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NiSource (NYSE:NI)
Q1 2019 Earnings Call
May. 01, 2019, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, ladies and gentlemen, and welcome to the first-quarter 2019 NiSource earnings conference call. [Operator instructions] As a reminder, this conference call is being recorded. I would like to introduce your host for today's conference, Randy Hulen, vice president of investor relations and treasurer. Sir, you may begin.

Randy Hulen -- Vice President of Investor Relations and Treasurer

Thanks, Brenda, and good morning, everyone, and welcome to the NiSource first-quarter 2019 investor call. Joining me today are Joe Hamrock, chief executive officer; and Donald Brown, chief financial officer. The purpose of this presentation is to review NiSource's financial performance for the first quarter of 2019, as well as provide an update on our operations, growth drivers and financing plans. Following our prepared remarks, we'll open the call to your questions.

Slides for today's call are available on nisource.com. Before turning the floor over to Joe and Donald, just a quick reminder. Some of the statements made during this presentation will be forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements.

Information concerning such risks and uncertainties is included in the MD&A and risk factors sections of our periodic SEC filings. Additionally, some of the statements made on this recording relate to non-GAAP measures. For additional information on the most directly comparable GAAP measure and a reconciliation of these measures, please refer to the supplemental slides and additional segment information, including our full financial schedules available on nisource.com. With all that out of the way, I'd like to turn the call over to Joe.

Joe Hamrock -- Chief Executive Officer

Thanks, Randy. Good morning, everyone, and thank you for joining us. I'm pleased to report on our first-quarter 2019 results, which reflect our team's continued execution of our long-term utility infrastructure modernization programs. These programs are the foundation of our focus on safety enhancements to our gas distribution system across all seven states.

In addition, we continue to advance our electric generation strategy in Indiana, and our dedicated team continues to support customers and communities in the Merrimack Valley during Phase 2 of our restoration work. With the progress we've made thus far, NiSource is well positioned to deliver on its commitments for 2019. Let's turn to Slide 3, which summarizes our key accomplishments through the first quarter and early second quarter of the year. We delivered non-GAAP net operating earnings of $0.82 per share versus $0.77 in 2018, in line with expectations and positioning us to deliver net operating earnings per share within our $1.27 to $1.33 guidance range for 2019.

We also continue to expect to complete 1.6 to $1.7 billion in capital investments in 2019, in line with our guidance. We remain confident in our long-term forecast of 5 to 7% annual growth of our non-GAAP earnings per share and dividend from 2019 through 2022 and capital investments of 1.6 to $2 billion annually from 2020 through 2022. Gas system safety enhancements remain a key focus across our seven-state footprint. We're executing on our accelerated Safety Management System, or SMS implementation.

Our SMS is aligned with the framework developed for pipeline operators by the American Petroleum Institute. SMS is a comprehensive approach to managing safety, emphasizing continual assessment and improvement in identifying and mitigating potential operational risks proactively. To provide independent review and oversight of our SMS implementation, we've established a quality review board chaired by former U.S. Transportation Secretary, Ray LaHood.

In addition to Mr. LaHood, the five-member QRB includes experts with diverse backgrounds, spanning the aviation, energy and nuclear industries. I'm honored that Secretary LaHood agreed to chair our QRB, which has begun its work and is providing significant benefits through the experience and expertise of all five members. I can also report progress on our commitment to install over-pressurization protection, automatic shut-off devices on low-pressure systems.

Initial pilot projects have been completed, and work has begun across all of our operating areas. These devices operate like circuit breakers. They've designed so that when they sense operating pressure that is too high or too low, they immediately shut down gas to the system regardless of the cost. This work remains a top priority.

Our gas team continues to execute on regulatory initiatives with the unanimous settlement filed in our Virginia base rate case, approvals of modernization tracker updates in Ohio and Massachusetts, and the first annual update application filed in our new capital expenditure program in Ohio. In Indiana, we filed a partial settlement last week with key stakeholders in our electric base rate case, which addresses our revenue requirement, federal tax reform and depreciation schedules related to the early retirement of our coal plants. And our electric team continues to advance our generation strategy with our wind farm applications filed and awaiting regulatory approval. Customer support efforts continue in the Merrimack Valley as well.

With the end of the winter heating season, work has begun to replace heating equipment that was repaired in the weeks after the mid-September event. Approximately 875 customers are receiving new furnaces or boilers with installations expected to be completed by September 15th of this year. Our team continues to process customer claims, provide repair support on appliances and heating equipment, and restore private and community property affected by last fall's restoration work. Now I'd like to turn the call over to Donald who will discuss our financial performance in more detail.

