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Item 1A. Risk Factors

2026-02-18 compared with 2025-02-19 · 98 added, 104 removed, 181 unchanged (53% of the section changed)

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Any of the risks described below or elsewhere in this report on Form 10-K or in our other SEC filings could materially adversely affect our business, operating results, financial condition and liquidity.

Additional risks and uncertainties we are not presently aware of or that we currently consider immaterial may also affect our business, operating results, financial condition and liquidity.

Unforeseen risks and uncertainties, or those that we currently consider immaterial, could also affect our business, operating results, financial condition and liquidity.

OPERATIONAL RISKS

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Capital investments in our Electric segment require regulatory approval and are subject to the risks of not being granted timely approval or allowed to be fully recovered.

In addition, our ability to construct and own utility assets may be impacted by regulatory requirements to competitively bid such investments, which could impact the amount and timing of our capital investments.

A lack of direct ownership, or the inability to complete capital projects on budget and in a timely manner could impact our ability to achieve our strategic financial goals and could adversely impact our operating results and financial condition.

If we are unable to manage these risks and complete our capital investment projects on budget and in a timely manner, it could have negative impact on our financial condition, operating results and liquidity.

Weather impacts, including seasonal fluctuations, could adversely affect our operating results.

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Demand for electricity is normally greater in the winter and summer months.

Unusually mild summers and winters could have an adverse effect on our financial condition and results of operations.

Unusually mild temperatures negatively impact demand for electricity which can have an adverse effect on our financial condition and results of operations.

Our Plastics segment businesses can be affected by seasonal weather prohibiting or delaying construction projects at any time of the year in any geography, but specifically times of the year when frozen ground and cold temperatures in many parts of the country can delay construction projects, all of which can result in reduced customer demand and could have an adverse effect on our financial condition, operating results and liquidity.

We are subject to physical and transition risks associated with climate change and extreme weather events.

Longer term shifts in climate patterns may impact our customers' demand for electricity, interrupt our business operations and damage our facilities;

We are subject to physical risks and transition risks associated with climate change and extreme weather events.

Longer-term shifts in climate patterns may impact our customers' demand for electricity;

interrupt our business operations and damage our facilities;

reduce the availability of natural resources, such as water;

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We may not have sufficient insurance coverage to avoid adverse impacts to our operating results or financial condition from damage to our facilities or an interruption in our business.

An extreme weather event within our utility service area could directly affect our capital assets, causing disruption in service to customers, and result in reduced operating revenues and additional repair or replacement costs, due to downed wires and poles or damage to other operating equipment.

In the past, severe weather events in the Gulf Coast region of the U.S.

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PVC resin production plants are located in the Gulf Coast region, an area prone to seasonal hurricane activity and other extreme weather events, our access to PVC resin may be impacted by the volume and magnitude of hurricane and storm activity in this region, which could impact our Plastics segment businesses.

Increased risk of natural disasters, such as wildfires, could have financial consequences, including limiting our ability to secure sufficient insurance coverage, or lead to increased insurance cost.

While we carry liability insurance, given an extreme event, if we were found to be liable for damages, amounts that exceed our coverage limit could negatively impact our financial condition, operating results and liquidity.

Increased risk of natural disasters, such as wildfires and severe convective storms, could have negative financial consequences, including limiting our ability to secure sufficient insurance coverage, or leading to increased insurance costs.

While we carry liability insurance, given an extreme event, if we were found to be liable for damages caused by the event, amounts that exceed our coverage limit could negatively impact our financial condition, operating results and liquidity.

These risks may also negatively impact our credit ratings, which may limit our access to capital markets and increase our borrowing costs.

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We have incurred and expect to continue to incur capital expenditures and operating costs to comply with applicable current and future laws and regulations.

Our businesses continue to be subject to additional and changing environmental, health and safety laws and regulations, and we could incur additional costs complying with requirements that are promulgated in the future.

New laws or regulations or changes to existing laws and regulations in the future may result in disruptions to our business, changes in customer preferences or changes in customer demand, which could adversely impact our financial condition, operating results and liquidity.

Recently, various federal and state agencies have heightened their scrutiny of per- and polyfluoroalkyl substances (PFAS), which are manufactured chemicals used in a variety of consumer and industrial products.

