NiSource IncNI

Morningstar Rating

Stock Research and Analysis

by Charles Fishman, CFA

NiSource recently stepped up its capital spending program to $1.5 billion-$1.8 billion per year compared to $1.1 billion in 2011. Management has identified over $25 billion of investment opportunities in its core business during the next 15-20 years. Read more

Bulls Say

NiSource can add gathering and other nonregulated pipelines connecting to its main transmission system at returns on invested capital exceeding 15%, significantly higher than allowed returns from regulated assets.

NiSource has leases for up to 200,000 acres in the Utica shale-gas formation. Originally leased for natural gas storage, a portion of these mineral rights for drilling have been earmarked as NiSource's contribution to the HilCorp JV, significantly reducing the cash required and risk of developing these rights.

FERC regulation tends to be less influenced by political agendas versus state regulatory bodies. This usually provides more constructive regulatory decisions and higher allowed returns on equity. Read more

Bears Say

Almost 50% of NIPSCO's electric sales are to industrial customers, higher than most utilities. Industrial sales are more sensitive to the economy than residential and commercial sales.

Continued weak natural gas prices could reduce shale-gas drilling activity in the Marcellus region, reducing opportunities for new gas gathering and transportation projects.

Mild winter or summer weather negatively affects NiSource's earnings. Read more

Management

We assign NiSource a standard stewardship rating. This rating is due in large part to our favorable opinion of management's ability to manage the regulatory process in numerous state jurisdictions and FERC. In addition, although one could argue it was Read more

Profile

NiSource is an energy holding company whose subsidiaries distribute natural gas and electricity to more than 3.8 million customers located within a corridor that runs from Read more