Donald?

Donald Brown -- Chief Financial Officer

Thanks, Joe, and good morning, everyone. Looking at our first-quarter results on Slide 4, we delivered non-GAAP net operating earnings of about $308 million or $0.82 per share compared with about $260 million or $0.77 per share for the same period in 2018. The biggest driver of our non-GAAP financial performance continued to be the impact of our long-term infrastructure modernization investment, supported by constructive regulatory outcomes and established infrastructure trackers. Before turning to our business segment financial results, I'd just like to address Greater Lawrence incident expenses.

Our estimates, which are detailed on Slide 10, are higher than what we provided with our fourth-quarter 2018 results. This increase was driven by final billings for construction and emergency response expenses, as well as adjustments made to reserves for legal, liability and settlement expenses. Despite this upward adjustment, our strong first-quarter financial results, coupled with our solid execution on the regulatory front, have us confident in reaffirming both our 2019 non-GAAP net operating earnings per share guidance range of $1.27 to $1.33. as well as our long-term earnings and dividend growth forecast.

We also expect to maintain our current financing plan. As we've previously stated, we have $800 million of casualty insurance coverage and $300 million of property insurance that we expect will recover a substantial portion of our Greater Lawrence incident cost. We started submitting claims in December 2018 and have recorded casualty insurance recoveries of $235 million through March 31st. We've also provided notice to our property insurer, and discussions around the claims and recovery have begun.

As the insurance recovery process moves forward, we will continue to provide quarterly updates on our progress. Let's turn now to the non-GAAP financial results for our business segments. Our gas distribution operations segment had operating earnings of about $398 million for the quarter compared with about $320 million for the same period in 2018. The increase of $78 million was driven primarily by regulatory outcomes and infrastructure replacement program execution.

Our electric operations segment reported operating earnings of about $95 million for the quarter compared with operating earnings of about $86 million for the comparable period in 2018. This increase, driven primarily by tracked infrastructure investments and lower O&M expenses, offset slightly by reduced customer usage. Now turning to Slide 5, I'd like to briefly touch on our debt and credit profile. Our total debt level as of March 31st was about $9.2 billion, of which about $7 billion was long-term debt.

The weighted average maturity on our long-term debt was approximately 18 years, and the weighted average interest rate was approximately 4.6%. At the end of the first quarter, we maintained net available liquidity of about $1 billion, consisting of cash and available capacity under our credit facility and our accounts receivable securitizations. Our credit ratings from all three major rating agencies are investment grade, and we're committed to maintaining our current investment-grade ratings. I'd now like to turn to Slide 6, which covers our financing plan for our long-term growth investments.

The current plan continues to include annual equity in the range of 200 to $300 million from our at-the-market or ATM equity issuance program and 35 to $60 million from our Employee Stock Purchase and other programs, plus incremental long-term debt. Our ATM is consistent with our approach to provide balanced, predictable financing for our infrastructure investments. The current ATM program allows us to issue up to $500 million in equity through the end of 2020. Execution of our financing plan is expected to enhance our credit profile by strengthening our funds from operations to debt metric to the 14 to 15% range in 2019 and beyond.

Now I'll turn the call back to Joe who will discuss a few infrastructure investment and regulatory highlights.

Joe Hamrock -- Chief Executive Officer

Thank you, Donald. Now let's turn to some specific highlights for the first quarter and early second quarter of 2019 from our gas operations on Slide 7. In Virginia, we filed a unanimous settlement agreement last month with parties to our base rate case, which remains pending before the Virginia State Corporation Commission. Filed in August 2018, our request seeks to recover costs associated with ongoing infrastructure investment programs and to incorporate changes from federal tax reform.

If approved as filed, the settlement is expected to increase annual revenues by 9 and a half million dollars, including $8.2 million in revenues currently collected through our infrastructure tracker. New rates went into effect, subject to refund, with the February billing cycle. We expect a commission order in the second half of 2019. In Ohio, we received regulatory approval last week of our infrastructure replacement program tracker annual adjustment, allowing us to begin recovery of approximately $200 million of infrastructure investments made in 2018.

This well-established pipeline replacement program, authorized through 2022, covers replacement of priority mainline pipe and targeted customer service lines. Also in Ohio, we filed in February our first annual application for adjustment to our capital expenditure program rider. The CEP rider, which was first approved by the Public Utilities Commission of Ohio in 2018, allows us to recover capital investments and related deferred expenses that are not recovered through our infrastructure modernization tracker. The adjustment application seeks to begin recovery of approximately $122 million of capital invested in 2018.

A PUCO order is expected in August 2019. In Indiana, our PHMSA compliance plan, covering approximately $230 million of capital expected to be invested between 2019 and 2023, remains pending before the Indiana Utility Regulatory Commission. We expect an order in the second half of 2019. And just yesterday, we received regulatory approval of our 2019 gas system enhancement plan in Massachusetts.

This order authorizes recovery of incremental 2019 capital investments of $64 million, and new rates take effect this month. I would note that this order covers capital investment and priority pipe replacement that will be done this calendar year and does not include cost recovery related to the Greater Lawrence incident. Now let's turn to our electric operations on Slide 8. As I mentioned earlier, we filed a partial settlement agreement on April 26 in our electric base rate case, which remains pending before the IURC.

The settlement addresses our revenue requirement, federal tax reform and depreciation schedules related to the early retirement of our coal-fired generation plants called for in our 2018 Integrated Resource Plan. If approved as filed, the settlement is earnings neutral and allows for a return on equity of 9.9%. An IURC order is anticipated in the second half of 2019. Our filing seeking approval to develop three wind farms in Indiana in partnership with experienced renewable energy developers remain pending before the IURC, with orders expected in the third quarter of 2019.

The three projects, Jordan Creek, Roaming Bison and Rosewater, have nameplate capacity totaling 800 megawatts and are expected to be in operation by late 2020. These filings, made February 1, are consistent with our 2018 integrated resource plan submitted to the IURC last fall. The IRP calls for the retirement of nearly 80% of our remaining coal-fired generation capacity in the next five years and all coal generation to be retired by 2028. The replacement capacity portfolio is still being fully defined, and options point toward lower-cost renewable energy resources such as wind, solar and battery storage technology.

We expect to announce additional renewable projects and issue a second round of RFPs later this year. Our goal is to transition to the most economical, cleanest electric supply mix available while maintaining reliability, diversity and flexibility for future technology and market changes. Our coal combustion residuals capital projects are substantially complete, with the last of the three units placed into service in the first quarter. These projects represent an investment of approximately $193 million and include environmental upgrades at generating facilities to meet current EPA standards.

The IURC, in December 2017, approved a settlement authorizing these projects and recovery of associated costs. We continue to execute on our seven-year electric infrastructure modernization program, which includes enhancements to our electric transmission and distribution system designed to further improve system safety and reliability. The IURC-approved TDSIC program represents approximately $1.2 billion of electric infrastructure investments expected to be made through 2022. Our latest tracker update request filed in January and covering approximately $59 million of incremental capital investments made from June 2018 through November 2018 remains pending before the IURC.

An order is expected in the second quarter of 2019. I should note that there is new legislation in Indiana, which makes several constructive changes to the TDSIC statute, the law which underlies and further supports our gas and electric infrastructure modernization program at NIPSCO. The legislation house enrolled Act 1470, provides some clarity around what can be included in TDSIC plans. Our team is putting together a proposed timeline for filing a new gas TDSIC plan with the filing date expected in the third quarter of 2019, and we're determining next steps related to the electric plan.

We will continue to execute on the current approved gas plan through 2020, as well as the current electric plan approved through 2022. Before I touch on our key takeaways for the quarter, I'll share a few quick updates. I'm pleased to report that last month, NiSource was named, for the fourth consecutive year, to Forbes Magazine's list of America's Best Large Employers. Inclusion on this list, which is based on an independent employee survey, reinforces that our 8,000-plus employees recognize the company as a great place to work, grow and build a career.

Our team is dedicated to building value for our customers, our community and our investors. If you haven't already done so, I encourage you to check out our 2018 integrated annual report, which we published last month and is available at nisource.com. The report shares how we're continuing to invest in safety upgrades and infrastructure enhancements, deliver on our financial and environmental commitments, build our culture and enhance the sustainability of NiSource for years to come. I'd also like to recognize and thank Rich Thompson, who is retiring this month from the NiSource board of directors after having served on the board since 2004, including the last six years as chairman.

His thoughtful and inspiring leadership will be missed, and we wish Rich the best in his well-earned retirement. We're just about ready to open the line to your questions, but let me share our key takeaways. We're off to a strong start in 2019, both in terms of our financial results and our solid execution on the regulatory front in each business segment. As a result, we're confident in reaffirming our 2019 non-GAAP net operating earnings guidance range of $1.27 to $1.33 per share and our financing plan.

Our long-term investment-driven growth plan is intact and resilient. We continue to expect to grow both net operating earnings per share and our dividend by 5 to 7% annually from 2019 through 2022. And we expect to maintain our investment-grade credit ratings. Safety remains the foundation for all that we do for our customers and the communities we serve, and we're advancing that commitment with our accelerated SMS implementation across our seven-state footprint and strong independent oversight from our quality review board.

We're making significant progress in our electric business with partial settlement of our base rate case and advancing our generation strategy with our wind projects. We're committed to finishing the restoration in the Merrimack Valley the right way as we continue to support our customers and communities there. Thank you for participating today and for your ongoing interest in and support of NiSource. We're now ready to take your questions.

Brenda?

Questions & Answers:


Operator

[Operator instructions] Our first question comes from Michael Weinstein from Credit Suisse. Your line is open.

Michael Weinstein -- Credit Suisse -- Analyst

This is Mike. I'm wondering if you could discuss a little bit about the differences between the IRP in Indiana that you guys filed and the one that Vectren recently filed and had a rejection of their CCGT certificate of need? How does your IRP differ from that? Maybe what are the lessons learned from the combination of the two processes that have happened here?

Joe Hamrock -- Chief Executive Officer

Yes. Thanks, Mike. I won't opine on the Vectren IRP, but I will talk about our approach. And for us, the first principle throughout the entire process have included a transparent evaluation of all of the viable options that we saw for replacement capacity, in particular, and then tested that through an RFP, a transactable RFP last year with the broadest possible stakeholder participation.

And we believe this approach stands up well as the IURC evaluates our filings, our CPCN filings that, of course, followed that IRP and are consistent with that strategy. And we'll continue to move through this process embracing those principles, including later this year, as I noted earlier, our expectation for a next round of RFPs to continue to show what's available in the market and what the best solutions will be for replacement capacity going forward. I think the IURC and all of our stakeholders' value that approach and have been very engaged in that approach throughout.

Michael Weinstein -- Credit Suisse -- Analyst

And on the same subject, the cede of SB 472, what do you think that says about political lobbyists in some state and I guess the power of the coal industry in particular going forward?

Joe Hamrock -- Chief Executive Officer

I'd say it's not surprising. It's not unexpected that various groups would try to protect their interests. And we certainly welcome that discourse and welcome the opportunity to discuss that. And again, it all rests on our approach of putting all the options on the table and making sure that we can all see as objective and transparent a picture as possible.

And I think that stands up well as we move forward through, what, by any measure, is a pretty dynamic and complex transition in Indiana, in particular, but in general across the country.

Michael Weinstein -- Credit Suisse -- Analyst

Do you think we'll see a new type of replacement bill for that to try to achieve the same thing? Or do you think that this issue of a moratorium is dead for the time being?

Joe Hamrock -- Chief Executive Officer

I think it's too early to try to predict all that. It does appear that the moratorium is off the table right now. We're proceeding on the course that we were on before all of those activities. But we'll continue to monitor that, and we'll continue to look for a track to run on here, and we expect that to be the case.

Michael Weinstein -- Credit Suisse -- Analyst

OK, great. Thank you very much. It's all I have for now.

Operator

Our next question is from Julien Dumoulin-Smith from Bank of America. Your line is open.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Hey, good morning. Morning, Joe. So I just want to be extra clear about what Mike was just asking about. So again, just to come back to this whole process in Indiana here on the electric side.

At the end of the day, the issue, they're very discreet to the legislative and peer companies out there. Any implications with respect to your settlement that you've just filed and/or future procurement plans are not existent at present? And maybe if you can, while were talking about it, let's go talk a little bit more about what the remaining issues are that weren't settled here, just to go through some of the remaining items as you look to close that out.

Joe Hamrock -- Chief Executive Officer

Yes, yes. Sure, sure thing. Yes, again, I don't see the significant implications for us. We've said all along that each company really is going to see a unique set of factors and circumstances that drive our IRP process in general.

The retirement of our assets, the valuation of that is unique to the age and the operating conditions of our assets. You can't transpose that on any other company. I think we would all agree with that. We did, as I noted earlier, test the market.

So I think we've given a pretty clear and transparent picture of all the options available to us. And so I wouldn't expect the process that's in front of us to substantially change that. And we'll continue, as I said earlier, we'll continue to commit to that kind of transparency to ensure that we're looking at all the options as we step through this progression of a sequence of retirements and replacement capacity over time. So I think we're in a really good position here.

I don't expect the review in the stakeholder process that's been set up at the legislature to substantially change our outlook. And as we noted earlier, a lot of this is further out on the horizon for us, so we have time to navigate the dynamics of this situation. As it relates to that rate case, I'd remind us that for us, this was a policy case at its core, at the very beginning designed to align with our IRP and our generation strategy, the core issue being depreciation of the generation assets as it relates to the retirement schedule. With the partial settlement that we have setting revenue requirements, it effectively sets that piece of the puzzle in place, which is not the most important point but the key for us as it relates to the overall strategy.

The open issues are related to allocation of revenue requirements among the customer groups, which is not solved and is always complex. We'll continue to facilitate and support parties communicating in that. But that may ultimately resolve in a litigated case. And that's OK.

That's something that -- that's what the process is for. And then the other piece for us is the -- within the revenue allocation, the question of the industrial tariff that we set up for the large industrials, it's a part of that puzzle. We continue to work with parties on that as well. So we feel good about the position that we're in on all fronts here as it relates to IRP, the wind CPCNs and the rate case, the relationship with the rate case settlement that we have.

Donald, anything you want to add to that?

Donald Brown -- Chief Financial Officer

Yes. I'd add that think about the process we ran last year for the IRP, including that RFP, the current projects that we've contracted with and have filed for approval on those projects, they were really to fill a gap we had on our Bailey plant that we shut down last year. And so, as we think about going forward on retiring the Schahfer units in 2023, we'll need to go through another IRP process, and we plan to issue another RFP to seek supplier resources to replace that generation when we close out. So it's an opportunity for us to get feedback on our old process, the process last year, as well as Vectren and others in the state so that we structure our next IRP and RFP to make sure that all of our stakeholders understand and have clarity around our plans in the market going forward.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Excellent. And if I can follow up just on the base rate gas side of the equation. Can you elaborate a little bit more on your confidence level on just the latest round of increases and total cost of that, if you can? I know that's a little bit difficult. And then separately, progress on any strategic decisions, rate case timing and/or financing implications from even the latest increase.

I imagine just debt financing for the most part.

Joe Hamrock -- Chief Executive Officer

Yes. Julien, let me take the first part of that, and I'll ask Donald to touch on the financing. I'll note that -- and Donald touched on this in the earlier remarks, but several factors drove the change to the cost estimates this quarter, which are up approximately 20% from prior estimates. Those factors include finalizing emergency response and construction costs, billing, as well as adjusting legal liability and settlement reserves based on our current view.

And despite these adjustments, we're confident in reaffirming our 2019 guidance, our long-term annual growth rate and maintaining our current financing plan. And I think it's important to note that key drivers for us, as always, include regulatory timing and outcomes and financing cost and timing. And in the cycle that we're in were also -- drivers within our range include timing of insurance recoveries as it relates to the cash flows here. So we'll continue to provide updates each quarter as it relates to all of these factors.

But I do feel like we continue to put more of this in the rearview mirror than not. Donald?

Donald Brown -- Chief Financial Officer

Yes. I think Joe said it. As we look forward and look at the estimates that we've got, the items that we're working on around settlements with parties and having started those discussions between the different parties, third-party claimants, we've got more information. But certainly, as we continue having those discussions, those estimates could be updated and will be updated in future quarters.

And to Joe's comment around the insurance recovery, we continue to progress there, but it's steady, weekly conversations that we're having with all of our insurance providers in the tower. It's very constructive, and we're just progressing up the tower. So we've got confidence that we'll continue to move in that path to get recovery on the insurance side. And on the other side, from a claims and reserves on our litigation, we're moving forward there as well.

Joe Hamrock -- Chief Executive Officer

And Julien, you asked about the regulatory, we haven't made any decisions at this point about regulatory plans in Massachusetts as it relates to the investments in pipeline replacement in the Merrimack Valley. As we have noted before and as is noted here, we're working with our property insurance on that side. And we'll go through that process before we make any determination on the regulatory front.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

All right. I'll leave it there. Thank you very much for your patience.

Joe Hamrock -- Chief Executive Officer

Thank you. Have a great day.

Operator

Our next question comes from Insoo Kim from Goldman Sachs. Your line is open.

