Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 2021 NISORCE Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. It's now my pleasure to turn today's call over to Mr. Chris Turner, Director of Investor Relations.

Please go ahead. Welcome to the NISORS fourth quarter 2021 investor call. Joining me today are Lloyd Yates, our Chief Executive Officer, Donald Brown, our Chief Financial Officer, Sean Anderson, our Chief Strategy and Risk Officer, Pablo Vegas, our Chief Operating Officer, and Randy Hewlin, our VP of Investors. The purpose of this presentation is to review NYSource's financial performance for the fourth quarter and full year of 2021. Operations and growth. Uncertainties that could cause actual results to differ materially from those concerning such risks and uncertainties is included in the MD&A section. SEC filing comparable gap measure and a reconciliation of these measures being our full financial schedules, also available at NYSource.com.

Thanks, Chris. Good morning, everyone, and thank you for joining us. Before we get started, I'd like to take a few moments to thank Joe Hamrock, my predecessor as President and CEO, for his outstanding service to Nysource. Joe retired last week as part of a long planned transition. I'm grateful for Joe's leadership and his decade of service to this company. He left Nysource in a strong position, poised for years of growth and success. We send him our best wishes as he begins the next chapter of his life. I expect to build on the significant progress NYSource has made in the past year, including our strategic initiatives. NYSource Next, Safety Management System, and Your Energy, Your Future, our transition to the future of energy. I want to take a step back and remind everyone of our mission. That is, of NYSource being a great place to work where we are all relentlessly focused on safety, operational excellence, the customer's experience, and delivering on our commitments to shareholders, as we did in 2021. Our strategic initiatives are what will enable us to achieve our mission of being relentless champions of safety, comfort, and service for our customers, and they will help set us up for long-term success. These initiatives are all about people. Our plans for investment-driven, long-term, and sustainable growth remain on track. We continue to expect these plans to drive industry-leading compound growth of 79% in diluted net operating earnings per share through 2024. My experience in the past two years on the Board of Directors has given me unique insights for executing and extending NYSource's growth plan. I plan to conduct a review of the business with the goal of ensuring that we are best positioned to drive long-term value for all stakeholders. And I look forward to further discussing our strategic initiatives with our employees and with shareholders in the coming months. Now, let's start our discussion. Hopefully, you've all had a chance to read our fourth quarter earnings release, which we issued earlier today. As we look at NYSERC results in 2021, we see strong financial and operational performance across key areas of the business. Advancing execution on our portfolio of renewable generation investments is matched by significant progress on regulatory initiatives across all our states. We are enhancing safety, providing customers with new ways to do business with us, and moving forward on our plan to reduce Scope 1 greenhouse gas emissions 90% by 2030 versus 2005 levels. Let's now turn to slide three and take a closer look at our key takeaways. I mentioned earlier our CEO succession. In addition to Joe's retirement, Sandra Barber and Cassandra Lee joined the NYSORCE Board of Directors. The additions of Sandra and Cassandra further strengthened the leadership, experience, diversity, and talent on the NYSORCE Board. Tipped into full-year 2021 results, we exceeded both our original and updated guidance ranges. We reported earnings of $1.37 non-GAAP diluted net operating earnings per share, or NOEPS. We are reaffirming our 2022 guidance of $1.42 to $1.48 diluted NOEPS non-GAAP. And we are reaffirming our forecast for 79% compound annual growth rate from 2021 through 2024, including near-term annual growth of 5% to 7% through 2023. In 2022, we expect $2.4 to $2.7 billion in capital expenditures as we continue to execute our core infrastructure programs and our renewable generation plans. The preferred plan from NIPSCO's 2021 Integrated Resource Plan, or IRP, advances our intention to retire all coal-fired generation between 2026 and 2028. Opportunities for additional generation investments will be better understood, and we continue to analyze the results of the proposals received in the IRP process. We receive final orders in gas rate cases in Pennsylvania, Kentucky, and Maryland, which provide balanced outcomes for all stakeholders Ohio's case continues to advance towards a third-quarter implementation and NIPSCO's gas cases is in constructive settlement discussions another key regulatory outcome is NIPSCO's electric key disorder represent 1.6 billion dollars of investments in safety reliability and improved customer service before we get into our specific nitrous utility highlights I'd like to take a moment to called out our safety progress in 2021. NYSWERS has reached important safety milestones. They include substantially completing the installation of automated shutoff valves on our low-pressure gas systems. We also expanded deployment of PECARO advanced leak detection technology. We successfully completed stage one of its certification of our safety management system by Lloyd's Register. and we bought in additional resources to strengthen our quality management system capabilities across all of our companies. I'm excited to say we expect to issue our very first annual safety report at about the same time as our annual report. I would encourage you to read more about our progress. Let's take a look at some NISORS gas distribution highlights for the fourth quarter, starting on slide nine. The Columbia Gas of Ohio rate case continues to progress on schedule. to file and request an annual revenue increase of $221 million net of the trackers being rolled into base rates, which support continued investments in safety and reliability. We received an order approving a settlement in the Columbia Gas of Kentucky rate case. The settlement supports continued investments in safety and infrastructure replacement and and includes an overall increase in revenues of approximately $18 million. In Maryland, we received a final order from the Public Service Commission. The order includes a revenue increase of approximately $2.4 million. The Pennsylvania Public Utility Commission approved our rate case settlement as filed. It provides a revenue increase of $58.5 million, and new rates went into effect in late December. The settlement continues our program of infrastructure modernization, supporting safety and reliability. We are engaged in constructive settlement discussions in NIPSCO's gas rate case, infrastructure modernization, and providing safe, reliable service while remaining in compliance with state and federal safety requirements. If approved, new rates would take effect between September of this year and March of 2023. Let's turn now to our electric operations on slide 10. As noted earlier, NIPSCO's electric TESIS plans received final approval in December from the Indiana Utility Regulatory Commission, or IURC. This is a five-year, $1.6 billion program, which includes newly identified projects aimed at enhancing service and reliability for customers, as well as some previously identified projects. The other items on this slide relate to our renewable generation strategy, and I'll turn it over to Shawn Anderson to give more detail.

