NiSource Inc. (NI) Earnings Call Transcript & Summary

Good morning, and welcome to the 2020 NiSource Virtual Investor Day. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Randy Hulen, Vice President of Investor Relations and Treasurer. Please go ahead.

Thank you, Andrea. Good morning, everyone, and welcome again to the NiSource 2020 Investor Day. Joining me today are Joe Hamrock, our President and Chief Executive Officer; Pablo Vegas, our Chief Operating Officer; Shawn Anderson, our Chief Strategy & Risk Officer; and of course, Donald Brown, our Chief Financial Officer. In light of the ongoing pandemic, our event is 100% virtual this year. But we do have a very exciting and comprehensive program planned, including a deep dive look at our business and our refreshed growth plan, followed by a question-and-answer session for the participants dialed in today. Before I turn the program over to Joe, I'd like to offer a couple of quick reminders. Some of the statements made during this presentation will be forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. Information concerning such risks and uncertainties is included in the MD&A and Risk Factors sections of our periodic SEC filings. You will also find our forward-looking statements legend in our slide presentation deck, which is visible in your webcast player window and also available at nisource.com. This presentation also includes financial results and guidance for NiSource with respect to net operating earnings available to common shareholders, which is a non-GAAP financial measure. We include the measure because management believes it permits investors to view our performance using the same tools that management uses and to better evaluate the company's ongoing business performance. With respect to such guidance, it should be noted that there will likely be a difference between this measure and its GAAP equivalent due to various factors, including, but not limited to, fluctuations in weather, the impact of asset sales and impairments and other items included in GAAP results. NiSource is not able to estimate the impact of such factors on GAAP earnings and therefore, is not providing earnings guidance on a GAAP basis. With all that out of the way, I'll now turn the program over to Joe.

