NiSource Inc. profits dropped 34.7 percent in the third quarter as compared to one year ago, mainly on higher operating expenses.

NiSource realized third-quarter net income of $31.4 million, or 10 cents per share, as compared to $48.1 million, or 16 cents per share, in the third quarter of 2013, according to the company.

The utility-holding company affirmed its 2014 earnings guidance, stating it expected to achieve net operating earnings at the upper half of its full-year earning's outlook of $1.61 to $1.71 per share.

"During the third quarter, NiSource's business units continued to produce strong financial results while driving solid, steady progress on a broad range of well-established, infrastructure-focused investment strategies," CEO Robert Skaggs Jr. said.

NiSource stock at mid-afternoon Thursday was trading at $42.25 per share, up 63 cents in light trading volume on the New York Stock Exchange.

Total operating expenses in the third quarter increased to $747.6 million, as compared to $667.9 million in the third quarter of 2013, according to the company's unaudited consolidated income statement. It was mainly that increase that accounted for the decreased third quarter earnings.

The company's plan to split off its pipeline storage and transmission business into a separate company remains on track, with completion of the separation expected in mid-2015, Skaggs said.

That business segment is NiSource's fastest growing, as it expands the capacity of pipelines serving booming gas drilling operations in Ohio, Pennsylvania and other states.

The cool summer depressed electric consumption among NIPSCO customers, but a robust increase in industrial consumption more than made up for the decrease.

NIPSCO is NiSource's only electric utility subsidiary, with about 459,000 customers in northern Indiana. NIPSCO also has 800,000 natural gas customers. NiSource has other natural gas subsidiaries in six other states serving 2.5 million additional customers.

Skaggs highlighted several major infrastructure projects underway at NIPSCO during a morning conference call with Wall Street analysts. Those included the $1.1 billion electric modernization program, an $860 million gas modernization, high voltage transmission lines and pollution reduction projects at generating stations.

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