Good morning, and welcome to the Q2 2020 NiSource Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. I would now like to turn the conference over to Mr. Nick Drew, Director of Investor Relations and Corporate Finance. Sir, you may begin.

Thank you, Cree. Good morning, and welcome to the NiSource Second Quarter 2020 Investor Call. Joining me today are Joe Hamrock, our Chief Executive Officer; Donald Brown, our Chief Financial Officer; Shawn Anderson, our Chief Strategy and Risk Officer; and Randy Hulen, our Vice President of Investor Relations and Treasurer. The purpose of this presentation is to review NiSource's financial performance for the second quarter of 2020 as well as provide an update on our operations, growth drivers, and financing plans. Following our prepared remarks, we'll open the call to your questions. Slides for today's call are available on nisource.com. Before turning the call over to Joe, Donald, Shawn, and Randy, just a quick reminder, some of the statements made during this presentation 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 MD&A and the Risk Factors sections of our periodic SEC filings. Additionally, some of the statements made on this 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 segment information, including our full financial schedules available at nisource.com. With all that out of the way, I'd like to turn the call over to Joe.

Thanks, Nick. Good morning, everyone, and thank you for joining us. Hopefully, you've all had a chance to read our second quarter earnings release, which was issued earlier this morning. As we did in the release, our plan for this call is to cover topics much broader than just our second quarter results. 2020 is a year of transition for NiSource as we mitigate the financial impacts of the COVID-19 pandemic, complete the sale of Columbia Gas of Massachusetts, and reposition NiSource for enhanced execution in our key focus areas. While driving our well-established asset modernization and safety enhancement programs and advancing our transition to renewable generation, we have accelerated the initiative to realign our capabilities and cost structure. Together, these efforts are designed to ensure optimal performance as we execute on the significant opportunities in the NiSource business plan. It's an ambitious agenda. So let's turn now to Slide 3 and discuss our key takeaways. As we have all seen, COVID-19 continues to spread and disrupt the global economy. Throughout NiSource, we remain focused on employee and customer safety and providing reliable utility service as we adapt to the pandemic. Our COVID-19 protections for customers and employees, as outlined in our first quarter 2020 release remain in place. In line with the base case scenario we outlined in late May, we continue to see modest commercial and industrial load impacts due to COVID-19, which are partially offset by increases in residential load. Cost savings and other measures have been implemented that are intended to mitigate these negative impacts on sales. We continue to manage these impacts and will update investors in future quarters. Despite challenges related to the pandemic, we continue to expect to make $1.7 billion to $1.8 billion in capital investments in 2020. Our planned sale of Columbia Gas of Massachusetts assets to Eversource remains on track for regulatory approval in the third quarter of 2020, with closing targeted shortly thereafter. Last month, NiSource and Eversource filed a joint petition with the Massachusetts Department of Public Utilities, seeking approval of the transaction as well as a proposed settlement with the Attorney General's office and the Department of Energy Resources, which would resolve all remaining state investigations related to the 2018 Greater Lawrence event, including the DPU's investigations of pipeline safety and emergency response. NiSource has agreed to make a payment of $56 million in lieu of penalties into an energy relief fund for customers. With the Massachusetts transaction closure imminent, we have launched a multiyear strategic initiative intended to better leverage the company's current scale by improving our cost structure and capabilities across the organization. As part of this effort, today we launched a voluntary separation program for certain groups of employees that will be rolled out in waves over the coming months, with the first wave commencing immediately. This initiative, along with the repositioning of executive leadership roles and responsibilities we announced earlier this year, is intended to ensure that our organization is best positioned to drive enhanced focus on safety, renewable energy, operational excellence, and customer value. We are also today initiating non-GAAP net operating earnings per share guidance for 2021 in the range of $1.28 to $1.36. This guidance reflects our expectations about the initial savings we expect to achieve through the cost restructuring and includes the base case scenario impacts of COVID-19. It also establishes the starting point for a long-term plan that will extend through 2024 with an expected compound annual rate base growth of 10% to 12%. This rate base growth is expected to drive compound annual earnings per share growth in excess of our previous 5% to 7% annual growth commitment, driven by our renewable portfolio investments and our ongoing modernization programs. We plan to provide more detail around this new long-term growth strategy at our next Investor Day, which we're planning for September 29. At Investor Day, which we expect will be a virtual event, we plan to discuss updates on our safety management initiatives, the next stage of our current $1.8 to $1.9 billion annual capital investment in safety and asset modernization programs. We'll also share details about our anticipated incremental capital investment opportunities in the range of $1.8 to $2 billion across 2022 and 2023 related to our electric generation strategy. This investment represents ownership through joint venture partnerships of approximately half the renewable generation portfolio needed to replace our coal plants retiring by 2023. As we have previously indicated, we expect to retire nearly 80% of our remaining coal-fired generation by 2023 and 100% by 2028. Our replacement plan is designed to reduce our greenhouse gas emissions by an industry-leading 90% by 2030 from a 2005 baseline. At Investor Day, we'll also share progress and additional details on the cost restructuring initiative we announced today. These strategic long-term cost reductions will support our growth strategy, as they are expected to create offsets in future customer bills to allow for robust capital investments. We'll provide details of our balanced financing plan to fund our robust capital investment plans, and this financing plan will be focused on maintaining our current investment-grade credit ratings. And we'll put all this together to underpin our updated net operating earnings per share growth outlook. We're pleased to preview this outline with you today, and we look forward to sharing all the details in September. Back to 2020, we continue to execute on our key priorities: asset modernization and safety enhancements and our electric generation strategy. We have gas base rate cases pending in Pennsylvania and Maryland, and we've received approval of an extension of our long-term gas modernization program in Indiana. In our Electric business, we made regulatory filings in Indiana seeking approval of PPAs, representing 300 megawatts of new solar generation and 30 megawatts of storage capacity. And commercial negotiations are advancing on build transfer agreements for a significant amount of additional solar capacity. Now I'd like to turn the call over to Donald, who will discuss our financial performance in more detail. Donald?

Thanks, Joe, and good morning, everyone. Looking at our second quarter results on Slide 4, we had non-GAAP net operating earnings of about $50 million or $0.13 per share compared to net operating earnings of about $19 million or $0.05 per share in 2019. The year-over-year increase was driven primarily by reduced employee and administrative expense measures put in place to offset the revenue impacts of COVID-19. Looking more closely at our segment results on Slide 5, operating earnings were up nearly $27 million in our Gas segment driven primarily by lower employee and administrative expenses and higher revenues from our safety and modernization investments. This was offset slightly by COVID impacts, including lower commercial and industrial demand, increased bad debt, and COVID-specific O&M and reduced late payment and reconnect fees. In our Electric segment, operating earnings were up nearly $4 million, driven primarily by lower employee and administrative expenses, lower generation maintenance expenses, and higher COVID-related residential demand. And this was offset slightly by the same COVID impacts I outlined for the Gas segment. As for COVID-19, as outlined on Slide 6, and consistent with our base case, we saw lower revenue and cash flows in the quarter due to lower commercial and industrial sales and increases in bad debt and other COVID-related expenses. The total impact of COVID-19 in the quarter was approximately $30 million or $0.06 per share, with most of the demand-related impact in April when states in our service footprint were shut down. As I mentioned, this impact was completely offset by non-safety-related expense reductions. To date, the pandemic has not presented significant barriers to our safety and infrastructure modernization programs. As Joe mentioned earlier, we continue to expect to invest $1.7 to $1.8 billion of capital in 2020. And we're monitoring the COVID-19 situation closely and will stand ready to make adjustments as necessary. We've been in dialogue with regulators in all of our states as we seek relief related to incremental COVID pandemic expenses, including bad debt. We've received orders in Indiana, Ohio, Pennsylvania, Virginia, and Maryland, which, to varying degrees, allow for deferral of these expenses for later recovery. As we stated on our first quarter call, the length and severity of the COVID pandemic will determine how significant the impact on our 2020 financial performance will be. Our base case still has us expecting a gradual recovery into the first half of 2021, and we haven't seen anything that would negatively impact our long-term growth. Turning to 2021 guidance on Slide 7. As Joe mentioned earlier, we have initiated 2021 net operating earnings per share guidance with the midpoint of $1.32. This guidance reflects our expectations about the initial cost savings we expect to achieve through our cost restructuring and about a $0.05 impact due to COVID-19, which is our base case scenario. On this slide, we provided some detail about our 2021 guidance range. You will recall that our initial guidance range for 2020, which we withdrew when we announced the CMA transaction in February, was a $1.36 to $1.40. Once we factor in the initial results of our cost restructuring and the expected impact of COVID in 2021, that brings us to the $1.28 to $1.36 guidance range for 2021 that we're initiating today. This 2021 guidance establishes the starting point for a long-term plan that will extend through 2024 with an expected rate base compound annual growth rate of 10% to 12%. This rate base growth is expected to drive earnings per share growth in excess of our previous 5% to 7% annual growth commitment with a shift to a CAGR due to the timing of our renewable portfolio investments. We're looking forward to sharing more details of our four-year financial plan and our fresh long-term growth strategy at our Investor Day next month. Now turning to Slide 8. I'd like to briefly touch on our debt and credit profile. Our debt level as of June 30 was about $10 billion, of which about $8.7 billion was long-term debt. The weighted average maturity on our long-term debt was approximately 16 years, and the weighted average interest rate was approximately 4.3%. In April, we financed our $850 million term loan and issued $1 billion of 10-year notes. We expect these transactions will provide us the necessary liquidity to manage through the impacts of the pandemic. At the end of the second quarter, we maintained net available liquidity of about $2 billion, consisting of cash and available capacity under our credit facility and our accounts receivable securitization programs. Our credit ratings from all three major rating agencies are investment grade, and we're committed to maintaining our current investment-grade ratings. Now I'd like to turn to Slide 9, which covers our 2020 financing plan. Our current plan, which is focused on providing funding for our ongoing safety and infrastructure investment programs, continues to include annual equity in the range of $200 million to $300 million from our at-the-market or ATM equity issuance program as well as $35 million to $60 million from our employee stock purchase and other programs. Now I'd like to turn the call back over to Joe, who will provide some infrastructure investment and regulatory updates from our Gas and Electric businesses.