Thank you, Randy, and thanks to all of you for joining us today. We're excited to share with you more details about our long-term growth strategy that we previewed on our second quarter earnings call last month. I'll start by walking you through an overview of our strategic plan and growth drivers. You'll then hear from Pablo Vegas, who will discuss our safety, operations and regulatory focus; Shawn Anderson, who will discuss our electric generation transition strategy; and Donald Brown, who will provide a financial overview. Of course, we'll leave plenty of time for your questions after the presentations are complete. There's much to cover, so let's turn now to our presentation that you can view in your webcast player window and which is also available at nisource.com. Slide 5 profiles what we see as a premier regulated utility business. This, of course, reflects the pending sale of our Columbia Gas of Massachusetts assets, a transaction that is expected to close very soon. Following the sale of CMA, NiSource will continue operating at significant scale across 6 states with approximately 3.2 million natural gas customers and about 500,000 electric customers. Our Columbia Gas companies in Kentucky, Maryland, Ohio, Pennsylvania and Virginia and our NIPSCO combined Gas and Electric utility in Indiana are all located in jurisdictions that feature economic diversity and resilience as well as local policy support for our operations. This strong fundamental support provides us with a great deal of confidence in our ability to achieve our expected rate of return on the capital we deploy and deliver not only sustainable growth but a compelling annual total shareholder return. Turning to Slide 6. Let's delve into why we believe NiSource offers investors a tremendous opportunity. In short, we have a strong foundation for growth based on the supportive fundamentals I mentioned within our jurisdictions, a well-developed operating structure driving safety, reliability and affordability and a clear financial plan, which we believe will drive predictable earnings growth. NiSource operates pure-play gas and electric utilities in multiple jurisdictions with regulatory diversity that supports operating and earnings stability. Excluding CMA, we have significant scale with approximately $14 billion of regulated rate base, currently about 65% gas and 35% electric, with that mix expected to shift toward electric through the coming years. The proximity of our operations to abundant, low-cost natural gas resources in both the Marcellus and Utica basins is a unique characteristic that helps sustain demand and policy support for natural gas and affordability for our customers. Additionally, we are advantaged in the fact that our capital investments are supported by favorable energy policies and constructive regulatory environments in our operating jurisdictions. As we think about building on our strong foundation, we have a clear path to drive incremental growth with approximately $40 billion in expected safety, infrastructure modernization and renewable generation investment opportunities over 20 years, a $10 billion increase over what we had identified at the time of the CPG separation in mid-2015. Our infrastructure investment opportunities, most of which are within well-established programs, represent a total nearly 3x our current rate base, which demonstrates the long runway we have for future growth. The confidence we have in our ability to achieve this growth is in large part because in each of the 6 states across our footprint, we have well-established capital investment programs with a long track record of efficient recovery through regulatory trackers. These investment opportunities, including our planned renewable energy investments, are expected to drive compound annual rate base growth of 10% to 12% from 2021 through 2024. As we operate our business, we do so with the goal of benefiting our customers and communities. Our ability to keep customer rates affordable stems from many of the dynamics I just mentioned: the low-cost of gas in our service territories; the strong policy and stakeholder support that we believe will continue in the foreseeable future; our significant scale, which enables us to manage certain costs better than smaller utilities; and transformational efforts happening on both the gas and electric sides of the business, which we'll discuss today. We expect that these fundamentals as well as our diligent approach to cost management will enable us to keep annualized rate increases in the low to mid-single-digit percentages for our customers throughout our plan period. When it comes to safety, those efforts are driven by our enterprise-wide approach to risk management in our Safety Management System, or SMS. We are using SMS to drive continuous learning and improvements to our culture, risk management practices, operations and capital allocation. As we continue to implement SMS, we never lose sight of the incident in Merrimack Valley in 2018. With that remaining firmly in mind, SMS has shifted from project mode to full organizational ownership. And we continue accelerating and enhancing our implementation focused on learning from within and beyond our industry in a way that we believe will clearly differentiate us and drive value for all stakeholders. We'll cover more on SMS in Pablo's update. We anticipate that our planned renewable generation investments will drive significant economic and environmental benefits for NIPSCO's electric customers. These investments, which are helping us transition our generation fleet from coal to primarily renewables will save customers $4 billion over 30 years and reduce greenhouse gas emissions by 90% by 2030 compared to a 2005 baseline. On the gas side of the business, safety and asset modernization investments are helping us keep our O&M costs at relatively flat levels, which again benefit our customers' bill pass over the long term. Our focus on cost management and becoming a more efficiently run organization are essential to our ability to drive continued customer affordability. We are also advancing our environmental commitments through our approach to sustainability. As we are growing our business, we are mindful of our responsibilities to our customers and the communities we serve. Finally, our shareholder value proposition is compelling with a 100% regulated revenue base, driving expected consistent, predictable non-GAAP earnings growth. Our robust rate base growth is expected to drive non-GAAP net operating earnings per share at a compound annual growth rate of 7% to 9% from 2021 through 2024. In addition, we continue to expect annual dividend growth at a level that will enable us to maintain our targeted 60% to 70% payout ratio. Enabling us to achieve these results is a balanced financing plan focused on maintaining our current investment-grade credit ratings and importantly, maximizing non-GAAP EPS growth. Donald will provide much more detail in our financial overview later in the presentation. We are at a key stage in the execution of our strategy to deliver on our long-term value proposition. Turning to Slide 7. You can see that we have taken a number of steps to enhance the safety of our operations and the sustainability of our business. We committed in late 2018 to accelerate our SMS implementation across our gas business. And in early 2019, we further enhanced safety oversight and guidance with the appointment of an independent quality review board comprised of safety experts from a number of different