Glen L. Kettering - Senior Vice President of Corporate Affairs Robert C. Skaggs - Chief Executive Officer, President, Director and Interim Chief Executive Officer for Gas Distribution Segment Stephen P. Smith - Chief Financial Officer and Executive Vice President

Paul T. Ridzon - KeyBanc Capital Markets Inc., Research Division Charles J. Fishman - Morningstar Inc., Research Division

Good day, ladies and gentlemen, and welcome to the Second Quarter 2013 NiSource Earnings Conference Call. My name is Janada, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Glen Kettering, Senior Vice President, Corporate Affairs. Please proceed. Glen L. Kettering: Thank you, Janada, and good morning, everyone. On behalf of NiSource, I'd like to welcome you to our quarterly analyst call. Joining me this morning are Bob Skaggs, President and Chief Executive Officer; Steve Smith, Executive Vice President and Chief Financial Officer; and Randy Hulen, Managing Director of Investor Relations. As you know, the focus of our call today is to review our financial performance for the second quarter of 2013 and to provide a business update. We'll then open the call up to your questions. At times during the call, we'll refer to the supplemental slides available on nisource.com. I'd like to remind all of you that some of the statements made on this conference call 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. And now I'll turn the call over to Bob Skaggs. Robert C. Skaggs: Thanks, Glen, and good morning, and thanks for joining us. For today's agenda, we'll touch on key highlights from another solid quarter. I'll ask Steve Smith, our Chief Financial Officer, to summarize our financial results. I'll then touch on some key upcoming execution markers and initiatives across each of our business units. And then we'll open the call to your questions. Let's start with key takeaways on Slide 3 in the supplemental deck that was posted online this morning. First and foremost, as we announced in our earnings release, NiSource's infrastructure-focused investment strategy once again delivered financial results in line with our expectations and consistent with our 2013 earnings guidance range of $1.50 to $1.60 per share, non-GAAP. We also announced that, thanks to our robust and growing inventory of accretive infrastructure investment opportunities, we're enhancing our 2013 capital program. We're now targeting an investment level of about $2 billion for 2013, up from our original $1.8 billion plan. Virtually all of these additional capital investments are allocated to track infrastructure replacement and modernization programs. And just a reminder, about 75% of our capital investments are focused on accretive growth and other revenue-generating opportunities. Another notable development during the quarter was the successful completion of our Pennsylvania rate case. We placed new forward-looking rates into effect July 1 as part of a settlement that, in addition to other benefits, will increase annual revenues by about $55 million. Meanwhile, our team at the Columbia Pipeline Group, or CPG, is on track with the initial phases of our landmark system modernization program. With a number of projects currently in flight, we're on pace to make our first tracker filing by the end of the year, with recovery slated to start in February 2014. And at NIPSCO, we became the first Indiana utility to file an electric infrastructure modernization plan under recently enacted Senate Bill 560. NIPSCO's 7-year, $1 billion plus plan involves systematic replacement and modernization of our core electric utility infrastructure. We anticipate action by the commission and initiation of the investment early in 2014. In a nutshell, we're pleased to report continued, steady, disciplined execution of our strategy during the second quarter. With delivery on an expanding array of customer, regulatory and growth initiatives, our team's performance has kept us squarely on target to deliver on our earnings commitments for 2013. So with that overview, I'll turn the call over to Steve Smith to take a closer look at our second quarter financial results referenced on Page 4 of our supplemental slides. Stephen P. Smith: Thanks, Bob, and good morning, everyone. As Bob mentioned, our team again delivered a very strong quarter. NiSource delivered net operating earnings, non-GAAP, of about $73 million, or $0.23 per share, during the second quarter. That compares with about $64 million, or $0.22 per share, for the same period last year. Our operating earnings for the quarter came in at about $195 million. As we noted on our last quarterly call, our results reflect our $340 million forward sale equity issuance completed in the third quarter of 2012, which added approximately 24 million common shares compared to the same period last year. For 2013, we expect this to have about an $0.08 per share impact on earnings. On a GAAP basis, our income from