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NiSource (NYSE:NI)
Q4 2019 Earnings Call
Feb 27, 2020, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good afternoon, ladies and gentlemen, and welcome to the Q4 2019 NiSource earnings conference call. [Operator instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Randy Hulen, vice president of investor relations and treasurer.

Please go ahead.

Randy Hulen -- Vice President of Investor Relations and Treasurer

Thank you, Detamora, and good morning, everyone, and welcome to the NiSource fourth-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 fourth quarter and full year 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 call 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 segment information, including our full financial schedules available at nisource.com. With all that out of the way, I would like to turn the call over to Joe.

Joe Hamrock -- Chief Executive Officer

Thanks, Randy, and good morning, everyone. And thank you for joining us. Before I discuss our fourth-quarter and full-year results, I would like to take a few minutes to speak to the announcements made yesterday that we have reached a plea agreement with the United States Attorney for the District of Massachusetts intended to resolve the criminal investigation and entered into a definitive agreement to sell our Columbia Gas of Massachusetts business to Eversource. In addition to agreeing to pursue the sale of the Columbia Gas of Massachusetts assets, we have also agreed to pay a $53 million criminal fine.

Following a thorough evaluation by the board and management team, we believe this sale to Eversource is in the best interests of all of our stakeholders, including shareholders. Through this process, it was paramount to us that we find a partner for Columbia Gas of Massachusetts who will create the right next chapter for not only Columbia Gas of Massachusetts business but for the customers and communities it serves, as well as its dedicated employees. We believe Eversource is that right partner. As New England's largest energy delivery company serving approximately 4 million electricity, natural gas and water customers in Connecticut, Massachusetts and New Hampshire, they have tremendous familiarity with the region.

In addition, they have a proven track record of investing in infrastructure, employees and operations to enhance system reliability and safety. Correspondingly, our focus across NiSource is on enhancing safety, service and system reliability through implementation of our safety management system, infrastructure modernization and advanced workforce training programs. The transaction is supportive of those priorities for all of our stakeholders. Yesterday's announcement is just the first step for this transaction, and we look forward to working closely with Eversource to ensure a smooth transition.

Throughout the approval and transition process, we will remain focused on customer service and enhancements in all areas of operations. Now turning to our results for the quarter and the year. As we look back at 2019, it was a year in which our team's performance demonstrated the resiliency of the NiSource business plan. Our employees remained relentlessly focused on safety and customer satisfaction, starting with the accelerated implementation of our Safety Management System, as well as advancing our electric generation strategy in Indiana and executing on nearly $1.9 billion in capital investments centered on infrastructure and safety in our gas and electric systems.

We also delivered non-GAAP net operating earnings per share of $1.32, near the top of our guidance range for the year, while maintaining our current investment-grade credit ratings and executing on our regulatory plan. Turning now to Slide 3. You can see some of our key accomplishments in 2019. Our SMS implementation and other system safety enhancements were and remain our top priority.

In 2019, we stood up an independent Quality Review Board to oversee our progress and named a chief safety officer reporting directly to me. In addition, we integrated the functions of safety, compliance and risk and increased staffing and capabilities across our gas segment. We introduced a Corrective Action Program, or CAP, to identify, track and prioritize risk. And we installed more than 1,000 automatic shutoff devices on low-pressure gas systems across our footprint.

As I mentioned earlier, we delivered non-GAAP net operating earnings per share of $1.32, near the top of our 2019 guidance range. Due to the expectation of closing the Columbia Gas of Massachusetts transaction this year, we are withdrawing our 2020 net operating earnings per share guidance of $1.36 to $1.40. However, we continue to expect to make capital investments of $1.8 billion to $1.9 billion in 2020. We also expect the transaction will enable NiSource to eliminate its previously planned 2020 block equity issuance.

The long-term growth opportunity for the remaining operating companies is unchanged. As a result, following the completion of the transaction, the company expects to initiate 2021 net operating earnings per share guidance and establish a 5% to 7% long-term growth rate for both net operating earnings per share and dividend with 2021 as the base year. This new long-term guidance is expected to be extended beyond 2022 to include significant investments related to the company's electric generation strategy. Reflecting on 2019, NiSource achieved a number of key milestones.