industries and chaired by former Transportation Secretary, Ray LaHood. We continued to enhance our Board structure, which I'll expand more on in just a minute. In August 2019, we also received regulatory approval for the Rosewater Wind Farm, our first renewable project which established the model for our other renewable investments to follow. In February 2020, we announced the sale of Columbia Gas of Massachusetts to Eversource Energy. We believe this transaction creates the right next chapter for the customers and communities we serve in Massachusetts as well as our CMA employees. It also supports a renewed focus on our remaining operating companies where the business has sustained years of consistent performance and where we believe the long-term growth opportunities remain strong. One of those areas of renewed focus is the significant progress we've made on our renewables portfolio through multiple regulatory approvals and project announcements. We've gotten off to a great start executing on our renewable investments and are expecting our 2 initial wind projects, Rosewater and Jordan Creek to be placed in service by year-end. In May of this year, we announced a repositioning of our executive leadership team that is designed to support our enhanced focus on safety, customer value and operational excellence. This set the stage for execution of a multiyear enterprise-wide strategic initiative to better leverage our company's current scale, improve our cost structure and capabilities and drive efficiencies across the organization. This initiative is what we call NiSource Next, a comprehensive multiyear program designed to deliver long-term sustainable capability enhancements and cost efficiency improvements that reflect the high priority NiSource places on safety, risk mitigation and customer service. NiSource Next is already well underway. One of the early components of NiSource Next is the voluntary separation program for certain employees, which we announced in early August. We'll provide additional details around NiSource Next later in the presentation. Turning to Slide 8. Here's a snapshot of the realigned and focused NiSource executive leadership team. I'll mention some of the shifts and responsibilities that were part of the repositioning we announced in May. Pablo moved into a new role as Chief Operating Officer and President of NiSource Utilities, overseeing both our gas and electric segments. This supports continued advancement of our SMS as well as aligning investment priorities and delivering operational excellence across our utility portfolio. Donald continues as CFO and took on additional responsibilities as President of NiSource Corporate Services. He is focused on driving value through enhanced capabilities, processes and systems across our central business support functions, including overall leadership of NiSource Next. Violet Sistovaris moved into a new role as Chief Experience Officer, responsible for our customer service, human resources and communications functions. Violet is singularly focused on enhancing our employee and customer experience. Shawn was named Chief Strategy & Risk Officer, charged with aligning our strategy with stakeholder priorities and ensuring that enhanced risk management capabilities drive our planning and capital allocation. This includes our industry-leading plan to reduce greenhouse gas emissions through the coming decade. Following the announced agreement to sell CMA to Eversource, I asked Chief Legal Officer, Carrie Hightman, to take on the additional role of CEO and President of CMA. In that role, she is responsible for the transition of that operating company and for overseeing the contractual, legal, regulatory and other responsibilities associated with the pending sale. I will also note, it's been almost exactly a year since we created the Chief Safety Officer role reporting to me. Chuck Shafer is accountable for driving our long-term road map to reduce risk providing an independent outlook and source of safety expertise and risk analysis across all NiSource companies with dual accountability to me as well as the rest of the NiSource Board of Directors. He leads a centralized safety function to provide structured oversight and assurance of safety process rigor at NiSource. Chuck's group also includes centralized leadership of safety innovation through technology. Turning to Slide 9, we provide a look at our Board of Directors, which reflects the diversity of skills, backgrounds and experience to guide the company forward. This includes a transition in the Chair role and recent active enhancements of the Board through 3 new additions over the past 2 years. Theo Bunting, retired Group President at Entergy, was elected to the Board in 2018. We add a nationally known safety expert, Deborah Hersman to our Board in 2019, and we added Lloyd Yates, retired Executive Vice President, Duke Energy, earlier this year. They bring tremendous energy, experience and expertise. Our Board is committed to strong governance and to working closely with and continuing to challenge our senior management team as we work together to achieve our common goals for our stakeholders and enhance value for our shareholders. Turning to Slide 10. As I said earlier, we are confident in our ability to achieve the rates of return on our capital investments. Throughout the 2021 to 2024 period, we plan to deploy approximately $9.9 billion to $10.5 billion in already identified capital investment opportunities across our gas and electric businesses, including $1.8 billion to $2 billion in incremental renewable generation investments. We expect that strong pipeline of investments will allow us to grow our rate base at a compound annual growth rate of 10% to 12% and non-GAAP EPS at a compound annual growth rate of 7% to 9% from 2021 through 2024. Moving to Slide 11. Before turning the discussion over to Pablo, I'll spend a moment talking about our overarching strategy for accelerating our path forward. That path is underpinned by a long-term dedicated approach to investing in utility asset modernization safety enhancement opportunities identified by SMS, the core operating model of the company and numerous active renewable energy projects as we transform our electric generation fleet. Our approach will drive incremental growth over and above the consistent growth we expect to achieve through our significant, well-established safety and asset modernization programs at our utilities. Our NiSource Next initiative will support these robust investment opportunities by identifying long-term sustainable cost savings and capability enhancements that will keep rates affordable for our customers without ever compromising safety or service reliability. We're here to serve the people who depend on us, and we have a clear path forward to create sustainable value for all stakeholders, and we're relentlessly focused on delivering that value. It's our belief that customers will benefit from enhanced safety, reliability and service, the public will benefit from enhanced safety and environmental performance of our systems, our employees and business partners will benefit from those safety enhancements as well as from technological and process improvements that will make it easier to serve customers. And our investors will see greater value as we enhance the earnings power of the company and generate greater shareholder returns over time. I would now like to turn the program over to Pablo, who will cover our safety and operational focus in greater detail.