Regulators have recently proposed additional chemicals be designated as hazardous substances, including a proposal to designate perfluorooctanesulfonic acid and perfluorooctanoic acid, two of the most common PFAS chemicals, as hazardous substances, which could have wide-ranging impacts on companies across various industries, including ours.

At this time, we cannot predict the outcome or the severity of the impact, if any, of future laws or regulations enacted to address PFAS.

As our businesses continue to be subject to additional and changing environmental, health and safety laws and regulations, we could incur additional costs complying with requirements that are promulgated in the future.

New laws or regulations, or changes to

existing laws and regulations in the future, may result in disruptions to our business, changes in customer preferences or changes in customer demand, which could adversely impact our financial condition, operating results and liquidity.

Claims, litigation, government investigations and other proceedings may adversely affect our business, operating results and liquidity.

We are periodically subject to actual and threatened claims, litigation, investigations and other proceedings, including proceedings by governments and regulatory authorities, involving utilities regulation, competition and antitrust, product quality matters and liability claims.

Any of these proceedings, including the currently ongoing proceedings related to our Plastics segment businesses, could have an adverse effect on our financial condition, operating results and liquidity.

It is possible that a resolution of one or more proceedings, including as a result of a settlement, could involve damages, sanctions, consent decrees or orders requiring us to make substantial future payments, prevent us from offering certain products or services, require us to change our business practices in a manner materially adverse to our business, otherwise disrupt our business, divert management resources, damage our reputation or otherwise have a material effect on our operations.

The outcomes of these matters are inherently unpredictable and subject to significant uncertainties, and we are unable to determine the likelihood of an outcome or estimate a range of reasonably possible losses, if any, arising from the proceedings at this time.

Any of these threatened or actual claims, proceedings, or investigations, including the currently ongoing proceedings and investigations related to our Plastics segment businesses and OTC, could have an adverse effect on our financial condition, operating results and liquidity.

It is possible that a resolution of one or more proceedings, including a resulting settlement, could involve damages, sanctions, consent decrees or orders requiring us to make substantial future payments, preventing us from offering certain products or services, requiring us to change our business practices in a manner materially adverse to our business, otherwise disrupting our business, diverting management resources, damaging our reputation or otherwise having a material effect on our operations.

The outcomes of these matters are inherently unpredictable and subject to significant uncertainties.

A cyber incident, security breach or system failure could adversely affect our business and operating results.

The operation of our business is dependent on the secure functioning of our computer hardware and software systems, as well as that of third-party service providers and vendors.

Information systems, both ours and those of third parties, are vulnerable to security breaches by computer hackers and cyber terrorists, system failures, the negligent or intentional breach of established controls and procedures or mismanagement of confidential information by employees.

Information systems, both ours and those of third parties, are vulnerable to security breaches by computer hackers and cyber terrorists, system failures, the negligent or intentional breach of established controls and procedures or the mismanagement of confidential information by employees.

Cyber attacks or other security breaches may also be perpetrated through the use of artificial intelligence, which could introduce additional complexity to such an attack or breach.

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A major cyber incident could result in significant expenses to investigate and repair security breaches or system damage, and could lead to litigation, fines, other remedial action, heightened regulatory scrutiny and damage to our reputation.

For example, we may be subject to liability under various federal, state and international disclosure laws and data protection laws.

These laws are subject to change and expansion and may require additional operational changes and costs to comply.

The misappropriation, corruption or loss of personally identifiable information and other confidential data could lead to significant monetary damages, regulatory enforcement actions and breach notification and mitigation expenses, such as credit monitoring, and result in reputational damage affecting relations with shareholders, customers, regulators and others.

In addition to property and casualty insurance, which may cover restoration of data, certain physical damage or third-party injuries, we have cybersecurity insurance related to a breach event.

In addition to property and casualty insurance, which may cover restoration of data and certain physical damage or third-party injuries, we have cybersecurity insurance related to a breach event.

However, damage and claims arising from such incidents may not be covered or may exceed the amount of any available insurance.

The loss of, or significant reduction in revenue from, any of our key customers could have an adverse effect on our operating results.

In 2024, a single customer provided more than 10% of our consolidated operating revenues, and each of our segments have customers which accounted for over 10% of the segment’s operating revenues.