Thank you, Lloyd. The preferred plan from NIPSCO's 2021 IRP confirmed the retirement of the last coal-fired generation unit at Michigan City, as well as two vintage gas peaking units at the Schaefer Generating Station site, and advanced the window for these retirements to occur between 2026 and 2028. to support reliable generation when these units retire enhancements to our portfolio will require replacement capacity from technology including solar standalone battery storage and natural gas peaking resources we estimate that the new investments of up to 750 million dollars will be required to support the retirement of our last coal fired units as we evaluate the actual projects required to support these portfolio additions we are evaluating all forms of technology bid through the rfp process launched in may we continue to analyze these proposals and complete due diligence on these projects available which align with the preferred plan identified back in november we expect to be able to share the results of our analysis during the first half of 2022. meanwhile we are making steady progress on the execution and construction of renewable generation projects resulting from NIPSCO's 2018 IRP. We continue to expect to invest two billion dollars in renewable generation by the end of 2023 to replace the retiring capacity at Schaefer. Our most recent project to come online and begin operations is Indiana Crossroads 1, a 302 megawatt wind facility which entered service in december this project joins the rosewater and jordan creek wind farms already operational and contributing to nipsco's power generation fleet across 2021. meanwhile we expect four additional projects to be in service by the end of this year they are dunsbridge solar one indiana crossroads solar brickyard solar and greensboro solar these projects will represent our first solar facilities while the greensboro project is our first project which also includes storage we expect the final seven renewable generation projects needed to replace the retiring capacity of schaefer to come online in 2023 our project and commercial teams continue to work tirelessly alongside our project partners to advance these projects as initially intended as this work continues we remain in close contact with some of the strongest developers in the renewable energy space regarding the progress of these projects and are actively monitoring any potential delays associated with the construction process including the dynamic nature of the global supply chain NYSource also continues to engage with producers and developers focused on renewable natural gas, hydrogen, and emerging storage technologies. We continue to support the advancement of these technologies and fuels to support accelerated and deeper decarbonization solutions, leveraging existing assets such as the natural gas system. We seek a risk-informed understanding of the options and technologies which may emerge as pathways toward further decarbonization and are encouraged on how our communities and service territory could benefit from the development of these technologies. Now I'd like to turn the call over to Donald who will discuss our 2021

