What changed in this filing

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Item 1A. Risk Factors

2023-02-27 compared with 2022-02-25 · 71 added, 72 removed, 280 unchanged (34% of the section changed)

8 unchanged sentences

Arizona, like certain other states, has a statute that allows the ACC to reopen prior decisions and modify otherwise final orders under certain circumstances.

Additionally, given that APS is subject to oversight by several regulatory agencies, a resolution by one may not foreclose potential actions by others for similar or related matters, such as the resolution of an Arizona Attorney General matter.

The ACC must also approve APS’s issuance of equity and debt securities and any significant transfer or encumbrance of APS property used to provide retail electric service and must approve or receive prior notification of certain transactions between us, APS, and our respective affiliates, including

the infusion of equity into APS.

Additionally, given that APS is subject to oversight by several regulatory agencies, a resolution by one may not foreclose potential actions by others for similar or related matters.

Decisions made by the ACC or FERC could have a material adverse impact on our financial condition, results of operations, or cash flows.

9 unchanged sentences

In November 2021, the Arizona Court of Appeals issued an opinion that called into question the ACC-approved limitation of liability provision found in the APS Service Schedules.

While APS is currently seeking review of the decision at the Arizona Supreme Court, the Court of Appeals decision—if undisturbed—could have an adverse impact on APS’s future, potential litigation exposure.

APS sought review of the decision at the Arizona Supreme Court, which was denied;

however, the Supreme Court depublished portions of the Court of Appeals’ decision.

APS is seeking revised tariff language to mitigate potential adverse impacts on APS’s future, potential litigation exposure which may result from this court decision.

We are unable to predict the impact on our business and operating results from any pending or future regulatory or legislative rulemaking.

32 unchanged sentences

Potential Financial Risks — Greenhouse Gas Regulation, the Clean Power Plan and Potential Litigation.

In 2015, EPA finalized a rule to limit CO 2 emissions from existing power plants, the CPP.

In 2015, EPA finalized a rule to limit CO 2 emissions from existing power plants, the Clean Power Plan, or CPP.

The implementation of this rule within the jurisdictions where APS operates would have resulted in a shift in generation from coal to more natural gas and renewable generation.

3 unchanged sentences

Circuit vacated the ACE regulations and remanded them back to EPA to develop new regulations governing carbon emissions from existing power plants consistent with the court’s ruling.

That decision endorsed an expansive view of the federal Clean Air Act consistent with EPA’s 2015 CPP, and the current administration has expressed its intent to assert such authority through new carbon emission regulations governing existing power plants.

That decision, which endorsed an expansive view of the federal Clean Air Act consistent with the CPP, was subsequently reversed by the U.S.

Supreme Court on June 30, 2022.

While the current administration has expressed its intent to develop new carbon emission regulations governing existing power plants in 2023, such action will be constrained by the U.S.

Supreme Court’s decision that the CPP violated the Clean Air Act.

Depending on the outcome of future carbon emission rulemakings under the Clean Air Act targeting new and existing power plants, the utility industry may become subject to more stringent and expansive regulations.

To the extent that these regulations focus on generation shifting as a means of compliance with federal emission performance standards, the electric utility industry may be forced to incur substantial costs necessary to achieve compliance.

Depending on the means of compliance with federal emission performance standards, the electric utility industry may be forced to incur substantial costs necessary to achieve compliance.

In addition, we anticipate that such regulations will be challenged in federal court prior to their implementation.

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Large increases in ambient temperatures could require evaluation of certain materials used within its system and may represent a greater challenge.

Limitations on water supplies necessary to operate electric generation infrastructure could arise from prolonged drought and shortage declarations associated with key surface water resources.

As part of conducting its business, APS recognizes that the southwestern United States is particularly susceptible to the risks posed by climate change, which over time is projected to exacerbate high temperature extremes and prolong drought in the area where APS conducts its business.

Co-owners of our jointly owned generation facilities may have unaligned goals and positions due to the effects of legislation, regulations, economic conditions, or changes in our industry, which could have a significant impact on our ability to continue operations of such facilities.

APS owns certain of its power plants jointly with other owners, with varying ownership interests in such facilities.

Changes in the nature of our industry and the economic viability of certain plants, including impacts resulting from types and availability of other resources, fuel costs, legislation, and regulation, together with timing considerations related to expiration of leases or other agreements for such facilities, could result in unaligned positions among co-owners.