continuing operations for the quarter was about $72 million, or $0.23 per share, compared to about $68 millio,n, or $0.25 per share, in the second quarter of last year. Schedules 1 and 2 to our earnings release show the GAAP to non-GAAP reconciling items. Turning to our business units. Columbia Pipeline Group, or CPG, delivered operating earnings of about $89 million in the second quarter compared to $92 million for the prior year. Net revenues, excluding trackers, were down about $8 million at CPG for the quarter due to reduced depreciation rates resulting from the Columbia Transmission customer settlement. CPG remains on track to deliver earnings in line with our plan for the year. NIPSCO Electric delivered operating earnings of about $59 million compared to $60 million for the prior year. Net revenues, excluding trackers, were up about $7 million for the quarter, partially as a result of increased recovery of environmental investments. And NiSource Gas Distribution, or NGD, delivered operating earnings of $52 million compared to $51 million for 2012. NGD net revenues, again, excluding trackers, were up about $21 million for the quarter due primarily to our infrastructure replacement programs. As Bob noted, we're pleased to report that we're squarely on track to deliver earnings within our guidance range for the year. Turning to Slide 5. Let's quickly touch on our financing and liquidity highlights. Thanks to disciplined capital management practices, our liquidity position remains strong at approximately $1.4 billion as of the end of the second quarter. We expect this position to maintain its strength throughout the year. This is supported by a number of developments in the first half of the year, including the sale of our retail services business, proactive financing and the extension of bonus depreciation. Finally, I will note that as of June 30, our debt-to-capitalization ratio was 58.6%, which is what we expect to effectively maintain on an ongoing basis, give or take 1% or so. Before turning the call back to Bob, I would like to take the opportunity to reiterate NiSource's core financial commitments, which are: maintaining our stable investment grade credit ratings; growing earnings by 5% to 7% annually; growing the dividend by 3% to 5% annually; and maintaining a strong liquidity position, all while supporting our approximately $2 billion investment program. With that, I'll turn the call back to Bob. Robert C. Skaggs: Thanks, Steve. Let's start with the CPG highlights on Slide 6. Jimmy Staton and his team are working overtime to develop and deliver a diverse mix of value-adding infrastructure investment opportunities. At the forefront, Columbia Gas Transmission is making good progress on its long-term system modernization program. And as I noted earlier, we're on track to file our first year modernization tracker filing by the end of this year, with recovery slated to start in February 2014. As you know, the settlement covers the initial 5 years of a projected modernization program of $4 billion to $5 billion over 10 to 15 years. On the midstream front, with the Big Pine Gathering System in service with XTO Energy, we're also scheduled to start providing long-term gathering services for PennEnergy later this year. Big Pine is capable of transporting more than 400 million cubic feet per day of Marcellus Shale gas. Phase 1 of our Pennant project, which we call the Hickory Bend Gathering System, is also tracking well. In fact, the initial gathering service is already in progress on part of the system to accommodate Hilcorp's early Utica Shale production. The processing and gathering facilities, 200 million cubic feet per day and 600 million cubic feet per day, respectively, are expected to start by the end of this year. From a production standpoint, our resource development arrangement with Hilcorp is progressing according to plan. Although the development of the acreage is still in its early stages, 6 wells are now complete. Five of those wells are currently producing, and with each well, drilling and stimulation techniques continue to be optimized. Notably, we remain encouraged as the initial production flows are consistent with some of the better flows reported in the area. Drilling activity will continue to accelerate, and we anticipate that by 2014, we will be completing 25 to 30 wells per year. All in all, very much in line with our expectations. Our commercial team also is moving ahead on a new project to modernize and upgrade our existing LNG peaking facility in Chesapeake, Virginia. It's a $30 million, 3-year upgrade. In sync with this upgrade, all existing costumers signed new long-term agreements at increased rates to support the projects. At Millennium Pipeline, the partnership placed the approximately $45 million Minisink Compressor station into service in the second quarter and anticipates placing the Hancock Compressor station into service by the end