financial performance in more detail. Thanks Sean and good morning everyone. Before we dive in, I want to update everyone about our Investor Day. It will take place in May and we'll get a specific date and location details to you as soon as they are finalized. We plan to provide an extension to our capital investment and growth plan, a detailed update on our generation transition and ESG profile, as well as give you an opportunity to hear from the leaders of our businesses. I hope you will be able to attend, and I look forward to speaking with you. As Lloyd mentioned a few minutes ago, our 2021 earnings exceeded the top end of our guidance range of $1.32 to $1.36. We've also reaffirmed 2022 guidance of $1.42 to $1.48 and our long-term diluted NOETS growth rates. Looking at our full year 2021 results on slide four, we had non-GAAP net operating earnings of about $571 million or $1.37 per diluted share, compared to non-GAAP net operating earnings of about $507 million or $1.32 per diluted share in 2020. The 2021 results reflect our ongoing execution of infrastructure investments and efficiencies resulting from our NYSORCE next initiative offset somewhat by the sale of Columbia Gas of Massachusetts which closed in October of 2020. Taking a closer look at our segment non-GAAP results on slide five, gas distribution operating earnings were about 674 million dollars for 2021 representing an increase of approximately six million dollars versus last year. Operating revenues, net of the cost of energy and tract expenses, were lower by approximately $94 million due to the sale of CMA. Other operating expenses were lower by approximately $100 million due to the sale of CMA and our NISORS Next initiatives. In our electric segment, non-GAAP operating earnings for 2021 were about $387 million, which was about $25 million higher than in 2020. Operating revenues, net of the cost of energy and tract expenses, increased by approximately $24 million due primarily to infrastructure investment programs and increased customer demand. And the other operating expenses were essentially flat to 2020 levels. Now, turning to slide 6, I'd like to briefly touch on our debt and credit profile. Our debt level as of December 31 was about $9.8 billion, of which about $9.2 billion was long-term debt. The weighted average maturity in our long-term debt was approximately 14 years, and the weighted average interest rate was approximately 3.7%. At the end of the fourth quarter, we maintain net available liquidity of about $1.6 billion, consisting of cash and available capacity under our credit facility and our accounts receivable securitization program. Last Friday, we successfully extended our revolving credit facility for another five-year term. The new facility capacity remains at $1.85 billion, with essentially the same borrowing term. We also continue our commitment to retaining our investment-grade credit ratings, and all three major rating agencies reaffirmed their ratings with stable outlooks in 2021. Taken together, this represents a solid financial foundation that will continue to support our long-term safety and infrastructure investments. As you can see on slide 7, we are reiterating our 2022 capital forecast of $2.4 to $2.7 billion. taking a quick look at slide 8 which highlights our financing plan there are no changes to our plan since April's equity unit issuance I would highlight that this balanced financing plan continues to be consistent with all of our earnings growth and credit commitments thank you all for participating today and for your ongoing interest in and support of NYSORCE we're We are now ready to take your questions.

At this time, I would like to remind everyone, in order to ask a question, press star followed by the number one on your telephone keypad. Your first question comes from the line of Julian Dumoulin-Smith with Bank of America. Your line is open.

Hey, good morning team, and congratulations again on the latest opportunity here for you. Can you perhaps give us some initial flavor, by chance, on what the strategy update might entail here? I know you made some comments already in the prepared remarks, but I know cost containment and reduction, admittedly, has been top of mind for you, Lloyd. But I'm wondering if you have any further thoughts you'd like to share, at least at this point, in terms of the process therein. I'm also cognizant that you stated in the prepared remarks that you still have this May timeframe for an analyst day, but how are you thinking about this opportunity today, and especially considering the inflationary backdrop that, you know, we've been talking with a lot of companies about.

Thanks for your question, Julian. Let me start by saying when you look at the current plan, I have a lot of confidence in the current plan. You know, the current plan talks about 7% to 9% compound annual growth rate, and I think that's really good. Our strategic review is really going to take a hard look at how do we extend that plan past 2024. So what does that mean? That means we're going to look at everything. We're going to look hard at the portfolio, the current portfolio we have, and we're going to look at the performance of that portfolio. Is that portfolio executing in a way that's maximizing shareholder value? We're going to look at the content of that portfolio. Should we keep all of the LDCs or all the businesses we have? Should we buy some? Should we sell other businesses? I think that's part of the view. We're going to look hard at our cost structure. and efficiency, productivity, and some of our operational metrics. So we're just getting started on that. I think that we have a team, the board will be involved, and that's moving forward. But a comprehensive look at the business. And just to add a little bit to that, I think as a new CEO and on an ongoing basis, my plan is to constantly evaluate the NYSource portfolio to make sure we're maximizing shareholder value.

Excellent. Excellent. Thank you. And just if you can clarify that last comment just in brief, what are the criteria here? How are you thinking about the merits or what kind of thresholds do we need to see in order to especially sell or divest other assets here and or frankly buy since you introduced that as well here, if you don't mind?

I don't have the criteria established yet. A little bit too early for that. You know, we are looking at the data points out there. We've seen the Dominion transaction. We've seen some of the other transactions. There will be data points that feed into our process. But I can't sit here and tell you I have the criteria established right now. I mean, this is my sixth day on the job, so I don't have all those things done yet. But we're working really hard on it.

Yeah. I'm sorry, I don't mean to press you too much there. And just last little detail if I can. I'm just on the solar projects here. I know that they're moving around a little bit because of the ongoing WRO policy backdrop, but no shift really in terms of meaningful earnings impact that you know of quite yet, or more importantly, probably rate case timing, right?

So not right now, but I'm going to turn that over to Sean Anderson, maybe a little more detail on that.

Yeah, thanks, Lloyd. Thanks for the question, Julian. You said it. It's premature to speculate how any potential delay might change the regulatory strategy here. And I know, just as I did in my prepared remarks, that we have not seen a delay yet, that it's extended beyond the timeline we initially planned for. So there's a lot that's going to play out here. There's a couple other considerations. Just to note, Indiana, as you probably already know, allows for a forward test year. we've utilized that historically for both our electric and gas cases in the past so it has some precedent there it also has some precedent for rate step implementations I think it's really important to remember that all of these projects have already received and approved CPCN so while the timing might have some potential to flex we believe the need for these rate-based additions is just really clear in terms of how they'll add value for our community so as you'd expect we'll continue to be active and we'll evaluate and monitor this and much more to come here in May or at the midpoint of 2022.

Excellent. Thanks, guys. I'll pass it off. Cheers.

Your next question is from the line of Dergesh Chopra with Evercore ISI. Your line is open.

Hey, good morning, team. Thank you for taking my question. Just, Lloyd, congratulations on your appointment. Thank you. Yep, sure. Can you clarify for us on the Analyst Day in May, is that going to be extended through 28, or do you have sort of a terminal year in mind that we're going to see our plans through?

Yeah, let me set expectations for Analyst Day. I can't promise you on Analyst Day that our strategic review will be complete. I think that we'll have more clarity on where we are and what the plan looks like. But, you know, I want to dive in and understand the organization and the business a little better. You know, we're talking about Analyst Day around the May timetable, and I just don't believe we'll have the whole strategic review done by then. I think that's really fast. But I do think we'll have an idea of what the strategic review looks like and the timetable for when we'll complete the strategic review by Analyst Day. Got it. That's very helpful.

So it won't be complete, but you'll give us sort of the bookends of what the process might look like and, you know, kind of when that process might come to a conclusion. That's correct. But just in terms of, like, you know, the extension of the CapEx plans and EPS growth, what year should we be expecting to, you know, to see this plan get extended to?

Let me turn that over to Donald in a little more detail on analyst day.

Yeah, so thanks for the question. We are planning to extend the financial plan. If you think about that next IRP, the 21 IRP we just filed last quarter with the future retirement of Michigan City, we do want to take the plan out to at least the period of retiring that plant. So it would certainly be to 2027 or 2028, depending on what the outcome is there. And then certainly we would provide an update on long-term strategy in the SG profile as Lloyd has provided.

All right. Thanks so much for that color, guys. I'll get back in the queue.

Your next question is from the line of Char Parraza with Guggenheim Partners. Your line is open.

Hi, guys. it's jameson ward on pershar uh we were wondering if uh just to piggyback on the last couple questions about uh the analyst and uh and then one on the indiana rfp um so we've got the 27 28 year there uh when you think about the way that you currently guide and provide disclosures um we're We're curious if we might expect to see some changes there, or if we should be expecting to see the same type of disclosures, but simply moved forward out to future years. Would you use this as an opportunity to change the way you guide?

That's something that we're exploring. We certainly want to look at the plan and how the plan comes out. You know, we want to be able to communicate that in the most effective way for our shareholders. But if you still step back and you think about what drives our annual earnings, it's our annual CapEx programs and it's those trackers that provides the predictability of our earnings growth and our cash flow growth. And so that's always going to be the strong foundation of our long-term plan. But certainly want to make sure that as we look at the next phase of our plan, we're communicating that in a way that provides the most impact for shareholders to understand the long-term value of NISORS.

Got it. And then on the Indiana IRP and the current RFP analysis, do you expect that you would have and include any amount of the $750 million of potential incremental CAPEX there by the analyst day, or would that be something that you'd be updating post-analyst day?

Yeah, that is our intention, that that next tranche of potential investment would be included in that financial plan at that time. If you think about our last analyst day, we provided a range of the potential investment, and I'd expect we'd be in that same place in May.

Got it. Thank you very much. I'll jump back in the queue.

Your next question comes from the line of Travis Miller with Morningstar. Your line is open.

Good morning, everyone. Thank you. So I was wondering on the Indiana electric rate case, is there anything specific that has to happen either in your eyes or just administratively before you could file that later this year?

Pablo, you want to handle that one?

Yeah, thanks for the question. No, I mean, I think we're set up in terms of the timing. What we're looking at right now is making sure that all the planned investments around the renewables that are going to be getting developed over the course of this year and next year, and the timing issues we've talked about related to that are all going to line up with the expected in-service dates that we need in order to support that rate case. All of the core approvals, the certificates for public convenience and necessity, the CPCMs, those have all been approved in advance, and so the prudence of these investments that we're going to do are essentially have been supported so now it's just making sure that the timing of the projects aligns with the timing of the rate case and the windows for that rate case and that would be the driver but everything is lined up for

that for the second half of this year okay and then just real quick on that it would be more the capital side of it than say anything that happened with operating expenses that the idea that that would be the biggest factor in in terms of rate increase or whatever, right?

Yeah, that's right. It would be the capex associated with the renewable projects and when that would go in service and be considered used and useful for the purpose of the rate case.

Perfect. Okay, great. And then, Lloyd, you obviously mentioned the portfolio review. If you were to make any kind of changes, particularly sell, what would be the use of capital for that? and thinking particularly potential equity to fund either the electric side or some other initiative, take me through your thought process in terms of how you'd use any kind of capital, incremental capital.

I think there are a couple ways to think about that. One is if you were to sell off some pieces of the portfolio, that would eliminate the need for equity in the future, so that's a possibility. There's also a possibility that if you're selling pieces the portfolio off, you could find some other attractive investments to make, whether it's in capital programs for your energy, your future on the ESG side, or whether there are some attractive properties that we may want to purchase. So I don't want to speculate on that, but I think what we're trying to do is make the best use, if we sell something, the best use or efficient use of that capital to add shareholder value.

Great. Thanks so much, Rose. I appreciate it.

Your next question is from Richard Sunderland with J.P. Morgan. Your line is open.

Good morning. Thank you for the time today. Maybe just starting with Ohio, any sense on the near-term pace, the proceeding? Just really curious if you're seeing anything on the ground here.

I don't know that Pablo handled his detail. I think Ohio's moving along at what I call a reasonable pace. We don't have any concerns with Ohio, but it's just taking time. And, you know, Pablo, you want to give a little more detail?

Yeah, happy to. Thanks, Richard. You know, there's a lot on the docket at the PCO right now. There's a DP&L case that is going to hearing. You've got a Duke Electric case that is out there, and it's still in the discovery phase. And it's been a while, you know, since Columbia Gas of Ohio has filed a rate case. I'll say that, you know, about half or a little more than half of our total costs have already flowed through extensive reviews in our tracker programs that we have over the last decade or so. And so, not expecting any issues or problems. The rate case is going fine. The next step is going to be to get the staff report. We expect to see that hopefully sometime in the next several weeks to a couple months. And we're still projecting an overall rate case timing of concluding sometime in the middle of the year. But it's moving forward, as Lloyd said, as we would expect, and no concerns on our part there.

Understood. Thank you for the color there. Maybe just one other one. What are the regulatory requirements with delivering the 2018 IRP projects? I'm curious how you see kind of supply chain risks within that context.

Sean, I'm sorry, could you just repeat that? The phone cut out right when you asked that question.

Apologies. the regulatory requirements with delivering the 2018 IRP projects and how you see supply chain

risks specifically in that context? So the 2018 projects have all been approved from a CPCN standpoint. So that's the first step in the process. Well, there's a number of steps in process. That's the first real regulatory step that you've got to cross through that demonstrates the prudence. In terms of the projects themselves, then they need to be executed. It's a process, of course through the supply chain process to get the materials on site and then to construct the facilities that takes six to six to twelve months depending upon the size of the facility and where it's being constructed that's where the remaining projects are outside the three that are operational are in the construction phase or to be constructed phase and the project team is currently working with the developers to then to then stand those projects up right now the schedule the schedule for the projects remains with four more projects to be COD or operational this year, and then the remainder of the projects in 2023. That would all take you through construction. And then as we've already sort of highlighted here on a rate case standpoint, you'll file a rate case and do a forward look test year that moves through that in-service date to then pick up those investments as part of your regulatory requirement

and your CapEx additions. Got it. So just to be clear, it's, you know, really around timing of the rate cases we discussed earlier and in terms of required delivery dates or other obligations coming out of the CPCN process not not so much to watch here is

that fair yeah that's that's exactly right and you'll step through each project individually there's multiple steps through that in terms of getting those constructed bringing spring materials on site etc so we'll step through each of those projects and then sweep all those investments into the rate case and proceed accordingly great that was very helpful thank you for the

time today absolutely your next question is from the line of ryan levine with city your line is

open good morning question for lloyd what are your priorities in the first hundred days of ceo and more specifically what work processes streams are underway to evaluate the business operations

as part of this broader business review so i mean a couple things that we're going to continue on One is Nice Horse Next. You know, we've taken some costs out of the business over the last couple of years with operational efficiency, so we're going to kind of ramp up the next phase of Nice Horse Next. I think as part of the strategic review process, we have an initiative called Your Energy, Your Future. You know, when you look at that, that's the retirement of the coal plants by 2028. What's the next phase of that, especially focused on the gas distribution system? I think decarbonizing the gas distribution system is good for the customers, and I think it will present an opportunity for the company to make investments. So we're looking hard at that. And then, as I mentioned earlier, continue to look hard at the portfolio. So those are probably the three focus areas.

And as you do this business review, should we look for some higher and near-term costs to help evaluate the different options? and is the company doing this business review completely internally or is there more reliance on third-party consultants?

Yeah, I think the cost efficiencies that we know about today are in the current guidance. So when you look at our targets for next year and then the following year, the 7% and 9%, we have cost efficiencies built into those. We're going to look harder to try to drive a little more, But right now, I mean, those are the guidance numbers we have, and I have a lot of confidence in us hitting those numbers.

Okay, and then last question for me is more specific on the quarter. What's the driver of some of the O&M cost declines in the electric business, and what drove some of the higher costs around O&M in the gas business?

Yeah, when you look at the electric business, part of the cost decrease is related to shutdown of our coal plants, two of our Schaefer units that retired in 2021 and then on the gas business it's continued spend and investment in our safety and SMS programs so we'll continue to see that over the next couple of years but the objective of NYSource Next is to help mitigate the inflation that we see every year so that we can't afford to continue to invest in safety and reliability.

Appreciate the cover.

Your next question is from the line of Insoo Kim with Golden Sox. Your line is open.

Yeah, thank you. My question, and it was more on the O&M side, but to piggyback off your guys' comments on the higher gas O&M related to SMS, my question was going to be kind of have you hit a pretty good run rate in terms of the spending on the SMS side for, you know, safety and reliability purposes, or, you know, are we seeing, you know, that continue to trend up over the years? And, you know, Lloyd, you've talked about cost management as one of, you know, your key priorities as well. So other than this type of spend, which is definitely very important, I think, for the company, what are some other general areas of cost efficiencies that we should be looking

So let me start with SMS, because I didn't mention it, Sarah. We are committed to continuing with SMS. I think in this business, when I think about SMS, I think about operational excellence, I think that's table stakes in this business. We have to operate well, and we have to continue to invest in those programs. On the other hand, we're going to control the cost in those programs. We're going to make sure that we invest effectively, and as a result of those programs, I think over time you should get cost efficiencies out of them. So the cost ramps up a little bit, but as the people who operate get used to the new ways of doing business, you should gain efficiencies out of that. And, again, other issues, not issues, but in our guidance, we'll continue to look at corporate services. Just like most companies, we're looking at productivity and any other costs that we spend in the business, it's making sure that those costs are aligned with other high-performing organizations.

Understood. My only other question is I think this is the second quarter that you've, you know, reiterated that seven to nine but off, you know, technically a higher base and, you know, this time off of the actual 2021 results. So as we go forward, I guess, in future years, is that something that we should think about as something that you will do going, forward, kind of guiding off of achievements on an annual basis, on an actual basis?

I'd say it's too early for me to provide guidance on next year's results, and so give us some time. But again, I'll go back to the core drivers of our earnings. It's the annual CapEx programs, and that's really what provides that clarity and consistency of earnings and allows us to guide off of last year's earnings and it's an update off of that. But I won't guide for 2023 yet, but certainly expect that we'll, you know, we've got confidence that we'll be in that 7 to 9 range off of 2021.

Got it. Thank you so much.

Your next question is from the line of Nicholas Campanella with Credit Suisse. Your line is open.

Hey, good morning. Thanks for taking my question. Just in terms of the strategic review comments and thinking about portfolio rotation, you know, I recall when you sold the Massachusetts assets, you did have some disenergies due to, you know, cost allocation model from the parent down to the OPCOs. And I'm just curious if that hurdle exists kind of across the entire portfolio and how we should kind of be thinking about that if you are considering potentially, you know, rotating capital here.

So I think that hurdle is going to exist across the portfolio. that when you rotate something out, you've got to deal with the disenergies. I think that we're here, and we need to manage those. If we decide to rotate something off the portfolio, we have to consider that in the math, but we also have to consider the fact that disenergies can be managed, and that will be part of our strategic review process as we think about that. But we believe they can be managed.

Got it. Thanks a lot for that. And then just one for Donald on the 7 and 9 CAGR and just like the relevant puts and takes. You know, you guys issued the equity units last spring and, you know, share count in the outer years can kind of move around depending on where those are remarketed. Does your updated 7 and 9 CAGR kind of take into account the increase in share price that we've seen since then?

It does. We're always paying attention to, you know, and updating our model for share price and share count. that is in our guidance right now. But, again, we want to make sure that we've got some cushion as share price moves around that we're not moving outside of our guidance. So we're confident where we are and certainly recognize the appreciation in the stock price over the last year and a half.

Great. Thanks a lot.

Your next question is from the line of Steve Fleischman with Wolf Research. Your line is open.

Yeah, hey, good morning. So, Lloyd, just high-level curious on the, you know, you've been around both now, you know, at NISORS on the board and at electric utilities over time. And curious if you have a view on kind of the mix between electric and gas, and is that an important aspect as part of your strategic review?

You know, I think it is, Steve. I think as we look at the strategic review, some of the companies that are receiving higher multiples have a higher mix of electric than gas, and I think we have to consider that as part of our strategic evaluation. You know, does that make sense, and are there opportunities to shift to more electric versus gas? I don't think we need to be out of gas. I think in the states that we operate in, you know, gas is very valuable. It may not be popular, but it's valuable. So I think as we look at this portfolio, we have to consider all those options, but also consider where we operate.

That's helpful. And then I just wanted to follow up on the renewables projects because I just wanted to clarify maybe, I guess, with Sean, just are these projects all on schedule as of now or, you know, and just, you know, it sounds like they are on schedule, but then you're having to monitor everything. So I guess I just want to clarify just, you know, where things stand. And my recollection is you had pretty strong contract terms in the event that anything was delayed. so just could you remind us how you're protected there if at all yep thanks

Steve appreciate the question so all projects are currently scheduled to be in service by the end of 2023 that's the critical window so we have the benefit of the remainder of the calendar for 2022 and 2023 for each project which is at a you know a different stage in its lifecycle to work through what's necessary to get it into service by the end of 2023 but that does require some active monitoring in terms of the partnership agreement the developers themselves they're all sophisticated top-tier developers this is this is their critical core competency when you think of names like next era edpr and vetergy so there's diversity and that was intentional across the developers themselves so as not to have concentration risk around one developer and we're working very closely with those developers as they they continue to move through the process, but everything remains with a projected 2023 COD, and that's the critical date for us to watch, and then in terms of contractual protections, you know, each agreement's a little bit unique, but to your point, there are provisions to provide NIPSCO capacity as it relates to the agreements. There's different levels of indemnity protection and flexibility in terms of even component suppliers when you start to get into the weeds of the agreements. Each one's unique, but the important point for customers is that the energy is contracted at that price. That protects our customers. That's an important part of this, and that's what we're seeking for with all 14 of these projects.

Thank you. Your next question is from the line of James Thaliker with BMO Capital Markets. Your line is open.

Thanks, guys. Thanks for the time. Lloyd, just

circling back to your comments on the strategic review, I know you're just beginning the process, but it sounds like you're casting a fairly wide net both in looking at both buying and selling assets. So going back to kind of Steve's question, is this kind of the initial scope is to kind of cast it wide and see what kind of falls out of that process? Or is part of the strategic review also looking at maybe even a more in-depth sort of view of how to sort of change the business profile to your point on the differences between the public market valuations on gas versus the electric?

So thanks for the question, and I think you're right. The goal here is to cast the net wide, to start broad and then kind of zoom back in. We're going to look at everything, and we're going to look at everything. So we're going to start wide, cast back in, and we're going to take a hard look at everything. I think I've said it, or I don't want to repeat myself, but we'll look at the portfolio, operational efficiencies, rotation, mix of electric versus gas, but everything's on the table is the point.

And then I guess, you know, the other question, and it's going, I've also, I think Julian asked a question too, but I know you, again, I realize you're six days on the job and we're starting this process, but, you know, when you, when you kind of look at, you know, monetizations or even acquisitions, I'm assuming that there's probably some guideposts, whether it be, you know, credit accretion or maintenance of credit or EPS or creative, do you see from your previous vantage point a lot of opportunities to maybe go on the offensive and shift that mix through creative acquisitions? Because in general, it seems like there's not a lot of really good values out there in the utility, especially when you go into a private market auction or even a competitive auction bid.

well i think we're going to you know if we buy we're going to look for value i mean you got to say that when our job is to create shareholder value and we're going to look for creative acquisitions if we purchase if we sell we're going to try to get as much as we can for any asset that we have and i think that's the challenge in these strategic evaluations and everybody wants to you know accomplish the same objective right buy low sell high so So if we're in that game, you know, I think how you look at those things and how you do that and your criteria is going to be really important. But everything we do, I mean, is to gain shareholder value, which means we're going to try to get as many accretive things. We're going to try to make everything accretive, but we're also going to protect credit quality. I mean, you've got to pay attention to the balance sheet. So we get all those things, and we're going to get after it.

Thank you so much for that. Appreciate it, and best of luck.

There are no further questions at this time.

I will now turn the call back over to the CEO, Mr. Lloyd Yates.

First of all, thank you for your questions. And I want to close by just reiterating just a few key takeaways. Our 2021 earnings of $1.37 per share exceeded the top end of our guidance range. Number two, we're reaffirming our guidance for 2022. to $1.42 to $1.48 per share, and our long-term growth commitments are reaffirmed as well. Number three, we continue to evaluate NIPSCO's portion of the investment needed to replace the retiring coal-fired generation outlined in the Preferred Plan from the 2021 IRP. Our strong regulatory execution continues. You know, further illustrate about, you know, we've got some late-breaking news last night that NIPSCO reached a settlement in principle in the gas rate case. Details to follow there. So, I mean, our regulatory team is really executing strong. And as Donald mentioned, we look forward to presenting the next phase of our strategy and financial plan at our investor day in May, where we'll kind of give an update on where we're moving with our broad strategic review. So thank you for your comments, and we appreciate you joining us this morning. and please stay safe. Thank you.

Ladies and gentlemen, thank you for your participation. This concludes today's conference call. You may now disconnect.