) announced that its unit Columbia Gas Transmission, under Gas
Transmission and Storage ("NGT&S") segment, achieved a customer
settlement to upgrade its natural gas pipeline infrastructure.
Today, the company filed this petition with Federal Energy
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NISOURCE INC (NI): Free Stock Analysis Report
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Per the settlement, NiSource plans to replace 1,000 miles of its
existing interstate transmission pipelines, upgrade natural gas
compression systems and increase in line checking capacities. This
settlement also includes a customer base rate decline and an
investment recovery contract.
This project is under a program with an initial span of five years.
This program also has an option of further extension. The expected
cost of this Columbia modernization program will be approximately
$4 billion. Under this program, the company will invest annually
$300 million on system improvements.
This infrastructure modernization program enables NiSource to
provide uninterrupted service to its customers while strengthening
its system competence and boosting environmental performance. These
factors will subsequently improve the company's customer
reliability and public safety. In addition, the petition for
reducing base rate, if approved will trim down pressure on its
customers and this project will also create approximately 7,000
We believe that NiSource's strong financial position encourages it
to follow steady infrastructure development activities. In
second-quarter 2012, the company's net cash from operating
activities were $771.8 million, up from $736 million in the
year-ago quarter. The company ended the previous quarter with cash
and cash equivalents of $52.8 million, significantly up from $11.5
million as of December 31, 2011.
In addition, NiSource's continuous effort toward improving customer
service will act as a positive catalyst for improving its financial
performance in the future.
However, we are skeptical about volatility in commodity prices and
stringent regulatory barriers, which may negatively impact the
company's forthcoming performance.
NiSource Inc. currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating.
Merrillville, Indiana-based NiSource is an energy holding company,
whose subsidiaries provide natural gas, electricity and other
products and services in the U.S. The company competes with