Thank you, Joe, and thanks to all of you for joining us today. I'm pleased to have the opportunity to speak with you about our operations and continued focus on enhancing our system safety and capabilities. I'll also provide further details about our NiSource Next transformation. On Slide 13, we have a snapshot of the key facts and figures across our operations. Our significant rate bases are the foundation for our growth strategy and our deep list of identified infrastructure investments. With a keen focus on safety, reliability and environmental sustainability, we've identified an impressive opportunity set of investments, focused on safety and asset modernization as well as renewable generation. As Joe mentioned, we operate in highly attractive jurisdictions that offer a great deal of economic resiliency through their population dynamics and display a solid base of policy support for our gas and electric operations, providing strong core fundamentals for long-term growth. Central to our operations is our Safety Management System, or SMS. The accelerated implementation of SMS has invigorated the safety culture throughout our organization, while driving meaningful risk reductions in the work we do every day. SMS requires a continuous improvement mindset and fosters high engagement across our operations. It aligns very well with our NiSource Next initiative and its goal to build on our SMS momentum by taking a truly holistic approach to driving sustainable capability enhancements and cost efficiency improvements that reflect the importance we place on safety, risk mitigation and customer service. Our SMS program has also changed the way we approach our longer-term capital allocation process. We're aiming to create an integrated leadership culture across our entire organization to accelerate our business transformation efforts. Through this lens, we have been able to continue advancing our safety performance while driving efficiency and effectiveness across utility and corporate business processes. As Joe notes, our transformation efforts and capital investments are being made from a customer-centric standpoint. Our customers are at the center of our business and as we execute our growth strategy, they will continue to be our focus as we improve system safety and reliability. Turning to Slide 14. The investments we are making in both our gas and electric businesses are made possible because of strong fundamentals, supportive regulatory frameworks and strong community relationships across our operating jurisdictions. We have well-established cost recovery mechanisms in all of our operating jurisdictions, and we anticipate that 100% of our capital investments will be recoverable through trackers or rate cases during our plan period. A significant portion of our investment portfolio is preplanned, repeatable and tracked for recovery annually. Looking at the bar chart on the left side of the slide, we have shown our total planned capital and the breakdown of our expected recovery time frames. As you can see, we expect to recover the vast majority of our investments within 18 months of deployment. Of note, you'll see we anticipate $8.1 billion to $8.5 billion of growth, safety and asset modernization investment opportunities from 2021 through 2024, with approximately $6.5 billion focused on tracked or future test year rate cases, which provide for the most efficient return on investments. We also plan to invest $1.8 billion to $2 billion in renewable generation investment opportunities through 2023, which will help us meet our goal of eliminating all coal-fired generation from NIPSCO's fuel source portfolio by 2028. These investments will preserve customer affordability with reasonable single-digit rate increases expected over the long term. We continue to see demand for gas system expansion in our jurisdictions. The Northern Loop and Marysville Connector projects in Northwest Columbus are notable examples that position Columbia Gas of Ohio to provide reliable service to our existing customers and serve the growing industrial commercial and residential markets in this region. The combined 21-mile, $135 million projects are scheduled to be in service in 2022. Importantly, the overall strength of the broader fundamentals in the service territories we serve has enabled each of our businesses to establish a consistent track record of earning close to our allowed returns year in and year out. Turning to Slide 15. As we have been emphasizing throughout, safety is at the core of everything we do. I'd like to play a short video for you that highlights the journey of our safety management system and brings to life some of the innovative initiatives we're actively employing in the field. [Presentation]

SMS is the operating system of our business, and I hope this video gave you a better understanding of how SMS is driving our integrated approach to improving safety, reducing risk and creating real value for our customers and communities. Turning to Slide 16. I'd like to take a moment to discuss NiSource Next, our enterprise-wide strategic initiative that we alluded to earlier. NiSource Next is our comprehensive approach to identifying long-term sustainable capability enhancements and cost efficiency improvements. It is structured to leverage our current scale, utilize technology, define clear roles and accountability with our leaders and employees and standardize our processes to create an organization focused on operational rigor and continuous improvement. NiSource Next's overarching objectives include promoting our commitment to safety leadership, which is embodied in our ongoing SMS journey; having achievable annualized run rate savings targets; creating a more efficient and empowered leadership structure; implementing enhanced digital customer service capabilities; standardizing operations management supported by modern technology for improved speed and reliability while throughout building customer trust and investor confidence. Specifically, NiSource Next is centered on 5 programs intended to accelerate our transformation to ensure our organization is well positioned to execute on our investments in safety, renewable energy, operational excellence and customer value. These include a streamlined organizational structure and more clearly defined roles and responsibilities. Second is the evolution of business services that will provide support to our employees when they need it and provide opportunities to consolidate and digitize processes. We'll do this across our supply chain, human resources, customer and billing and finance organizations to standardize and automate processes to drive accuracy and reduce manual work. Third is operational work standardization, which builds from the operational rigor, risk identification and safety enhancement work underway with our safety management system and is intended to ensure we execute our work processes one way, the best way and the safest way. Fourth is enabling field mobility, which will provide tools and resources to our employees when and where they are needed. We will deploy enhanced work planning and scheduling tools and provide our field employees with the technology and resources they need to allow for a paperless environment, providing them all the information they need at the job site to support the safe execution of work while also improving the consistency and quality of records and operational data. And fifth is the creation of a connected customer experience, which will enable us to be responsive to and empower our customers. We will implement digital and mobile capabilities to drive self-service, decrease our call handling times using automation and empower our teams with tools to achieve high productivity in a remote working environment. We will also seek to modernize our billing practices and transition customers to paperless billing, while applying analytics to optimize meter reading frequencies and reduce truck rolls for disconnection of services. This program of work is already underway and has deepened our focus on driving O&M cost savings and transforming our operations to ensure we are well positioned to deliver on our commitments to operational excellence and customer value. Safety is the first priority of our NiSource Next work, and it will build upon the early successes we've had in our ongoing SMS journey. The entire organization is engaged in this effort, and our NiSource Utilities business segments are driving to one culture focused on operational excellence and better leveraging our scale and new technologies. As we work to drive long-term growth, we are actively managing our cost to maintain customer affordability and improve our capabilities to better engage with our employees and customers. Over time, we anticipate that NiSource Next will enhance our ability to achieve consistent, stable growth while fostering a culture of leadership, innovation and commitment to continuous improvement by everyone within our organization. On Slide 17, I'd like to discuss several important operational highlights in our natural gas business. Our gas segment has continued to focus on improvements to operational rigor, advancing SMS maturity and preparing for an active regulatory environment. The SMS focus has yielded a cohesive strategy to gain contractor alignment, strengthened by our emergency preparedness and response capabilities through virtual and expanded tabletop exercises that utilize mobile command units, and has implemented additional operational controls for critical activities like work on our low-pressure regulator stations. We are targeting significant planned annual capital investment in natural gas safety and asset modernization programs through 2024. An important component of our capital investment plan is our approach towards pipeline modernization, which is focused on replacing priority pipeline in all of our jurisdictions and improving the safety and reliability of our distribution and transmission systems. In addition to these investments, our SMS program is identifying other opportunities to mitigate risks in our infrastructure. Through SMS, improved risk analytics are prioritizing certain safety investments within our $1.9 billion to $2.2 billion of planned growth, safety and asset modernization investments through 2024. We've included several examples here on this slide. These investments demonstrate our dedication to safely operating in the communities we serve. And as an additional benefit, we are projecting that modernization of our pipeline system will result in a 50% reduction in methane emissions from natural gas distribution mains and service lines by 2025 as compared to 2005. As you can see, safely and sustainably operating in the communities we serve continues to be our highest priority. Turning to Slide 18. Let's transition to a discussion of NIPSCO Electric's operational highlights and how we are advancing our system reliability and embracing the need for clean energy to drive customer benefits. We are targeting $500 million of annual capital investment in base electric system infrastructure and asset modernization programs through 2024, which is incremental to our renewable generation investment opportunities through 2023. By advancing our renewable strategy through a well-established and supported plan for electric generation replacements, we are providing further sustainability and diversification to our portfolio of generation sources. Central to this strategy, which Shawn will speak to in more detail momentarily, is our goal to develop a renewable generation portfolio that supports the retirement of 80% of our current coal-fired generation capacity by 2023, and retires all coal-fired generation by 2028. Key to reaching this goal is safely and efficiently taking our existing coal-fired plants off-line and ensuring a smooth transition for our employees in those facilities. We are well underway in our plan to replace our coal plants with cleaner and more affordable generation sources, including wind, solar and battery storage. This year, we continue to make great progress towards our goal of retiring all Schahfer coal plant units by 2023. Additionally, the Michigan City plant retirement, which is planned by 2028, and is expected to create the next set of incremental clean energy investment opportunities. Lastly, I'd like to highlight that the electric rate case completed last year has helped to position our generation fleet for the coming transition by restructuring our risk exposure to change in industrial demand, while supporting the competitiveness of our energy-intensive industrial customers. Turning to Slide 19. NiSource remains focused on improving customer experience and satisfaction. Our customers are at the center of our business. During this transformational period, we are elevating our capabilities to better engage with customers with a strong ongoing commitment to maintaining affordable rates. Touching on a few highlights. Earlier this year, we launched the Know Your Home campaign to help better educate customers on the gas infrastructure at their homes. This campaign is intended to familiarize customers with potential gas-related hazards and provide them with valuable information on ways to keep their families safe, both inside and outside of their home. Proactively engaging customers on the safety front advances another frontier in our SMS journey to help drive safety, not only in the work we do, but in how our customers use our products. In line with our digital transformation efforts, we also introduced several new payment platforms, including PayPal and Venmo to make bill payment for our customers even easier. These efforts are driving progress with recent J.D. Power scores showing year-over-year improvement in overall customer satisfaction in 4 of our gas businesses as well as NIPSCO Electric and 2 of our brands scored in the top 5 in the nation. Since the beginning of the COVID-19 pandemic, we've been helping our customers navigate this challenging time. We led this support by suspending disconnects soon after the outbreak began and are dedicated to continuing our payment assistance programs to help customers dealing with the ongoing impact of COVID-19. And our NiSource Next transformation will reimagine the customer experience. It will improve operational efficiency and deliver higher quality service to our customers at a better value. With that, I would like to now turn the program over to Shawn, who will cover some of the details of our generation transition strategy.

