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Leases | 12 Months Ended
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Dec. 31, 2024
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 39 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, 2024 and December 31, 2023 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 Classification | 2024 |  | 2023
Finance lease cost |  |  |  |
Amortization of right-of-use assets | Depreciation and amortization | $ | 27.1 |  |  | $ | 32.0 |
Interest on lease liabilities | Interest expense, net | 13.5 |  |  | 8.6 |
Total finance lease cost |  | 40.6 |  |  | 40.6 |
Operating lease cost | Operation and maintenance | 14.7 |  |  | 11.3 |
Total lease cost |  | $ | 55.3 |  |  | $ | 51.9 |
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 Classification | 2024 |  | 2023
Assets |  |  |  |
Finance leases | Net Property, Plant and Equipment | $ | 222.9 |  |  | $ | 184.3 |
Operating leases | Deferred charges and other | 26.4 |  |  | 32.9
Total leased assets |  | $ | 249.3 |  |  | 217.2
Liabilities |  |  |  |
Current |  |  |  |
Finance leases | Current portion of long-term debt | $ | 22.9 |  |  | 23.8
Operating leases | Other accruals | 9.1 |  |  | 8.3
Noncurrent |  |  |  |
Finance leases | Long-term debt, excluding amounts due within one year | 223.3 |  |  | 181.6
Operating leases | Other noncurrent liabilities and deferred credits | 18.2 |  |  | 25.8
Total lease liabilities |  | $ | 273.5 |  |  | $ | 239.5 |
Other pertinent information related to leases was as follows:
Year Ended December 31, (in millions) | 2024 |  | 2023
Cash paid for amounts included in the measurement of lease liabilities |  |  |
Operating cash flows used for finance leases | $ | 11.2 |  |  | $ | 9.3 |
Operating cash flows used for operating leases | 14.5 |  |  | 11.1
Financing cash flows used for finance leases | 26.9 |  |  | 33.1
Right-of-use assets obtained in exchange for lease obligations |  |  |
Finance leases | 65.9 |  |  | 64.5
Operating leases | $ | 12.2 |  |  | $ | 5.6 |
| December 31, 2024 |  | December 31, 2023
Weighted-average remaining lease term (years) |  |  |
Finance leases | 20.5 |  | 16.4
Operating leases | 5.6 |  | 6.7
Weighted-average discount rate |  |  |
Finance leases | 5.6 | % |  | 5.5 | %
Operating leases | 4.5 | % |  | 4.3 | %
Maturities of our lease liabilities as of December 31, 2024 were as follows:
As of December 31, 2024, (in millions) | Total | Finance Leases | Operating Leases
2025 | $ | 44.6 |  | $ | 34.6 |  | $ | 10.0 |
2026 | 34.7 |  | 29.4 |  | 5.3 |
2027 | 28.5 |  | 24.2 |  | 4.3 |
2028 | 26.1 |  | 23.0 |  | 3.1 |
2029 | 21.5 |  | 19.0 |  | 2.5 |
Thereafter | 304.9 |  | 299.2 |  | 5.7 |
Total lease payments | 460.3 |  | 429.4 |  | 30.9 |
Less: Imputed interest | (186.8) |  | (183.2) |  | (3.6) |
Total | $ | 273.5 |  | $ | 246.2 |  | $ | 27.3 |
Reported as of December 31, 2024 |  |  |
Short-term lease liabilities | 32.0 |  | 22.9 |  | 9.1 |
Long-term lease liabilities | 241.5 |  | 223.3 |  | 18.2 |
Total lease liabilities | $ | 273.5 |  | $ | 246.2 |  | $ | 27.3 |
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 39 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, 2024 and December 31, 2023 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 Classification | 2024 |  | 2023
Finance lease cost |  |  |  |
Amortization of right-of-use assets | Depreciation and amortization | $ | 27.1 |  |  | $ | 32.0 |
Interest on lease liabilities | Interest expense, net | 13.5 |  |  | 8.6 |
Total finance lease cost |  | 40.6 |  |  | 40.6 |
Operating lease cost | Operation and maintenance | 14.7 |  |  | 11.3 |
Total lease cost |  | $ | 55.3 |  |  | $ | 51.9 |
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 Classification | 2024 |  | 2023
Assets |  |  |  |
Finance leases | Net Property, Plant and Equipment | $ | 222.9 |  |  | $ | 184.3 |
Operating leases | Deferred charges and other | 26.4 |  |  | 32.9
Total leased assets |  | $ | 249.3 |  |  | 217.2
Liabilities |  |  |  |
Current |  |  |  |
Finance leases | Current portion of long-term debt | $ | 22.9 |  |  | 23.8
Operating leases | Other accruals | 9.1 |  |  | 8.3
Noncurrent |  |  |  |
Finance leases | Long-term debt, excluding amounts due within one year | 223.3 |  |  | 181.6
Operating leases | Other noncurrent liabilities and deferred credits | 18.2 |  |  | 25.8
Total lease liabilities |  | $ | 273.5 |  |  | $ | 239.5 |
Other pertinent information related to leases was as follows:
Year Ended December 31, (in millions) | 2024 |  | 2023
Cash paid for amounts included in the measurement of lease liabilities |  |  |
Operating cash flows used for finance leases | $ | 11.2 |  |  | $ | 9.3 |
Operating cash flows used for operating leases | 14.5 |  |  | 11.1
Financing cash flows used for finance leases | 26.9 |  |  | 33.1
Right-of-use assets obtained in exchange for lease obligations |  |  |
Finance leases | 65.9 |  |  | 64.5
Operating leases | $ | 12.2 |  |  | $ | 5.6 |
| December 31, 2024 |  | December 31, 2023
Weighted-average remaining lease term (years) |  |  |
Finance leases | 20.5 |  | 16.4
Operating leases | 5.6 |  | 6.7
Weighted-average discount rate |  |  |
Finance leases | 5.6 | % |  | 5.5 | %
Operating leases | 4.5 | % |  | 4.3 | %
Maturities of our lease liabilities as of December 31, 2024 were as follows:
As of December 31, 2024, (in millions) | Total | Finance Leases | Operating Leases
2025 | $ | 44.6 |  | $ | 34.6 |  | $ | 10.0 |
2026 | 34.7 |  | 29.4 |  | 5.3 |
2027 | 28.5 |  | 24.2 |  | 4.3 |
2028 | 26.1 |  | 23.0 |  | 3.1 |
2029 | 21.5 |  | 19.0 |  | 2.5 |
Thereafter | 304.9 |  | 299.2 |  | 5.7 |
Total lease payments | 460.3 |  | 429.4 |  | 30.9 |
Less: Imputed interest | (186.8) |  | (183.2) |  | (3.6) |
Total | $ | 273.5 |  | $ | 246.2 |  | $ | 27.3 |
Reported as of December 31, 2024 |  |  |
Short-term lease liabilities | 32.0 |  | 22.9 |  | 9.1 |
Long-term lease liabilities | 241.5 |  | 223.3 |  | 18.2 |
Total lease liabilities | $ | 273.5 |  | $ | 246.2 |  | $ | 27.3 |

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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