Insoo Kim -- Goldman Sachs -- Analyst

Thank you. Just going back to the cost estimate for Massachusetts. Acknowledging that the large increase did come from the third-party claim that could potentially fluctuate based on negotiations and whatnot, could you elaborate on why it seems to be a bit difficult to get a more compressive estimate this time just given the quarter -- the increase from fourth quarter that you guys had estimated? And just separately and from the settlement side have been filed, if any, have been filed on the claims, have they been at face value or some level below that?

Donald Brown -- Chief Financial Officer

So let's start with the insurance cost and recovery there. Certainly, there's a process to go through each claim, understand the claims, how we made decisions on the claims process. The first couple of insurance providers in our tower, it's been very constructive and consistent. We haven't seen, at this point, any significant concerns about the costs that we incurred for the restoration events and the construction events last year.

And so, at this point, we're confident in that process. And certainly, we'll continue to have conversations as we walk through each of those claims. But we have provided the full amount of the cost in our estimates to all of our insurance providers. And so, they're all seeing that information.

And now it's really the process of going through provider by provider as they work through their process to get comfort with the cost. Oh, and the other third-party claims and litigation reserves, I'd say the big change really is the timing of having conversations. If you think about where we were at year-end at the time, we were still finishing up the restoration. And so, it really has allowed us here in the first quarter to start having conversations with the different third parties, whether that's the municipalities or other claims, that larger reserves and litigation reserves that we've had here in the first quarter.

So it did have the announcement earlier this week about one of the significant injury claims that we were able to settle. And so that's certainly in our reserve estimate. And we'll continue to have more conversations with the different third parties.

Insoo Kim -- Goldman Sachs -- Analyst

Understood. And then on the financing front, I know the plan hasn't really changed. But is there any clarity you could give or any level you can give on the preferred equity fund? I know it's always kind of a TBD amount for '19 and '20.

Donald Brown -- Chief Financial Officer

Yes, it's still early. As we've said, the amount of preferred equity that we may need will depend on cash flow this year, in particular, the timing of -- timing and amount of the insurance recovery. So it's too early at this point, but it's still something that we're looking at as an opportunity this year.

Insoo Kim -- Goldman Sachs -- Analyst

Got it. Thank you very much.

Operator

Our next question comes from Christopher Turnure from JP Morgan. Your line is open.

Christopher Turnure -- J.P. Morgan -- Analyst

Thank you. Most of my questions have been answered, but I wanted to follow up, I think, Joe, on your comments on HB 14 70 and kind of how that impacts your longer-term plans, how your filing will kind of come together on the gas side there and dovetail with the exploration of the existing TDSIC.

Joe Hamrock -- Chief Executive Officer

Yes. So, thanks, Chris. The TDSIC statute that's now passed brings essential clarity for all of us regarding eligible investments. It also provides opportunities for advanced technology investments on the electric side, as well as targeted economic development investments on the electric side, which is a great feature.

So as we look at the new gas plan, we're in a cycle where we want to be updating anyway since the current plan runs through 2020. So it will just set us up to file for the next plan, so to speak. On the electric side, we're evaluating the opportunities that might exist or the options that might exist as a result of the legislation. And we may or may not file a new plan there.

We're continuing to evaluate that because the electric plan runs through 2022. So it's more about the clarity that it brings and how much value that might provide for all stakeholders as we step through the next couple of years.

Christopher Turnure -- J.P. Morgan -- Analyst

OK great. That's all I have. Thank you, Jim.

Operator

Our next question comes from Steve Fleishman from Wolfe Research. Your line is open.

Steve Fleishman -- Wolfe Research, LLC -- Analyst

Hi, good morning. So just maybe you could just kind of tie us back to the -- you do have a couple hundred-million-dollar insurance increase, but really no change in your comfort level on financing plan and credit. Is that kind of a reflection that the rest of the business is doing a little better or you're getting a little more confident on timing of insurance recoveries?

Donald Brown -- Chief Financial Officer

Thanks, Steve. I think that's right. I think as we continue to progress both from conversations with our insurance providers, having the NIPSCO electric rate case, having that partial settlement and especially the acceleration of the depreciation for the closure of plants, that has a positive cash impact annually to our business, as well as we look forward at the different regulatory items we've got, that ultimately, we've got confidence in our long-term plan. But at the same time, we'll continue to work with our insurance providers on really the timing of those cash flows and getting the initial 800 million back and then also seeking recovery on the property insurance side, which helps offset the higher cost that we've incurred.

Steve Fleishman -- Wolfe Research, LLC -- Analyst

OK. And I guess do you have enough certainty with the risk of future increases to the point where you'd -- what is the risk, I guess, that we come into the future quarter and certainly have to add more financing or other stuff to deal with to preserve credit? Or do you have enough visibility now that that's unlikely?

Donald Brown -- Chief Financial Officer

Yes, I think it's always possible. I'm not going to say that our reserves could not change as we continue down settlement discussions with third parties. But from the information we have now, we are confident in the reserves we've got and the estimates we have at this time. If you think about financing, again, it's going to -- it's really going to change depending on the timing of insurance recoveries.

And so that might impact needing more equity content in 2019 to ensure we hit our targets for this year, but that's really a timing between 2019 and 2020 and doesn't impact our long-term financing plan.

Steve Fleishman -- Wolfe Research, LLC -- Analyst

OK. Thank you.

Operator

Our next question comes from Shar Pourreza from Guggenheim Partners. Your line is open.

Shar Pourreza -- Guggenheim Partners -- Analyst

Hey, guys. Thank you. So I think you touched on most of it, but let me ask -- I'm still trying to get a sense on how you're thinking about the rate case in Massachusetts because you guys obviously have a higher -- the claims have jumped up so the lag is increasing. With sort of some of the increase in confidence of what you guys have around your discussions in insurance recoveries, I guess what's holding you back from filing a rate case?

Joe Hamrock -- Chief Executive Officer

I wouldn't say that we're being held back. We're progressing through a series of restoration activities. As it relates to some of the claims, there's really no relationship between the claims issues and the rate case itself, except for on the property side, which I noted earlier, where we're looking at the investments we made there. And we do want to make sure we proceed through the insurance process before we establish a strategy for the regulatory.

So I wouldn't call that holding it back. I think it's just the order of operations, so to speak, before we determine what the best course of action would be on the regulatory side. And the other thing I'd note is we did pull a settlement last year. So we've got some work to do to get back to where we were before we even put the replacement investments into our rate base last year.

So we've got some things to work through, but it's not about being held back. It's really about an orderly process to get to the best strategy.

Shar Pourreza -- Guggenheim Partners -- Analyst

And then just, are you still -- from a timing perspective, we should be thinking about for modeling Q4, maybe early 2020 for filing?

Joe Hamrock -- Chief Executive Officer

Yes. I think what we've said before is it will be late this year, early next year before we make a decision. So it wasn't about the timing of the case, but it was about the timing of a decision.

Shar Pourreza -- Guggenheim Partners -- Analyst

OK got it. Thanks, guys. That was in my remaining questions.

Joe Hamrock -- Chief Executive Officer

Sure, appreciate it.

Operator

Our next question comes from Greg Gordon from Evercore ISI.

Greg Gordon -- Evercore ISI -- Analyst

Thanks. You know what, guys, I think you've been pretty thorough and my questions have been answered. Have a great day.

Joe Hamrock -- Chief Executive Officer

Thanks. You too.

Operator

[Operator instructions] Our next question comes from Charles Fishman from Morningstar Research. Your line is open.

Charles Fishman -- Morningstar Research -- Analyst

Thank you. Just one quick one. Joe, does this pending legislation in Indiana move the needle as I'm looking at your Slide 12? In other words, the 24% of your infrastructure investment 2020 through 2022 comes from periodic rate cases. Is it material enough to lower that number 100 or 200 basis points? Or is it really insignificant?

Joe Hamrock -- Chief Executive Officer

Charles, that's a great question. I think it's too early to tell. I think it's back to the point I made a few minutes ago about evaluating some of the new features in the TDSIC statute, especially around economic development and advanced technologies. So grid modernization, in particular, some advanced grid investments might be a good opportunity.

That would have been in traditional rate cases were it not for this legislation. We'll evaluate that. It could move that line, but right now, it's too early for us to say that with any clarity.

Charles Fishman -- Morningstar Research -- Analyst

Got it. That's all I have. Thank you.

Operator

Our next question comes from Andrew Levi from ExodusPoint. Your line is open.

Andrew Levi -- ExodusPoint -- Analyst

Hi, guys. I apologize for asking this because I haven't really been on the call. So just on the liabilities, what were you guys saying as far as -- so you're up to like $1 billion now. Is the likelihood of that increasing significantly not likely or likely? Just kind of -- and everything kind of around that.

I'm sorry that I missed it.

