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NiSource Unit to Replace Gas Pipelines Post Hurricane Florence

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NiSource, Inc.’s (NI - Free Report) business unit, Columbia Gas of Massachusetts, recently announced plans to replace the complete natural gas distribution system in the Merrimack Valley. The unit will collaborate with the Governor’s Office and stakeholders. Notably, the replacement involves 48-mile cast iron and bare steel pipeline system, which serves nearly 8,600 customers. The pipeline was severely affected by Hurricane Florence which hit Columbia on Sep 13, 2018.

NiSource will replace the existing pipeline of Andover, Lawrence and North Andover towns, with state-of-the-art plastic distribution mains and service lines. Moreover, considering the modernization project, the company will apply latest safety features like pressure regulation and excess flow valves at each premise.

Importance of Investment for Utilities

Demand for utility services is always constant as the companies are generally regulated, fundamentally strong and provide basic services. Regular investment on infrastructure is important to maintain uninterrupted flow of service, for which utilities are required to upgrade and strengthen existing infrastructure and modernize the generation fleet. Monitoring and servicing on a day-to-day basis increases customers’ reliability and resiliency on a service provider.

However, utility sector tends to suffer from natural calamities like hurricanes. Massive infrastructural loss dents optimism in the sector. To restore reliability, utilities keep on investing in assets, evident from NiSource’s latest announcement to replace and upgrade pipeline.

Keeping up with this strategy, NextEra Energy (NEE - Free Report) has plans to invest nearly $40.0-$44.0 billion in different projects over the 2017-2020 periods. Duke Energy (DUK - Free Report) expects to spend about $37.6 billion for electric utilities and infrastructure for the 2018-2022 periods. FirstEnergy Corporation (FE - Free Report) projects capital investments in the range of $5.7-$6.7 billion through 2021.

Our view

NiSource has a 100% regulated utility business model and provides natural gas, electricity and other products as well as services in the United States. To provide safe and reliable service to customers through enhanced gas system and reduce greenhouse gas emissions, the company continuous to invest on infrastructure. In this line, NIPSCO (“Northern Indiana Public Service Company”), a segment of the company, filed for $1.25-billion gas infrastructure investments through 2025. The decision of the commission is expected in the second half of 2018. The investment is aimed at the modernization of underground natural gas distribution infrastructure, which will increase reliability of services and allow the company to serve customers efficiently.

In the long term, the company plans to invest $30 billion on regulated infrastructure. Of the amount, the company will invest nearly $20 billion to strengthen gas operations. The annual investment is expected between $1.6 billion and $1.8 billion in 2019-2020 time frames.

Zacks Rank & Price Movement

NiSource carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



Shares of NiSource have gained 6.6% compared with the industry’s rise of 3.8% in the past six months.

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