of this year or early 2014. This approximately $45 million project will increase the pipeline's delivery capacity to 850,000 dekatherms per day. And as we discussed in prior calls, our East Side and West Side Expansion projects are on schedule. These projects represent a combined investment of more than $400 million and together will add about 800,000 dekatherms per day of new transportation capacity on our systems. The initial level of service has already begun on the West Side Expansion. Let's now shift to Indiana in our electric business, as summarized on Slide 7. NIPSCO continued to deliver positive results on many, many fronts in the first half of the year. As I mentioned, earlier this month, we were the first to file a 7-year electric infrastructure modernization plan with the Indiana Utility Regulatory Commission. Our plan, which will kick into gear in early 2014, includes investments in our core distribution and transmission systems, which are good for the sustainability and reliability of infrastructure in Northern Indiana and support continued economic development and job creation in our service territory. I would also note that NIPSCO will file a similar infrastructure modernization plan for our gas operations later this year. The plan will address system modernization and expansion to rural areas of Northern Indiana. NIPSCO remains on track with the $0.5 billion plus FGD project at our Schahfer Generating Station. These new units will be placed into service in the fourth quarter of this year and in 2014. Construction is also moving ahead at our Michigan City Generating Station, where NIPSCO is installing another $250 million FGD unit. On the electric transmission front, NIPSCO is moving forward with an overall investment of up to $0.5 billion for 2 electric transmission projects in Northern Indiana. These projects will strengthen the Midwest electrical infrastructure while supporting economic development and providing new jobs. The planning and outreach activities are the key focus for those projects in 2013, with in-service targeted for the latter part of the decade. Final route selection is anticipated in August of this year for the first project, the so-called Reynolds-Topeka line. So as you can see, across many fronts, NIPSCO is generating long-term sustainable results for customers, communities and shareholders. Let's turn now to our Gas Distribution Operations discussed on Slide 8. Our NGD team continues to deliver strong results by aligning its long-term $10 billion infrastructure replacement and enhancement program with a variety of complementary customer and regulatory initiatives. As I noted earlier, we placed new forward-looking rights into effect on July 1 at Columbia Gas of Pennsylvania. Also on the regulatory front, Columbia Gas of Kentucky, Columbia Gas of Massachusetts and Columbia Gas of Maryland all have rate cases in front of their respective commissions. In Kentucky, the case seeks an annual revenue increase of about $17 million. The case also includes a more modern rate design using a revenue normalization adjustment. In Massachusetts, the case is designed to support the company's expanded infrastructure efforts with timely recovery. The case seeks increased annual revenues of about $30 million. And in Maryland, we're seeking an annual revenue increase of about $5 million. We expect a decision with rates effective in Kentucky in January 2014, in Massachusetts during the first quarter of 2014 and in Maryland in late September of this year. Finally, in June, NIPSCO, along with the Indiana Consumer Counselor and other stakeholders, filed a unanimous agreement with the IURC to extend NIPSCO's 2010 natural gas customer rate settlement through 2020. The decision on the filing is expected by the end of this year. This is a great win-win settlement that will continue to deliver benefits for all our major stakeholders. And in Virginia, Columbia Gas of Virginia received an order approving an amendment to its SAVE program for infrastructure replacement. The order authorized an annual spending level of $25 million, up from about $20 million. Consistent with our plan, our NGD team is continuing to execute on its established strategy of investing in safety and reliability while providing innovative programs to customers and solid financial performance for shareholders. To wrap up, teams across NiSource are continuing to deliver on our core investment and customer-focused strategy, and we are well positioned to meet our growth and other commitments on a disciplined, balanced and sustainable basis going forward. As always, we'll communicate with you and all our stakeholders about these and other matters of importance in a transparent and timely manner through our analyst calls and news releases posted on nisource.com. Thank you for participating today and for your ongoing interest and in support of NiSource. Janada, let's now open the call to questions.

[Operator Instructions] Your first question comes from the line of Paul Ridzon with KeyBanc. Paul T. Ridzon - KeyBanc Capital Markets Inc., Research Division: Can you just talk a little bit about kind of year-to-date results are down, kind of the earnings projected for the balance of the year and the drivers there? Robert C. Skaggs: Yes, I'm going to toss that to Steve, Paul. Stephen P. Smith: Yes, sure. Thanks, Paul. The year-to-date results so far are right in line with our expectations for our guidance range of $1.50 to $1.60. And I would note that we had a number of items that came in the first 6 months that will be benefiting the latter half of the year. For example, the Columbia Pennsylvania rate case is effective July 1, so that's going to contribute significantly to the latter half of 2013. We also had an IRP filing in Ohio in the May time frame, so we'll be enjoying those benefits throughout the balance of the year. And in addition, we also had an environmental recovery mechanism tracker in Indiana filed at that time frame as well, which will benefit us going forward. On the pipeline side, we also have a number of projects that will be coming up to speed for us in the latter part of the year. First is the Pennant project and the Big Pine project, both of which that Bob mentioned, and also the Millennium Minisink project for the latter half of the year. So we feel very comfortable about where we stand year to date. We think we're squarely in line with where we expect to be and believe our guidance is appropriate and are reaffirming it. Paul T. Ridzon - KeyBanc Capital Markets Inc., Research Division: And I guess you've obviously basically lapped the new shares as well? Stephen P. Smith: That's correct. Robert C. Skaggs: Correct. Yes. Paul, I would just say, just from our perspective, a clean quarter. And again, what's notable are the accomplishments the team posted on the initiatives. Paul T. Ridzon - KeyBanc Capital Markets Inc., Research Division: And is this Michigan City new capital or have we talked about that before? Robert C. Skaggs: It's been in the plan, and we have talked about it fairly extensively. So it's reflected in the numbers. Paul T. Ridzon - KeyBanc Capital Markets Inc., Research Division: And then just with the increased capital this year, any updates on financing plans? Stephen P. Smith: Well, I would say, as you know, we did a $750 million, 30-year bond deal not too long ago at 4.8%. With respect to additional financing in 2013, we're looking at potentially tapping the markets in the late third quarter or early fourth quarter in the $300 million to $500 million range. We haven't yet determined what the appropriate maturity will be there. But we expect to do some capital markets activity on the debt side in late third quarter or early fourth quarter of this year. Robert C. Skaggs: Yes, Paul. And you'll recall that at our Analyst Day last year, we suggested the need for equity in and around 2015 in an amount that would be similar to what we did a couple of years ago. And we believe, for planning purposes and modeling, that continues to be a sound assumption. And Steve can mention a couple of things that have enhanced our cash position. In fact, he alluded to those in his prepared remarks. But, Steve, maybe you can give a little more color around that. Stephen P. Smith: Right. Thanks, Bob. Yes, the other things that we were able to accomplish here in the first of the year was the sale of our NiSource retail services business for approximately $120 million. The other benefit that we're enjoying is the extension of bonus depreciation, which should contribute approximately $250 million of benefit to us. So that's in excess of $350 million of incremental cash that are helping us spend at a slightly higher rate this year. Paul T. Ridzon - KeyBanc Capital Markets Inc., Research Division: I guess you didn't have those items on the radar when you talked about equity in '15? Stephen P. Smith: We did not. Robert C. Skaggs: We did not.