Co-owners of our jointly owned generation and transmission facilities may have unaligned goals and positions due to the effects of legislation, regulations, economic conditions, or changes in our industry, which could have a significant impact on our ability to continue operations of such facilities.

APS owns certain of its power plants and transmission facilities jointly with other owners, with varying ownership interests in such facilities.

Changes in the nature of our industry and the economic viability of certain plants and facilities, including impacts resulting from types and availability of other resources, fuel costs, legislation, and regulation, together with timing considerations related to expiration of leases or other agreements for such facilities, could result in unaligned positions among co-owners.

Differences in the co-owners’ willingness or ability to continue their participation could lead to eventual shut down of units or facilities and uncertainty related to the resulting cost recovery of such assets.

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The ACC continues to discuss matters related to retail electric competition, including the potential for additional buy-through programs or other pilot programs.

At the same time, the Arizona legislature is considering a bill that would nullify, if approved, a 20-year-old electric deregulation law that has been in place since 1998.

The bill has several procedural steps in the legislative process before becoming law.

Changes in tax legislation or regulation may affect our financial results .

We are subject to taxation by various taxing authorities at the federal, state, and local levels.

Legislation or regulations could be enacted by any of these governmental authorities, which could affect the Company’s tax positions.

The prospects for federal tax reform have increased due to the results of the 2020 Federal elections.

Any such reform may impact the Company’s effective tax rate, cash taxes paid and other financial results, such as earnings per share, gross revenues, and cash flows.

We cannot predict the timing or extent of such tax-related developments which, absent appropriate regulatory treatment, could have a negative impact on our financial results.

In April 2022, the Arizona Legislature passed and the Governor signed a bill that repealed the electric deregulation law that had been in place in Arizona since 1998.

OPERATIONAL RISKS

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Effects of Energy Conservation Measures and Distributed Energy Resources.

The ACC enacted rules regarding energy efficiency that mandated a 22% cumulative annual energy savings requirement by 2020.

This will likely increase participation by APS customers in energy efficiency and conservation programs and other demand-side management efforts, which in turn will impact the demand for electricity.

The rules also include a requirement for the ACC to review and address financial disincentives, recovery of fixed costs and the recovery of net lost revenue that would result from lower sales due to increased energy efficiency requirements.

To that end, the LFCR is designed to address these matters.

APS must also meet certain distributed energy requirements.

A portion of APS’s total renewable energy requirement must be met with an increasing percentage of distributed energy resources (generally, small scale renewable technologies located on customers’ properties).

The distributed energy requirement is 30% of the applicable RES requirement for 2012 and subsequent years.

Customer participation in distributed energy programs would result in lower demand since customers would be meeting some of their own energy needs.

APS customers in energy efficiency and conservation programs and other demand-side management efforts, which in turn impact the demand for electricity.

APS must also meet certain distributed renewable energy requirements.

A portion of APS’s total renewable energy requirement must be met with an increasing percentage of distributed renewable energy resources (generally, small scale renewable technologies located on customers’ properties).

The distributed renewable energy requirement is 30% of the applicable RES requirement for 2012 and subsequent years (this requirement has been waived by the ACC for 2023).

Customer participation in distributed renewable energy programs would result in lower demand since customers would be meeting some of their own energy needs.

In addition to these rules and requirements, energy efficiency technologies and distributed energy resources continue to evolve, which may have similar impacts on demand for electricity.

3 unchanged sentences

For the three years through 2022, APS’s customer growth averaged 2.2% per year.

We currently project annual customer growth to be 1.5% to 2.5% for 2022, and the average annual growth will be in the range of 1.5% to 2.5% through 2024 based on anticipated steady population growth in Arizona during that period.

Retail electricity sales in kWh, adjusted to exclude the effects of weather variations, for the year ended December 31, 2021, compared with the prior-year period increased 4.2%, which reflects a correction to 2020 commercial and industrial sales volumes of 111 GWh.

While steady customer growth was offset by energy savings driven by customer conservation, energy efficiency, and distributed renewable generation initiatives, the main drivers of positive sales for this period were residential sales being stronger than anticipated due to continued work-from-home policies, a strong improvement in sales to commercial

and industrial customers, and the ramp-up of new data center customers.

Though the total expected impact of COVID-19 on future sales is currently unknown, APS experienced higher electric residential sales and lower electric commercial and industrial sales from the outset of the pandemic through April 2021.

Beginning in May 2021, electric sales to commercial and industrial customers increased to levels in line with pre-COVID sales.

We currently project annual customer growth to be 1.5% to 2.5% for 2023 and the average annual growth to be in the range of 1.5% to 2.5% through 2025 based on anticipated steady population growth in Arizona during that period.

Retail electricity sales in kWh, adjusted to exclude the effects of weather variations, increased 2.4% for the year ended December 31, 2022, compared with the prior-year period.

While steady customer growth was offset by energy savings driven by customer conservation, energy efficiency, and distributed renewable generation initiatives, the main drivers of positive sales for this period were a strong improvement in sales to commercial and industrial customers and the ramp-up of new data center customers.

For the three years through 2022, annual retail electricity sales growth averaged 2.5%, adjusted to exclude the effects of weather variations.

We currently project that annual retail electricity sales in kWh will increase in the range of 1.5% to 2.5% for 2022 and average annual growth will be in the range of 3.5% to 4.5% through 2024, including the effects of customer conservation, energy efficiency and distributed renewable generation initiatives, but excluding the effects of weather variations.

This projected sales growth range includes the impacts of new, large manufacturing facilities, which are expected to contribute to average annual growth in the range of 1.0% to 2.0% through 2024.

This projected sales growth range also includes our estimated contributions of several large data centers, but not all, and we will continue to estimate contributions and evaluate sales guidance as these customers develop more usage history.

These estimates could be further impacted by slower than expected growth of the Arizona economy, slower than expected ramp-up of the new data centers, larger manufacturing facilities not coming to Arizona as expected, a shift away from remote work, slower than expected commercial and industrial expansions, or acceleration of the expected effects of customer conservation, energy efficiency and distributed renewable generation initiatives.

Actual sales growth, excluding weather-related variations, may differ from our projections as a result of numerous factors, such as economic conditions, customer growth, usage patterns and energy conservation, ramp-up of data centers, impacts of energy efficiency programs and growth in DG, and responses to retail price changes.

Due to the expected rapid growth of several large data centers and new large manufacturing facilities, we currently project that annual retail electricity sales in kWh will increase in the range of 3.5% to 5.5% for 2023 and that average annual growth will be in the range of 4.5% to 6.5% through 2025, including the effects of customer conservation, energy efficiency, and distributed renewable generation initiatives, but excluding the effects of weather variations.

This projected sales growth range includes the impacts of several large data centers and new large manufacturing facilities, which are expected to contribute to average annual growth in the range of 3.5% to 5.5% through 2025.

Actual sales growth, excluding weather-related variations, may differ from our projections as a result of numerous factors, such as economic conditions, customer growth, usage patterns and energy conservation, slower ramp-up of and/or fewer data centers and large manufacturing facilities, slower than expected commercial and industrial expansions, impacts of energy efficiency programs, and growth in DG,

and responses to retail price changes.

Based on past experience, a 1% variation in our annual residential and small commercial and industrial kWh sales projections under normal business conditions can result in increases or decreases in annual net income of approximately $20 million, and a 1% variation in our annual large commercial and industrial kWh sales projections under normal business conditions can result in increases or decreases in annual net income of approximately $5 million.

7 unchanged sentences

Wildfires have the potential to affect the communities that APS serves and APS’s vast network of electric transmission and distribution lines and facilities.

The potential likelihood of wildfires has increased due to many of the same weather impacts existing in Arizona as those that led to the catastrophic wildfires in Northern California.

The potential likelihood of wildfires has increased due to many of the same weather and climate change impacts existing in Arizona as those that led to the catastrophic wildfires in California.

While we proactively take steps to mitigate wildfire risk in the areas of our electrical assets, wildfire risk is always present due to APS’s expansive service territory.

held liable for damages incurred as a result of wildfires if it was determined that they were caused by or enhanced due to APS’s negligence.

The Arizona liability standard is different from that of California, which generally imposes liability for resulting damages without regard to fault.

APS could be held liable for damages incurred as a result of wildfires if it was determined that they were caused by or enhanced due to APS’s negligence.

Any damage caused to our assets, loss of service to our customers, or liability imposed as a result of wildfires could negatively impact APS’s financial condition, results of operations, or cash flows.

The inability to successfully develop, acquire or operate generation resources to meet reliability requirements and other new or evolving standards or regulations could adversely impact our business.

The inability to successfully develop, acquire or operate generation resources to meet future resource needs and load forecasts in accordance with reliability requirements and other new or evolving standards and regulations could adversely impact our business.

Potential changes in regulatory standards, impacts of new and existing laws and regulations, including environmental laws and regulations, and the need to obtain various regulatory approvals create uncertainty surrounding our current and future generation portfolio.

The current regulatory standards, laws, and regulations create strategic challenges as to the appropriate generation portfolio and fuel diversification mix.

In addition, APS is required by the ACC to meet certain energy resource portfolio requirements, including those related to carbon emissions, renewables development and energy efficiency measures.

The development of any generation facility is also subject to many risks, including those related to financing, siting, permitting, new and evolving technology, and the construction of sufficient transmission capacity to support these facilities.

APS’s inability to adequately develop or acquire the necessary generation resources could have a material adverse impact on our business and results of operations.

In expressing concerns about the environmental and climate-related impacts from continued extraction, transportation, delivery and combustion of fossil fuels, environmental advocacy groups and other third parties have in recent years undertaken greater efforts to oppose the permitting, construction, and operation of fossil fuel infrastructure projects.

In addition, APS is required by the ACC to meet certain energy resource portfolio requirements, including those related to renewables development and energy efficiency measures, in addition to specific competitive resource procurement requirements.

The development and operation of any generation facility is also subject to many risks, including those related to financing, siting, permitting, new and evolving technology, and the construction of sufficient transmission capacity to support these facilities.

APS needs to develop or acquire new generation facilities, potentially modernize existing facilities, and/or contract for additional capacity in order to meet future resource needs and load forecasts.

APS’s inability to do so could have a material adverse impact on our business and results of operations.

and operation of fossil fuel infrastructure projects.

These efforts may increase in scope and frequency depending on a number of variables, including the future course of Federal environmental regulation and the increasing financial resources devoted to these opposition activities.

1 unchanged sentence

In January 2020, APS announced its goal to provide 100% clean, carbon-free electricity by 2050 with an intermediate 2030 target of achieving a resource mix that is 65% clean energy, with 45% of the generation portfolio coming from renewable energy.

APS’s ability to successfully execute its clean energy commitment is dependent upon a number of external factors, some of which include supportive national and state energy policies, a supportive regulatory environment, sales and customer growth, the development, deployment and advancement of clean energy technologies and continued access to capital markets.

The lack of access to sufficient supplies of water could have a material adverse impact on APS’s business and results of operations.

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Both groundwater and surface water in areas important to the operation of APS’s generating plants have been and are the subject of inquiries, claims and legal proceedings.

In addition, the region in which APS’s power plants are located is prone to drought conditions, which could potentially affect the plants’ water supplies.

Climate change is also projected to exacerbate prolonged drought conditions.

APS’s inability to access sufficient supplies of water could have a material adverse impact on our business and results of operations.

In addition, the region in which APS’s power plants are located suffer from prolonged drought conditions, which could potentially affect the plants’ water supplies.

Climate change is also projected to exacerbate such drought conditions.

In addition, Colorado River water supplies for Arizona are subject to a Tier 2a shortage declaration, which substantially limits the quantity of water available for the state.

APS’s inability to access sufficient supplies of water, along with that of its customers, could have a material adverse impact on our business and results of operations.

We are subject to cybersecurity risks and risks of unauthorized access to our systems that could adversely affect our business and financial condition.

1 unchanged sentence

In the regular course of our business, we handle a range of sensitive security, customer, and business systems information.

There appears to be an increasing level of activity, sophistication, and maturity of threat actors, in particular nation state actors, that seek to exploit potential vulnerabilities in the electric utility industry and wish to disrupt the U.S.

There appears to be an increasing level of activity, sophistication, and maturity of threat actors, including from both nation state and non-nation state actors, that seek to exploit potential vulnerabilities in the electric utility industry and wish to disrupt the U.S.

bulk power system, our information technology systems, generation (including our Palo Verde nuclear facility), transmission and distribution facilities, and other infrastructure facilities and systems and physical assets.

