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NiSource seeks 'more clarity' on tax change implications for utility cash flow

NiSource Inc. is working with regulators as the company adapts to changes in the U.S. corporate tax code that are expected to reduce cash flow to utilities, executives said during a Feb. 20 earnings call.

While the tax code overhaul should cut costs for consumers, it also resulted in changes to NiSource's deferred tax liabilities, company officials said.

"The new tax law is a positive for our customers since it lowers their costs and supports our continued investment in critical utility infrastructure, which benefits all stakeholders by enhancing safety, service reliability and the environmental performance of our system," NiSource Executive Vice President and CFO Donald Brown said on the call. "As we get to more clarity on the regulatory implementation and work through business initiatives focused on efficiencies, we will better understand the impact of tax reform on our credit metrics."

Pressed by analysts on the tax revision's implications for earnings, Brown said NiSource has "flexibility and levers" to address the cash flow impacts and the company still expects to meet its guidance of 5% to 7% earnings growth.

"What really drives our earnings year to year are regulatory programs and our execution on those regulatory programs, and so that's still the case going forward here," Brown said.

Officials are working with regulators in the seven states in which NiSource utilities operate to continue the company's capital expense programs. NiSource plans to spend between $1.6 billion and $1.8 billion annually on utility infrastructure programs through 2020.

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NiSource utilities saw new rates under infrastructure modernization tracker programs take effect in January in Kentucky, Indiana, Maryland and Virginia. The same month, the Ohio Public Utilities Commission approved a five-year extension of Columbia Gas of Ohio Inc.'s infrastructure replacement program.

Northern Indiana Public Service Co. has a base rate case pending in Indiana as well, and in light of the tax revisions, the company docked its recovery request by $26 million.

NiSource on Feb. 20 reported fourth-quarter 2017 net operating earnings of $110.3 million, or 33 cents per share, compared to net operating earnings of $107.6 million, or 33 cents per share, for the same period in 2016. Full-year 2017 income from continuing operations totaled $128.6 million, or 39 cents per share, a decrease from $328.1 million, or $1.02 per share, in 2016.