In a landmark regulatory decision, NiSource, one of the largest fully regulated utility companies in the U.S. with a market capitalization of approximately $20 billion, secured approval from the Indiana Utility Regulatory Commission (IURC) for NIPSCO Generation (GenCo), a separate entity designed to serve the growing data center market in Northern Indiana.
The approved structure, announced on Sept. 24, 2025, is the first of its kind in the U.S. to grant limited regulation to an affiliate of a vertically regulated public utility company. The pioneer model allows NiSource to separate the costs of serving new data center customers from existing NIPSCO retail customers, protecting current customers from any new data center development costs.
IURC's approval marks a pivotal transformation for the company and the region, unlocking GenCo's ability to create energy solutions tailored for the data center boom while protecting existing customers. The GenCo structure provides a pathway for risk-adjusted returns outside the standard regulatory returns, enabling prudent investments with predictable cash flows.
In its decision, IURC stated that the GenCo model “reflects a forward-looking approach to risk mitigation.” While IURC is “highly aware and sensitive to customer concerns surrounding the potential of new megaload customers” it noted that by “ringfencing the generation assets dedicated to these high-demand users, GenCo will offer the opportunity to ensure that the electric costs tied to data center development and operation do not result in costs to other ratepayers.”
The approval comes as data centers continue to drive significant energy demand across the U.S., requiring utilities to develop new generation capacity and transmission infrastructure. NiSource, which serves approximately 3.3 million natural gas customers and 500,000 electric customers across six states, is positioning itself to capture this growth opportunity. The company has not disclosed specific investment amounts or timelines for new generation projects that may result from this regulatory approval.
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