In 2024, two customers combined to account for 19% of Electric segment revenues, two customers combined to account for 36% of Manufacturing segment operating revenues and two customers combined to account for 52% of Plastics segment operating revenues, with one of those customers providing more than 10% of our consolidated operating revenues.

In 2025, no single customer provided more than 10% of our consolidated operating revenues, however, each of our segments had customers which accounted for over 10% of the segment’s operating revenues.

In 2025, two customers combined to account for 16% of Electric segment revenues, three customers combined to account for 44% of Manufacturing segment operating revenues and two customers combined to account for 47% of Plastics segment operating revenues.

The loss of any one of these customers or a significant decline in sales to these customers would have a significant negative impact on the segment's financial condition and operating results and could have a significant negative impact on the Company’s consolidated financial condition, operating results and liquidity.

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The inability to attract and retain a skilled and stable workforce at necessary staffing levels, whether due to decreases in hiring rates, increases in employee retirements, increases in terminations, or any combination thereof, may negatively affect our ability to service our customers, manufacture products or successfully manage our business and achieve our objectives.

We are subject to risks associated with our supply chain and trade regulations and tariffs.

Our operations depend on the timely and cost-effective procurement and transportation of raw materials, including coal, natural gas, steel and aluminum, PVC resin and other materials.

Global and domestic supply chain disruptions, which may be caused by numerous factors outside of our control, may affect the availability and pricing of critical materials and equipment.

Changes in trade policies, including tariffs and anti-dumping and countervailing duties, could increase the cost of certain materials used in constructing and maintaining our utility assets and impact the cost of raw materials used in our manufacturing processes.

Specifically, tariffs arising from recent or ongoing anti-dumping and countervailing duty investigations could impact the cost of components necessary in constructing certain renewable generation assets.

The imposition of such tariffs could increase the cost of our capital investments for which we are not guaranteed recovery.

Alternatively, modifications to our material sourcing may delay our project plans and lead to increased costs.

Recent federal legislation restricting the use of "foreign entities of concern" in the supply chain for energy-related projects may limit our ability to source certain components, particularly for renewable generation projects.

Compliance with these requirements could result in higher project costs, longer lead times, the need to identify alternative suppliers and project delays.

We face risks related to transportation logistics, including rail availability for coal and PVC resin, pipeline capacity and availability for natural gas and trucking capacity for steel and aluminum and other materials.

Disruptions in these transportation systems, which can be caused by many factors outside of our control, could increase our costs or disrupt our operations.

If we are unable to effectively manage our supply chain and trade-related risks, our operations could be adversely impacted, which may have a material impact on our operating results, financial position and liquidity.

FINANCIAL RISKS

We are subject to capital market and interest rate risks.

We rely on access to debt and equity capital markets as a source of liquidity to fund our investment initiatives, including rate base growth investments in our Electric segment and opportunities for investment, including acquisitions, in our Manufacturing and Plastics segments.

We rely on access to debt and equity capital markets as a source of liquidity to fund our strategic investment initiatives.

Capital markets are impacted by global and domestic economic conditions, monetary policy, commodity prices, geopolitical events and other factors.

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Our pension and other postretirement benefit plans are subject to investment and interest rate risks.

The financial obligations and related costs of our pension and other postretirement benefit plans are affected by numerous factors.

Assumptions related to future costs, investment returns, actuarial estimates and interest rates have a significant effect on our funding obligations and the cost recognized related to these plans.

If our pension plan assets do not achieve our estimated long-term rate of return or if our other estimates prove to be inaccurate, our operating results, financial condition and liquidity may be adversely impacted.

The financial obligations and related costs of our pension and other postretirement benefit plans are affected by numerous factors, including interest rates, investment returns, future employee compensation levels, healthcare cost trends and mortality rates.

Changes in any, or a combination, of these factors could have a significant effect on our funding obligations and the costs recognized for these plans.

In addition, our funding requirements could be impacted by changes to the Pension Protection Act.

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OTC is a holding company with no significant operations of its own.

The primary source of funds for payment of our financial obligations and dividends to our shareholders is from cash provided by our subsidiary companies.

Our ability to meet our financial obligations and pay dividends on our common stock principally depends on the earnings, cash flows, capital requirements and general financial positions of our subsidiary companies.

The primary source of funds for payment of our financial obligations and dividends to our shareholders is cash provided by our subsidiary companies.

