NiSource grew Q2 2026 revenue 4.6% to $1.34B on new rates, but a NIPSCO union lockout, higher depreciation and a 43% rise in interest expense cut diluted EPS to $0.09 from $0.22; 2026 guidance of $2.02-$2.07 adjusted EPS was reaffirmed.
Revenue
$1.3B
+4.6% YoY
Net income
$46M
-55.5% YoY
Diluted EPS
$0.09
-59.1% YoY
Operating margin
17.0%
Q2 2026: rate increases lifted revenue, but a union lockout, higher depreciation and a 43% jump in interest cost cut EPS to $0.09
NiSource owns regulated gas utilities in five states (Columbia Gas) and a combined gas-and-electric utility in northern Indiana (NIPSCO). It grew second-quarter 2026 revenue 4.6% to $1,342.4 million, mostly from rate increases regulators had already approved. Profit still fell sharply. Net income attributable to NiSource dropped 55.5% to $45.5 million, and diluted EPS fell to $0.09 from $0.22. In the filing's words, the decline was "primarily due to higher operation and maintenance expense, primarily related to outside services and labor costs, increased depreciation expense, and higher interest expense, partially offset by higher revenues associated with capital investments."
Some of the damage came from one-off items. On the company's non-GAAP basis, which strips out weather and one-time costs, adjusted EPS was $0.16, down from $0.22. So even after those items, underlying quarterly earnings fell about 27%. Q2 is NiSource's smallest quarter, because gas utilities earn most of their money in the heating season, and small swings in costs show up as large percentage moves. Management reaffirmed full-year guidance.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Operating revenue
$1,342.4M
$1,283.0M
+4.6%
Revenue less cost of energy (pass-through fuel/gas)
$1,148.8M
$1,021.2M
+12.5%
Operating income
$228.1M
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Source: NiSource Form 10-Q for the quarter ended June 30, 2026 and the August 5, 2026 earnings release (Exhibit 99.1).
A note on reading utility revenue: most of the "cost of energy", meaning the natural gas and fuel NiSource buys for customers, is passed straight through to bills with no markup. Cost of energy fell by $68.2 million this quarter, and that pulled the revenue line down with it. With the pass-through removed, revenue grew 12.5%. That is a better measure of what the business itself earned.
What drove the quarter
Rate increases were the engine. A regulated utility earns money by investing in pipes, wires and power plants. State regulators then let it recover that investment, plus an allowed return, through customer rates. Most of the revenue growth came from rates:
NIPSCO added $120.8 million of revenue from "rates from base rate proceedings, regulatory capital and DSM programs." This mainly reflects Step 2 of NIPSCO's electric rate case, effective March 2026. That case approved a $257.0 million annual increase at a 9.75% allowed return on equity (ROE, the profit rate regulators allow on shareholders' investment).
Columbia added $27.8 million from rate cases and pipe-replacement programs. That includes Columbia of Pennsylvania's new rates from January 2026 ($55.6 million approved of $110.4 million requested, at a 10.0% ROE).
Much of that new revenue went straight out again as depreciation. Depreciation is the annual charge for wearing out assets, and new rate orders usually raise it along with rates. NIPSCO's depreciation and amortization rose $56.2 million (+34%), which the filing attributes to "new base rates." Columbia's rose $19.7 million (+18%). Together, that consumed most of the rate-driven revenue gain. This is partly timing: the revenue and the matching depreciation both come from the same rate order.
The NIPSCO union lockout was the biggest one-off cost. NIPSCO locked out United Steelworkers-represented employees on April 2, 2026, after contracts expired March 31. The lockout ended when new agreements were ratified on April 24 and May 1. NIPSCO booked $30.5 million of "workplace continuity related expenses" for contractors, security and admin support. The company's adjusted-EPS reconciliation excludes $21.4 million, which is the cost net of wages it didn't pay to locked-out workers.
Weather hurt both segments. April–June was mild in NiSource's territories:
NIPSCO's cooling degree days were 22% below normal and 30% below last year. (Cooling degree days measure how hot it was, and so how much air conditioning people ran.) Residential electric volume fell 5.8%.
Heating degree days were 11% below normal in Columbia's territories and 13% below normal at NIPSCO Gas.
Weather cut revenue by $8.9 million at Columbia and $9.3 million at NIPSCO versus last year. The company estimates the hit versus normal weather at $16.0 million. It adds that amount back in adjusted EPS.
Industrial electricity demand grew even though weather didn't help. NIPSCO industrial electric sales rose 10.4% to 2,246.2 GWh, and industrial electric revenue rose 19.6%. That helped push electric revenue up 16.0%, to $572.5 million, in a mild quarter. Industrial load is less weather-sensitive, so this is a more durable signal than the weather drag.
Other cost pressure: outside services (+$6.4 million Columbia, +$12.2 million NIPSCO), property taxes (+$6.9 million at Columbia) and $5.4 million of "Value Captured" costs. Value Captured is a cost-efficiency program launched this year. In Q2 it included consulting fees and severance from a first round of job cuts, and the company says more reorganization is coming.