In our electric business, we reached commercial agreements on multiple wind projects, completed a second round of requests for proposals for replacement generation capacity for our retiring coal plants and completed our coal combustion residuals capital investments. We made approximately $1.9 billion of capital investments in our gas and electric utilities primarily focused on safety improvements and infrastructure modernization. We executed on our regulatory initiatives, including approvals of our electric base rate cases in Indiana and our gas base rate case in Maryland and Virginia. In the Merrimack Valley, we substantially completed the restoration following the September 2018 event, including the settlement of all the major customer claims and finishing substantially all service line verifications.

And we added about 28,000 net new gas customers across the company driven by healthy new construction and conversion markets. Now I would like to turn the call over to Donald who will discuss our financial performance in more detail.

Donald Brown -- Chief Financial Officer

Thanks, Joe, and good morning, everyone. Looking at our 2019 results on Slide 4. We had a non-GAAP net operating earnings of about $495 million or $1.32 per share, compared to net operating earnings of about $463 million or $1.30 per share in 2018. The biggest drivers of our 2019 non-GAAP financial performance compared to 2018 were higher net revenue due to the impact of our long-term infrastructure modernization investments, which were offset by increased safety-related spending and higher financing costs due largely to the Greater Lawrence incident.

Now turning to Slide 5, I would like to briefly touch on our debt and credit profile. Our debt level as of December 31, was about $9.6 billion, of which about $7.7 billion was long-term debt. The weighted average maturity on our long-term debt was approximately 17 years, and the weighted average interest rate was approximately 4.4%. At the end of the fourth quarter, we maintained net available liquidity of about $1.4 billion, consisting of cash and available capacity under our credit facility and our accounts receivable securitization program.

Our credit ratings from all three major rating agencies are investment-grade, and we're committed to maintaining our current investment-grade ratings. I would now like to turn to Slide 6, which covers our financing plan for our long-term growth investment. The agreement for a purchase price of $1.1 billion in cash, subject to adjustment based on Columbia Gas Massachusetts net working capital as of the closing, the purchase price represents a loss compared to the book value of Columbia Gas of Massachusetts. As a result of the asset sale transaction, we no longer expect to pursue our previously planned 2020 block equity issuance.

Our current plan, which is focused on providing funding for ongoing safety and infrastructure investment programs, has approximately $500 million of long-term debt in 2020 and continues to include annual equity in the range of $200 million to $300 million from our at the market, or ATM, equity issuance program, as well as $35 million to $60 million from our employee stock purchase and other programs. As Joe mentioned, due to the timing of this transaction, we are withdrawing our 2020 non-GAAP net operating earnings per share guidance of $1.36 to $1.40. However, we continue to expect to make capital investments of $1.8 billion to $1.9 billion in 2020. Following the completion of the transaction, we expect to initiate 2021 net operating earnings per share guidance and establish a 5% to 7% long-term growth rate for both net operating earnings per share and dividend with 2021 as the base year.

This new long-term growth rate is also expected to be extended beyond 2022 to include significant investments related to the company's electric generation strategy. As we work through the impact of the sale by factoring in the elimination of the block equity dilution, the loss of CMA earning and the expected dis-synergies, we believe that at a minimum, the 2021 baseline is expected to be at or above our withdrawn 2020 guidance. Now I'll turn the call back to Joe for 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 fourth quarter and early first quarter of 2020 from our gas operations on Slide 7. In Maryland, our base rate case request was approved by the Public Service Commission and new rates went into effect in December. The order supports continued replacement of aging pipelines and adoption of pipeline safety upgrades.

Columbia Gas of Kentucky received an order in December from the Public Service Commission in its annual Accelerated Main Replacement Program rider adjustment case. The commission approved a modification to the AMRP to expand its scope to cover capital investments, including safety enhancements to low-pressure systems and other risk-based investments identified under our SMS program. As part of the order, the program was renamed to the Safety Modification and Replacement Program or SMRP. We filed an application in December with the Indiana Utility Regulatory Commission for a six-year extension of our long-term gas infrastructure modernization program.

The proposal includes nearly $950 million in capital investments through 2025 to be recovered through semiannual adjustments to the existing Transmission, Distribution and Storage Improvement Charge, or TDSIC tracker. The existing gas TDSIC program has been in place since 2014. An IURC order is expected in July 2020. Now let's turn to our electric operations on Slide 8.

Our team is reviewing the results of our latest request for proposals to consider potential resources to meet the future electric needs of our customers. Consistent with NIPSCO'S 2018 integrated Resource plan, the RFP sought to identify replacement sources for our coal capacity, which will be 100% retired by 2028 to be replaced by lower-cost, reliable and cleaner options. The plan is expected to drive a 90% reduction in our greenhouse gas emissions by 2030 and to save our electric customers more than $4 billion over the long term. We considered all sources in the RFP process, which closed in November, and we're currently in early discussions with a number of commercial bidders who responded to the RFP.

Progress continues on the active wind projects we've proposed in 2019. On December 19, the Federal Energy Regulatory Commission approved our Section 203 and Section 205 applications for Rosewater, a 100-megawatt joint venture between NIPSCO and EDP Renewables. The IURC had previously approved the joint venture and ownership agreement for Rosewater, as well as a power purchase agreement application for Jordan Creek. Construction is under way on both Rosewater and Jordan Creek, which are expected to be in service by the end of this year.

NIPSCO has notified the IURC of its intention to not move forward with the Roaming Bison project due to local zoning restrictions. Last week, the IURC approved our application for an additional wind project, Indiana Crossroads, another joint venture with EDP Renewables. Indiana Crossroads will have an aggregate nameplate capacity of 302 megawatts and is expected to be in operation in the fourth quarter of 2021. In December, we received an order from the IURC in our electric base rate case with new rates effective in January 2020.

The order approved a partial settlement agreement filed in April 2019 that addresses the revenue requirement, federal tax reform and changes to our depreciation schedules related to the early retirements of coal-fired generation as submitted in the IRP. The order established a return on equity of 9.75%, reflecting a reduced business risk profile and positions NIPSCO to successfully execute on its generation strategy, which benefits its customers. 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 program, originally approved by the IURC in 2016, includes approximately $1.2 billion of electric infrastructure investments expected to be made through 2022.

Our latest tracker update request covering $131.1 million in incremental capital investments made from December 2018 through June 2019 was approved by the IURC on December 18, 2019, with rates effective in January 2020. Turning now to Slide 9. I'll focus on our systemwide safety enhancements. Safety is and will remain the foundation of everything we do across our business.

We are resolved to lead in safety and exceed industry standards, anchored by three pillars: a culture where everyone is empowered to identify and report risk, process safety that adds layers of protection and enhanced asset risk and analytics. A safety management system, or SMS, is a comprehensive approach to managing safety, emphasizing continual assessment and improvement, as well as proactively identifying and mitigating potential risks. We made great progress on our SMS implementation in 2019, and it remains our top priority in 2020. Nearly 90% of our gas segment employees were trained in SMS in 2019, and the remainder will be trained this year.

Gas segment employees and contractors have embraced the CAP tool, which offers a simple way for employees and contractors to report safety concerns and supports our systematic process to review, prioritize and track progress to reduce risk. In 2019, we worked closely with the National Transportation Safety Board, which concluded its investigation into the Greater Lawrence event. We finished implementing the board's urgent safety recommendations, and NTSB deemed our responses as acceptable. In conjunction with its final report, NTSB issued a recommendation around enhancing our emergency preparedness and response capabilities.

We have implemented an Incident Command Structure, or ICS, aligned with Federal Emergency Management Agency standards and provided ICS training to nearly all NiSource employees. Before we turn to the Q&A portion of the call, I'll share and reiterate a few key takeaways. As noted, with the expected closing of the Columbia Gas of Massachusetts transaction this year, we are withdrawing our 2020 net operating earnings per share guidance of $1.36 to $1.40. We continue to expect to make capital investments of $1.8 billion to $1.9 billion in 2020, and we remain committed to our current investment-grade credit ratings.

We expect the transaction will enable NiSource to eliminate its previously planned 2020 block equity issuance. Following the completion of the transaction, we expect to initiate 2021 net operating earnings per share guidance and establish a 5% to 7% long-term growth rate for both net operating earnings per share and dividend with 2021 as the base year. As Donald mentioned, we believe that at a minimum, the 2021 baseline is expected to be at or above our withdrawn 2020 guidance. Our electric-generation strategy is advancing with our base rate case approved, wind project construction under way and the second RFP completed to identify additional sources to replace our coal capacity.

We have substantially completed our service line verification work in the Merrimack Valley, and we're cooperating fully with the Massachusetts Department of Public Utilities as it reviews the cause of September 2018 Merrimack Valley event and our emergency response. Through the close of the transaction, NiSource will remain focused on customer service and enhancements in all areas of operations. Thank you all for participating today and for your ongoing interest in and support of NiSource. We are now ready to take your questions.