In addition, OTP is subject to federal and state regulations which may restrict its ability to pay dividends.

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Our debt agreements include restrictions on the payment of cash dividends upon an event of default.

Changes in tax laws could materially affect our financial condition and operating results.

Our provision for income taxes and tax obligations are impacted by various tax laws and regulations, including the availability of various tax credits, IRS tax policies such as tax normalization and, at times, the ability to carryforward net operating losses and tax credits.

Changes in tax laws, regulations and interpretations could have an adverse effect on our financial condition and operating results.

Tax law changes that reduce or eliminate production or investment tax credits (ITCs), or the ability to transfer or sell these credits, or a failure to meet the compliance requirements to receive these credits, may impact the economics of constructing certain electric generation resources, which may impact our planned investments, and could adversely affect our financial condition and operating results.

Changes in tax laws, or failures to comply with tax credit eligibility requirements, could materially affect our financial condition and operating results.

Changes in tax laws, regulations and interpretations could have an adverse effect on our financial condition, operating results and liquidity.

Tax law changes that reduce or eliminate production or investment tax credits (ITCs), or the ability to transfer or sell these credits, may impact the economics of constructing certain electric generation resources, which may impact our planned investments, and could adversely affect our financial condition and operating results.

Failure to meet initial and ongoing tax credit eligibility requirements could also adversely impact our financial condition, operating results and liquidity.

ELECTRIC SEGMENT RISKS

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OTP is subject to federal and state legislation and comprehensive regulation by federal and state regulatory agencies, including the public utility commissions in each of the three states in which OTP operates, and by the FERC.

Our financial condition, operating results and liquidity are significantly impacted by and dependent upon our ability to recover the costs associated with providing utility service and earn a return on our utility capital investments.

Our financial condition, operating results and liquidity are significantly impacted by, and dependent upon, our ability to recover the costs associated with providing utility service and earning a return on our utility capital investments.

There is no assurance that each state utility commission will judge our utility costs to have been prudently incurred or that rates will produce full recovery of such costs.

In addition, changes in the federal or state regulatory framework could impair our ability to recover utility costs historically collected from our customers.

In addition, there is no assurance that we will be authorized to recover a rate of return on our investments that allows us to achieve our financial goals.

An adverse decision by one or more regulatory authorities or any prolonged delay in rendering a decision in a rate case or other proceeding could adversely impact our financial condition, operating results and liquidity.

Changes in the federal or state regulatory framework could impair our ability to recover utility costs historically collected from our customers.

Diverging public policy priorities across the jurisdictions we serve, and a lack of inter-jurisdictional consensus may impact our ability to recover the cost of and return on our capital investments and our operating costs.

it may impact our future capital investment opportunities;

Recently, the NDPSC and North Dakota’s federal legislators have opposed cost recovery for projects in MISO Tranche 2.1, challenging renewable energy goals built into MISO’s benefits calculation for the projects.

Federal and state opposition may impact our future capital investment opportunities;

and may result in inefficiencies which could negatively impact our financial position, operating results and liquidity.

In addition to the recovery of our utility costs, our profitability is impacted by our authorized ROE, which can be impacted by macroeconomic factors such as interest rates.

There can be no assurance that each state utility commission or the FERC will authorize a rate of return which allows us to achieve our financial goals.

An adverse decision by one or more regulatory authorities or any prolonged delay in rendering a decision in a rate or other proceeding could adversely impact our financial condition, operating results and liquidity.

Regulatory requirements to competitively bid capital projects could impact our ability to construct and own utility assets.

A lack of direct ownership of such investments could impact our ability to achieve our strategic financial goals and adversely impact our operating results.

Inflationary cost pressures have increased the cost of constructing our utility assets and operating our utility business.

There can be no assurance that our state regulatory commissions will authorize recovery of rising costs.

There can be no assurance that our state or federal regulatory commissions will authorize recovery of rising costs.

Regulatory commissions may also limit future capital investments, or the rate of return allowed on such investments in response to inflationary cost pressures and customer bill impacts.

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We may be unable to fully recover costs of our co-owned coal-fired generating facilities.

Changes in regulatory, operational or economic factors could result in the early closure or sale of or withdrawal from our interest in a coal-fired generating facility.

Changes in regulatory, operational or economic factors could result in the early closure, sale of, or withdrawal from our interest in a coal-fired generating facility.

