NiSource Stock Is Headed for Largest Percent Decrease In Five Months. Here’s Why.

NiSource provides natural gas and electricity through its subsidiary brands, Columbia Gas and Northern Indiana Public Service Company. (Spencer Platt/Getty Images)

Shares of regulated utility company NiSource were headed for their steepest decline in five months on Thursday as questions swirled regarding the spinoff of a subsidiary focused on data centers.

Merrillville, Ind.-based NiSource provides natural gas and electricity through its Columbia Gas and Northern Indiana Public Service Company (NIPSCO) brands.

The Indiana Utility Regulatory Commission (IURC) is overseeing a proposal to create a lightly regulated subsidiary of NIPSCO called GenCo, which would fund capacity for data-center customers.

On Wednesday, two of five IURC commissioners announced their plans to resign early, days away from an anticipated decision on the NIPSCO application. Commissioners Sarah Freeman and Wesley Bennett were set to end their terms at the end of 2026, but both will depart in October.

Citi Research analysts believe the likelihood of the application succeeding this month has decreased following the development. The firm rates NiSource at Neutral with a $44 price target.

“If the decision date were to move until after the two IURC commissioners leave and are replaced, the timeline could drag on and new information could be introduced and modifications could be made,” the firm wrote on Thursday.

NiSource slid 5.8% to $39.37, putting the stock on pace for its largest same-day percent decrease since a 6.4% drop on April 4, according to Dow Jones Market Data. The benchmark S&P 500 index was up 0.4%.

Other shake-ups have introduced even more uncertainty. On Tuesday, Indiana Gov. Mike Braun appointed Abby Gray to oversee the Office of Utility Consumer Counselor (OUCC), replacing William Fine. The office represents the interests of residential and small business customers for utility-related cases before the IURC.

In a press release, Braun directed the OUCC to evaluate utilities’ profits and find cost-saving measures “to ease the burden on ratepayers.” This includes making investors “bear more of the cost of doing business,” Braun said.

This change “raises questions on the priorities of the organization,” Citi analysts wrote on Thursday, noting that Gray’s predecessor didn’t object to the GenCo application settlement. If Gray is just as supportive, “then we would not expect any changes to the GenCo’s likelihood from this action,” analysts added.

The firm noted that NiSource is “highly confident that the application will still be successful” in light of the recent changes, citing discussions with management.

In a statement to Barron’s, NiSource said it said it looked forward to working with Gray and welcoming new appointees to the IURC.

“NIPSCO maintains a constructive relationship with both the IURC and the OUCC in service to our customers, and we are committed to working together to meet the energy needs of Northern Indiana,” the company said.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com