Detamora?

Questions & Answers:


Operator

[Operator instructions] Your first response is from Shar Pourreza of Guggenheim Partners. Please go ahead.

Shar Pourreza -- Guggenheim Partners -- Analyst

Hey. Good morning, guys.

Joe Hamrock -- Chief Executive Officer

Good morning, Shar.

Donald Brown -- Chief Financial Officer

Good morning.

Shar Pourreza -- Guggenheim Partners -- Analyst

So could we -- just a couple of questions here. Could we just talk directionally about the earnings impact from the sale of Columbia Gas of Massachusetts? So like, are you expecting any kind of dilution versus your prior 2020 guide? Is there any opportunities to mitigate? I mean, obviously, you've eliminated a very large equity slug in 2020.

Donald Brown -- Chief Financial Officer

Thanks, Shar. Yes, we think there are opportunities to mitigate that. We are starting to work on that plan. But as I stated, when you look at the loss of the earnings, although Massachusetts CMA was not earning its allowed return on its rate base, but we do lose that impact of those earnings.

We will have some dis-synergies and we'll start working on a plan there to offset and mitigate some of those dis-synergies. But as we've stated and you have as well, we will not need to issue that equity, which helps minimize dilution. We'll go out to the rating agencies this spring and show them our plan and talk about the financing plan going forward. And so I think we'll need a few quarters or so really, to develop this plan, get closer to a transaction close and understanding the timing of that, as well as just the transition.

Looking at a close by the end of the third quarter, but we also expect that there's going to be a transition of up to a couple of years to transition the business over to Eversource. And so we need to take all of those items into account. Having said that, we're confident that at a minimum, we'll be at or above this year's guidance, but certainly see the opportunity to do better. And it's in our interest to do better, as you'd expect.

Shar Pourreza -- Guggenheim Partners -- Analyst

Right. And then how should we sort of think about sort of the ongoing equity beyond '20, especially as we're layering capex around Indiana generation, etc.? So like, do you see any scenarios -- mainly what I'm trying to get at is if there's any scenarios where there could be future block equity beyond sort of the ATMs and internal programs maybe to fund the "significant investments" you kind of mentioned in your prepared remarks? Or do you sort of think your ongoing internal programs, ATMs is sufficient to fund what appears to be a pretty healthy capex program?

Donald Brown -- Chief Financial Officer

Yeah. I would say it's too early to say exactly what that financing program will be. That will be part of our discussions with the rating agency, as well as the board this spring to talk about how to finance, what the size of those investments are and how we finance that. Certainly, the ATM program has been a very good program for us.

But depending on the timing and size of those investments, the financing program will have to match up. And we expect that we will provide more details later in the year around that plan.

Shar Pourreza -- Guggenheim Partners -- Analyst

Got it. Thanks, guys. I'll jump back in the queue. Appreciate it.

Joe Hamrock -- Chief Executive Officer

Thanks, Shar.

Operator

Thank you. Your next response is from Michael Weinstein of Credit Suisse.

Michael Weinstein -- Credit Suisse -- Analyst

Hi. Good morning.

Joe Hamrock -- Chief Executive Officer

Good morning, Michael.

Donald Brown -- Chief Financial Officer

Good morning.

Michael Weinstein -- Credit Suisse -- Analyst

Hey. So when you say that you have an estimate of the loss on the sale, is there any goodwill recovery factored into your expected retention of proceeds?

Donald Brown -- Chief Financial Officer

So we did write off. We had goodwill on the books that we wrote off as of 12/31, as well as there was an intangible asset on our books related to the same-state gas purchase by NiSource back in 1999 or 1998. Both of those amounts were written off. It's about $415 million write-off that we did take at 12/31 this year.

Michael Weinstein -- Credit Suisse -- Analyst

Gotcha. And just a follow up on Shar's question. Is there any corporate overhead retained? I mean, you're talking about dis-synergies going forward? Is there any quantification you can put on the corporate overhead?

Donald Brown -- Chief Financial Officer

Not at this point. I think what we're trying to do is develop a plan to help mitigate those dis-synergies. Obviously, you can't eliminate them all because we will lose scale in our business, but what we're attempting to do is build a plan that offsets and mitigates that.

Michael Weinstein -- Credit Suisse -- Analyst

Gotcha. And can you just briefly review the additional, I guess, investigations that are still pending, seeing that you're still liable for any liabilities that are in connection with the incident, right?

