NiSource (NI) Q3 2025: $7B Data Center CapEx Fuels 8–9% EPS Growth Outlook Through 2033

October 29, 2025 | By EarningsIQ Research

NiSource’s Q3 spotlighted a transformative $7 billion data center investment that redefines its growth trajectory, introducing a new business model that delivers both customer affordability and shareholder upside. The approval and execution of the GENCO structure unlocks scalable growth, with robust regulatory support and protective contract terms. Management’s guidance now embeds a higher, consolidated EPS growth rate through 2033, signaling a durable earnings ramp as large load opportunities accelerate.

Summary

• GENCO Model Unlocks Platform Growth: New structure enables rapid scaling to serve hyperscale data centers, diversifying earnings streams.
• Customer Affordability Remains Central: Special contracts ensure existing retail customers benefit from bill savings as new load comes online.
• Long-Term EPS Trajectory Rises: Management targets 8–9% annual consolidated EPS growth through 2033, up from 6–8% base plan.

Performance Analysis

NiSource’s Q3 results reflect disciplined execution on both legacy utility and emerging growth fronts. The company reaffirmed the upper half of its 2025 EPS guidance, despite modest year-on-year EPS softness from increased depreciation and higher debt balances. Constructive regulatory outcomes at NIPSCO Electric and Columbia Gas operations offset these pressures, while ongoing O&M efficiency initiatives helped maintain cost discipline.

The most material shift is the introduction of a $7B capital plan for data center-driven infrastructure, which is incremental to the refreshed $21B base plan. This elevates total five-year CapEx by 45% over prior outlooks, positioning NiSource to capitalize on the generational demand surge from digital transformation and onshoring. Management’s new guidance bifurcates base utility growth (6–8% EPS CAGR) from consolidated growth (8–9% EPS CAGR) that includes GENCO contributions, giving investors improved visibility into risk-adjusted returns.

• Regulatory Approval Secured: Indiana’s greenlight for the GENCO model underpins contract stability and future project scalability.
• Data Center Contract Drives Upside: The initial hyperscale agreement supports 3 GW of new generation, with further 1–3 GW in negotiation.
• Capital Structure Remains Prudent: Blackstone’s minority stake and fixed-rate contracts help minimize equity dilution and financing risk.

The quarter marks a pivotal inflection, as NiSource shifts from incremental rate-based utility growth to a hybrid model with scalable, contracted earnings tied to digital infrastructure.

Executive Commentary

Strategic Positioning

1. GENCO Model as Growth Engine

GENCO, NiSource’s new generation company structure, is purpose-built to serve large-scale data center and industrial load with speed and flexibility. Unlike traditional utility investments, GENCO operates under fixed-grade contracts—long-term, capacity-based agreements that provide stable, predictable returns and insulate NiSource from fuel and dispatch risk. The structure was designed with regulatory approval and minority equity support (notably from Blackstone), creating a repeatable blueprint for future large load additions.

2. Customer Affordability and Risk Mitigation

Affordability is embedded in the GENCO contract design. Special arrangements ensure that the infrastructure costs for new data center load do not burden existing NIPSCO retail customers. Instead, bill savings of approximately $1B are expected to be returned to legacy customers over the contract life. The contracts also include termination protections, cost-sharing, and risk transfer mechanisms that shield NiSource from early exit and construction overrun risk—critical for long-dated, capital-intensive projects.

3. Multi-Year Capital Plan and Pipeline Visibility

The $28B consolidated CapEx plan (2025–2030) represents the largest investment cycle in NiSource’s history, with $7B allocated to GENCO projects and $21B to the traditional six-state utility base. Management disclosed an active pipeline of 1–3 GW of additional data center load in negotiation, with the initial customer contract already supporting 3 GW of new generation. These projects are phased for efficient ramp and align with MISO capacity requirements, providing multi-year visibility to earnings accretion and asset deployment.

4. Digital and Operational Transformation

AI-driven operational initiatives are delivering sustained productivity gains, with over 20% improvement in field work efficiency and pilots underway in supply chain, reliability, and storm response. These O&M efficiencies support flat operating expense projections over the plan horizon, helping offset inflationary pressures and enabling NiSource to commit to annual bill increases of less than 5% for customers.