Thanks, Pablo, and thanks to all of you for joining us today. I'm pleased to have the opportunity to speak with you about our electric generation transition strategy and how we are transforming our business to meet the needs of our customers. Turning to Slide 21. I'd like to share a brief overview of our generation transition journey. As you may recall, NIPSCO's generating assets have historically consisted of significant coal-fired resources. This portfolio was primarily deployed in the '60s and '70s and has historically provided affordable and reliable energy for our customers. We have continued to invest significantly to keep these facilities compliant and reliable. However, facing significant future maintenance capital needs, increased environmental capital expenditures and less favorable dispatch economics, we began to take a closer look at the retirement timing for these units. The IRP process in Indiana, summarized on this slide is a highly collaborative and stakeholder-intensive process with the key planning consideration built upon delivering a supply portfolio that is diverse, flexible and compliant, providing affordable and reliable electricity to our customers and the communities we serve. The 2016 and 2018 Integrated Resource Plans informed a series of retirement decisions, most recently, the full retirement of our Schahfer facility and set the plan to fully retire our coal-fired assets by 2028. The planned retirements created a need for replacement capacity and the 2018 IRP demonstrated that a portfolio of primarily renewable resources was the best path for customers to deliver on these key resource planning considerations. On Slide 22, you'll see that we titled this generation transition, Your Energy, Your Future because we believe it captures the essence of the balanced value being created for the many stakeholders involved, affordable energy for our customers through environmentally friendly sources. Today, we continue to execute on our plan to transition our generating fleet while simultaneously growing our electric rate base in Indiana. Our plan includes incremental capital investment of approximately $1.8 billion to $2 billion through 2023 to execute and operationalize these resources. Importantly, as we advance our strategy, we are mindful that leaving our stakeholders better off should remain one of their top priorities, and we are confident this broad and balanced plan maintains reliability, lowers the cost profile of electric generation for our customers, creates economic activity for our communities, incorporates capital investment opportunity for our shareholders, all while reducing our environmental footprint. Turning to Slide 23. Our overall approach is driven by our commitment to provide affordable and reliable energy to our customers and the communities we serve. We have a high level of confidence in our ability to execute this impactful generation transition, all while managing impacts to customer bills. As we have mentioned previously, the 2018 IRP showed that customers will save about $4 billion over 30 years as compared to operating and maintaining our current generation portfolio. These savings will begin to materialize as soon as the units at Schahfer are retired by 2023. For instance, the elimination of fuel costs related to coal plants will yield annual savings of about $105 per household. Our generation transition strategy represents a tremendous amount of economic investment. We have been very clear about our preference and desire for that investment to be within the state of Indiana. By 2023, the total investment in new generation is expected to approach $5 billion to $6 billion when you take into account the total value of PPA and rate base investments. Initial independent studies show that this level of investment will create 11,000 jobs during construction and over $2.3 billion in incremental economic output within Indiana. Turning to Slide 24. Pursuing our generation transition strategy also enables us to drive significant long-term environmental benefits in the communities we serve and operate. We plan to achieve a 90% reduction in greenhouse gas emissions by 2030 versus 2005 baseline levels and significantly reduce other environmental impacts associated with our current generation portfolio. These dramatic reductions to our environmental footprint build upon the progress we have already made in recent years and demonstrate our commitment to sustainability as we will provide our customers with a more affordable and cleaner generation portfolio. Before we introduce the projects already underway, which will deliver this value to stakeholders, Slide 25 lays out the ownership structures to efficiently enable the transition of our portfolio. First, we are utilizing both rate base investments and purchase power agreements to acquire the replacement resources. This blend helps balance the cost to customer through immediate monetization of tax credits and optimize duration and diversity within the resource portfolio. For projects identified as rate base investment additions, the total capital investment required is approximately $3 billion. Of that, NIPSCO's direct investment is expected to be approximately $1.8 billion to $2 billion. Tax equity investors will fund the remaining balance of about $1 billion. The tax equity partnership structure allows for the monetization of renewable tax credits, which results in significant cost savings for customers. We have and continued to structure agreements with our developers and tax equity partners to optimize the deployment of our capital in proximity to when these assets are added to rate base in 2023. As we progress to the next slide, we'll detail the projects to replace the capacity, including the $1.8 billion to $2 billion of our direct investment through 2023, approximately $400 million of which is already approved. Turning to Slide 26. We currently have 2 joint venture projects fully approved and under construction, our Rosewater Wind project and Indiana Crossroads project, which represent approximately $400 million of investment. We are also in advanced commercial negotiations on additional solar and solar plus storage projects, which will build out the balance of need for capacity, and are estimated to complete the $1.8 billion to $2 billion of direct investment for NIPSCO. As you'll note, we've been able to locate each of these projects in Indiana directly or near our service operating area, a preference we have when feasible to accomplish. Turning to Slide 27. We capture the status of all executed projects, inclusive of PPA projects. As you can see, the wind projects are coming online first as we laid out in the IRP because our analysis showed significant value to customers from tax incentives available to be applied. This provided an initial backdrop in support of wind projects. Our Rosewater, Jordan Creek and Indiana Crossroads projects are all under construction with expected in-service dates in late 2020 and 2021. These represent 800 megawatts of wind projects approved by the Indiana Utility Regulatory Commission. We also have over 300 megawatts of solar and battery storage, our Brickyard and Greensboro projects, currently pending before the IURC. Commercial negotiations are advancing on 8 to 10 additional build transfer agreements and purchase power agreements, mostly for solar and solar plus storage projects. The regulatory filings related to these build transfer agreements are expected shortly after commercial agreements are executed. As we have done with the executed projects, we will continue to seek highly credible counterparties such as EDP Renewables and NextEra Energy Resources, both of whom have proven capabilities and are leaders in the development of wind and solar projects across the country. Beyond providing a vehicle to monetize tax credits, the partnerships with tax equity investors and the developers of early wind projects will enable NIPSCO to delay its deployment of capital for the projects until the 2022 and 2023 time frame to minimize cash flow lag and better align with the regulatory process. This structure also functions to ensure our customers can take full advantage of tax credits available and keep energy costs as low as practicable. We plan to continue to update these projects as commercial agreements are established, and the execution continues toward in-service dates and provide intermediate updates as we progress through this transition and operationalize these projects. Now on Slide 28, I'd like to take just a quick moment to look at a brief case study on our first renewable project, Rosewater, a joint venture with EDP Renewables, which represents a blueprint we plan to follow for much of the approval and sequencing of activity throughout the key steps to enable these projects to operationalize. On the left side of the slide, we've included a time line of the realized and anticipated key milestones during Rosewater's project life cycle. Notable in this process was filing the CPCN in February of 2019 with the IURC, and receiving the required regulatory approvals in August of last year, which enabled construction to commence shortly thereafter. More recently, in July of this year, we moved forward with the tax equity financing agreement for the project, closing the structure with Wells Fargo, which is funding approximately 55% of the $170 million project cost with an estimated buyout date of 2030. Rosewater represents a roughly $90 million rate base investment, which is expected to be recovered through a subsequent base rate case, which we will discuss on the next slide. On Slide 29, we've provided an overview of our near-term rate case expectations. The 2018 rate case set the foundation for execution of our generation transition strategy. It resolved federal tax reform benefits being passed back to customers and approved changes to depreciation and amortization schedules related to early retirements of coal-fired generation as informed by the IRP. For example, all of our coal-fired generation is now expected to be fully depreciated by 2032. Another outcome of the 2018 rate case was the implementation of a new rate structure and service flexibility for large industrial customers, which provides planning certainty for future capacity needs. We intend to engage the regulatory process in 2022 and use a 2023 forward test year to begin to pass maintenance and fuel cost savings back to customers resulting from coal plant retirements, while capturing the capital returns associated with our $1.8 billion to $2 billion of direct investments in renewable generation. As illustrated on the right-hand side of the slide, we expect the savings customers will experience from reduced maintenance and fuel costs to help mitigate the rate impact from the increases to rate base. Turning to Slide 30. I want to show you a clear and simple illustration of where we are today versus where we are headed with our generation and supply mix as we follow the 2018 preferred IRP plan. First and foremost, we are committed to our goal of retiring 100% of coal assets by 2028. By 2023, NIPSCO's supply mix should transition from being about 70% coal today to approximately 15% coal with renewables representing over 50% of the supply mix. By the end of this transition, when we plan to retire the Michigan City Generation Station by 2028, NIPSCO's supply mix will be coal-free. NIPSCO will file IRPs in 2021 and 2024, which will further inform our investment plans related to the Michigan City retirement and none of these future investments are included in the $1.8 billion to $2 billion of generation strategy investments we have discussed today. I know I said this once, but I think it's important to reiterate, we have confidence in these targets and our ability to effectively execute and manage the assets coming into the portfolio. Our rigorous project development process considers a number of important aspects, including impacts to system reliability, capital recovery and financing plans as well as customer affordability and the robust and collaborative IRP process that informed this strategy gives us confidence that we have a balanced plan, which will deliver value back to the many stakeholders involved. When this generation transition strategy is fully implemented, we know we will leave it better for our communities and our broader stakeholders. Before we take a quick break, I would like to play a brief video that explains the impact of our transition plans in more detail. [Presentation]