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If a significant cybersecurity event or breach were to occur, we may not be able to fulfill critical business functions and we could (i) experience property damage, disruptions to our business, theft of or unauthorized access to customer, employee, financial or system operation information or other information;

(ii) experience loss of revenue or incur significant costs for repair, remediation and breach notification, and increased capital and operating costs to implement increased security measures;

(ii) experience loss of revenue or incur significant costs for repair, remediation and breach

notification, and increased capital and operating costs to implement increased security measures;

and (iii) be subject to increased regulation, litigation and reputational damage.

If such disruptions or breaches are not detected quickly, their effects could be compounded or could delay our response or the effectiveness of our response and ability to limit our exposure to potential liability.

These types of events could also require significant management attention and resources and could have a material adverse impact on our financial condition, results of operations or cash flows.

These types of events would also require significant management attention and resources and could have a material adverse impact on our financial condition, results of operations, or cash flows.

We develop and maintain systems and processes aimed at detecting and preventing information and cybersecurity incidents which require significant investment, maintenance, and ongoing monitoring and updating as technologies and regulatory requirements change.

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The risk of these system-related events and security breaches occurring continues to intensify.

We have experienced, and expect to continue to experience, threats and attempted intrusions to our information

technology systems and we could experience such threats and attempted intrusions to our operational control systems.

We have experienced, and expect to continue to experience, threats and attempted intrusions to our information technology systems and we could experience such threats and attempted intrusions to our operational control systems.

To date, we do not believe we have experienced a material breach or disruption to our network or information systems or our service operations.

We may not be able to anticipate and prevent all cyberattacks or information security breaches, and our ongoing investments in security resources, talent, and business practices may not be effective against all threat actors.

As such attacks continue to increase in sophistication and frequency, we may be unable to prevent all such attacks from being successful in the future.

We maintain cyber insurance to provide coverage for a portion of the losses and damages that may result from a security breach of our information technology systems, but such insurance is subject to a number of exclusions and may not cover the total loss or damage caused by a breach.

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Deployment of renewable energy technologies is expected to continue across the western states and result in a larger portion of the overall energy production coming from these sources.

These trends, which have benefited from historical and continuing government support for certain technologies, have the potential to put downward pressure on wholesale power prices throughout the western states which could make APS’s existing generating facilities less economical and impact their operational patterns and long-term viability.

These trends, which

have benefited from historical and continuing government support for certain technologies, have the potential to put downward pressure on wholesale power prices throughout the western states which could make APS’s existing generating facilities less economical and impact their operational patterns and long-term viability.

We are subject to employee workforce factors that could adversely affect our business and financial condition.

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We are subject to other employee workforce factors, such as the availability and retention of qualified personnel and the need to negotiate collective bargaining agreements with union employees.

Additionally, any regulatory changes requiring us to enforce a COVID-19 vaccine mandate could impact the availability of, and our ability to attract and retain, sufficient qualified employees.

These or other employee workforce factors could negatively impact our business, financial condition, or results of operations.

1 unchanged sentence

COVID-19 is a continually developing situation around the globe that has led to economic disruption and volatility in the financial markets.

The continued spread of COVID-19 and efforts to contain the virus and mitigate its public health effects, including but not limited to a vaccine mandate, could decrease demand for energy, lower economic growth, impact our employees and contractors, cause disruptions in our supply chain, increase certain costs, further increase volatility in the capital markets (and result in increases in the cost of capital or an inability to access the capital markets or draw on available credit facilities), delay the completion of capital or other construction projects and other operations and

maintenance activities, delay payments or increase uncollectable accounts, impact our ability to hire or retain qualified employees, or cause other unpredictable events, each of which could adversely affect our business, results of operations, cash flows or financial condition.

As a result of the COVID-19 pandemic, from March 2020 through April 2021, APS experienced higher electric residential sales and lower electric commercial and industrial sales and the cumulative impact on weather normalized retail electricity sales usage was a net increase as compared to 2019.

APS also experienced an increase in bad debt expense associated with the COVID-19 pandemic that resulted in a negative impact to its 2021 operating results.

In mid-March 2020, we drew on our revolving credit facilities as a result of the commercial paper markets failing to function normally due to COVID-19, but we were subsequently able to utilize the commercial paper market in April 2020 and we have paid down the revolving credit facilities completely.

We are also experiencing increased operations and maintenance expenses due to the need for personal protective equipment and other health and safety-related costs related to COVID-19.

