NISOURCE INC.

8. Regulatory Matters

Regulatory Assets and Liabilities. We follow the accounting and reporting requirements of ASC Topic 980, which provides that regulated entities account for and report assets and liabilities consistent with the economic effect of regulatory rate-making procedures when the rates established are designed to recover the costs of providing the regulated service and it is probable that such rates will be charged to and collected from customers. Certain expenses and credits subject to utility regulation or rate determination normally reflected in income or expense are deferred on the balance sheet and are recognized in the income statement as the related amounts are included in customer rates and recovered from or refunded to customers. We assess the probability of collection for all of our regulatory assets each period. The offset to the regulatory liability associated with our renewable investments included in regulated rates is recorded in "Depreciation and amortization" on the Condensed Statements of Consolidated Income (unaudited).

NIPSCO Electric rate case filing. Following the IURC order in June 2025, new rates were implemented in multiple steps beginning in July 2025 and the final step was implemented in March 2026.

Columbia of Pennsylvania rate case filing. Following the order in December 2025, rates became effective in January 2026. Two parties filed petitions for reconsideration on certain aspects of the final order; however, the Pennsylvania Public Utility Commission issued a final order in February 2026 denying reconsiderations and the timeline for appeal has passed.

NIPSCO Electric Special Contract and GenCo PPA filing. In November 2025, NIPSCO and GenCo filed an application with the IURC seeking approval of (i) a retail special contract for electric service between NIPSCO and ADS, (ii) a related power purchase agreement between NIPSCO and GenCo, and (iii) an alternative regulatory plan and associated accounting treatment. Testimony from the Indiana Office of the Utility Consumer Counselor ("OUCC") and intervenors was filed in January 2026. In February 2026, NIPSCO, GenCo, the OUCC, and the NIPSCO Industrial Group filed a Stipulation and Settlement Agreement ("Settlement") resolving all issues and accompanying testimony with the IURC. The Citizens Action Coalition is opposing the Settlement, and the LaPorte County Board of Commissioners is not opposing the Settlement. A settlement hearing occurred in April 2026. An order is anticipated in the second quarter of 2026.

In April 2026, NIPSCO submitted a compliance filing containing an amendment to the ADS Contract to accelerate the delivery of capacity to ADS. This compliance filing is expected to be acted upon at the same time as IURC's order noted above. NIPSCO and GenCo also filed an application with the IURC seeking approval of (i) a retail special contract for electric service between NIPSCO and a wholly owned subsidiary of Alphabet, (ii) a related power purchase agreement between NIPSCO and GenCo, and (iii) an alternative regulatory plan and associated accounting treatment. A procedural schedule has not been established, but an order is expected in the third quarter of 2026.

202(c) Emergency Order for R.M. Schahfer coal facility. Before the planned retirement of the R.M. Schahfer coal facility at the end of December 2025, NIPSCO received the first of successive emergency orders under section 202(c) of the Federal Power Act, to continue operating in 90-day increments, currently through June 21, 2026. The orders stated that continued operation of R.M. Schahfer is required to meet an energy emergency across MISO’s North and Central regions. Consistent with the Federal Power Act and the U.S. Department of Energy regulations, the order authorizes NIPSCO to obtain cost recovery pursuant to 16 U.S.C. § 824a(c). As directed, NIPSCO continued to make R.M. Schahfer available in the MISO market. Following receipt of the initial emergency order, NIPSCO filed a complaint with FERC seeking a modification of the MISO tariff to establish a mechanism for recovery and allocation of the cost to comply with this order. In March 2026, FERC ordered MISO to make a compliance filing with tariff language for NIPSCO recovery and allocation of the cost to comply with this order within 30 days of FERC approving MISO’s tariff in Consumer’s FERC 202(c) complaint. NIPSCO filed a petition with the IURC to recover federally mandated costs related to the U.S. Department of Energy's 202(c) order in December of 2025, but the proceeding is being held in abeyance pending resolution of FERC/MISO level recovery of costs incurred while operating under the 202(c) order. While we do not believe IURC-level recovery under the FMCA Statute will be required, the petition was filed to preserve the right to seek such recovery if needed. Should such recovery become necessary, NIPSCO intends to file testimony and evidence outlining and justifying its request at a later date. As of March 31, 2026, $65.9 million has been deferred to non-current regulatory assets for incremental costs incurred to comply with the 202(c) Emergency Order and $54.4 million of non-current regulatory liabilities have been established for net MISO revenues and customer receipts in the first quarter of 2026. At present, NIPSCO is filing quarterly status reports with the IURC to keep them informed.

IURC Investigation. In November 2025, the IURC initiated an investigation into the accuracy of NIPSCO’s gas meters. This investigation followed NIPSCO's disclosure of a latent issue with a small percentage of the meter indexes in NIPSCO's gas meters, which was discovered during roll-out of new AMI communications modules for gas meters. NIPSCO filed testimony in March 2026 and a hearing is scheduled for July 2026.