Infrastructure growth driving NiSource 3Q13 earnings

Officials with NiSource (NYSE: NI) said the company’s infrastructure-focused business strategy continues to deliver solid financial results and resulted in a significant contribution to the 3Q13 net earnings announced on Oct. 31.

“The engine driving our performance is capital investment; specifically, earnings-accretive investments in infrastructure growth and long-term modernization programs,” Robert Skaggs, president and CEO, said during the company’s Oct. 31 earnings call. “We continue to generate sustainable shareholder and customer value through our team’s consistent execution.”

Underpinning the company’s infrastructure investment strategy is its deep and growing inventory of quality investment opportunities in both gas and electric infrastructure, Skaggs said, referring to plans filed by subsidiary Northern Indiana Public Service Company (NIPSCO).

“NIPSCO filed a seven-year, $700m plan to modernize and expand its core natural gas system … on the heels of NIPSCO’s $1bn electric modernization plan,” he said, noting that both plans sync with legislation recently enacted in Indiana that encourages investment in the state’s energy infrastructure.

The modernization plans were filed in July and remain under review by the Indiana Utility Regulatory Commission (IURC). Company officials anticipate action on the plans by the IURC in mid-2014, after which it will make electric and natural gas investments called for by the plans.

Meanwhile, work continues on NIPSCO’s two electric transmission projects in northern Indiana. With NIPSCO recently selecting the route for the 100-mile, 345-kV Reynolds-Topeka project, the utility is currently in discussions with landowners and communities along the line’s path. The estimated cost of the Reynolds-Topeka project is approximately $271m, according to TransmissionHub data. The second project, the Reynolds-Greentown multi-value project segment, will kick off with a series of community open houses in early 2014. Together the projects will involve an investment by NIPSCO of approximately $500m, the company said.

“Our NIPSCO team is delivering on a broad agenda of initiatives that will strengthen its core natural gas and electric system, while enhancing service and providing a platform for economic growth and development across northern Indiana,” Skaggs said. “NIPSCO is positioned to provide sustainable value for its customers, northern Indiana’s economy and NiSource shareholders for years to come.”

Net revenues, excluding the impact of trackers, increased by $11.6m due primarily to an increase in environmental investment cost recovery and higher industrial and commercial margins. The increase was partially offset by the final reconciliation of the revenue credit in 2012 and lower residential margins.

Electric operations make substantial contribution

NiSource reported corporate operating earnings of $183.7m on a non-GAAP basis for 3Q13, compared to $124.2m in 3Q12. On a GAPP basis, operating income was $176.4m for 3Q13, compared with $131.5m in the year-ago period.

The company’s electric operations generated operating earnings of $90.5m for 3Q13 on a non-GAAP basis, compared with operating earnings of $77.8m for the prior year period. Net revenues, excluding the affect of trackers, increased by $11.6m due primarily to an increase in environmental investment cost recovery and higher industrial and commercial margins, the company said. The increase was partially offset by the final reconciliation of the revenue credit in 2012 and lower residential margins.

On a non-GAAP basis, NiSource announced net corporate operating earnings from continuing operations of $57.1m for the three months ended Sept. 30, compared with $12.2m for 3Q12. On a GAAP basis, NiSource reported income from continuing operations for 3Q13 of $49.5m compared with $16.6m in the same period a year ago.

NiSource’s results for 2013 reflect the company’s $340m forward sale equity issuance completed on Sept. 10, which added approximately 24 million common shares outstanding, company officials said.

The company reaffirmed its earnings guidance at $1.50 to $1.60 per share on a non-GAAP basis.

Based in Merrillville, Ind., NiSource is a Fortune 500 company engaged in electric transmission, distribution and generation, as well as natural gas transmission, storage and distribution.

Originally published on Nov. 1, this article was updated Nov. 7 to include the names of the twotransmission projects underway in northern Indiana.