Now we will take a quick 5-minute break and reconvene when Donald will provide a financial overview. [Break]

Just to let everybody know we'll be resuming here shortly. Thank you.

Welcome back, and thanks again for joining us today. I'm pleased to have this opportunity to speak with you about our financial outlook and NiSource strong foundation for long-term value creation. Turning to Slide 33. Let me highlight the key building blocks of that foundation. You've heard many of these points earlier in the presentation, but I think they bear repeating. First, we have a strong platform for growth, driven by a long-term opportunity to invest $40 billion, have identified regulated gas and electric infrastructure investments across our 6 utilities. These investments will provide consistent and predictable earnings growth supported by our well-established trackers while also increasing the safety and reliability of our service to our customers. Over the next 4 years, our annual investment plan is anchored by $1.9 billion to $2.2 billion of core growth, safety and modernization investments. 75% of these investments provide earnings and cash flows within 18 months. In addition, as we announced on our second quarter earnings call, we plan to invest an incremental $1.8 billion to $2 billion in renewable generation investments, primarily in 2022 and 2023 to replace our coal units we plan to retire by 2023. Expected execution of this investment strategy will drive 10% to 12% rate base CAGR, which results in a 7% to 9% non-GAAP net operating earnings per share CAGR through 2024, with a base annual growth rate from 2021 through 2023 of 5% to 7%. We also expect to grow our annual dividend in a manner that maintains a long-term targeted payout ratio of 60% to 70%. Our liquidity is solid with no major debt maturities through our near-term planning horizon, and we are committed to maintaining our current investment-grade credit ratings. In addition to creating value for our shareholders, our plan provides value to our customers, employees and communities to ensure long-term sustainability. Turning to Slide 34. I'd like to discuss the diversity and balance in our business mix. On this slide, you'll see our operating earnings mix broken out by regulated gas and electric businesses, with gas representing approximately 60% and electric approximately 40%. This breakdown reflects the pending sale of CMA. Our revenue mix is also diverse, with approximately 60% coming from residential customers, 25% from commercial customers and 15% from industrial customers. And we have a stable revenue profile with approximately 50% of our margins classified as non-volumetric and the other 50% as volumetric. Turning to Slide 35. Our NiSource Next efforts are designed to improve our cost profile and enhance the capabilities of our organization to provide greater service to our customers. We recognize that our strategy and value is driven by our long-term safety and modernization investments, so we are focused on ensuring affordability to our customers. Through the combination of NiSource Next efforts and the sale of CMA, we anticipate delivering approximately 8% reduction in O&M costs in 2021 from 2020. Moving forward, we expect our transformation efforts will at least offset future inflationary pressure and keep O&M costs relatively flat through 2024, while continuing to invest in our safety programs. We've already gotten off to a strong start towards this goal with our recently announced VSP program. However, this initiative encapsulates numerous initiatives across the organization and is a multiyear effort to ensure that our organization is well positioned to execute on our investments around safety, renewable energy, operational excellence and customer value. Let's look now at our capital forecast on Slide 36. Our capital plan is focused on enhancing the safety, reliability and environmental performance of our systems as well as driving shareholder value. We are forecasting $8.1 billion to $8.5 billion in total expected growth, safety and modernization investments through 2024. The majority of these investments, approximately 75%, will begin to provide earnings and cash flow within 18 months of investment through our well-established trackers and other regulatory programs. The bulk of our planned $1.8 billion to $2 billion of renewable generation investments is expected to occur in late 2022 and early 2023 to coordinate with our plan to retire the Schahfer Generation Station by mid-2023. We expect to begin recovering our investments through a base rate case in the second half of 2023, and we anticipate that any increases to customer rates will be largely mitigated by the savings from closing those higher cost plants. It's this capital investment that drives our robust rate base growth. Turning to Slide 37, you'll see that we expect compound annual rate base growth of 10% to 12% through 2024 as we execute on our annual investment plan. The rate base growth we are projecting is balanced across all 6 of our jurisdictions and between our gas and electric businesses. Importantly, each of our companies operate in constructive regulatory environments that support our continued investment in the safety and reliability of our systems. Slide 38 illustrates how our capital investment will drive our non-GAAP net operating earnings per share growth. We expect our underlying rate base growth to drive compound annual growth of 7% to 9% in our non-GAAP net operating earnings per share through 2024. We provided both a CAGR and an annual growth rate to reflect the timing of our renewable portfolio investments and related electric base rate case. We expect our core annual safety and modernization investments of $1.9 billion to $2.2 billion will drive near-term annual earnings growth of 5% to 7% through 2023. Additionally, as I had mentioned earlier, we expect to grow our annual dividend in a manner that maintains our long-term targeted payout ratio of 60% to 70%. As we announced in the second quarter earnings, we have initiated non-GAAP net operating earnings guidance for 2021 of $1.28 to $1.36 per share. Therefore, our long-term earnings guidance is anchored off of that 2021 starting point. As a reminder, our 2021 earnings guidance includes a COVID-19 impact of approximately $25 million. Consistent with our base case scenario, we've built this $0.05 impact into the numbers for 2021. Slide 39 provides an overview of our financing strategy through 2024. The top section highlights the expected financing for our core annual growth, safety and modernization investments. Consistent with our prior financing plans, we expect to continue utilizing our well-established ATM equity issuance plan to raise $200 million to $300 million per year as well as our employee stock purchase plan and other programs to raise $30 million to $50 million of equity annually. We also expect to issue $500 million to $700 million in long-term debt annually from 2022 through 2024 to finance that core annual investment program. The bottom section outlines our expected financing for our renewable generation investments. The overall financing mix for these investments is expected to be 60% equity and 40% debt. In 2021, we expect to issue a total of $600 million to $1 billion in mandatory convertible and/or a combination of hybrid securities. And over 2022 and 2023, we envision having 1 total block equity issuance in the range of $500 million to $700 million and issuing a similar $500 million to $700 million of incremental long-term debt to finance renewable investments. All of this financing is included in our long-term earnings guidance. I also want to reiterate here our focus on maintaining our current investment-grade credit ratings and staying well within our defined debt covenants. Our financing plan continues to target long-term FFO to total debt ratio of approximately 14% to 15%. I'd like to note that although the numbers we presented today do not include any analysis of potential portfolio optimization opportunities we will continue to evaluate opportunities to maximize incremental long-term shareholder value. Slide 40 touches on some of our key balance sheet metrics. Our estimated total debt for the end of September is expected to be approximately $9.1 billion. The weighted average rate of our debt is 3.7% and our weighted average maturity is 15.5 years. We have a strong credit profile with all of our credit ratings with the 3 major rating agencies being an investment grade, including Moody's at Baa2, S&P at BBB+ and Fitch at BBB. We have a strong liquidity position with net available liquidity of $1.5 billion to $1.6 billion. Importantly, we have no significant refinancing needs through 2024 and we expect to have sufficient liquidity to meet all of our financial obligations during the plan period. In summary, our refreshed long-term financial plan is set to deliver tremendous value creation for our customers and our shareholders. Our multiyear transformation plan is designed to improve operational efficiency and achieve sustainable O&M cost reductions, which will support the long-term sustainability of capital investment programs across our electric and gas operating companies. These investments, complemented by our regulatory initiatives, will help drive an expected 7% to 9% CAGR in our non-GAAP net operating earnings per share through 2024 and dividend growth consistent with a targeted 60% to 70% payout range. Now I'd like to turn things back over to Joe, who will provide brief closing remarks before we open up for questions. Joe?

Thank you, Donald, and thanks to Pablo and Shawn for their presentations as well. Before we open it up to your questions, I'd like to touch on a couple of closing thoughts. Turning to Slide 42. Our ability to successfully execute on our strategic plan and to create lasting value for our shareholders is underpinned by the sustainable approach we take to running our business. We consider all of our stakeholders when making decisions to improve our business. We're also committed to reducing our environmental impacts by retiring our coal plants and transitioning to a more renewable focused generation fleet. Our plan to retire all coal generation from our fleet by 2028 is an ambitious goal but it's one that we believe strongly is the right thing to do for our customers and that we're well positioned to execute. You often hear us say that we're seeking to leave our stakeholders better off than they were before. This remains the case today and is evidenced by our transformation efforts that have been carefully structured to improve customer safety and economically benefit the communities we serve. Importantly, we believe in expanding inclusion and diversity and developing an engaged workforce in our communities. It's our core belief that the diversity of our team makes us stronger and we are committed to working across our organization and the communities we serve to confront social and racial injustices head on. And we are confident that we have the right management team and Board in place to oversee the execution of our strategic plan. We have a strong framework for risk management and oversight and the enhancements we've made at the executive level give us even more confidence that we will be able to deliver on the promises we've made today. And finally, turning to Slide 43. I hope you are all as excited as our team is about the long-term growth plan we've mapped out today. I know we've covered quite a bit of ground today. NiSource is at a key stage in executing on our strategy to deliver on our long-term value proposition, and we have taken and continue to take a number of strategic actions to accelerate our efforts. What you've heard today is the product of robust analysis and development of a strong operational and financial plan that has included significant engagement from our Board. This includes accelerating the SMS implementation that we have executed on for the past few years, selling Columbia Gas of Massachusetts, continued execution of our well-established safety and asset modernization investments, transitioning our electric generation fleet from coal to renewables, developing a balanced financing plan to fund our investments and executing NiSource Next. There is one other audience who I'd like to acknowledge with great sincerity. I'd like to thank our teams across the country for their hard work and the exceptional service they provide. It's their dedication to operational excellence that supports our ability to take these transformative steps for our customers and communities. As we work to enhance our capabilities, continue investing in system safety and modernization, improve our cost structure and size our organization appropriately, we believe we will be well positioned to enhance our system safety, increase customer satisfaction, improve earnings power and create long-term sustainable value for all stakeholders. With that, we'll now open up the call for your questions. Andrea?