In the event of an early closure, a significant asset impairment charge could be required, and we would be obligated to pay for our share of the costs of closure of the generating facility.

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There can be no assurance that we would be authorized by any of our state utility commissions to recover any costs or losses associated with the early closure or sale of our interest in a generating facility.

Our IRP, approved in Minnesota by the MPUC in May 2024, directs OTP to commence activities to no longer serve Minnesota customers with capacity or energy from Coyote Station as early as 2029.

Our latest IRP, approved in Minnesota by the MPUC in May 2024, directs OTP to commence activities to no longer serve Minnesota customers with capacity or energy from Coyote Station as early as 2029.

The discontinuation of service to Minnesota customers from Coyote Station could result in stranded costs, which may significantly impact our operating results, financial condition and liquidity.

Environmental regulation could require us to incur substantial capital expenditures, increased operating costs or make it no longer economically viable to operate some of our facilities.

Environmental regulation could require us to incur substantial capital expenditures or increased operating costs, or make it no longer economically viable to operate some of our facilities.

We are subject to federal, state and local environmental laws and regulations relating to air quality, water quality, waste management, natural resources and health safety.

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Failure to comply with environmental laws and regulations, even if caused by factors beyond our control, may result in civil or criminal liabilities, penalties and fines.

Coyote Station, one of OTP's jointly owned coal-fired power plants, is subject to assessment under the second planning period of the RHR as part of the state of North Dakota's RHR SIP.

In December 2024, the EPA partially disapproved the North Dakota SIP related to Coyote Station and now must promulgate a Federal Implementation Plan.

The federal plan may include emission controls required to satisfy the requirements of the RHR.

Coyote Station, one of OTP's jointly owned coal-fired power plants, is subject to assessment under the RHR as part of the state of North Dakota's RHR SIP.

We cannot predict with certainty the final resolution of regional haze compliance in North Dakota and specifically the impact, if any, on the operations of Coyote Station.

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Current and future federal, state, regional and international legislation and regulations to address global climate change and reduce GHG emissions, including measures such as mandated levels of renewable generation, mandatory reductions in CO 2 emission levels, taxes on CO 2 emissions, or cap-and-trade regimes, could require us to incur significant costs which could negatively impact our financial condition, operating results and liquidity if such costs cannot be recovered through rates granted by rate-making authorities or through increased market prices for electricity.

In May 2024, the EPA finalized new regulations under Section 111 of the Clean Air Act to regulate GHG emissions from existing and new fossil fuel-based power plants.

The new regulations require existing coal-fired power plants to achieve certain CO 2 emissions reduction levels, with the amount of reduction dependent upon the remaining operating life of the facility.

The new regulation has the potential to materially impact the operations of our coal-fired power plants, which could have a material impact on our operating results, financial condition and liquidity.

New regulations recently finalized by the EPA require existing coal-fired power plants to achieve certain CO 2 emissions reduction levels, with the level of reduction dependent upon the remaining operating life of the facility.

At this time, we cannot determine how this may impact our power plants and the potential impact on our operating results, financial condition and liquidity.

However, significant emission control investments could be required, which may have a material impact on our operating results, financial condition and liquidity.

Alternatively, such investments may prove to be uneconomic and result in the early closure, sale of or withdrawal from our interest in a coal-fired plant.

In addition to complying with legislation and regulation, we could be subject to litigation related to climate change.

If we were subjected to such litigation, the costs of such litigation could be significant and an adverse outcome could require substantial capital expenditures, changes in operations and possible payment of penalties or damages, which could affect our financial condition, operating results and liquidity if the costs are not recoverable in rates or covered by insurance.

General economic and industry conditions impact our business.

Several factors, many of which are beyond our control, may contribute to reduced demand for energy from our customers or increase the cost of providing energy to our customers.

These risks include economic growth or decline in our service areas, demographic changes in our customer base and changes in customer demand or load growth due to, among other items, proliferation of distributed generation, energy efficiency initiatives and technological advancements.

In addition, customer demand could be impacted by increased competition in our service territories or the loss of a service territory or franchise.

Other risks include increased transmission or interconnection costs, generation curtailment and changes in the manner in which wholesale power is purchased and sold.

A decrease in revenues or an increase in expenses related to our electric operations could negatively impact our financial condition, operating results and liquidity.

