, we have entered into certain construction and equipment supply contracts in relation to additional generation and transmission assets that may be used to serve potential future data center customers. As we continue to evaluate our potential data center opportunities, we will continue to focus on the community, financial, operational and regulatory factors that must be managed effectively in order to succeed with our data center strategy. We believe data center development can enhance our local tax base, diversify the employment base across the state of Indiana, and provide greater value to existing customers and shareholders. We continually evaluate ways to effectively manage the potential power demand, generation sources, and transmission capabilities to meet potential further load growth from additional data center customers, while at the same time focusing on our environmental goals.

In order to perform under any further data center contracts, we expect that we would need to develop additional generation and transmission assets and obtain additional financing in connection with such development. For these and other reasons, our ability to successfully execute our data strategy is subject to a number of risks and uncertainties. Refer to Part II, Item 1A, “Risk Factors” for a discussion of certain risks relating to our data center strategy.

Energy Transition: We continue to advance our energy transition strategy, primarily through the continuation and enhancement of existing programs, such as implementing our plan to retire and replace remaining coal-fired electric generation by 2028 with a balanced mix of low- or zero-emission electric generation, ongoing pipe replacement and modernization programs, and deployment of advanced leak detection and repair. Our electric generation transition, initiated through our 2018 Integrated Resource Plan ("2018 Plan") is well underway, and we are continually adjusting to the dynamic energy landscape. As of September 30, 2025, we have placed in service owned renewable and storage projects with combined nameplate capacities of 1,950 MW and 101 MW respectively. Renewable PPA projects with a combined nameplate capacity of 1,000 MW have also been placed in service. In addition, a renewable BTA project with a nameplate capacity of 200 MW, and a renewable PPA project with a nameplate capacity of 195 MW were under development as of September 30, 2025, all of which have received IURC approval. For additional information, see Note 14, "Other Commitments and Contingencies - D. Other Matters". We are continuing to evaluate the development of federal and state executive orders, or other regulatory actions, with respect to our generation transition plans. Absent a directive to remain open, we remain on track to retire R.M. Schahfer's remaining two coal units by the end of 2025. We are taking steps to be prepared to respond to any executive order or regulatory action to the contrary. For additional information, see "Results and Discussion of Operations - NIPSCO Operations," in this Management's Discussion, and see Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

NIPSCO's 2021 Integrated Resource Plan ("2021 Plan") lays out a timeline to retire the Michigan City Generating Station by the end of 2028. The 2021 Plan calls for the replacement of the retiring units with a diverse portfolio of resources including demand side management resources, incremental solar, stand-alone energy storage and upgrades to existing facilities at the Sugar Creek Generating Station, among other steps. Additionally, the 2021 Plan calls for a new natural gas peaking facility to replace existing vintage gas peaking facilities at the R.M. Schahfer Generating Station to support system reliability and resiliency, and upgrades to the electric transmission system. Following approval by the IURC in October 2024, the construction of a new 400 MW natural gas peaking generation facility is underway, which is expected to support the planned retirement of the existing vintage gas peaking facilities by the end of 2028. Final retirement dates for these units, as well as Michigan City, will be subject to MISO approval.

NIPSCO's 2024 Integrated Resource Plan ("2024 Plan") was submitted to the IURC on December 9, 2024. The 2024 Plan maintains the retirement decisions and capacity additions identified in the 2018 and 2021 Integrated Resource Plans and calls for additional generation resources through 2029 to support capacity requirements. The 2024 Plan informs future generation investments required to ensure reliability for NIPSCO’s customers and incorporates factors such as anticipated load growth from data centers and other economic development opportunities, EPA emissions rules, and evolving MISO resource accreditation rules. We plan to move as efficiently as possible while maintaining the integrity of our commercial, planning, regulatory, procurement and operational execution processes.

We continue to enhance safety and reduce methane emissions on our gas systems through modernization programs and utilization of advanced leak detection and repair. In addition, we plan to advance other low- or zero-emission energy resources and technologies, such as hydrogen and renewable natural gas.

Transformation: Our enterprise-wide transformation roadmap focuses on operational excellence, safety, operation and maintenance management, and unlocking efficiencies. We are committed to identifying and implementing initiatives that will enable us to streamline work and improve logistics company-wide. These efforts include investments in proven technologies backed with standardized processes that will change the way we plan, schedule, and execute work in the field and how we engage and provide service to our customers. Taken together, all of our optimization initiatives will prioritize safety and continue to optimize our long-term growth profile. Completing the first major milestone of our enterprise-wide transformation roadmap, we concluded all three phases of a WAM ERP program. Phase one of the program implemented the solution within our electric and transmission operations, while the second phase of the program included all gas distribution operations across our operating territories. The third and final phase incorporated our generation assets. This ERP system optimizes the scheduling, dispatch, and execution of our field operations. We will now proceed as planned with our enterprise transformation roadmap by focusing on our customer technology platforms. In addition to transforming technology to enhance our employee and customer experiences, we believe these programs will also ensure we remain on modern systems that help reduce enterprise risk related to end-of-life systems.

Economic Environment: We continue to monitor risks related to order and delivery lead times for construction and other materials, potential unavailability of materials due to global shortages in raw materials, and decreased construction labor productivity in the event of disruptions in the availability of materials. We continue to experience elevated material and supply costs in certain product sourcing categories driven by increased demand and tariffs. To the extent that work plan delays occur or our costs increase, our business operations, results of operations, cash flows, and financial condition could be materially adversely affected.

We are faced with increased competition for employee and contractor talent in the current labor market which has resulted in increased costs to attract and retain talent. We are ensuring that we use all internal human capital programs (development, leadership enablement programs, succession, performance management) to promote retention of our current employees along with having a competitive and attractive appeal for potential recruits. Our flexible work arrangements, where possible, support a broader talent footprint for sourcing talent needed and for remaining competitive.

We continue to evaluate our financing plan to manage interest expense and exposure to rates. For more information on interest rate risk, see "Market Risk Disclosures".

Summary of Consolidated Financial Results

A summary of our consolidated financial results for the three and nine months ended September 30, 2025 and 2024 are presented below:

The majority of the costs of energy in both segments are tracked costs that are passed through directly to the customer, resulting in an equal and offsetting amount reflected in operating revenues.

The increase in net income available to common shareholders for the three and nine months ended September 30, 2025 was primarily due to higher revenues driven by our capital investments, partially offset by higher operating expenses, including increased operation and maintenance expense and depreciation expense attributed to our net plant balances, as well as increased interest expense.

For additional information on operating income variance drivers see "Results and Discussion of Segment Operations" for Columbia Operations and NIPSCO Operations in this Management's Discussion.

Income Taxes

Refer to Note 12, "Income Taxes," in the Notes to the Condensed Consolidated Financial Statements (unaudited) for information on income taxes and the change in the effective tax rates for the periods presented.