Thank you, Donald. Now let's look at some NiSource utilities highlights for the second quarter and early third quarter of 2020, starting with our Gas Operations on Slide 10. In Pennsylvania, we filed a base rate case in April with the Public Utility Commission, seeking an annual revenue increase of $100.4 million to invest in, modernize, and upgrade our existing natural gas distribution system as well as maintain the continued safety of the system. New rates are expected to become effective in February 2021. We also filed a rate case request with the Maryland Public Service Commission in May, the request supports further upgrading and replacement of our pipelines in the state. Our proposal updated in July would result in an annual revenue increase of $6.3 million, including $1.3 million of current tracker revenue if approved as filed. A PSC order is expected in the fourth quarter of 2020, with rates effective in December 2020. In Indiana, our application for a 6-year extension of our long-term gas infrastructure modernization program was approved by the Utility Regulatory Commission in July. The approved program includes nearly $950 million in capital investments through 2025 to be recovered through semiannual adjustments to the existing gas transmission distribution and storage improvement charge or TDSIC tracker. The gas TDSIC program has been in place since 2014. New rates went into effect in May in Ohio in our infrastructure replacement program following regulatory approval of our annual tracker adjustment. This allowed us to begin recovery of approximately $234 million in safety and infrastructure investments made in 2019. This well-established pipeline replacement program, authorized through 2022, covers replacement of priority mainline pipeline and targeted customer service lines. Also, in Ohio, our annual application for adjustment to our capital expenditure program rider remains pending before the Public Utilities Commission. This rider allows us to recover capital investments and related deferred expenses that are not recovered through the IRP. The adjustment application seeks to begin recovery of approximately $185 million in capital invested in 2019. A commission order is expected this month with new rates effective in September 2020. Now let's turn to our Electric Operations on Slide 11. Shawn will cover our generation strategy progress in a moment, but I will mention that we continue to execute on our long-term electric infrastructure modernization plan in Indiana. This well-established program includes enhancements to our electric transmission and distribution system designed to further enhance safety and reliability. The program, originally approved by the IURC in 2016, includes approximately $1.2 billion in electric infrastructure investments we expect to make through 2022. And now I'll ask Shawn to talk about our renewable generation projects.