Violations of extensive legal and regulatory compliance requirements could have a negative impact on our business and results of operations.

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If a serious reliability incident were to occur, it could have a material effect on our operations or financial results.

Some states have the authority to impose substantial penalties in the event of non-compliance.

We attempt to mitigate the risk of regulatory penalties through formal training.

However, there is no guarantee our compliance program will be sufficient to ensure against violations.

We attempt to mitigate the risk of regulatory penalties through our compliance program.

However, there is no guarantee our program will be sufficient to prevent compliance violations.

These laws and regulations significantly influence our operations and may affect our ability to recover costs from our customers.

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Changes in regulations or the imposition of additional regulations could have a material adverse impact on our financial condition, operating results and liquidity.

Our generation, transmission and distribution facilities could be vulnerable to cyber and physical attack.

Our electric facilities could be vulnerable to cyber and physical attack.

OTP owns electric transmission, distribution and generation facilities subject to mandatory and enforceable standards advanced by the NERC.

These bulk electric system facilities provide the framework for the electrical infrastructure of OTP’s service territory and interconnected systems, the operation of which is dependent on information technology systems.

Further, the information systems that operate OTP’s electric system are interconnected to external networks.

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OTP is subject to mandatory cybersecurity and physical security regulatory requirements.

OTP implements the NERC standards for operating its transmission and generation assets and remains abreast of best practices within the business and the utility industry to

protect its computers and computer-controlled systems from outside attack.

OTP implements the NERC standards for operating its transmission and generation assets and remains abreast of best practices within the business and the utility industry to protect its computers and computer-controlled systems from outside attack.

We rely on industry-accepted security measures and technology to securely maintain confidential and proprietary information necessary for the operation of our systems.

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However, all these measures and technology may not adequately prevent security breaches, ransomware attacks or other cyber attacks, or enable us to recover effectively from such a breach or attack.

Any significant interruption or failure of our information systems or any significant breach of security due to cyber-attacks, hacking or internal security breaches or physical attack of our generation or transmission facilities could adversely affect our business and our financial condition, operating results and liquidity.

Our generation, transmission and distribution facilities are subject to operational risks, which include circumstances that could result in injuries, loss of life, property damage and fires.

The operation of our generation, transmission and distribution facilities involves many risks including equipment failures, accidents and workforce safety matters, environmental damage, property damage, operator error and the occurrence of catastrophic events such as fires, explosions and floods.

Any significant interruption or failure of our information systems or any significant breach of security due to cyber attacks, hacking or internal security breaches or physical attacks on our generation or transmission facilities could adversely affect our business and our financial condition, operating results and liquidity.

We are subject to risks associated with energy and capacity markets.

Our electric business is subject to the risks associated with energy and capacity markets, including changes in market supply, and energy and capacity prices.

If we need to procure market energy and are faced with shortages in market supply, we may be unable to fulfill our obligations to our retail, wholesale and other customers at previously anticipated costs.

This could force us to obtain alternative energy or fuel supplies at higher costs or suffer increased liabilities for unfulfilled contractual obligations.

Changes in our own generation capacity or market capacity, including from changes in capacity accreditation or other factors, could lead to increased capacity prices.

Significantly higher than expected energy or capacity costs could negatively affect our financial condition, operating results and liquidity.

Our electric facilities are subject to operational risks, which could result in injuries, loss of life, property damage and liability claims.

The operation of our generation, transmission and distribution facilities involves many risks including the potential for equipment failures, accidents and workforce safety matters, environmental damage, property damage, operator error and the occurrence of catastrophic events such as fires, explosions and floods.

Diminished availability or performance of those facilities could result in facility shutdowns, reduced customer satisfaction, reputational harm and regulatory inquiries and fines.

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We own our coal-fired generation facilities jointly with other co-owners with varying ownership interests in such facilities.

Our ability to make determinations to best navigate changing environmental regulations and economic conditions may be impacted by our rights and obligations under the co-ownership and related agreements, and our ability to reconcile a divergence in the interests of OTP and the co-owners of these generation facilities.

Such a divergence could impair our ability to effectively manage these changing conditions to meet our strategic objectives, and could adversely impact our financial condition, operating results and liquidity.

We are subject to risks associated with energy and capacity markets.