Donald Brown -- Chief Financial Officer

Andy, no problem. I think what I stated was that it's certainly possible that as we continue to have litigation settlement discussions, that the reserves could be adjusted in the future. But based upon the information we've got, as well as our progress in discussions this quarter, we're confident in where those reserves are.

Andrew Levi -- ExodusPoint -- Analyst

So you say you've taken excess beyond what has been claimed, I guess, is what you're saying? Is that right? So like whatever you took this quarter and you've taken is an estimate of where it may go, not what has actually been filed?

Donald Brown -- Chief Financial Officer

Yes, it would be our estimate of where we're going -- what settlement amounts would be for the major third-party claims.

Andrew Levi -- ExodusPoint -- Analyst

Right. OK. And that's higher than what's been already filed or not?

Donald Brown -- Chief Financial Officer

Filed? What do you mean by filing?

Andrew Levi -- ExodusPoint -- Analyst

Well, just is there -- I mean like were there lawsuits or claims or things like that, those amounts relative to what you've reserved?

Donald Brown -- Chief Financial Officer

Well, they're higher than what we had on the fourth -- in our fourth quarter results. In some cases, there hasn't been a filing of cases, but we've started having discussions with third parties. So it depends on really the third party, kind of what the status is from a legal standpoint, as well as our discussions.

Andrew Levi -- ExodusPoint -- Analyst

OK. And then my last question is just in general, I don't know if you want to answer this, but is it possible that some of the claims could be inflated or not real? Have you experience that? Or has there been any discussion around that?

Donald Brown -- Chief Financial Officer

Yes. We're having constructive conversations. We're trying to understand the third parties and their claims and how they've made up their claims, and that's part of the process of settlement discussions. It's really understanding how they've made up their claims.

Andrew Levi -- ExodusPoint -- Analyst

OK. I'll follow up with Randy off-line. Go ahead.

Joe Hamrock -- Chief Executive Officer

Joe here. The other thing I'd note is the adjustments this quarter are not all related to claims and litigation. There's a number of other factors driving it. So I just don't want you to walk away thinking that whole adjustment was based on claims alone.

As I noted earlier and as Donald noted, it was also true-ups to some of the restoration costs from last year, some of the mutual assistance cost. So there's a lot of different things moving inside that adjustment that we booked this quarter.

Andrew Levi -- ExodusPoint -- Analyst

OK. I'll follow up with Randy. Thank you very much, guys.

Operator

And we do have a follow up from Julien Dumoulin-Smith from Bank of America. Your line is open.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Hey, guys. Sorry, just to come back very quickly. The TDSIC plan that you're expecting to file later this year, I would imagine that doesn't change your near-year capex plans just based on the reasoning for it. But I suspect that adding greater granularity and adding back potentially some of the capex that might have been pushed out, given the ambiguity earlier and the reason for the legislation itself, you could actually see that reintroduce an increase.

I just want to understand what your current assumption is relative to the baseline in TDSIC and how that can be updated as you think about it later this year?

Joe Hamrock -- Chief Executive Officer

Yes. Are you talking about the gas side, Julien?

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Admittedly, both sides.

Joe Hamrock -- Chief Executive Officer

OK. Yes. On the gas side, possibly. I don't think we have enough clarity yet to go back and sort of back cast what we originally filed.

Keep in mind, those were pretty small changes in the original plan as we adjusted through the various filings. So even if it was kind of a back to where we were, it's not a significant shift there. On the electric side, it's possibly a little more interesting as we look at advanced technologies and some of those, but too early to say that with clarity.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

All right. I'll leave it there. Thank you.

Operator

I'm showing no further questions at this time. I would now like to turn the call over to Joe Hamrock, CEO, for closing remarks.

Joe Hamrock -- Chief Executive Officer

Thank you, Brenda. And thanks to all of you for your participation today and your continued interest in and support of NiSource. Have a great day.

Operator

[Operator signoff]

Duration: 52 minutes

Call participants:

Randy Hulen -- Vice President of Investor Relations and Treasurer

Joe Hamrock -- Chief Executive Officer

Donald Brown -- Chief Financial Officer

Michael Weinstein -- Credit Suisse -- Analyst

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Insoo Kim -- Goldman Sachs -- Analyst

Christopher Turnure -- J.P. Morgan -- Analyst

Steve Fleishman -- Wolfe Research, LLC -- Analyst

Shar Pourreza -- Guggenheim Partners -- Analyst

Greg Gordon -- Evercore ISI -- Analyst

Charles Fishman -- Morningstar Research -- Analyst

Andrew Levi -- ExodusPoint -- Analyst

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