Donald Brown -- Chief Financial Officer

That's right. So if you look at the -- there's still ongoing investigations in Massachusetts with the DPU that we are working with the DPU. Our hope and goal is to have those investigations resolved by the close of the transaction with Eversource.

Michael Weinstein -- Credit Suisse -- Analyst

Gotcha. OK. Thank you very much.

Operator

Thank you. Your next response is from Julien Dumoulin-Smith of Bank of America. Please go ahead. Julien, your line is open.

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

Good morning. Can you hear me?

Joe Hamrock -- Chief Executive Officer

Yeah, we can hear you now, Julien.

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

Excellent. Sorry about that. So I appreciate it. So let me come back to this, if I can, just in brief.

When you think about the timing-related issues on '20 versus the full-year run rate on '21, let's just focus on '21 here, how do you think about the puts and takes here? Because without interjecting a specific earned ROE on the Massachusetts business directly, it would seem as if, roughly, excluding the dis-synergies, the equity would seem to offset the loss of earnings from the core business. That's my words, I just want to see how that reconciles with you just as we think about puts and takes off of the way the Street and ourselves are already positioned on this.

Donald Brown -- Chief Financial Officer

Yeah, that's a good way to think about it. I don't know if it's exact offset, but I would say it's pretty close.

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

Got it. So when you say -- so if I can put this back to you, so if it's pretty close, and I get that there's some slight dis-synergies or something, when you talk about '21 being similar to '20, was that to say that it was similar originally and that you're only now disclosing that for the first time? Do you get what I'm saying?

Donald Brown -- Chief Financial Officer

No. I'm sorry, could you --

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

I apologize. Let me try this again. So when you're talking about '21 now and you're saying that it'll be similar or above '20, was that originally the case under the prior plan? Or is this transaction somehow actually resulting in a net negative to your '21 estimates, if it roughly nets out on '21 to begin with?

Donald Brown -- Chief Financial Officer

Yeah. So if you take the premise that you stated around the loss of the CMA earnings, offset by the dilution and then -- so both to offset and then we've got some dis-synergies from the loss of scale, there is a potential net negative from this transaction. And then that, as I said, is part of what we're working through to develop a plan, and it's really too early to give specific guidance around 2021. But otherwise, we would have expected to meet our 5% to 7% earnings per share and dividend per share growth guidance off of 2020.

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

Got it. Or if I may, one more time, '20 into '21 would have otherwise achieved the 5% to 7%, and the only delta that we're at least publicly aware about today is the slight dis-synergy on the sale of the business, assuming there's a broadly netting of one versus the other?

Donald Brown -- Chief Financial Officer

That's correct.

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

Thank you for clarifying. I'll leave it there.

Operator

Thank you. Your next response is from Greg Gordon of Evercore ISI.

Greg Gordon -- Evercore ISI -- Analyst

Hey, guys. Good morning.

Joe Hamrock -- Chief Executive Officer

Good morning, Greg.

Greg Gordon -- Evercore ISI -- Analyst

I'm going to beat a dead horse here, so please humor me. I apologize in advance. You guys, based on the very articulate guidance your team has given the Street, have been earning a very low equity return in Massachusetts. If we assume that the equity return was, practically speaking, sort of 50% of the authorized, and that's the net income that you're shedding when you sell the asset, then it does make complete sense that foregoing the equity issuance would offset that dilution.

But that just doesn't fit with you saying that your earnings in '21 could potentially be at the guidance range for '20 because if you then grow at 5% to 7% off of that, it implies '22 is anywhere from $0.07 to $0.10 below where it otherwise would have been based on the prior guidance when this, just based on basic algebra, should be a $0.05 or less dilutive. So you're implying that the dis-synergy could be fairly meaningful. And you have to understand, pulling the guidance gives investors quite a bit of agita around what they're missing that may be problematic in the underlying business away from just the puts and takes in this transaction. So if you can, could you please articulate in a little more detail how you're coming up with that notional at 2020 levels in '21?

Donald Brown -- Chief Financial Officer

Yeah. Greg, I don't know what other detail to give without giving you exact numbers that at this point we don't have. We're working through those details. But again, if you look at where we were, where we have committed to for 2020 net guidance, our plan all along was 5% to 7% off of that.

