CompanyGraph
NiSource Inc.
NI · NYSE Arca · United States
Delivers natural gas and electricity to locked-in customers across six states under government-granted monopoly franchises.
NiSource distributes natural gas through its Columbia Gas networks and electricity through NIPSCO to homes and businesses across Indiana, Kentucky, Maryland, Ohio, Pennsylvania, and Virginia, where state commissions have granted it the sole legal right to serve each address — no competitor may run a parallel pipe or wire to the same door. Because those franchise boundaries are fixed by law, the only way NiSource earns a return on the money it buries in replacement pipelines or electric infrastructure is by filing a rate case with the relevant commission and waiting for approval, so the speed at which it can recover capital depends on whichever commission moves slowest or pushes back hardest. In northern Indiana, Columbia Gas and NIPSCO franchises overlap on the same geography, which lets NiSource coordinate gas and electric spending against a single customer base — but that same overlap means a hostile rate case from the Indiana commission, or a sharp drop in northern Indiana industrial activity, compresses both revenue streams at once with no other territory to cushion the blow.
How does this company make money?
The main source of income is a regulated rate of return on the capital NiSource has invested in pipelines, electric generation, and transmission equipment — state commissions set the approved return and customers pay it through their bills. On top of that, customers pay volumetric charges based on how much natural gas they use and how many kilowatt-hours of electricity they consume. Between full rate cases, the company collects infrastructure surcharges and riders — smaller, targeted charges that let it recover the cost of specific replacement programs without waiting for a complete new rate case. NIPSCO also receives capacity payments from PJM simply for having generation equipment available and ready to run, even when that equipment is not actively producing power.
What makes this company hard to replace?
State commission franchises legally bar any other company from entering the service territory, so there is simply no alternative natural gas distributor or local electric provider a customer could call. Switching would require a new provider to physically duplicate the pipes and meters already in place — an enormous construction cost that no entrant has any reason to take on. For electric customers, PJM transmission interconnection agreements and long-term capacity commitments add further regulatory steps that make building a replacement generation source even harder.
What limits this company?
Every dollar NiSource spends on new pipe or electric infrastructure must survive a separate approval hearing in each of the six state commissions before it can be added to customer bills. Each commission runs on its own schedule and its own standards of scrutiny. The speed at which the company earns a return on what it builds is set by whichever commission moves slowest or pushes back hardest — not by how fast construction crews can work.
What does this company depend on?
Columbia Gas depends on interstate natural gas transmission pipelines to deliver the gas it then distributes to customers. NIPSCO depends on coal supply contracts to fuel its generation facilities. Both depend on state public utility commission franchise renewals across all six states to keep operating legally. NIPSCO also depends on PJM Interconnection for access to the regional electric grid in northern Indiana, and the entire gas network depends on federal pipeline safety certifications to stay in service.
Who depends on this company?
Industrial manufacturers in northern Indiana depend on NIPSCO's 3,000-plus megawatts of generation capacity to keep their production running — a loss of that power would halt operations. Residential customers across the six-state Columbia Gas territory have no other natural gas distributor available, so any disruption to Columbia Gas service leaves them without heat and hot water. PJM Interconnection also relies on NIPSCO generation being available and ready to dispatch during periods of peak electricity demand across the regional grid.
How does this company scale?
The legal and engineering know-how needed to run rate cases and manage regulatory filings can be applied across all six state jurisdictions without building anything new — the same teams use the same methods in each state, so that overhead spreads efficiently. What cannot scale is the physical footprint: state commission franchises fix the service boundaries permanently, so no matter how well the regulatory teams perform, the pipes and wires can only serve the addresses already inside those granted territories.
What external forces can significantly affect this company?
Federal pipeline safety rules require NiSource to accelerate the replacement of older cast iron and bare steel pipes regardless of whether customer demand is growing, which forces large capital spending that the company did not choose on its own schedule. State renewable portfolio standards are pushing NIPSCO to retire coal plants and invest in cleaner energy sources. On top of that, residential electrification policies spreading across multiple states could reduce the number of homes using natural gas over time, slowly shrinking the volume of gas Columbia Gas distributes.
Where is this company structurally vulnerable?
If the Indiana Utility Regulatory Commission rejected or heavily cut a NIPSCO rate case — for either electric or gas investment — both revenue streams would shrink at the same time in the same northern Indiana geography. Because the gas and electric franchises overlap there, the same ruling hits both businesses simultaneously, and there is no separate territory elsewhere to make up the difference.
Supply Chain
Liquefied Natural Gas Supply Chain
The LNG supply chain moves natural gas from producing regions to importing countries by cooling it to -162°C for ocean transport, then reheating it for distribution through domestic pipeline networks to heat homes, generate electricity, and fuel industrial processes. The system is governed by three root constraints: liquefaction infrastructure that costs $10-20 billion per facility and takes five to seven years to build, regasification dependency that prevents importing countries from receiving LNG without their own terminal infrastructure regardless of global supply levels, and long-term contract structures requiring fifteen to twenty-year take-or-pay commitments that lock trade flows into rigid patterns that cannot quickly redirect when geopolitical or market conditions change.
Natural Gas Pipeline Supply Chain
The natural gas pipeline supply chain moves methane from production basins to homes, power plants, and factories through networks of buried steel pipes, compressor stations, and underground storage facilities. The system is governed by three root constraints: infrastructure irreversibility that locks specific producers to specific consumers for decades once a pipeline is built, compressor station physics that make pipeline capacity a function of the entire compression chain rather than pipe diameter alone, and storage geography mismatches where seasonal demand buffering depends on underground facilities whose locations were determined by geology rather than proximity to consumption centers.