NISOURCE INC.

9. 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 Special Contract and GenCo PPA filing. In November 2025, NIPSCO and GenCo filed an application with the IURC seeking approval of (i) the ADS Contract, (ii) a related power purchase agreement between NIPSCO and GenCo, and (iii) an alternative regulatory plan and associated accounting treatment. An order was received in June 2026, fully approving the Stipulation and Settlement Agreement filed with the IURC by NIPSCO, GenCo, the OUCC and NIPSCO Industrial Group resolving all issues.

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 was 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. An order was received in July 2026 approving the application as filed, without change.

In July 2026, NIPSCO and GenCo filed an application with the IURC seeking approval of (i) an amendment to the ADS Contract for incremental service, (ii) a related power purchase agreement between NIPSCO and GenCo, and (iii) an alternative regulatory plan and associated accounting treatment. An order is expected in the fourth quarter of 2026.

In August 2026, NIPSCO and GenCo filed applications with FERC seeking authorization to engage in affiliate transactions between GenCo and NIPSCO to serve ADS and Alphabet. FERC orders are expected in the fourth quarter of 2026.

Section 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 several successive emergency orders under Section 202(c) of the Federal Power Act, to continue operating in 90-day increments, currently through December 18, 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. As directed, NIPSCO continues to take actions to comply with the orders. 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 granted NIPSCO's complaint and ordered MISO to make a compliance filing with proposed Schedule 56 (NIPSCO's Cost Recovery Mechanism) within 30 days of FERC's approval of the compliance filing for Schedule 55 (Consumers Energy Company's Cost Recovery Mechanism). NIPSCO filed a petition with the IURC to recover federally mandated costs related to the U.S. Department of Energy's Section 202(c) emergency 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 Section 202(c) emergency 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 September 30, 2026, $141.4 million has been deferred to non-current regulatory assets for incremental costs incurred to comply with the Section 202(c) emergency order and $33.5 million of non-current regulatory liabilities have been established for net MISO revenues. At present, NIPSCO is filing quarterly status reports with the IURC to keep it informed. In August 2026, NIPSCO filed its Sections 205, 202(c), and 309 filing to recover $38.0 million of net costs incurred in the first quarter of 2026 to comply with the December 2025 Section 202(c) emergency order. In September 2026, NIPSCO filed its Section 205, 202(c), and 309 filing to recover an additional $62.6 million of net costs incurred in the second quarter of 2026 to comply with the March Section 202(c) emergency order, and filed a correction to its August 2026 filing. Following FERC’s approval of MISO’s Compliance Tariff Mechanism for Consumers Energy Company, MISO will file NIPSCO’s Compliance Tariff Mechanism with FERC. After FERC’s approval, and sixty days has passed since NIPSCO filed its application to recover its 202(c) costs, MISO will begin invoicing, subject to refund, the designated Market Participants.

Regulatory Investigations. 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 Advanced Metering Infrastructure communications modules for gas meters. NIPSCO filed testimony in March 2026. The OUCC and Citizens Action Coalition filed their recommendations in September 2026. In October 2026, a settlement in principle was reached with the OUCC. A settlement procedural schedule has been established. The evidentiary hearing is scheduled for March 2027.

In July 2026, the IURC initiated formal investigations related to authorized return on equity and the future use of regulatory trackers for Indiana investor-owned electric utilities. These investigations were initiated in connection with the implementation of House Enrolled Act 1002 and are intended to evaluate potential adjustments to the regulatory framework as Indiana utilities transition to multi-year rate plans. The outcome of these proceedings could affect future ratemaking mechanisms and regulatory policy applicable to the Company; however, the Company cannot currently predict the timing or outcome of these investigations.

On August 11, 2026, NIPSCO experienced an unprecedented severe weather event, accompanied by a series of storms over the ensuing days, which caused widespread damage across portions of its electric distribution system and resulted in outages of approximately 375,000 impacted customers. Restoration efforts included the deployment of significant Company and contractor resources and the replacement of approximately 1,500 distribution and transmission poles andfive transmission towers. In September 2026, the IURC initiated a formal investigation to review NIPSCO's practices and procedures related to our storm restoration response. A procedural schedule will be established in the future. For additional information, refer to "Results and Discussion of Segment Operations - NIPSCO Operations," in Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations.