NiSource Inc. finished 2009 with a weak fourth quarter but posted a markedly improved annual performance last year.

NiSource is reporting a net income in 2009 of $217.7 million or basic earning per share of 79 cents, compared to a net income in 2008 of $79 million or basic earnings per share of 29 cents.

For the fourth quarter of 2009 NiSource is reporting a net income of $89.5 million or basic earnings per share of 32 cents, compared to a net income of $162 million in the year-ago period or basic earnings per share of 59 cents.

Meanwhile, 2010 may become known as the year of the rate case for NiSource’s subsidiary, the Northern Indiana Public Service Company. Not only does NIPSCO expect the Indiana Utility Regulatory Commission (IURC) to issue an order later this year in its pending electric rate case—the company is petitioning the IURC for an increase in residential customers’ rate of 14.34 percent—it also plans to file two brand-new rate cases in 2010: a second electric rate case but also a natural-gas rate case, both previously announced.

“Our team’s exceptional execution enabled NiSource to not only weather the storm during 2009 but to emerge as a stronger, more robust company,” NiSource President and CEP Robert Skaggs said in a statement released today. “Despite unprecedented dislocations in the financial markets and a very challenging economic environment—particularly in our Northern Indiana markets—our company’s underlying business performance remained strong, our liquidity position improved significantly, and we produced tangible results from our core strategy to build shareholder value and deliver long-term, sustainable earnings growth.”

“Through our revenue growth initiatives, as well as aggressive cost management efforts across all our businesses, we mitigated a significant portion of the impacts of the economic recession,” Skaggs said. “Our ability to deliver on our financial commitments in the face of a tough economy underscores the resilience of our core regulated businesses and is a testament to the team’s disciplined execution of their business plans.”

“Without question, 2009 was a challenging year for NIPSCO,” Skaggs said. “The company’s earnings were impacted by a significant increase in pension expense, as well as materially lower industrial demand as a result of the economic recession. Looking forward, we have a solid regulatory and business plan for 2010 to restore NIPSCO’s earnings base and position it to grow in the future. Executing that plan is a key priority for NiSource this year.”

“Although the landscape we face today is much more stable, and less treacherous, than the one we encountered a year ago, 2010 will present its share of challenges,” Sikagg said. “As we face those challenges and continue the basic work of building and growing NiSource, I am convinced we do so as a stronger company—one with a business plan that is compelling, balanced, and tested.”

If the IURC were to grant NIPSCO’s pending electric rate case, residential customers would seen an immediate increase of 14.34, raising the average monthly bill by $12.76, from $81.68 to $94.44. Under the proposed hike, residential customers would shoulder the greatest part of the increase, as the overall hike, when spread among NIPSCO’s residential, commercial, and industrial customers, would total only 9.8 percent.

NIPSCO expects to file a second electric rate case later this year. “The filing will include the effect of increased pension expense, as well as demand levels based on more recent operating experience, among other items,” NiSource said. “New rates from this case are expected to be effective in 2011.”

And NIPSCO expects to file a natural-gas rate case this year. It would be the company’s first since 1987, with new rates anticipated to be effective late in 2010.

“NiSource’s financing and liquidity position continued to improve during the fourth quarter of 2009,” the company said, will the issuance of $500 million of senior unsecured notes on Dec. 4, proceeds from which will be used by NiSource to complete the refinancing of outstanding long-term debt scheduled to mature in 2010 and 2011. “The company continues to maintain its $1.5 billion revolving credit facility that extends to July 2011.”

The company’s debt issuance followed a decision by Moody’s Investors Service to affirm the company’s investment grade credit rating of Baa3 and raise its outlook to stable, NiSource said. “Moody’s cited the successful resolution of a variety of rate proceedings by NiSource’s gas utilities and the management of the company’s liquidity position as major influencing factors for raising NiSource’s outlook to stable.”

•Gas distribution: $327.8 million ($336.1 million in 2008).

•Gas transmission and storage: $388.5 million ($369.7 in 2008).

•Electric: $116.7 million ($219.2 million in 2008).

•Other: an operating loss $14.5 million (an operating income of $2 million in 2008).

•Corporate: an operating loss of $16.6 million (an operating loss of $8.3 million in 2008).

•Total: $801.9 million ($918.7 million in 2008).

In 2008 NiSource reported losses from discontinued operations and on the disposition of discontinued operations of $290.8 million.

•Gas distribution: $114.5 million ($147.2 million in the year-ago period).

•Gas transmission and storage: $116.1 million ($104.7 million in the year-ago period).

•Electric: $32.9 million ($48.7 million in the year-ago period).

•Other: an operating loss of $8.6 million (an operating income of $700,000 in the year-ago period).

•Corporate: an operating loss of $7.5 million (an operating loss of $2 million in the year-ago period).

•Total: $247.5 million ($299.3 million in the year-ago period).

Posted 2/1/2010