v3.25.4
Leases
 12 Months Ended
Dec. 31, 2025
Leases [Abstract]  
Lessee, Operating Leases
Lease Descriptions. We are the lessee for substantially all of our leasing activity, which includes operating and finance leases for corporate and field offices, railcars, land, and fleet vehicles. Our corporate and field office leases and certain land leases have remaining terms between 1 and 38 years with options to renew the leases for up to 35 years. We lease railcars to transport coal to and from our electric generation facilities in Indiana. Our railcars are specifically identified in the lease agreements which have remaining lease terms between 1 and 3 years with options to renew for 1 year. Our fleet vehicles include trucks, trailers and equipment that have been customized specifically for use in the utility industry. We lease fleet vehicles for 1 year terms, after which we have the option to extend on a month-to-month basis or terminate with written notice. We elected the short-term lease practical expedient, allowing us to not recognize ROU assets or lease liabilities for all leases with a term of 12 months or less. ROU assets and liabilities on our Consolidated Balance Sheets do not include obligations for possible fleet vehicle lease renewals beyond the initial lease term. While we have the ability to renew these leases beyond the initial term, we are not reasonably certain to do so.
We have not provided material residual value guarantees for our leases, nor do our leases contain material restrictions or covenants. Lease contracts containing renewal and termination options are mostly exercisable at our sole discretion. Certain of our real estate and railcar leases include renewal periods in the measurement of the lease obligation if we have deemed the renewals reasonably certain to be exercised.
With respect to service contracts involving the use of assets, if we have the right to direct the use of the asset and obtain substantially all economic benefits from the use of an asset, we account for the service contract as a lease. Unless specifically provided to us by the lessor, we utilize NiSource's collateralized incremental borrowing rate commensurate to the lease term as the discount rate for all of our leases. ASC 842 permits a lessee, by class of underlying asset, not to separate nonlease components from lease components. Our policy is to apply this expedient for our leases of fleet vehicles, IT assets and railcars when calculating their respective lease liabilities.
Lease costs for the years ended December 31, 2025 and December 31, 2024 are presented in the table below. These costs include both amounts recognized in expense and amounts capitalized as part of the cost of another asset. Income statement presentation for these costs (when ultimately recognized on the income statement) is also included:
Year Ended December 31, (in millions)
Income Statement Classification20252024
Finance lease cost
Amortization of right-of-use assetsDepreciation and amortization$20.5 $27.1 
Interest on lease liabilitiesInterest expense, net12.9 13.5 
Total finance lease cost33.4 40.6 
Operating lease costOperation and maintenance14.3 14.7 
Total lease cost$47.7 $55.3 
Our right-of-use assets and liabilities are presented in the following lines on the Consolidated Balance Sheets:
At December 31, (in millions)
Balance Sheet Classification20252024
Assets
Finance leasesNet Property, Plant and Equipment$249.8 $222.9 
Operating leasesDeferred charges and other25.8 26.4
Total leased assets$275.6 $249.3 
Liabilities
Current
Finance leasesCurrent portion of long-term debt$19.7 $22.9 
Operating leasesOther accruals9.7 9.1
Noncurrent
Finance leasesLong-term debt, excluding amounts due within one year254.3 223.3
Operating leases
Other noncurrent liabilities and deferred credits
17.2 18.2
Total lease liabilities$300.9 $273.5 
Other pertinent information related to leases was as follows:
Year Ended December 31, (in millions)
20252024
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for finance leases$14.5 $11.2 
Operating cash flows used for operating leases15.7 14.5
Financing cash flows used for finance leases22.0 26.9
Right-of-use assets obtained in exchange for lease obligations
Finance leases50.2 65.9
Operating leases$13.9 $12.2 
December 31, 2025December 31, 2024
Weighted-average remaining lease term (years)
Finance leases21.820.5
Operating leases5.35.6
Weighted-average discount rate
Finance leases5.7 %5.6 %
Operating leases4.5 %4.5 %
Maturities of our lease liabilities as of December 31, 2025 were as follows:
As of December 31, 2025, (in millions)
TotalFinance LeasesOperating Leases
2026$43.3 $32.6 $10.7 
202732.5 27.4 5.1 
202830.0 26.2 3.8 
202924.5 21.3 3.2 
203024.4 22.3 2.1 
Thereafter373.7 368.1 5.6 
Total lease payments528.4 497.9 30.5 
Less: Imputed interest(227.5)(223.9)(3.6)
Total
$300.9 $274.0 $26.9 
Reported as of December 31, 2025
Short-term lease liabilities29.4 19.7 9.7 
Long-term lease liabilities271.5 254.3 17.2 
Total lease liabilities$300.9 $274.0 $26.9 
Lessee, Finance Leases
Lease Descriptions. We are the lessee for substantially all of our leasing activity, which includes operating and finance leases for corporate and field offices, railcars, land, and fleet vehicles. Our corporate and field office leases and certain land leases have remaining terms between 1 and 38 years with options to renew the leases for up to 35 years. We lease railcars to transport coal to and from our electric generation facilities in Indiana. Our railcars are specifically identified in the lease agreements which have remaining lease terms between 1 and 3 years with options to renew for 1 year. Our fleet vehicles include trucks, trailers and equipment that have been customized specifically for use in the utility industry. We lease fleet vehicles for 1 year terms, after which we have the option to extend on a month-to-month basis or terminate with written notice. We elected the short-term lease practical expedient, allowing us to not recognize ROU assets or lease liabilities for all leases with a term of 12 months or less. ROU assets and liabilities on our Consolidated Balance Sheets do not include obligations for possible fleet vehicle lease renewals beyond the initial lease term. While we have the ability to renew these leases beyond the initial term, we are not reasonably certain to do so.
We have not provided material residual value guarantees for our leases, nor do our leases contain material restrictions or covenants. Lease contracts containing renewal and termination options are mostly exercisable at our sole discretion. Certain of our real estate and railcar leases include renewal periods in the measurement of the lease obligation if we have deemed the renewals reasonably certain to be exercised.
With respect to service contracts involving the use of assets, if we have the right to direct the use of the asset and obtain substantially all economic benefits from the use of an asset, we account for the service contract as a lease. Unless specifically provided to us by the lessor, we utilize NiSource's collateralized incremental borrowing rate commensurate to the lease term as the discount rate for all of our leases. ASC 842 permits a lessee, by class of underlying asset, not to separate nonlease components from lease components. Our policy is to apply this expedient for our leases of fleet vehicles, IT assets and railcars when calculating their respective lease liabilities.
Lease costs for the years ended December 31, 2025 and December 31, 2024 are presented in the table below. These costs include both amounts recognized in expense and amounts capitalized as part of the cost of another asset. Income statement presentation for these costs (when ultimately recognized on the income statement) is also included:
Year Ended December 31, (in millions)
Income Statement Classification20252024
Finance lease cost
Amortization of right-of-use assetsDepreciation and amortization$20.5 $27.1 
Interest on lease liabilitiesInterest expense, net12.9 13.5 
Total finance lease cost33.4 40.6 
Operating lease costOperation and maintenance14.3 14.7 
Total lease cost$47.7 $55.3 
Our right-of-use assets and liabilities are presented in the following lines on the Consolidated Balance Sheets:
At December 31, (in millions)
Balance Sheet Classification20252024
Assets
Finance leasesNet Property, Plant and Equipment$249.8 $222.9 
Operating leasesDeferred charges and other25.8 26.4
Total leased assets$275.6 $249.3 
Liabilities
Current
Finance leasesCurrent portion of long-term debt$19.7 $22.9 
Operating leasesOther accruals9.7 9.1
Noncurrent
Finance leasesLong-term debt, excluding amounts due within one year254.3 223.3
Operating leases
Other noncurrent liabilities and deferred credits
17.2 18.2
Total lease liabilities$300.9 $273.5 
Other pertinent information related to leases was as follows:
Year Ended December 31, (in millions)
20252024
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for finance leases$14.5 $11.2 
Operating cash flows used for operating leases15.7 14.5
Financing cash flows used for finance leases22.0 26.9
Right-of-use assets obtained in exchange for lease obligations
Finance leases50.2 65.9
Operating leases$13.9 $12.2 
December 31, 2025December 31, 2024
Weighted-average remaining lease term (years)
Finance leases21.820.5
Operating leases5.35.6
Weighted-average discount rate
Finance leases5.7 %5.6 %
Operating leases4.5 %4.5 %
Maturities of our lease liabilities as of December 31, 2025 were as follows:
As of December 31, 2025, (in millions)
TotalFinance LeasesOperating Leases
2026$43.3 $32.6 $10.7 
202732.5 27.4 5.1 
202830.0 26.2 3.8 
202924.5 21.3 3.2 
203024.4 22.3 2.1 
Thereafter373.7 368.1 5.6 
Total lease payments528.4 497.9 30.5 
Less: Imputed interest(227.5)(223.9)(3.6)
Total
$300.9 $274.0 $26.9 
Reported as of December 31, 2025
Short-term lease liabilities29.4 19.7 9.7 
Long-term lease liabilities271.5 254.3 17.2 
Total lease liabilities$300.9 $274.0 $26.9