[Operator Instructions] And our first question comes from Shar Pourreza of Guggenheim Partners.

Just a couple of questions here. Just on the financing strategy slide, starting there. On the block equity in '22 and '23, why not remove the overhang and sort of any uncertainties for future pricing and kind of issue everything in '21? So why not over equitize sooner than later? Is that something that's being potentially contemplated, Donald? Or is this timing a function of maybe needing additional visibility with the renewable projects? And then just secondarily on this slide, the reference around portfolio optimization. How do we sort of think about that? Are you talking about incremental efficiencies with the generation fleet? Or could this also include some additional LDC or noncore asset sales? So wondering about your thoughts there.

Shar, this is Joe. Let me take them kind of in the reverse order and ask Donald to add in here. And I want to address the portfolio question you asked. As always, we're open to and we'll continue to evaluate opportunities to maximize incremental long-term shareholder value. And that includes periodic reviews of the business mix and the strategy with our Board. So that's the reference point there. And we've got a track record of doing that, including the spin-off of our pipeline group 5 years ago, and I and current members of the Board were a part of that strategy. And then our pending sale of CMA is another example, which is expected to be completed soon. Beyond that, this is a reference to always looking for the long-term incremental shareholder value opportunities. So -- and with that, I'll ask Donald to touch on the financing equity raise.

Thanks, Shar. Great to hear from you. Let me first just say, we've gotten some questions around the financing slide as it relates to the generation strategy. We are targeting 60% equity or $1.2 billion if we get to the $2 billion of financing. We've heard from some folks that they're using midpoints at the slide that arrive at an equity level of $1.4 billion. So I want to be very clear, the plan is to finance incremental renewable investments at $1.2 billion of equity or equity content. And so the earnings ranges that we've given in the financing plans are indicative of lots of possibilities and flexibility to arrive at the $1.2 billion of equity content. As well as using hybrid. Certainly, they come in many forms, such as converts or perpetual preferred instruments which we've used in the past. So we've been focusing our evaluation on structures that achieve at least 50% equity credit with the agencies. Now to answer your question directly, we've got flexibility in this plan. We certainly can look at forwards as we think about the overall financing plan. But what we've tried to achieve here is balancing out the timing of the investments, earnings growth and the credit metrics to make sure that hit our goals there.

Got it. But you still have some flexibility, so that could change?

That's right.

Okay. And then just can you maybe give a quick update on the progress of the current renewable projects in negotiation? Has there been like any major movement on these outside of being in "advanced negotiations"? And is the pace of the negotiations, Joe, kind of in line with your expectations? Maybe you can get a little bit more specific here. And any sense on when you'll be in a position to announce sort of the new wave of projects that are in advanced talks?

Shar, this is Shawn Anderson. I appreciate the question. I think Slide 27 helps frame what's pending. And I think we'll intend to update this as we progress through the project life cycles, if you will. To your point, there have not been new projects announced since our last earnings update, but we continue to advance the commercial negotiations. We're probably 80% to 90% through the majority of those, and everything is consistent with the time lines that we've expected. And then I'd probably point to hopefully another update here on our next earnings update.

Excellent. And then just one last one for me. Maybe a little bit premature to talk about the '21 IRP, but wondering if that will include sort of, Joe, some of the incremental "generation replacement opportunities" you highlight? Will these be in that IRP? Or the future IRP? And is there any sort of opportunity to potentially pull forward any of those investments into the current plan given sort of obviously the decarbonization path in the state?

Yes. You've got it, Shar, in terms of the timing. The process will kick off probably spring-ish and conclude by October or so. So this time next year, we should be looking at the results of the next IRP, and it inherently looks out through the season in which we'll retire the Michigan -- we expect to retire the Michigan City plant and we would update -- much like we did in the last IRP, we would update a look at the market, all of the available capacity options and for the timing as well, although I think it's far too premature to speculate about any of that finding its way into this '21 through '24 season that we're in, especially with the anticipated '28 retirement date. And then keeping in mind that part of our strategy is to kind of ladder the series of retirements and capacity replacement so that we have the opportunity to look at changes in the market, changes in technology and make sure that we're, in essence, future-proofing through the way that we take a series of options through time. So we'll have a lot more to say about that a year from now. And then we may be in a position coming out of there to extend our look beyond '24, but it's too early to know what we'll be able to say at that point.

Congrats.

Our next question comes from Michael Weinstein of Credit Suisse.

This is actually Andres on behalf of Michael. Quick question. Could you be able to expand a bit on the opportunities you see after the Michigan City retirement? Your projection for the $40 billion long-term investment opportunities beyond 2024 is about $10 billion higher than the prior forecast for $20 billion gas and $10 billion electric. So how should we think of the new split between electric and gas long term opportunities?

Yes. Thanks for extending the view there. That's a key part of our outlook. And what I want to say first is we're really confident in the long-term opportunities for capital investments. And that $40 billion reflects, for the most part, well-known modernization programs and capacity programs across both the gas and electric business. While we're not here today to describe in detail the mix beyond '24, what I will say is you have a pretty indicative mix if you look at the last 5 years and the next 4 or 5 years. That's a pretty good sense how the outlook looks for us on these well-supported programs for modernization and our plans for replacing generating capacity in the coming decades. So more to come on that as we go through future planning seasons, but that inherent mix that we have is strong, well supported. And the balanced mix of electric and gas that we have in very constructive jurisdictions provides diversity and stability, which we're always going to strive to maintain throughout our entire planning season. So I appreciate the outlook there and the opportunity to continue shaping that long view, which I think is a unique strength of NiSource.

Great. That's very helpful. And separately, what is driving the $500 million higher forecast for the 2024 rate base versus your prior forecast?

Yes, I want to make sure I'm understanding the question. Comparing that to what?

To the prior forecast in the rate base?

Yes. Joe, if I could just interject a little bit. We gave a preview on the second quarter to what that rate base amount was going to be, a little preliminary from the planning perspective. So as we step through finalizing the plan, that's where we trued it up, if you will, and it turned out to be just a bit higher.

Yes. Yes. Thanks, Randy.

Got it. Okay. Fair enough. And then last question. I think Shar touched on this as well, but just going back to the equity. Some investors have expressed concern that you might issue equities for the renewables in the 2021, 2022 time frame rather than 2022, 2023. Can you maybe address this concern? Is there any validity here or considerations?