As you've stated and Julien and I think others, we are underearning in Massachusetts, we lose that. That was at full run rate, earning allowed return about 8% to 10% of our business. Not earning that dilution does offset most of the impact of losing those earnings, but there's certainly the impact of dis-synergies that we've got. That will remain with the business for the amount that we can't mitigate or offset through other ways.

And so for me, that is the simple math in terms of the growth and the opportunity to grow going forward. Because otherwise, our operating companies are strong, they are earning their allowed returns. We're continuing to make the investments. And that's actually why we didn't change our capital investment guidance.

We continue to invest in our program of about $1.9 billion, and that will continue going forward. And ultimately, that's what drives our earnings growth.

Greg Gordon -- Evercore ISI -- Analyst

OK. So we don't have to worry about there being some significant change in your assumptions with regard to the financial or operating profile of the rest of the business?

Donald Brown -- Chief Financial Officer

That's right. Yeah, O&M --

Greg Gordon -- Evercore ISI -- Analyst

I just wanted to be 100% clear on that. It really is about what are you losing, the offsetting benefit of not issuing the equity and whatever we think the underlying dis-synergy will be. And we don't have to worry about anything else if we're trying to figure this out. Is that fair?

Donald Brown -- Chief Financial Officer

That is very fair.

Greg Gordon -- Evercore ISI -- Analyst

OK, Thank you.

Operator

Thank you. Your next response is from Steve Fleishman of Wolfe Research. Please go ahead.

Steve Fleishman -- Wolfe Research -- Analyst

Yeah, hi. I just wanted to clarify prior questions because a few other questions said that you stated similar '21 versus '20. But if I heard you correctly, I thought you said a minimum of at or above the prior 2020 guide for 2021. So just to clarify, is that what you said? And then also -- yup, is that correct?

Donald Brown -- Chief Financial Officer

That is correct, at a minimum, the 2020 guidance.

Steve Fleishman -- Wolfe Research -- Analyst

At or above that?

Donald Brown -- Chief Financial Officer

At or above.

Steve Fleishman -- Wolfe Research -- Analyst

OK. And would you say being at it would be a very conservative assumption?

Donald Brown -- Chief Financial Officer

Well, I don't want to start providing sensitivity around that. I would say that we are comfortable at that range for 2021, which is why we've given it. But at the same time, we think there's ability to be above that range and have growth off of that 2020 range.

Steve Fleishman -- Wolfe Research -- Analyst

Yeah. OK. And then just in terms of looking forward, so this transaction will close and you'll be kind of focused back to all the rest of the 93% of the company. And just is there any kind of -- if we kind of focus on that 93%, is there any kind of key things to watch this year outside of just really the -- probably the big event I'm aware of is the RFP outcomes.

But is there any other kind of key things to watch in your states?

Joe Hamrock -- Chief Executive Officer

Yeah. Steve, this is Joe. I think you hit the big one. The work we're doing with the generation replacement, the RFPs that are well under way is the key item that'll drive our longer-term guidance, particularly beyond 2021.

And we do expect to see more clarity on that quarter by quarter probably as we step through this year. The other thing I would say is the important point overarching and underpinning what Donald has been talking about is the resilience of the NiSource business plan. When you look at all the other states and the capital deployment there and the strong regulatory mechanisms, we're in that sort of season of looking at the regulatory cycle rate cases. And that'd be the space to watch as we go through the remainder of 2020, just the regulatory actions that we would expect to see that'll kind of set the stage for '21 and beyond.

Steve Fleishman -- Wolfe Research -- Analyst

Great. Thank you.

Operator

Your next response is from Charles Fishman of Morningstar. Please go ahead.

Charles Fishman -- Morningstar -- Analyst

Hi. Good morning. If we could just move to capex for a minute, if I have the numbers right, you've actually moved up the capex range for 2020 $100 million. First of all, is that correct? Did I get that right?

Donald Brown -- Chief Financial Officer

That is correct. That is correct.

Charles Fishman -- Morningstar -- Analyst

OK. And then you've pulled '21 and '22, or at least you're going to wait a quarter, and then you'll give us some guidance. But I would think with the kind of long-term programs you have with pipe replacements and things and the frameworks you have in place, and actually probably Massachusetts was your weakest, we should be confident that that $1.7 billion to $2 billion annually that was the old guidance for '21 and '22, it's not going to be too different from that.

Donald Brown -- Chief Financial Officer

I agree. I agree. As we work through our safety management program and start to look at investments across our system and how to prioritize those investments, we're confident that that overall capex guidance range is not going to change. Again, we'll provide more clear guidance and direct guidance probably around the third quarter of this year.

