NiSource announced on Oct. 16, 2026, that its generation subsidiary, NiSource Generation Company LLC (GenCo), had signed a 20-year electric supply agreement with Microsoft for the company's planned data center campus in La Porte, in northwest Indiana. The same day, NiSource filed a Form 8-K with the Securities and Exchange Commission disclosing a separate long-term tolling agreement under which GenCo will take the output of a stand-alone battery energy storage system connected to the MISO grid.
Service under the Microsoft agreement is expected to begin in 2028, and the deal covers about 1,100 MW of generation resources over its 20-year term, according to NiSource's announcement as reported by Finviz. NiSource said Microsoft will fund all of the generation and transmission infrastructure needed to serve the campus, so existing NIPSCO customers should not bear those costs.
The Microsoft agreement
The deal runs through GenCo, the NiSource unit that serves large-load customers such as data centers under a separate arrangement from NIPSCO, the company's regulated Indiana utility, WSBT 22 reported. NiSource frames the structure around cost allocation: Microsoft pays for the new generation and transmission equipment, and existing customers are projected to share in savings.
With the Microsoft contract added, NiSource raised its projection of savings for existing customers to about $1.75 billion over the life of its contracts, up from an earlier estimate of $1.4 billion, according to Finviz. The company said savings could reach up to $140 per existing electricity customer per year. NiSource described both figures as projections, not guaranteed reductions.
"Affordability is not separate from economic development," NiSource President and CEO Lloyd Yates said, as quoted by WSBT 22. Yates also said the agreement "reflects the balanced approach we believe is needed for Indiana to attract significant investment," according to the station. Jeff Riles, Microsoft's senior director of energy markets, said the company is "committed to paying our own way," Finviz reported.
NiSource said it will provide further financial and operational details on its third-quarter earnings call.
The battery tolling agreement
Finviz reported that GenCo contracted 600 MW of battery energy storage under a long-term tolling agreement, with an affiliate of AGP Group developing and building the facility. The 8-K, filed under Item 2.03 (creation of a direct financial obligation), gives the terms. GenCo signed the agreement on Oct. 15, 2026, with Atlas Storage 1 LLC, an indirect subsidiary of AGP Capital Holdings Pte. Ltd. (AGP Group). AGP will develop, construct, own and operate a stand-alone battery system rated at 600 MWac and 2,400 MWh, interconnected to MISO's transmission system. That works out to four hours of discharge at full rated output.
The economics are structured as a toll. GenCo supplies, at its own expense, the electricity used to charge the project and has the right to instruct its dispatch. In return, it receives the project's available capacity, discharged energy, energy storage services and ancillary services, along with revenues from selling those products into MISO markets. GenCo also holds an exclusive option to purchase the project at specified intervals during and at the end of the delivery term.
The filing puts GenCo's aggregate storage payments at about $2.2 billion over a delivery term of about 20.5 years, measured from the commercial operation date of the project's first phase. Payments combine a fixed rate, subject to adjustments, with a component based on the project's actual power capacity. NiSource expects to account for the agreement as a finance lease obligation under ASC Topic 842, the lease accounting standard.
The agreement is conditional: it takes effect only if AGP Group executes an engineering, procurement and construction (EPC) contract and an interconnection agreement reasonably satisfactory to it. Among the risk factors in its forward-looking statements, the 8-K lists "the receipt, timing and terms of required regulatory approval in connection with the Tolling Agreement."
Context
Microsoft broke ground on the La Porte site in June 2026, according to WSBT 22, about four months before NiSource announced the supply agreement. The Microsoft contract is the latest addition to GenCo's large-load business. NiSource's earlier $1.4 billion savings projection covered its contracts before this one, and the Microsoft deal brought that estimate to about $1.75 billion, Finviz reported.
What Happens Next
- Third-quarter earnings call: NiSource is expected to give more detail on the Microsoft agreement. No date has been announced.
- Jan. 31, 2027: AGP Group's deadline to execute the EPC contract and interconnection agreement. Without them, the battery tolling agreement does not take effect.
- Regulatory approval: The tolling agreement still requires regulatory approval, according to the 8-K.
- Dec. 1, 2027: Expected commercial operation date for the battery project's first phase.
- 2028: Electric service to Microsoft's La Porte campus is expected to begin.
