Randy G. Hulen - NiSource, Inc. Joseph J. Hamrock - NiSource, Inc. Donald E. Brown - NiSource, Inc.

Christopher Paul Sighinolfi - Jefferies LLC Charles Fishman - Morningstar, Inc. (Research) John J. Barta - KeyBanc Capital Markets, Inc.

Good day, ladies and gentlemen, and welcome to the Q3 2016 NiSource Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Mr. Randy Hulen, Vice President of Investor Relations. You may begin. Randy G. Hulen - NiSource, Inc.: Thank you, Vicky, and good morning, everyone. Welcome to the NiSource quarterly investor call. Joining me this morning are Joe Hamrock, Chief Executive Officer; and Donald Brown, Chief Financial Officer. The purpose of today's call is to review the NiSource financial performance for the third quarter of 2016, as well as provide an update on the utility operations and growth drivers. We'll then open the call up to your questions. We will be referring to our supplemental earnings slides during this call. These are available on the NiSource website. Also available on our website is a document containing segment and financial information to accompany this presentation. Before turning the call over to Joe, just a quick reminder 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. In addition, some of the statements made on this conference call relate to non-GAAP measures. For additional information on the most directly comparable GAAP measure and a reconciliation of these measures, please refer to the supplemental slides and additional segment and financial information available on nisource.com. In that document, you'll also find our full set of financial schedules that have historically been available in our earnings release. So with all that covered, the call is yours, Joe. Joseph J. Hamrock - NiSource, Inc.: Thanks, Randy. Good morning, everyone, and thanks for joining us. Let's start on page three of our supplemental slides. The NiSource team has continued to execute programs and regulatory initiatives that benefit our customers by enhancing system safety, reliability and customer services, while driving solid financial performance. Based on our results through the first nine months of the year, we continue to expect to deliver non-GAAP net operating earnings of $1.05 to $1.10 per share for 2016. We are also on pace to complete approximately $1.5 billion in capital investments. Based on these strong results and with confidence in our ability to continue executing on our investment programs, we are initiating 2017 net operating earnings guidance of $1.12 to $1.18 per share. Additionally, we expect to complete approximately $1.5 billion in planned utility infrastructure investments in 2017. These investment levels keep NiSource on pace for continuing sustained execution on the more than $30 billion of identified regulated utility investments outlined in 2014, investments that we expect to drive 4% to 6% long-term annual growth in both net operating earnings and dividends. With this robust level of investment and steady earnings and dividend growth projected, NiSource remains committed to maintaining our investment grade credit ratings and strong liquidity. Let's now turn to our third quarter performance. Starting with the business highlights, we continue to make progress on the regulatory front, with settlements approved in our base rate cases at Columbia Gas of Pennsylvania and Columbia Gas of Maryland. Additionally, a settlement was reached in Columbia Gas of Kentucky's rate case and interim rates were implemented while we continue through the regulatory process in Virginia. At NIPSCO Electric, updated base rates went into effect last month, following a final order approving our settlement reached in July. And our long-term electric generation strategy is advancing. We'll discuss each of these significant milestones in a few minutes. On the financial side, we delivered non-GAAP net operating earnings of $0.06 per share versus $0.06 per share in the third quarter of 2015. Donald will go into a bit more detail on these results, which can be found on page four of our supplemental slides and in our segment and financial information available in the Investors section of nisource.com. Donald? Donald E. Brown - NiSource, Inc.: Thanks, Joe, and good morning, everyone. As Joe mentioned, we are on pace to meet our guidance range of $1.05 to $1.10 per share non-GAAP. For the third quarter, on an operating earnings basis, NiSource reported about $107 million for the quarter, which is a decrease of about $9 million over the same period in 2015. On a GAAP basis, our operating income was about $114 million for the quarter versus about $110 million in the third quarter of 2015. Annually, the biggest driver continues to be the impact of our long-term infrastructure modernization investments. I would note that these investments have a somewhat muted impact each year in the third quarter due to inherent lower seasonal sales on our natural gas business. On a segment level, our Gas Distribution Operations segment delivered operating earnings of about $5 million, a decrease of about $17 million from 2015. This variance was driven primarily by non-track O&M expenses of about $206 million, which is consistent with the quarterly run rate of about $204 million in the last three quarters. This quarter-over-quarter variance of $18 million was largely attributable to employee-related benefit true-ups and post-separation staffing, as well as higher outside service costs driven by gas compliance and maintenance activities. The quarter-over-quarter O&M variance was partially offset by new base rates at Columbia Gas of Massachusetts and Columbia Gas of Pennsylvania, as well as new rates under Columbia Gas of Ohio's infrastructure replacement program. Our Electric Operations segment reported operating earnings of about $105 million, an increase of about $3 million from 2015. Similar to the Gas segment, Electric Operations non-tracked O&M of about $115 million was consistent with the last three quarters' average of about $115 million. However, it was about $14 million higher than in the third quarter of 2015. This quarter-over-quarter variance in O&M was primarily attributable to increased generation-related maintenance activities and employee and administration costs related to benefit true-ups. This variance was offset by higher revenue from increased capital spend on electric transmission projects and environmental investments. As you can see, solid progress for the year with continued growth projected for the fourth quarter as we continue to execute our capital program and regulatory initiative. Now, turning to slide five, I'd like to briefly touch on our debt and credit profile. Our debt level as of September 30 was about $7.7 billion with a weighted average maturity on long-term debt of approximately 13 years and a weighted average interest rate of approximately 5.4%, down from 5.88% at the end of 2015. At the end of the third quarter, we maintained net available liquidity of about $677 million, consisting of cash and available capacity under our credit facility. And as a reminder, currently, Standard & Poor's rates NiSource at BBB+, Moody's at Baa2 and Fitch at BBB, all with stable outlook. Now, I'll turn the call back to Joe to discuss a few customer, infrastructure investment, and regulatory highlights. Joseph J. Hamrock - NiSource, Inc.: Thanks, Donald. I'll start by highlighting some recognition we recently received. In September, NiSource was named for the third straight year to the Dow Jones Sustainability North America Index in recognition of our sustainable business practices and performance. We're proud of this achievement. A sustainable approach to safety, reliability, customer experience, environmental performance and community engagement is core to our strategy, which delivers value to all of our stakeholders including you, our investors. In order to sustain the company and to continue to execute on our long-term strategy, it's important that we have the right talent in place with the proper skills throughout their career. To support that goal, we are advancing our field training program. The first of four new employee training centers featuring modern simulators, hands-on training labs and safety towns opened in Pennsylvania in July. This center is expected to serve on average 35 employees per day and provide training for 100 first responders each year. In August, we broke ground on a similar center in Ohio, and will begin construction of a facility in Virginia later this month. In Massachusetts, we expect to break ground on a center next spring. You can learn more about our approach to training and the features of these centers, which are gaining significant industry attention, via a link on the home page of nisource.com. In addition to enhancing system safety and reliability, our utility investments are focused on growing our customer base. This summer, we launched pilot programs in Pennsylvania and Indiana, which are designed to add gas customers through conversions from other fuel sources. The programs include adding field employees who are dedicated to assisting customers through the conversion process and interfacing with builders and developers, enhanced marketing, building trade ally networks and streamlining internal processes to accommodate customer conversions. We plan to expand the program to all NiSource states by 2018. Now, let's turn to some specific highlights for the quarter from our gas operations on slide six. In Pennsylvania, on October 27, we received Pennsylvania Public Utility Commission approval of a settlement agreement in our base rate case. The approved settlement supports the company's continued upgrading and replacement of infrastructure and allows recovery of increases in safety-related operating and maintenance costs. It will increase annual revenue by $35 million and also includes incentives to expand gas service to commercial customers. New rates will go into effect in December. And in Virginia, we implemented updated interim base rates, subject to refund, on September 28. The new rates are a part of a base rate case which remains pending before the Virginia State Corporation Commission. The request seeks to adjust base rates to recover investments and other costs associated with the company's ongoing initiatives to improve overall system safety and reliability and to grow the system in response to increasing customer demand for service. If approved as filed, the case would result in an annual revenue increase of $37 million. A commission decision is expected early next year. Our base rate case in Kentucky is progressing, with the settlement agreement reached with parties in late October, and is being heard today by the Kentucky Public Service Commission. If approved as filed, the settlement would increase annual revenue by $13.4 million and allow for continued system modernization and pipeline safety investments to improve overall system safety and reliability. A commission decision is expected by the end of the year. And in Maryland, the commission approved the settlement agreement in our base rate case. The settlement includes an annual revenue increase of $3.7 million and provisions to encourage customer growth. And most importantly, it supports the continued replacement of aging infrastructure and the adoption of increased pipeline safety upgrades. In Indiana at NIPSCO Gas, the team continues to execute on its seven-year, approximately $800 million gas infrastructure modernization program to further improve system reliability and safety. In August, the company filed its semi-annual tracker update covering an additional $67 million of investments made in the first half of 2016. An order by the Indiana Utility Regulatory Commission is expected in the fourth quarter of 2016. Other NiSource companies have filed tracker update request in support of their gas infrastructure modernization programs. This includes Columbia Gas of Massachusetts under its Gas System Enhancement Plan and Columbia Gas of Virginia under its SAVE Act, Steps To Advance Virginia's Energy Plan program. Combined, these filings cover about $110 million in capital investments focuses on safety and reliability. As you can see, much progress on the regulatory customer and infrastructure fronts with several things to be resolved before the year's end. Now, let's turn to our Electric Operations on slide seven. New rates became effective on October 1, under NIPSCO's electric base rate case settlement. The approved settlement provides a platform for NIPSCO's continued electric infrastructure investments and service improvements for customers, and it increases the company's annual base rate revenues by about $73 million. NIPSCO is also focused on executing on its long-term electric infrastructure modernization program, which includes enhancements to the electric transmission and distribution system, designed to improve system safety and reliability. In July, the Indiana Commission approved the settlement related to the program, which allowed for recovery of approximately $1.25 billion of investments to be made through 2022. NIPSCO expects to begin recovering on $46 million of these investments beginning in February 2017. The company's two major electric transmission projects remain on schedule with anticipated in-service dates in the second half of 2018. Both projects are designed to enhance region-wide system flexibility and reliability. Substation, line and tower construction are well under way for both projects. Finally, NIPSCO will submit its Integrated Resource Plan or IRP, to the Indiana Commission later today. The IRP process is conducted by Indiana electricity providers to outline their plan to meet their customers' anticipated long-term energy needs. The NIPSCO team has worked constructively with stakeholders to develop a balanced plan focused on providing customers affordable, clean energy while maintaining flexibility for future technology and market changes. The plan remains consistent with the future generation strategy we previewed in August. As outlined in the IRP, NIPSCO today will also file with the IURC for approval to construct required environmental investments at its Michigan City and Schahfer generating facilities. So, before opening the call to questions, I'd like to lift up some key takeaways for the remainder of the year and 2017. NiSource's long-term utility infrastructure modernization programs continue to produce benefits for customers and communities, while also driving solid financial performance. We expect to deliver non-GAAP net operating earnings of $1.05 to $1.10 per share for 2016, and we expect 2017 net operating earnings of $1.12 to $1.18 per share. Our robust investment plans include approximately $1.5 billion in planned utility infrastructure investments in 2017. NiSource expects to complete about $1.5 billion in such investments in 2016. These investment levels keep NiSource on pace for sustained execution on the more than $30 billion of identified long-term regulated utility investments that we outlined in 2014. And we continue to expect to grow both operating earnings and our dividend by 4% to 6% annually, while maintaining our investment grade credit rating. Finally, while we'll provide more specific details later, I wanted to highlight that we are planning to host an Investor Day sometime in the latter part of the first quarter of 2017. This New York event will provide an opportunity for the NiSource team to share a more comprehensive picture of our utility investment strategy. So, stay tuned, more to come as we confirm the date and details of that event. Thank you all for participating today and for your ongoing interest in and support of NiSource. Now, let's open the call to your questions. Vicky?

And our first question comes from the line of Chris Sighinolfi with Jefferies. Your line is now open. Christopher Paul Sighinolfi - Jefferies LLC: Hey, good morning, Joe. How are you? Joseph J. Hamrock - NiSource, Inc.: Good morning, Chris. Christopher Paul Sighinolfi - Jefferies LLC: Thanks for the time this morning. Just had a couple of questions. I think Donald hit on some of this, but the costing items, and I think just the cadence expected going forward, I think principally at the gas side, can we just talk about that? I just want to review it. You had said employee-related benefit true-up costs were part of the year-on-year change, but effectively, the cadence over the last three quarters, at least, the non-tracked O&M costs... Joseph J. Hamrock - NiSource, Inc.: Yeah, let me ... Christopher Paul Sighinolfi - Jefferies LLC: ...ranging in that low $200 million range. Is that something we should expect roughly going forward? Joseph J. Hamrock - NiSource, Inc.: Let me ask Donald to shed a little more light on those details, but the higher level point I would stress is that, if you look at year-to-date expenses on a consolidated basis, it's about 2% higher than prior year, year-to-date, expense profiles, although there are certainly some shifts in the expense profile across the businesses and some deliberate timing of certain work programs we've put in place. But I'll ask Donald to share a little more insight into some of those shifts in the spending patterns. Donald E. Brown - NiSource, Inc.: Yeah. Thanks, Joe. And that's right, I think, if we look at it on an annual basis, we're about 2% year-over-year growth, which is in line with our expectations, as well as our guidance for 2016. In the quarter, we did have some accrual true-ups on pension as well as healthcare and other employee benefits that were higher than, I'd say, last year's quarter. So, nothing that's out of the ordinary, really just kind of looking at kind of our historical performance, as well as the pension performance. So, we've seen some higher pension expenses this year based upon kind of last year's results of the fund performance. Christopher Paul Sighinolfi - Jefferies LLC: Okay. And in terms of – not to get too in the weeds on any of the components of your 2017 guidance, but broadly speaking, Donald, is that sort of the cadence and magnitude of O&M creep you think you might see next year? Donald E. Brown - NiSource, Inc.: Yeah, it's right. I think we're in the 2% to 3% range next year. We're still finalizing the plan, but it is consistent with our guidance of $1.12 to $1.18. Christopher Paul Sighinolfi - Jefferies LLC: Okay. And then I guess on the converse side, the debt cost improvement that you mentioned, I think it's around 50 basis points since the end of last year. I'm just wondering, any effort or opportunity to maybe refinance? I think you guys do have some higher coupon tranches sitting out there later in the decade. I'm just wondering if there is any opportunity to get rid of that stuff earlier, if there's a view around rates rising or anything along that line? Donald E. Brown - NiSource, Inc.: No, I mean, we consistently look at what's the right time to – if there's an opportunity to refinance that higher coupon debt. I think the challenge that we see is around the premiums you've got to pay upfront. I tend to look at that type of analysis and compare the returns that I can get from my regulatory investments versus paying those premiums. And for most cases, it does not end up being NPV-positive investments. So, we've got a lot of debt kind of over the next three years or four years, about $500 million a year, that's going to mature anyway. And so, while we'll continue to look at the opportunities to refinance early, I think over time will also just naturally bring the cost of debt down lower. Christopher Paul Sighinolfi - Jefferies LLC: Okay. Great. Donald E. Brown - NiSource, Inc.: And I would say that we have hedged a portion of our expected refinancing for 2017 and 2018 to lock in rates and take some of that risk off the table. Christopher Paul Sighinolfi - Jefferies LLC: Okay. Great. And I think final question for me. Joe, you mentioned that in the release today, I'm just curious if there's anything sort of additionally supporting it, but the comments or the disclosures around the employee training centers, just curious if that's purely an on-source initiative or if that's something that any of the regulators have sort of inquired about? I mean, I know you guys have had a focus on obviously safety and training for some time. But just curious what's – I guess, what's new and what's different now? And maybe what's the impetus behind it? Joseph J. Hamrock - NiSource, Inc.: Yeah. Great question, Chris, that's really our initiative driven to ensure faster, readiness and proficiency for our field workforce in an era of changing regulations and changing expectations from our customer base as well. Not so much driven by regulators, but certainly supported by regulators. Christopher Paul Sighinolfi - Jefferies LLC: Okay. Good. Thanks so much for the time this morning, guys. Joseph J. Hamrock - NiSource, Inc.: Thanks, Chris. Have a good one.

And our next question comes from the line of Charles Fishman with Morningstar. Your line is now open. Charles Fishman - Morningstar, Inc. (Research): Thank you. The only question I had is, on the IRP that's going to be filed later today, does that include any transmission? Joseph J. Hamrock - NiSource, Inc.: It doesn't include specific transmission asset of retirements or projects, but it's certainly based on our outlook for transmission support for the generating portfolio. Charles Fishman - Morningstar, Inc. (Research): Okay. I guess, I did have a follow-up on that is, are renewables going to be included in that as well? Joseph J. Hamrock - NiSource, Inc.: We have laid out in this IRP an outlook for the retirement as we noted of some of the current coal units and what I'll call an expected or a default view of replacement capacity in the middle of the next decade, predominantly combined cycle generation, at this point gas generation. We'll continue to look at the ideal portfolio before we commit to those decisions, which we don't expect the need to do for another couple of years at this point, based on the retirement schedules and the capacity profile. Charles Fishman - Morningstar, Inc. (Research): Okay. That's all I have. Thank you. Joseph J. Hamrock - NiSource, Inc.: Thanks, Charles.

And our next question comes from the line of John Barta with KeyBanc. Your line is now open. John J. Barta - KeyBanc Capital Markets, Inc.: Hey, guys. Good morning. Joseph J. Hamrock - NiSource, Inc.: Good morning, John. John J. Barta - KeyBanc Capital Markets, Inc.: So, I just have kind of a bigger picture-type question. Over the last couple of years, we've seen a handful of transactions in the midstream space, and I'm just curious, is there anything holding you back from potentially getting back in there on a larger scale. I know you've tons of opportunities already out there. But is there anything from a legal perspective from Columbia or anything like that that's potentially holding you back from getting back in that space? Joseph J. Hamrock - NiSource, Inc.: Thanks, John. It's a very insightful question. Not being, certainly, from a legal or regulatory perspective holding us back there, more of a focus of ours today committed to the $30 billion of identified investments on the gas LDC and the transmission assets that we currently operate as well as the electric side. We certainly look at opportunities occasionally, but our focus is much more dominated by the infrastructure modernization opportunities that we see in our current footprint. John J. Barta - KeyBanc Capital Markets, Inc.: Okay. Well, thank you. Joseph J. Hamrock - NiSource, Inc.: Thanks, John.

And I'm showing no further questions at this time. I would now like to turn the call back over to Mr. Joe Hamrock for closing remarks. Joseph J. Hamrock - NiSource, Inc.: Thanks, Vicky, and thank you all for your time and attention today. We look forward to seeing many of you at the EEI Financial Conference next week. And until then, please have a great day. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.