[Operator Instructions] Your next question comes from the line of Charles Fishman with Morningstar. Charles J. Fishman - Morningstar Inc., Research Division: When I look at Slide 10, it looks like the 2013 CapEx for gas distribution is up about $100 million. And then when I go to Slide 16, I don't see any changes versus this slide in the last quarter. So is it just an acceleration of these projects, is what's going on? There's nothing that was added that I see, is that correct? Robert C. Skaggs: That's correct in part. It is an acceleration of some of the spending that we have inherently with the infrastructure replacement programs. It's also a bit of an uptick in new business. So we are seeing some organic growth, if that's the right term, in new customer additions. And that's helped elevate the number. Charles J. Fishman - Morningstar Inc., Research Division: Bob, what state is the growth coming from? Robert C. Skaggs: We're seeing it across all of the companies. Typically, we see more in Virginia, relatively speaking, but we're seeing a bit of an uptick across the board. Now having said that, it's not dramatic. But over the past couple of years, we've seen the new adds come back. All told, across the Gas Distribution group, probably $100 million, $125 million is spent on new customer additions -- will be spent for new customer additions in 2013. Charles J. Fishman - Morningstar Inc., Research Division: Okay. So that would account for, let's say, about half of the $200 million step up, is natural gas? And then the rest of it was... Robert C. Skaggs: It was at CPG. Charles J. Fishman - Morningstar Inc., Research Division: Okay, okay. And again, that's just an acceleration? Or I guess you added also the LNG project? Robert C. Skaggs: You're really going down the right track. It's a number of relatively small incremental projects that surfaced during the year, and we felt confident enough to launch those programs and increase the spend. Charles J. Fishman - Morningstar Inc., Research Division: Now I notice under Pennant, the gas gathering went from 400 million cubic feet per day to 600. Is that part of that acceleration or things are going better on the drilling? Robert C. Skaggs: No, no. It's still consistent with plan. So it's still consistent with plan. We've talked about additional phases down the road for Pennant. We're not there yet, but as I suggested in the prepared remarks, we're very encouraged by initial drilling results. We're encouraged by the additional -- or the drilling program for 2014. And so Pennant remains on track. Charles J. Fishman - Morningstar Inc., Research Division: Okay. Then moving just to Indiana, on Senate Bill 560. If you take Senate Bill 560 and the trackers there and you combine that with the trackers you have for the environmental spend on the generation, I mean, it is -- it would appeared to me, that, that covers a good chunk of your CapEx and you might avoid a general rate case for quite a while. Is that a correct way of looking at it? Robert C. Skaggs: Well, your first point is correct. Across NiSource, about 75% of our spend is via tracking mechanisms or relatively frequent rate cases. So a number like that, 75%, is probably relatively a good number to use at NIPSCO. Now the point on rate case, the Senate Bill 560 requires a filing company, somebody participating in that program, to file a rate case within that 7-year period. Our current expectations, and they're current, would suggest we would file at the latter stages of that 7-year period. But that's as we stand here today. Charles J. Fishman - Morningstar Inc., Research Division: Okay. And then I realize it's a new program, but on the Gas Distribution side, the Senate Bill 560, that tracker, is really, it appears to me, very similar to the trackers you have in other states with respect to gas distributions. Is that correct? Robert C. Skaggs: Similar. There are some differences, but it's very, very similar. It's akin to what we see in other states.

[Operator Instructions] And we do have a follow-up question from the line of Charles Fishman of Morningstar. Charles J. Fishman - Morningstar Inc., Research Division: I've got another one, but I wanted to give other people a chance. Effective tax rate, I notice both first and the second quarter was down. Do you see that going on for the second half? And is there any guidance you can provide? Stephen P. Smith: Yes, no. Charles, that's a deferred tax liability that we had on the balance sheet we didn't need to carry any longer. And so that benefit was approximately $4 million in the quarter. And we also had a few other items that contribute $1 million here or there. So we don't expect that effective tax rate to continue at that rate. We anticipate that it will bounce back up. Charles J. Fishman - Morningstar Inc., Research Division: So we'd be still looking at maybe mid-30s for the remainder of the year? Stephen P. Smith: Yes. Robert C. Skaggs: That's correct. Charles J. Fishman - Morningstar Inc., Research Division: Okay. And the only thing I had was just out of -- really more of a curiosity on the transmission. You said you're going to the second round of public hearings on those lines? Robert C. Skaggs: We just completed that, the second round. Charles J. Fishman - Morningstar Inc., Research Division: I'm just curious, what's the difference between the second round and the first round? What actually transpires? Robert C. Skaggs: Well, it's a process. So the first round, you basically introduce the projects. You introduce the approximate routing. The second round, you come back with more concrete information that begins to hone in or narrow down to a more specific route. And again, you give the opportunity to folks to vet that, to lodge their concerns, their interests and the like, and we try to be responsive. So it's part of a comprehensive outreach plan.

And at this time, we have no further questions. I would now like to turn the call back over to Mr. Bob Skaggs for any closing remarks. Robert C. Skaggs: All right, Janada. Thank you, everybody. Again, we appreciate your participation, your interest and support. And we will see you in the not-too-distant future. Have a great day. Thanks.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.