Thank you, Joe. We're excited about the opportunity. And as mentioned earlier, NiSource has a significant incremental capital investment opportunity related to our electric generation strategy in Indiana. This strategy is consistent with our 2018 integrated resource plan, which outlines plans to retire nearly 80% of our remaining coal-fired generation by 2023 and retire all of our coal generation by 2028, which will be replaced by lower cost, reliable and cleaner options designed to drive a 90% reduction in our greenhouse gas emissions levels by 2030 compared to the 2005 baseline. Notably, we also expect this strategy to save our electric customers more than $4 billion over 30 years. We've laid out our replacement plan on Slide 13, which points to a renewable portfolio designed with a combination of NIPSCO ownership, structured through joint ventures and purchase power agreements. Currently, we anticipate half of the capacity in the replacement plan targeting ownership in the joint ventures, which includes NIPSCO and tax equity partners as the members. The remaining new capacity is expected to be primarily in the form of PPAs. As part of the transition to cleaner energy and renewable generation, the Midcontinent Independent System Operator recently approved our plan to retire the R.M. Schahfer Generating Station by 2023. We plan to replace approximately 1,400 megawatts of this retiring coal-fired generation, and we see the incremental capital investment opportunities to replace this capacity with our renewable platform in the range of $1.8 to $2 billion, primarily in 2022 and 2023. As you can see on Slide 14, we currently have 800 megawatts of wind, our Jordan Creek, Rosewater, and Indiana Crossroads projects approved by the Indiana Utility Regulatory Commission. And 300 megawatts of solar and 30 megawatts of storage PPAs, Brickyard solar and Greensboro solar, pending before the IURC. Jordan Creek and Rosewater are under construction and expected to be in service by the end of this year. NextEra Energy Resources, which developed the Brickyard and Greensboro projects, are expected in service in mid 2023. Of the wind joint venture projects just mentioned, the IURC has already approved the construction for Rosewater and Indiana Crossroads projects, which represent $400 million in capital investments and rate base opportunity for NiSource. In July, we also moved forward with the tax equity financing agreement for the Rosewater project, closing the structure with Wells Fargo. We are working on the next steps for Indiana Crossroads, which is a 300-megawatt joint venture project with EDP Renewables North America, which was approved for construction in February and is expected to go in service by the end of 2021. Commercial negotiations are advancing on additional build transfer agreements representing a significant amount of additional solar capacity. The construction and regulatory filings related to these build transfer agreements are expected shortly after commercial agreements are executed. We expect to have much more to share on our transition to renewable generation at our upcoming Investor Day in September. With that, now I'll turn the call back to Joe.

Thank you, Shawn. Before we wrap up, I'd like to take a moment to address the social issues and actions taking place across the United States. Earlier this summer, we made a commitment to our employees that at NiSource, we will address systemic racism head-on, wherever we see it. We value diversity, and we will not tolerate intolerance based on race or any other aspect of diversity. Internally, this means we will hold ourselves and our colleagues accountable to ensure that valuing diversity is a fundamental requirement to work at NiSource. And for our managers, creating and nurturing this environment is a foundational job expectation to which they will be held accountable. Before we turn to the Q&A portion of the call, I'll share and reiterate a few key takeaways. 2020 represents a period of transition for NiSource as we mitigate the financial impacts of the COVID-19 pandemic, complete the sale of Columbia Gas of Massachusetts, and reposition NiSource for enhanced execution in our key focus areas. We have launched a strategic initiative, which involves the realignment of our organizational structure and costs. This effort is designed to ensure that we are optimally positioned to support both the significant capital investments we will be making in renewable generation and our ongoing asset modernization and safety enhancement investments. We continue to see modest commercial and industrial load impacts due to COVID-19, which are partially offset by increases in residential load. Cost savings and other measures have been implemented to mitigate these negative impacts on sales. Despite challenges related to the pandemic, we continue to expect to make $1.7 billion to $1.8 billion in capital investments in 2020. Looking ahead, for 2021, we have initiated non-GAAP net operating earnings per share guidance in the range of $1.28 to $1.36. This guidance reflects the initial cost savings we expect to achieve through this strategic initiative and the base case scenario impacts of COVID-19. It also establishes the starting point for a long-term plan that will extend through 2024 with an expected best-in-class rate base compound annual growth rate of 10% to 12%. This rate base growth is expected to drive earnings per share growth in excess of our previous 5% to 7% annual growth commitment, with the shift to a CAGR due to the timing of our renewable portfolio investments. We're excited about sharing more details with you around this new long-term growth strategy at our next Investor Day, which, again, we're planning for September 29. So thank you all for participating today and for your ongoing interest in and support of NiSource. We're now ready to take your questions. Cree?

And your first question comes from Michael Weinstein with Credit Suisse.

I noticed that you mentioned the liquidity appears sufficient for the next 12 to 24 months. Does that imply there will likely be no block equity through 2021? Also, can we assume that some block equity may be necessary as you develop the generation plan in 2022 and 2023?

Michael, it's Donald. I'll take that question. We'll provide more detail on our Analyst Day about what the financing plan looks like. We will have to finance this in a balanced way. We're looking at, certainly, equity, hybrids, which we've done in the past, and converts. So really taking into account all the different options as we deliver this plan that builds on that 10% to 12% rate base growth, and we're going to do that in the least cost-effective way. But we'll come back in September with that detailed plan on financing.

All right. But that's built into your 5% to 7% CAGR, right? Which I assume is back-end loaded as you get more into the generation build part of the plan?

Most of the investments are from 2022 and 2023, and the timing of these projects affects the financing. We are also examining our cost savings as we negotiate the generation projects. Additionally, we need to align our regulatory plans with our financing strategies to provide earnings guidance in September.

Your next question is from Julien Dumoulin-Smith with Bank of America.

If I can pick it up where Mike left it off. When you think about the linearity of that 5% to 7%, especially since you're talking about being in excess, how do you think about the lumpiness in the back half? And let's just be a little bit more specific, if you can, as you think about the cycle of those rate cases and when those uplifts will be realized. I suspect, if I can, that '22 looks more like a '21 and then you get a bigger uptick as you normalize into '23 and then really the full year for '24. But can you talk about the trajectory, especially now that you're making this comment about being in excess of that 5% to 7%?

Yes. We have a chart in our supplemental slides that outlines the timing of investments and regulatory outcomes. We're planning to make significant investments in 2022 and 2023. We're coordinating our expectations around regulatory timing and when we will start to see revenues from those investments. Those initial investments will likely result in dilution during 2022 and 2023 before we begin to receive the new revenues that will support them. The situation is expected to improve once we start to realize full revenues, which will have a complete impact on earnings in 2024. This is why we are anticipating a compound annual growth rate in both rate base growth and earnings growth.

Got it. And then if I can ask for clarification on the tax equity bit here. You guys talk about roughly 1/3, 2/3 mix between tax equity and investment. How confident are you in that capital structure mix at this point in time? I know that that's been something of a moving target a little bit over time as you fine-tune the percent of wind and solar. And also as you fine-tune what is a novel structure in the industry. I just want to get a little clarity on that. And then also related to that, your level of confidence about where you could be within that $2.8 billion to $3 billion range just against the backdrop of getting approval for the JV-owned projects.

Yes. When considering the solar and wind projects, the structure of the one-third, two-thirds model is closely tied to the types of projects represented in the RFPs we've received and are currently negotiating. This significantly influences the amount of tax equity involved. Additionally, the pricing from the RFP plays a crucial role in determining our level of ownership compared to the Power Purchase Agreement (PPA).

Okay. Fair enough. But you believe that it is fairly well-established at this point that this part of the overall RFP will be joint venture projects. There isn't much ambiguity regarding the PPA versus ownership.

No, Julien. This is Shawn. We're highly confident in the range provided. We believe it strikes the balance of benefits to customers in the form of that lower energy cost over the 30-year horizon that we pointed to in the 2018 IRP as well as the significant capital investments yielding meaningful returns to our shareholders. We're confident in what that looks like. We're stepping through those commercial arrangements at the moment. We will provide much more detail in September. But we've been able to look at a couple of the structures already in front of the IURC and feel that that's a good template for us to follow.

Your next question comes from Insoo Kim with Goldman Sachs.

My first question, just in Indiana and the renewable projects, what type of customer bill impact can you see when you balance the impact of the renewable rate base and the coal capacity retirement?