No, that's not in our current plan. What you see outlined on this slide is our expectation for how we plan to finance the renewables. And again, all of this financing is contemplated in our 7% to 9% earnings growth range.

Our next question comes from Julien Dumoulin-Smith of Bank of America.

First off, the updated EPS CAGR through '24 here, can you talk a little bit about the conservatism reflected there? I mean, for instance, if you took out that $0.05 impact on COVID, I don't want to stretch here too much, but it sounds like you could probably achieve that as well. But I just love to hear how you reconcile the RAB trajectory against the 7% to 9% as a starting point? And I got a follow-up.

Thanks, Julien. I think if the -- we didn't have that $0.05 impact in the 2021 starting point, we'd still be in the 7% to 9% EPS CAGR range and very confident about that starting point. And you have another question around rate base growth or overall?

No, I was just trying to reconcile the two, but it sounds like you've got a good amount of latitude in that EPS number. That's the core one here.

That's right. Absolutely. Yes. We're confident in this range, but always, we'll strive to provide higher shareholder value.

Got it. Excellent. And then if I can continue here quickly. The convertible versus preferred versus other, I'm going to leave other broadly defined as financing solutions here in '21, what are the relative merits and options here on the table? How do you think about that? Because that seems like one of the key variables in terms of ultimately year '24 implied EPS here, if you can talk to it.

Yes. We're looking at structures that provide 50% -- at least 50% equity content for securities that we'd issue next year. Ultimately, we're trying to make sure that we maximize earnings growth over that period of time as well as hit our credit metric targets and achieve by the end of that period, the 14% to 15% FFO, the debt target that we've outlined previously.

And sorry for the quick follow-up, clarification, if I can. Does one of those other options include asset sales, specifically of gas LDCs? I'm just curious what you meant by the comments to Shar earlier if you can elaborate. And would that align with this '21 financing since it's a little bit less clear exactly what you're intending there?

Yes. We don't have any asset sales in this plan. What I was referencing, though, was that as we look at our plan, we will always look at opportunities that provide shareholder value. And if that includes selling an LDC, we'd certainly take a look at that opportunity?

Yes. Basically swapping gas for electric rate base [indiscernible]

Yes. I guess in the end, that's exactly what you'd be doing in terms of financing the generation investments.

Our next question will come from Steven Fleishman of Wolfe Research.

Just a question on your thoughts, Joe, on decarbonization with your gas businesses. Obviously, you're really dramatically decarbonizing your electric business. But how are you thinking about that trend in gas? And people seem to be worried about this for gas, but -- and that growth opportunities will slow, but it seems like your rate-based growth in gas is still very strong over the period and over the 20 years. Could you maybe just talk about your thoughts there?

Yes. Thanks, Steve, and thanks for tuning in. A couple of things I'd like to touch on there really and we're, like everybody, tuned into and actively engaged in that discussion about decarbonization broadly and the future of natural gas. You've got a couple of different layers of that, that we're watching and following pretty closely, namely hydrogen and renewable natural gas as transitional strategies for decarbonization of the gas stream itself. And while that's not yet a part of our investment plan, we've highlighted here pretty clearly what's driving the investment plan for us. We are expecting to learn a lot more in the coming years. And I wouldn't be surprised to see opportunities emerge in either of those or maybe other innovation areas relative to decarbonization of gas. We've made great progress and continue to make great progress just on leak mitigation itself in terms of methane emissions, but we know there's another chapter beyond that. So I'd characterize, in this moment, our approach is prudently following the developments with more of a focus on the gas stream itself than end-use technology or alternative uses. But that's -- it's an evolving area and I think it's an area that we'll likely see additional opportunities in the future. But with that, let me kind of step back a minute and say that the long-term fundamentals in our footprint relative to natural gas, both for power generation and for the end-use of the product itself, we see strong fundamentals, strong consumer demand and continuing constructive regulatory support. And I think it's a mistake to view that question as kind of a yes, no, there is a future, there isn't a future. Because of those fundamentals, because of the role of gas in the clean energy future scenarios that we're all a part of building out and because of economic security and independence that's really attributable to the abundant resources that we're fortunate to sit right on. If you look at Marcellus, Utica Shale, we're extremely well positioned. And that drives not only the fundamentals, but it drives, I think, the policy orientation in our regions. So our energy and our investments are focused on safety, reliability, capacity, and with such a strong foundation and such strong economic fundamentals, I even think that you could flip that description and say there's room for blending renewables. There's room for blending hydrogen and still being in a very good position relative to affordability and long-term use. So we're bullish on all of the above, including the future of gas across our territory. Recognize that, that conversation is evolving, but we expect to be an actor in that and very well positioned to benefit from that in the future.

Okay. Great. And then one other question or just a clarification. The rate case in 2023 to recover the renewables investments. It sounds like what you're saying is those projects won't be preapproved or [ receipt ] -- have certificates. And then it sounds like you also expect rates to be flat to down in that rate case? Or overall, is that fair?

Yes. Let me kind of take that picture a bit and ask Shawn to help out here. But it's -- we haven't laid out the rate case -- overall rate case. What we've talked a lot about, even back through the 2018 IRP, is the economics of renewables replacing coal. And that drives the familiar $4 billion savings over the life of the avoided fuel cost, all of the things that we've publicly talked about and engage stakeholders. When I look at the path between the last rate case that we implemented this year, in 2024 and look at the overall rate progression, much like all of our companies, we're well within that sort of low to mid single-digit percentage. That's the way we manage the business on an annualized basis. And so we've got expectations of very familiar kinds of regulatory initiatives that we've executed before, whether they be the trackers between now and then or the rate case as it compares to our history of executing rate cases in Indiana on the electric side of the business. So we didn't say overall rates would go down. We haven't said one way or the other on the total rate. We've talked about the generation portion, the significant reduction of O&M and fuel offsetting and mitigating the introduction of new assets into rate base. But you have to put that into the whole rate equation when we approach that rate case. And we've got plenty of time to optimize that between now and then as well. Let me ask Shawn to maybe color in some of the additional insights on the -- not so much the case, but the generation strategy itself.

Yes. Thanks, Joe. I appreciate that. Great question. The $4 billion savings, really, that 30-year horizon of savings that we would expect relative to ongoing operation and maintenance of the existing fleet compared to a more efficient profile that the IRP pointed to, that's that long-term savings that customers can come to expect from the plan that we are currently pursuing. But I think as Joe touched on it, it's the savings from passing maintenance and fuel costs back to customers more in the immediate once that rate case is filed as well as programs like NiSource Next, which will help reduce the overall bill impact at the time of our next proceeding. So Joe hit it. We don't have that total bill impact identified just yet, but the prudence behind those maintenance expenditures and fuel savings that we plan to reduce as well as NiSource Next should help mitigate what that overall bill impact might be.

Our next question comes from Durgesh Chopra of Evercore ISI.

Just a quick clarification. Maybe Donald, this is in your wheelhouse. I know there's [indiscernible] you've seen in Indiana on transmission and distribution assets. Just -- but that's not available for generation CapEx, am I right?