NiSource said on 28 October 2026 that its Indiana utility, NIPSCO, has signed a data-centre contract with Microsoft, its third big-tech customer after Amazon and Alphabet.
The contract starts with capacity in 2028 and rises to 788 megawatts from 2031, according to the company’s quarterly report. NiSource says its signed agreements with data-centre customers are now expected to deliver about $1.75 billion in savings for existing customers, up from the $1.4 billion it cited in August.
Short explainer · AI power brief
A vertical news Short narrated from the published headlines and opening lines of this piece and four related FourWeekMBA pieces on AI power.
Business Pill · Grid Cost Allocation
An evergreen Business Engineer explainer on how grid costs are allocated. It explains the general idea only and does not discuss NiSource or Microsoft.
The key insight: As we read it, NiSource expects to employ more capacity, planned generation plus contracted capacity, for three data-centre customers than it owned at the end of 2025, and it says its signed agreements should deliver savings for existing customers.
Capacity NiSource expects to employ at full ramp (2032) to serve its three data-centre customers, Amazon, Alphabet and Microsoft (about 4,920 MW of generation to be built plus contracted capacity), against the roughly 3,967 MW of generating resources it owned at the end of 2025. The +24% is our arithmetic. Source: NiSource Form 10-Q, filed 28 Oct 2026.
NiSource’s 10-Q, filed on 28 October, describes the deal: “In October 2026, NIPSCO entered into an agreement with Microsoft, which will be submitted to the IURC for approval, under which NIPSCO will provide capacity and electricity services to Microsoft’s data center facility to be located in NIPSCO’s service territory pursuant to a capacity commitment beginning in 2028 and increases to 788 MW commencing in 2031.”
Term. The initial term ends 20 years after the data centre is first energised.
Payments. The 10-Q says “Microsoft will make an initial capacity payment in 2026”, followed by monthly capacity charges from the second quarter of 2027, subject to specified minimums.
Savings route. The charges include “an existing system charge which will be used to pass savings back to existing electric customers.”
Approval. The contract still needs approval from the Indiana Utility Regulatory Commission (IURC), and a related power purchase agreement with NiSource’s generation unit, GenCo, needs approval too.
The 10-Q adds that the charges are designed to give NiSource an unlevered internal rate of return “within a defined range” and that, if the contract is terminated other than as a result of a NIPSCO default, it must make termination payments the company believes will be sufficient to reimburse its investment.
Expected savings for NiSource’s existing customers from its signed data-centre agreements, as stated by the company: about $1.4 billion in August 2026 (Amazon and Alphabet agreements) and about $1.75 billion in October 2026 (after the Microsoft agreement). NiSource gives no time period; the roughly $350 million increase is our arithmetic. Source: NiSource releases, 5 Aug and 28 Oct 2026.
The Savings and the Plan
The 28 October release lists “Expanding GenCo cost savings for existing customers to approximately $1.75 billion through new agreement with Microsoft” among the quarter’s highlights. In its 5 August release, NiSource cited “$1.4 billion in savings for existing customers through recently approved Amazon and Alphabet agreements.” The increase is about $350 million, by our arithmetic; NiSource does not say over what period the savings accrue.
Capital plan. A seven-year plan of $40.0 billion for 2027-2033: $32.0 billion of base-plan capital and $8.0 billion for data-centre investments, the release says.
Earnings guidance. 2027 non-GAAP consolidated adjusted EPS of $2.22-$2.30, and a 10%-11% expected compound growth rate for 2027-2033, up from 9%-10%.
Quarter. Third-quarter GAAP net income available to common shareholders was $129.5 million, or $0.27 a share, against $94.7 million, or $0.20, a year earlier.
Chief executive Lloyd Yates said in the release: “Our signed GenCo agreements are expected to deliver approximately $1.75 billion in customer savings, positioning us to deliver industry-leading growth and long-term value for customers, communities, and shareholders.”