Our electric business is subject to the risks associated with energy and capacity markets, including changes in market supply, energy and capacity prices.

If we need to procure market energy and are faced with shortages in market supply, we may be unable to fulfill our contractual obligations to our retail, wholesale and other customers at previously anticipated costs.

This could force us to obtain alternative energy or fuel supplies at higher costs or suffer increased liabilities for unfulfilled contractual obligations.

Changes in our own generation capacity or market capacity, including from changes in capacity accreditation, could lead to increased capacity prices.

Significantly higher than expected energy or capacity costs could negatively affect our financial condition, operating results and liquidity.

We are subject to risks associated with the procurement and transportation of fuel to our coal and natural gas-powered generation facilities.

We rely on a limited number of suppliers to provide coal and a limited number of service providers to transport coal and natural gas to our facilities.

A counterparty's failure to perform their obligations may arise due to liquidity challenges or insolvency, operational deficiencies or other circumstances such as severe weather or natural disasters and could impact our ability to provide service to our customers or require us to seek alternative sources for these products and services, if available.

A prolonged failure to perform by one or more of our current suppliers or service providers could lead to increased costs or other consequences, which could negatively impact our financial condition, operating results and liquidity.

General economic and industry conditions impact our business.

Several factors, many of which are beyond our control, may contribute to reduced demand for energy from our customers or increase the cost of providing energy to our customers.

In addition, customer demand could be impacted by increased competition in our service territories or the loss of service territory or franchise.

Other risks include increased transmission or interconnection costs, generation curtailment and changes in the manner in which wholesale power is purchased and sold.

A decrease in revenues or an increase in expenses related to our electric operations could negatively impact our financial condition, operating results and liquidity.

MANUFACTURING SEGMENT RISKS

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Additionally, a certain amount of residual material (scrap) is a by-product of the manufacturing and production processes used by our manufacturing companies.

Declines in commodity prices for these scrap materials due to weakened demand or excess supply can negatively impact the profitability of our manufacturing companies as it reduces their ability to mitigate the cost associated with excess material.

Declines in commodity prices for these scrap materials due to weakened demand or excess supply can negatively impact the profitability of our manufacturing companies.

Competition from domestic and foreign manufacturers could affect the revenues and earnings of our manufacturing businesses.

Our manufacturing businesses are subject to intense competition from domestic and foreign manufacturers, many of whom have broader product lines, greater distribution capabilities, greater capital resources, larger marketing, research and development personnel and facilities, and other capabilities.

Our manufacturing businesses are subject to intense competition from domestic and foreign manufacturers, some of which have broader product lines, greater distribution capabilities, greater capital resources, greater marketing and research and development capabilities, or lower cost structures.

Our ability to compete on product performance, competitive pricing, technological innovation and customer service is critical to our ongoing success.

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The markets for our manufacturing businesses are characterized by changing technology and evolving process development.

The continued success of our businesses will depend on our ability to:

The continued success of our business will depend on our ability to:

• maintain technological leadership in our industry;

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The acquisition and implementation of new technologies and equipment may require us to incur significant expense and capital investment, which could reduce our margins and affect our operating results.

Failure to anticipate and adapt to customers’ changing technological needs and requirements and to

maintain manufacturing, engineering and technological expertise may have material adverse effects on our financial condition, operating results and liquidity.

Failure to anticipate and adapt to customers’ changing technological needs and requirements and to maintain manufacturing, engineering and technological expertise may have material adverse effects on our financial condition, operating results and liquidity.

PLASTICS SEGMENT RISKS

External factors beyond our control could cause fluctuations in demand for and pricing of our PVC pipe products.

Our PVC pipe products, sold through distributors and wholesalers, are primarily used in municipal and rural water projects, wastewater projects, storm drainage systems and reclamation systems.

Our PVC pipe products, sold through distributors, are primarily used in municipal and rural water projects, wastewater projects, storm drainage systems and reclamation systems.

External factors beyond our control can cause volatility in demand for our products and sales prices impacting our operating margins.

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• severe weather and natural disasters;

• governmental regulation in the United States;

• governmental regulation;

• funding shortages for municipal water and wastewater projects.

Sales prices for PVC pipe began to significantly increase in 2021, reaching a peak level in mid-2022.

Pipe prices have since retreated from the high point but remain elevated compared to historic levels.