Yes. Great question. This is Shawn. The customer bill impact, actually, we expect the $4 billion savings over the 30-year horizon. As you imagine, the lower cost of overall O&M for customers. So we actually see that generation strategy driving savings over the long term. On the investment side and in the combined bill, we still expect that low single-digit bill increase when rates do increase on an annualized basis. In terms of the regulatory filing and timelines, you can see on supplemental Slide number 14, we wouldn't expect this activity really to occur until 2023 and 2024, where we'll step through that. What's critical about that is the retirement as well of Schahfer, which would yield then that O&M savings back to customers almost simultaneously. So they have to work a little bit in concert with one another, but we believe that bill impact to be moderated overall.

Got it. From a balance sheet perspective, you're still aiming for a total debt target of 14% to 15% in the long term. Looking at 2021, do you anticipate being at least in the 14% range solely through your annual ATM program?

Yes. Long-term, we're targeting that 14% to 15%. Just recently met with the rating agencies and continue to have conversations with them about our investment plan over the next four years, and we're confident in that plan. Again, we'll provide more detail on what that looks like at our Analyst Day.

Our next question comes from Aga Zmigrodzka with UBS.

How should we think about the future renewable investments from '24 to '28? Should the CapEx size be similar to the investments that you just announced for '22, '23?

Great question. We'll have a number of IRP analyses that will help to inform the real answer to your question. In fact, 2021, we'll be stepping through the public IRP process again in Indiana. So we'll have much better insights as we grow closer to that. But speaking from the 2018 IRP's perspective, it did point to the retirement of the Michigan City generation facility by 2028. That facility, which is about 500 megawatts on MISO, would then need to be replaced. As far as the forum, we would step through the IRP process and as Donald referenced earlier, what the commercial costs and the fuel costs would be to then deliver what the solution would be for that capacity.

And recently, your peer in Pennsylvania announced a settlement for roughly 30% of progressive revenue in their rate case. Could you provide an update on your rate case in Pennsylvania? Are there any delays due to the COVID and social distancing?

Okay. No. So we have filed the rate case. We continue to work with intervenors and the commission. At this point, we're not seeing or expecting any change related to COVID in terms of the timing or the outcome of that rate case.

Your next question comes from Durgesh Chopra with Evercore ISI.

Can I ask you about the 10% to 12% rate base growth on a consolidated level? I think you addressed my question regarding Indiana, but in your other jurisdictions, like Pennsylvania and Ohio, how should we consider the bill impact from this rate base growth?

Yes. Still, on the gas side, we continue to see rate base growth of about 10% to 12%. That's not changing. Again, we're always targeting to be in the low single digits in terms of total bill impact for our customers.

Low single. That makes sense. Can I go back to the earnings growth trajectory and the move to CAGR? Given the cost reductions mentioned earlier, should we expect to see a 5% to 7% range in low growth years, and potentially exceed that in high-growth years? Or could you potentially fall below 5%? I'm unsure if you're ready to disclose that information, but how should we consider that?

Yes. We're not ready to share that yet. Again, as we think about the timing of those investments, the timing of cost savings, and then aligning that with the regulatory plan is the work that we're finalizing now, and we'll be prepared to give more detail in our Analyst Day.

Your next question is from Charles Fishman with Morningstar. Donald Brown, CFO, responded that they are not prepared to share that information yet. He explained that they are currently finalizing the timing of investments, the timing of cost savings, and aligning those with the regulatory plan. More details will be provided at the Analyst Day.

The $0.05 impact from COVID-19 as you transition from 2020 guidance to 2021 guidance is notable. You mentioned that you don't anticipate any long-term effects from COVID-19. Can I conclude that the $0.05 will decrease after 2021?

Yes. Our base case really has an impact in 2021, lingering into early 2021. Long term, we'd expect to get that back through customers, either through base rate cases if it were permanent demand reduction or through the commercial side coming back. So it's really the short term.

Okay. So is that included in the 5% to 7% plus EPS growth that you're projecting?

That's correct.

Okay, and then a question on the renewables. It was a previous question about the 50% owned, and I know that's a number you've discussed in the past. But remind me, is that something that has regulatory approval? Have you just had just sort of informal discussions with the commission on that 50% owned? And you still would have to go back in Indiana, project by project, PPA by PPA for approval, correct?

Yes. That's absolutely correct. You would really look at it on a project-by-project basis, what the commercial arrangements would be. You'd look at the overall cost of then what that project would be. And then you'd push that out over a 30-year horizon, so to speak, to find the balance of affordability for customers and delivering reliable service. But you answered it correctly.

Yes. And I would just add, the blueprint is well established. We've already got approval of the joint venture approach, and it's that blueprint that we're using as a model for the future investments.

Yes. And not to beat a dead horse here because I think you've answered this on a previous question this morning. The 50%, though, you feel pretty confident with. You've probably had informal conversations with staff and commission on that?

Yes. Actually, it's laid out fairly explicitly in terms of the 2018 IRP. And we're at this point following that plan rather closely. It is still tracking online. So it's been a pretty public process, and it will continue to be in 2021 as we provide those updates.

Next question is from Chris Sighinolfi with Jefferies LLC.

I wanted to maybe follow on from Charles' questions there. Just with regard to COVID impact, Donald, you say the guidance is pretty clear, I think, for 2021. You had mentioned in, I think, your prepared remarks that COVID impacts on the second quarter were somewhere estimated around the $0.06 territory. I'm just curious if you could maybe frame up, is the guidance that you gave with the May presentation around 2020 COVID impacts still a good benchmark to use as we think about sort of how they may feather away over time?

That's right. Yes, we're still seeing our base case in the results. Certainly, June came in a little bit better than what we were estimating, but still kind of negative below our original plan this year because of COVID. And we'll continue to watch kind of month-by-month to see how this plays out. But right now, what we provided in June is still consistent with our base case.

Okay. And the base year for your EPS CAGR would be 2020, is that correct?

2021.

2021 will be the new. Okay. And then I guess, separately, as I was thinking about comments that you made about non-safety expense management in the quarter, which looked pretty impressive given the financial performance. And then comments that Joe had made about maybe a more longer derated cost structure improvement on the company, things like the employee option, early retirement options, things like that. Just how do we think about things that maybe you pulled hard back on the reins during 2Q to offset for COVID or because you couldn't do certain things perhaps. Coming back in the back half of this year versus things that will then become more permanent in nature. Can you just maybe provide a little bit more color about the puts and takes on those two different types of expense management programs?

Yes. I'd say this year, there's certainly more temporary items that we can hold back on different programs and different initiatives to offset the impact of COVID. As we look at 2021 and beyond, it's really about having structural permanent cost reduction that will provide savings to customers long-term in the plan.

Okay. By the time of the Investor Day in about one and a half months, Joe mentioned that some of these programs are being implemented right away. Based on employee acceptance of some offers, you may have a clearer idea of how successful future phases might be. Can you outline for us the different categories of cost improvements you anticipate from various initiatives?

Yes, that's right. We'll provide more detail on what that long-term plan looks like. Certainly, VSP is just one step. Longer term, it really is around how do we structure our organization to reduce scale. There's opportunities to invest in digitization, which improves productivity across our operations. And then long term, it's really around how do we continue to drive operational excellence to continue to improve on how we perform our work, and we'll provide more details on that at our Analyst Day.

And Chris, this is Joe. Just in the spirit of the framing of the question and Donald's response, there's certainly, as Donald said, some temporary changes we made to help in the second quarter here. We'll see in the back half of the year, though, the beginning of the more permanent structural changes in cost. And I would add, this is really an acceleration of some initiatives that we've had underway for some time. We had a number of cost restructuring initiatives underway. As far back as two or three years ago, designed to flatten O&M. And as we step into this transition moment, we're accelerating a number of those initiatives. And we will, as Donald said, have a lot more detail on that in September when we get together.

Okay. Great. Totally unrelated question, Donald. Just with regard to the second quarter, you had flagged in the first quarter release, I think, some negative headwind from the performance of your company-owned life insurance. I'm assuming with the market rebound here in the second quarter that you got some of that back. I'm just curious if it was anything noteworthy in the results or anything you could frame for us there?

Yes. Certainly, the market did perform better in the second quarter and it came back, but nothing significant that drives our overall results this year.

At this time, there are no questions. I would like to turn the call back over to Joe Hamrock.

Thank you, Cree. And thank you all again for participating today, for your ongoing interest in and support of NiSource. We do look forward to seeing you again in September when we go into more detail on the framing that we laid out today. So have a good day and make it a safe day. Thank you.

This concludes today's conference. You may now disconnect.