Ind. regulators approve new NiSource unit's plan to serve data centers

Indiana regulators have agreed to decline jurisdiction over a new NiSource Inc. unit's plan to build generation that will serve large-load customers, primarily data centers, clearing the way for the formation of the new business unit.

The Indiana Utility Regulatory Commission on Sept. 24 approved a settlement agreement that allows NIPSCO Generation LLC to exclusively contract with affiliate Northern Indiana Public Service Co. LLC (NIPSCO) to meet the electric supply needs of new "megaload customers" in the utility's service territory. (Cause 46183)

Under the order, the IURC declines to exercise its regulatory authority over NIPSCO Generation's "construction, operation and financing" of facilities because the affiliate would only enter into contracts with NIPSCO to meet the needs of the utility's data center customers. The generation unit would not have any service territory or retail customers and would not make retail sales in Indiana or elsewhere, according to regulatory filings.

In addition, the approved settlement requires commission approval of power purchase agreements involving the sale of energy and capacity from NIPSCO Generation to NIPSCO, and allows the generation unit to sell non‐committed capacity or energy into the wholesale market.

"NIPSCO and GenCo will not enter into PPAs unless there is at least one executed special contract under which NIPSCO would have an obligation to serve a megaload customer," the settlement states.

The settlement also outlines certain conditions that must be met, including commission approval, before any assets are transferred between the generation unit and NIPSCO.

"In the case of an agreement transferring GenCo assets to NIPSCO, NIPSCO must demonstrate that the resource has been selected as part of an open, competitive process run by an independent third party," according to the agreement.

The new generation structure "offers a compelling option" that would shield existing customers from the costs of new capacity investments, while providing the "speed and flexibility" to meet data center needs, NiSource President and CEO Lloyd Yates said in August on the company's second-quarter 2025 earnings call.

The settlement agreement was signed by NIPSCO Generation, NIPSCO and the NIPSCO Industrial Group.