But certainly, we have resiliency and strength in our remaining states to continue this growth.

Charles Fishman -- Morningstar -- Analyst

OK. And then one sort of related investment question. A year ago, I think, or after the first round of IRPs in Indiana, the big surprise was the cheap solar. And yet, obviously, you're moving forward with wind.

Is solar still on the horizon here getting out five years? Are you still seeing that as a viable option in Indiana?

Joe Hamrock -- Chief Executive Officer

Yeah. Charles, definitely. If you look at the current RFP, and the team just did a public meeting, a virtual meeting on that and shared some of the indicative bid ranges around that. And you can see from that that solar is very much in the hunt for the future portfolio here, solar and storage both.

Charles Fishman -- Morningstar -- Analyst

And then related to that, the plan, I don't have it in front of me, but the coal closings that you accelerated, that's still on track?

Joe Hamrock -- Chief Executive Officer

Yeah. That's still on track, and we had, from the IURC, the final approval, if you want to call it that, of the directors' report in the IRP that that supports the overall plan, as well as the rate case outcome that accelerated depreciation of the existing coal fleet, consistent with the early retirement. So we've seen all of the right regulatory support for the plan that we've put forward.

Charles Fishman -- Morningstar -- Analyst

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

Joe Hamrock -- Chief Executive Officer

Thanks, Charles.

Operator

Thank you. [Operator instructions] Your next response is from Andrew Levi of ExodusPoint. Please go ahead.

Andrew Levi -- ExodusPoint -- Analyst

Hey, guys. How are you?

Joe Hamrock -- Chief Executive Officer

Hey, good morning, Andy. Good.

Donald Brown -- Chief Financial Officer

Hey, Andy.

Andrew Levi -- ExodusPoint -- Analyst

Obviously, most of the questions have been asked and answered well. Just on the categories of things that you can mitigate to help '21 and beyond, could you just give us, like at a very high level, what categories you're talking about?

Donald Brown -- Chief Financial Officer

Yes. If you think about it, Andy, it's really our shared costs across our corporate services and customer services that we need to develop a plan to help offset those dis-synergies that we've got. Operating across seven states, both on the gas side, we've got some shared gas services, as well as just, I would say, our typical accounting, finance, IT and corporate services that we allocate the costs across to our seven operating companies.

Andrew Levi -- ExodusPoint -- Analyst

So, I guess, it's more O&M related. And I guess, reallocating a portion of that to the other operating companies and getting it to go flow through your trackers, I guess, for no better way to put it, and then at the same time, try to cut costs?

Donald Brown -- Chief Financial Officer

I think that's all of the above, both from a recovery from other states, as well as continuing to find opportunities to be lower cost and more efficient.

Andrew Levi -- ExodusPoint -- Analyst

And then at the same time, I guess, be able to allocate the capex that you had at base state of -- was base state years ago, that's how old I am, into your other businesses, which you kind of have really begun to do it anyway, that's what was in your release today?

Donald Brown -- Chief Financial Officer

That's right. Yeah, we'll be looking at that as well, at the opportunity to do that and have that capital go into those other states into their tracker programs.

Andrew Levi -- ExodusPoint -- Analyst

Got it. OK, I understand it. Thank you very much.

Operator

Thank you. I'm showing no further questions at this time. I would like to turn the conference back over to Joe Hamrock, our CEO.

Joe Hamrock -- Chief Executive Officer

Thank you, Detamora, and thank you all for joining us. In closing, I would like to reiterate that our deep focus of providing value for our customers and our shareholders through comprehensive investments and programs that drive safety and risk mitigation remains at the center of our focus. And we appreciate your support and ongoing interest in NiSource, and we look forward to engaging with you in the weeks and months ahead. Have a safe day.

Thank you.

Operator

[Operator signoff]

Duration: 46 minutes

Call participants:

Randy Hulen -- Vice President of Investor Relations and Treasurer

Joe Hamrock -- Chief Executive Officer

Donald Brown -- Chief Financial Officer

Shar Pourreza -- Guggenheim Partners -- Analyst

Michael Weinstein -- Credit Suisse -- Analyst

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

Greg Gordon -- Evercore ISI -- Analyst

Steve Fleishman -- Wolfe Research -- Analyst

Charles Fishman -- Morningstar -- Analyst

Andrew Levi -- ExodusPoint -- Analyst

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