More Power for Three Customers Than It Owned
The 10-Q gives the scale. At full ramp, expected in 2032, NiSource says it expects “to employ approximately 4,920MW of capacity” to serve its existing data-centre customers. By comparison, at the end of 2025 it owned generating resources of about 3,967 megawatts and had power purchase agreements for about 1,200 megawatts.
So the capacity planned for three data-centre customers, Amazon, Alphabet and now Microsoft, is about 24% more than the generation NiSource owned at the end of 2025, by our arithmetic. The company flags the risk in its filing: “Our partnerships with our data center customers expose us to significant customer and industry concentration risk.”
Connecting the Coverage
Our data-centre map of 22 October listed NiSource among utilities building generation for single customers, as we reported then. Today the Energy Department offered Constellation up to $5 billion for nuclear uprates whose output Google and Amazon have contracted, as we reported today, while equipment makers GE Vernova and Generac reported data-centre demand, here and here. Microsoft itself opened its Copilot harness to developers today, as we reported.
Local pushback is part of the picture too, as with a realtor’s claim that xAI aims to buy homes near its gas plant, as we reported today. What’s new here: Microsoft’s capacity figure and contract terms in NiSource’s own filing, and the $1.75 billion savings figure.
The Structural Read
The Microsoft terms in the 10-Q are capacity payments with specified minimums over a 20-year initial term, plus a charge that will “pass savings back to existing electric customers.” The filing says Microsoft’s supply will come from NiSource’s pooled generation assets.
NiSource’s own filing flags the trade-off: “Our partnerships with our data center customers expose us to significant customer and industry concentration risk.”
The release says $8.0 billion of the $40.0 billion 2027-2033 capital plan is for data-centre investments.
Lloyd Yates, NiSource CEO
“Our signed GenCo agreements are expected to deliver approximately $1.75 billion in customer savings”
Three Implications
FOR MICROSOFT The 10-Q says NIPSCO will provide capacity and electricity services to its planned data centre, rising to 788 megawatts from 2031, subject to approval.
FOR EXISTING CUSTOMERS NiSource says its signed agreements are expected to deliver about $1.75 billion in savings for them.
FOR NISOURCE The 10-Q says the charges are designed to return its invested capital at an unlevered internal rate of return “within a defined range”.
The framework puts it as “The structural bottleneck isn’t computing, it’s electrons.”
As we read it, NiSource’s filing puts a number on that bottleneck for one utility: about 4,920 megawatts for three data-centre customers by 2032. The framework was published in December 2025 and does not discuss NiSource or Microsoft.
What Is Not Established
The Microsoft contract and the related power purchase agreement still need regulatory approval. NiSource does not disclose the contract’s dollar value, the capacity price, Microsoft’s initial payment amount or the data centre’s location within its territory. The $1.75 billion savings figure is the company’s expectation, without a stated time period, and it is not an independent estimate. We did not find a Microsoft statement on the contract.
This Week In The AI Supercycle
Execution Fault Lines, Concentrated Demand, and Geopolitical Firewalls
This week’s issue: the AI build is not short of demand for its parts. It is short of cheap money, and its end revenue rests on a narrow base of large, often venture-funded buyers.
NiSource’s Indiana utility signed a 20-year contract to supply Microsoft’s planned data centre, rising to 788 megawatts from 2031, subject to state approval. The company says its three data-centre contracts should save existing customers about $1.75 billion, up from $1.4 billion in August, and that serving them will take about 4,920 megawatts by 2032, more than the roughly 3,967 megawatts it owned at the end of 2025.
A note on sourcing. The contract terms and capacity figures come from NiSource’s Form 10-Q filed on 28 October 2026; the savings, capital plan and earnings figures come from its results releases of 28 October and 5 August 2026, both filed with the SEC. Percentage and difference figures are our arithmetic. We did not contact NiSource or Microsoft.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