Below the operating line: financing costs are the real story
Net interest expense rose $60.1 million, or 43%, to $199.2 million. That increase alone is larger than the $34.8 million drop in operating income. The 10-Q doesn't itemize the cause, but the balance sheet shows total debt rising as NiSource funds a much bigger construction program:
Long-term debt, including the current portion, plus short-term borrowings reached about $17.4 billion at June 30. That compares with about $16.2 billion at year-end.
In May, NiSource issued $1.25 billion of new notes: $500 million at 4.75% due 2031 and $750 million at 5.30% due 2036.
Six-month capital spending rose 47% to $1.90 billion.
NiSource also raised equity through forward share sales under its $1.5 billion at-the-market program, with about $1.15 billion of capacity left.
Partly offsetting this, "Other, net" income was $18.2 million versus $0.5 million. Minority partners also absorbed an $8.6 million loss, versus $1.7 million a year ago, which slightly helped the figure attributable to NiSource. The effective tax rate rose to 21.7% from 19.1%, mainly because of lower federal investment and production tax credits, net of the share passed back to customers.
Takeaway: Q2 shows a utility in its heaviest build phase. NiSource is getting the rate increases it asked for: NIPSCO revenue from rates rose $120.8 million. But interest costs rose 43%, and depreciation from the same rate orders ate most of the gain. The lockout and a mild quarter then turned a flat quarter into a steep EPS decline. The core issue isn't demand, since industrial electric volume rose 10%. It is timing: NiSource borrows and depreciates now and earns the matching revenue later, and that gap will widen as data-center construction spending ramps up.
Six-month view
The half-year picture is steadier, because Q1 winter heating dominates the year. Six-month revenue rose 6.9% to $3,705.5 million, and operating income rose 2.4% to $1,047.3 million. GAAP diluted EPS fell to $1.15 from $1.22. Interest expense (+$118.9 million) and the Q2 lockout more than offset the operating gains. Adjusted EPS rose to $1.22 from $1.19. That is roughly 60% of the midpoint of management's full-year range, in line with NiSource's usual winter-heavy seasonality.
Data centers: the approvals landed
The larger strategic development came from regulators, not the income statement:
Amazon: in June 2026, Indiana regulators (the IURC) fully approved NIPSCO's special contract with Amazon Data Services, the related power purchase agreement with NiSource's generation affiliate (GenCo), and the settlement with consumer advocates and industrial customers.
Alphabet: in July, the IURC approved a second contract, with an Alphabet subsidiary, "as filed, without change."
Still pending: a July filing to expand the Amazon contract, with an order expected in Q4 2026, and FERC affiliate-transaction approvals, also expected in Q4.
The company estimates the cost of generation assets serving its current data-center customers at $9.25–$9.75 billion. It plans to finance that with contract payments, debt, equity and capital from Blackstone affiliates, which hold minority stakes in the relevant subsidiaries. GenCo is building a new gas-fired combined-cycle plant, with site mobilization in June and construction starting in Q3 2026. It is also building 400 MW and 100 MW battery-storage installations. NiSource also expects about $600 million of incremental "Pool Resource Asset" capex. These are shared generation assets it will dispatch across data-center customers, rather than dedicating each plant to one contract.
One regulatory wrinkle: NIPSCO's R.M. Schahfer coal plant was due to retire at the end of 2025. It is still running under successive 90-day U.S. Department of Energy emergency orders, currently through September 19, 2026. NIPSCO is seeking cost recovery through the regional grid operator MISO's tariff, with an Indiana filing as a backstop. The filing says this uncertainty means NiSource will need to re-evaluate its previously communicated generation timelines.
Outlook
Guidance (reaffirmed August 5, 2026):
2026 consolidated adjusted EPS of $2.02–$2.07.
9%–10% annual adjusted EPS growth from 2026 to 2033.
A $28.6 billion capital plan for 2026–2030: $21.0 billion in the base utilities plus $7.6 billion of data-center infrastructure. Management expects this to support 9%–11% annual rate base growth. (Rate base is the asset value on which regulators allow a return.)
Pending rate cases:
Columbia of Virginia requested $64.4 million over two years, with rates from October 2026 and October 2027.
Columbia of Kentucky requested $28.8 million, with rates from January 2027.
Our read: Reaching the guidance range looks plausible. The company needs roughly $0.80–$0.85 of adjusted EPS in the second half, and Q2's lockout cost won't recur. Also, $1.22 in the first half beat last year's $1.19 despite a mild winter-spring. The larger risk is financing, not demand. This quarter's 43% interest increase came before most of the $9+ billion data-center build. The investment case depends on regulators continuing to grant timely recovery, which they did for Amazon and Alphabet this quarter. It also depends on NiSource issuing debt and equity fast enough to fund the build without squeezing earnings per share in between. Things to watch in Q3:
The IURC order on the Amazon contract expansion.
The FERC rulings.
Whether the Schahfer emergency orders keep getting renewed, and who ends up paying for them.