Pipe prices have since retreated from the peak but remain elevated compared to historic levels.

Elevated pipe prices led to a significant expansion in our operating margins and cash generation.

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Changes in PVC resin prices could negatively affect our plastics business.

The cost of PVC resin is based on global supply and demand conditions, which can create volatile pricing.

Changes in PVC resin cost prices can negatively affect PVC pipe prices and profit margins on PVC pipe sales.

PVC resin is a commodity product.

Its market price is impacted by global supply and demand conditions along with feedstock component pricing.

Both of these factors can create volatile pricing for PVC resin, the primary material input used in manufacturing our PVC pipe products.

Changes in the cost of PVC resin directly impact our profit margins.

In addition, changes in PVC resin cost can impact the pricing of PVC pipe price.

We may be unable to fully, or in a timely manner, adjust the pricing of PVC pipe in response to changing PVC resin costs.

Accordingly, our operating results and liquidity could be materially impacted.

Our plastics operations are highly dependent on a limited number of vendors and a limited supply of PVC resin and other materials.

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resin production plants are located in the Gulf Coast region.

This could increase the risk of a shortage of resin in the event of a hurricane, other extreme weather events and other natural disasters in that region.

The loss of a key vendor or any interruption or delay in the availability or supply of PVC resin could disrupt our ability to deliver our plastic products, cause customers to cancel orders or require us to incur additional expenses to obtain PVC resin from alternative sources, if such sources were available.

This could increase the risk of a shortage of resin in the event of a hurricane or other extreme weather events and other natural disasters in that region.

Although PVC resin is the most significant raw material input in our PVC pipe manufacturing process, we also use certain other materials, such as stabilizers, gaskets, lumber, banding and others in the process of manufacturing and shipping our PVC pipe products.

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We compete against other manufacturers of PVC pipe and manufacturers of alternative products.

Competition in the plastic pipe industry arises from other PVC pipe manufacturers and the fungible nature of the product.

Certain of the companies we compete with have a broader geographical reach, integration with PVC resin producers, greater manufacturing capacity and national relationships with key distribution partners.

In addition to competing with other plastic pipe manufacturers, our products also complete against similar products serving the same end markets, including ductile iron, HDPE, steel and concrete pipe.

We face intense competition in the plastic pipe industry from other PVC pipe manufacturers.

Certain companies we compete with have a broader geographical reach, integration with PVC resin producers, greater manufacturing capacity and national relationships with key distribution partners.

In addition to competing with other plastic pipe manufacturers, our products also compete against similar products serving the same end markets, including ductile iron, HDPE, steel and concrete pipe.

Our inability to compete effectively on product price, customer service and product performance may adversely affect the financial performance of our plastics businesses.

GENERAL RISK FACTORS

Changes in economic conditions and economic policies could negatively impact our businesses.

Our businesses are affected by local, national and worldwide economic conditions.

Economic recessions, inflation, changes in commodity prices, changes in interest rates and tightening of credit in financial markets could adversely affect our operating results, financial condition and liquidity.

In addition, changes in government policies, including trade regulations and tariffs, could impact our businesses, including increasing our costs of materials, negatively impacting our supply chain, reducing sales volumes of our products or services, or disrupting the competitive environment in which we operate.

A broad increase in tariffs may also lead to elevated inflation and increased interest rates, which may negatively impact national economic conditions and impact our operating results, financial condition and liquidity.

If we are unable to achieve the organic growth we expect, our financial performance may be adversely affected.

We expect much of our growth in the next few years will come from major capital investments at existing companies.

To achieve the organic growth we expect, we must have access to the capital markets, be successful with capital expansion programs related to organic growth, develop new products and services, expand our markets and increase efficiencies in our businesses.

Competitive and economic factors could adversely affect our ability to do this.

If we are unable to achieve and sustain consistent organic growth, we will be less likely to meet our earnings growth targets, which may adversely affect the market price of our common shares.

The effects of a major public health crisis, such as an epidemic or pandemic, and measures taken to reduce and slow the spread of the disease could adversely impact our business.

A future widespread outbreak of an infectious disease, which affects a large percentage of the population regionally, nationally or globally could impact our business operations, including our employees, customers, construction contractors, suppliers and vendors, and could impact our operating results, financial condition and liquidity.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors