NiSource Capex Plan Soars 45%, Driven Largely by Planned Data Centers

Written by John Egan for IIR News (Sugar Land Texas)

---

Summary

Utility holding company NiSource Incorporated has increased its planned five-year capital budget about 45%, to an estimated $28 billion, largely to serve planned data centers, and it has an approved corporate structure that would insulate residential and business customers from the costs and risks of serving large-load customers such as data centers.

---

Planned Data Center Campuses Drive Up NiSource Capex

What a difference a year, and artificial intelligence (AI), can make! NiSource Incorporated (Merrillville, Indiana), a holding company for gas and electric utilities in six Midwestern and Mid-Atlantic states, plans to increase capital expenditures (capex) about 45% over the 2026-2030 period, to an estimated $28 billion. Additional capital outlays of up to $2 billion may be made over the 2026-2030 period, the company told investors in its third-quarter 2025 earnings call October 29. A year ago, at yearend 2024, the company's planned five-year capex budget was about $19.4 billion.

Click on the image at right to see NiSource's five-year capex budget.

That 2024 estimate was before internet giant Amazon Web Services (AWS) (Seattle, Washington) came knocking, with plans to invest up to $15 billion to build data center campuses in northern Indiana. That led NiSource to sharply increase its planned capex as well as adopt a first-of-its-kind corporate structure, approved by Indiana utility regulators, that would shield residential and business customers from the risks and costs of building the energy infrastructure to serve large loads like the planned AWS campuses. Moreover, residential and business customers are in line to receive up to $1 billion in rebates over the 15-year lifetime of the planned AWS data center campuses, to be paid by AWS.

Between $6 billion and $7 billion of NiSource's updated capex budget will go to serve the planned AWS' data center campuses, NiSource said in its third-quarter earnings presentation dated October 29, 2025. Separately, in a November 24, 2025, statement, AWS said it plans to invest $15 billion to build data center campuses in the northern Indiana area served by NiSource's electric and gas utility units, Northern Indiana Public Service Company (NIPSCO). That unit provides electricity to about 500,000 customers and gas to approximately 900,000 customers.

AWS said the proposed campuses would support AI and cloud computing technologies. The campuses would add approximately 2.4 gigawatts (GW) of data center capacity in the region.

The proposed data center campuses are expected to create more than 1,100 new high-skilled jobs while supporting thousands of other jobs in the data center supply chain, AWS said. "These new high-skilled jobs will range from data center engineers and network specialists, to engineering operations managers, security specialists, and many more technical roles," it said in its November 24 statement. "In addition to these direct positions, this planned investment is expected to support thousands of local electricians, construction workers, and fiber-optic technicians, and other jobs within the local community."

NiSource said the $6 billion to $7 billion in AWS-related capital outlays will go to build two 1,300-megawatt (MW) natural gas combined cycle (NGCC) generators, 400 MW of battery energy storage and associated transmission infrastructure. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can learn more by viewing the related project reports.

Beyond these capacity additions, NiSource told investors it is in "strategic negotiations" to build an additional 1,000 MW to 3,000 MW of new generating capacity to serve planned data centers by 2035. NiSource also said it also is "developing opportunities" to build up to an additional 3,000 MW of generation to serve that sector by that date over the next decade.

Click on the image at right to see NiSource's potential construction of electric generating capacity to serve data centers through 2030.

Corporate Structure Could be a Harbinger

Regulators and customer advocates have grown alarmed about how planned utility capital outlays to serve large-load customers such as data centers could affect electric bills paid by homeowners and commercial customers that are not large electricity users. For more on that, see October 22, 2025, article - State Regulators Set Up Guardrails on Aggressive Data Center Construction Plans. Many analysts believe that a large minority, perhaps even a majority, of proposed data centers will not get built. For more on that, see December 8, 2025, article - U.S. Data Center Buildout Hits Obstacles--Speed Bumps or an Iceberg?

That being the case, regulators are trying to find ways to shield existing retail customers from the risks and financial costs of building electric assets that will not be needed if a proposed data center does not materialize. NiSource proposed a corporate structure, approved by Indiana utility regulators, that may offer a path forward.

In a November 2025 presentation to the annual financial conference sponsored by the Edison Electric Institute (EEI) (Washington, D.C.), a NiSource executive detailed a corporate structure where its NIPSCO utility assets would be one unit and its generation holdings would be held by a second unit. The investment firm Blackstone (New York, New York) holds a 19.9% share in each unit. Both units will be regulated by the Indiana Utility Regulatory Commission (IURC) (Indianapolis, Indiana), which NiSource said has approved the structure.

"The electric demands for the new data center customers will be met via generation that will be owned or contracted by the generation unit," the NiSource speaker told the EEI conference attendees. "All data center related assets will be excluded from NIPSCO's revenue requirement (i.e., rate base) to existing customers. Large load customers will pay a system charge under the special contract which will return $1 billion to existing customers." That's the source of a rebate, to be paid over 15 years, to NIPSCO's existing customers.

NiSource officials say this corporate structure, coupled with assurances that protect existing customers, is the first-of-its kind and offers utilities, regulators, lawmakers, data center developers and consumer advocates a path forward to balancing the needs of planned data centers while also protecting existing customers.

NiSource Also Investing in its Gas Utilities

Beyond the electric and gas units of NiSource subsidiary NIPSCO, NiSource also operates gas distribution utilities in Ohio, Pennsylvania, Virginia, Kentucky and Maryland under the "Columbia Gas" brand. All told, NiSource has gas distribution utilities in six states that collectively serve approximately 3.3 million customers.

Roughly 39% of NiSource's five-year capex program, or about $11 billion, is earmarked for hardening its gas utilities' systems over 2026-2030.

Click on the image at right to see NiSource's potential construction of electric generating capacity to serve data centers through 2035.

Key Takeaways

• Utility holding company NiSource has increased its five-year planned capex 45%, to about $28 billion, with the potential that another $2 billion may be added over the 2026-2030 period.
• Most of that surge stems from plans to build new generation, storage and transmission to serve a data center campus announced by Amazon Web Services.
• Roughly 39% of the planned $28 billion outlay, about $11 billion, will go to hardening the systems of NiSource's six gas distribution utilities.
• Indiana utility regulators approved a corporate structure that may balance the needs of planned large-load customers, such as data centers, while also protecting existing residential and commercial customers from the risks and costs of an infrastructure buildout tied to serving large-load customers.

---

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).