5. Strengthened Balance Sheet and Financing Flexibility

Blackstone’s $1.5B minority equity commitment to GENCO, along with prudent use of at-the-market (ATM) equity issuance, preserves NiSource’s credit profile (14–16% FFO-to-debt target) and minimizes dilution. The company expects to issue $300–500M of maintenance equity annually, with GENCO’s fixed-rate, contracted cash flows supporting strong, predictable coverage of new debt and equity needs.

Key Considerations

This quarter marks a strategic leap from regulated utility to hybrid infrastructure platform, with implications for risk, capital allocation, and long-term value creation.

Key Considerations:

• Blueprint for Repeatability: The GENCO model, now proven with a flagship data center contract, is positioned for scale as additional customers are negotiated under similar terms.
• Regulatory and Political Alignment: Indiana’s proactive stance on economic development and affordability underpins management’s ability to win approval for rapid infrastructure buildout.
• Capital Discipline Amid Expansion: The phased investment approach, with cost-sharing and risk transfer, is designed to prevent overextension while capturing upside from digital infrastructure demand.
• Pipeline Visibility and Ramp Timing: Management’s negotiation pipeline (1–3 GW incremental) offers potential for upside to current EPS guidance, though timing and technology mix will influence the earnings profile.
• Execution Risk Remains: While the structure mitigates many risks, successful delivery of large-scale projects and customer ramp is critical to achieving the targeted growth trajectory.

Risks

NiSource faces execution risk on multi-gigawatt infrastructure projects, including construction delays, supply chain constraints, and customer ramp timing. Although contract structures include protections, deviations in demand realization or regulatory shifts could impact returns. Debt and equity needs remain elevated, and any deterioration in credit metrics, or failure to secure new customer contracts at scale, could pressure the consolidated growth outlook.

Forward Outlook

For Q4 and full-year 2025, NiSource guided to:

• Adjusted EPS in the upper half of the $1.85–$1.89 range
• 2026 consolidated adjusted EPS of $2.02–$2.07, including GENCO contribution

For full-year 2026 and beyond, management introduced:

• Base utility EPS CAGR of 6–8% through 2030
• Consolidated EPS CAGR of 8–9% through 2033, reflecting data center growth

Management highlighted:

• GENCO’s initial contract supports $0.10–$0.15 EPS by 2030, rising to $0.25–$0.45 by 2033
• Potential for upside as additional load is secured, with pipeline visibility for 1–3 GW more

Takeaways

NiSource’s Q3 signals a step-change in growth and business model, with the GENCO structure and data center contracts anchoring a higher, more diversified earnings profile.

• GENCO as Growth Catalyst: The model’s approval and first contract validate a scalable approach to capturing digital infrastructure demand, with protections for both customers and shareholders.
• Affordability and Regulatory Alignment: Bill savings and risk transfer mechanisms support sustained regulatory goodwill and customer support, anchoring the growth thesis in community value.
• Execution on Pipeline is Key: Realization of the 1–3 GW negotiation pipeline will determine if NiSource can outperform its new EPS targets and fully capitalize on the digital infrastructure supercycle.

Conclusion

NiSource’s Q3 marks a strategic turning point, shifting from traditional rate-based growth to a hybrid model with scalable, contracted earnings from digital infrastructure. Execution on the GENCO pipeline and disciplined capital allocation will be decisive for sustaining the new 8–9% EPS growth trajectory.

Industry Read-Through

NiSource’s GENCO contract and regulatory model set a precedent for U.S. utilities seeking to capture hyperscale data center load without burdening legacy customers. Contracted, fixed-rate structures with customer bill flowbacks may become the new standard for utilities navigating the digital infrastructure buildout. Regulatory flexibility and public-private partnerships are increasingly central to unlocking large-scale grid investments. Peers with similar load growth opportunities and regulatory support will likely follow this blueprint, while those without may face relative growth and valuation headwinds.

NI Utilities Regulated Utility Data Centers Infrastructure GENCO Capital Allocation Affordability