Despite our efforts to manage the impacts, the degree to which the COVID-19 pandemic and related actions ultimately impact our business, financial position, results of operations and cash flows will depend on factors beyond our control including the duration, spread and severity of the outbreak, the actions taken to contain COVID-19 and mitigate its public health effects, including but not limited to a vaccine mandate, the impact on the U.S.

and global economies and demand for energy, and how quickly and to what extent normal economic and operating conditions resume.

The spread of COVID-19 and efforts to contain the virus and mitigate its public health effects, could decrease demand for energy, lower economic growth, impact our employees and contractors, cause disruptions in our supply chain, increase certain costs, further increase volatility in the capital markets (and result in increases in the cost of capital or an inability to access the capital markets or draw on available credit facilities), delay the completion of capital or other construction projects and other operations and maintenance activities, delay payments or increase uncollectable accounts, impact our ability to hire or retain qualified employees, or cause other unpredictable events, each of which could adversely affect our business, results of operations, cash flows or financial condition.

FINANCIAL RISKS

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Declines in market values of the fixed income and equity securities held in these trusts may increase our funding requirements into the related trusts.

Additionally, the valuation of liabilities related to our pension plan and other postretirement benefit plans are impacted

by a discount rate, which is the interest rate used to discount future pension and other postretirement benefit obligations.

Additionally, the valuation of liabilities related to our pension plan and other postretirement benefit plans are impacted by a discount rate, which is the interest rate used to discount future pension and other postretirement benefit obligations.

Declining interest rates decrease the discount rate, increase the valuation of the plan liabilities, and may result in increases in pension and other postretirement benefit costs, cash contributions, regulatory assets, and charges to OCI.

19 unchanged sentences

APS’s operations include managing market risks related to commodity prices.

APS is exposed to the impact of market fluctuations in the price and transportation costs of electricity, natural gas, and coal to the extent that unhedged positions exist.

APS is exposed to the impact of market fluctuations in the price and transportation costs of electricity, natural gas, and coal to

the extent that unhedged positions exist.

We have established procedures to manage risks associated with these market fluctuations by utilizing various commodity derivatives, including exchange traded futures and over-the-counter (“OTC”) forwards, options, and swaps.

1 unchanged sentence

The changes in market value of such contracts have a high correlation to price changes in the hedged commodity.

To the extent that commodity markets are illiquid, we may not be able to execute our risk

management strategies, which could result in greater unhedged positions than we would prefer at a given time and financial losses that negatively impact our results of operations.

To the extent that commodity markets are illiquid, we may not be able to execute our risk management strategies, which could result in greater unhedged positions than we would prefer at a given time and financial losses that negatively impact our results of operations.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) contains measures aimed at increasing the transparency and stability of the over-the-counter derivative markets and preventing excessive speculation.

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The passage of certain initiatives or referenda could result in laws and regulations that impact our business plans and have a material adverse impact on our financial condition, results of operations, or cash flows.

General economic conditions could materially affect our business, financial condition, and results of operations.

General economic factors that are beyond the Company’s control impact the Company’s forecasts and actual performance.

These factors include interest rates;

supply chain constraints;

unemployment trends;

sanctions, trade restrictions, military interventions and the threat or possibility of war;

terrorism or other global or national unrest;

and political or financial instability.

In particular, during 2021 and 2022, the United States’ economy has experienced a substantial rise in the inflation rate.

There is increased uncertainty as to whether the rise in inflation will continue and for how long.

Increases in inflation raise the Company’s costs for commodities, labor, materials and services.

Additionally, COVID-19 severely impacted global supply chains, resulting in equipment delays and

increased costs.

A failure to recover the increased costs caused by increased inflation and supply chain constraints through our rates could have a material adverse impact on our financial condition, results of operations, or cash flows.

The market price of our common stock may be volatile.

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• our dividend policy;

• change in our management;

• future sales by the Company of equity or equity-linked securities;

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However, certain market disruptions or revisions to rules or regulations may cause our cost of borrowing to increase generally, and/or otherwise adversely affect our ability to access these financial markets.

In addition, the credit commitments of our lenders under our bank facilities may not be satisfied or continued beyond current commitment periods for a variety of reasons, including new rules and regulations, changes to the internal policies of our lenders, periods of financial distress or liquidity issues affecting our lenders or financial markets, which could materially adversely affect the adequacy of our liquidity sources and the cost of maintaining these sources.

Changes in economic conditions, monetary policy, fiscal policy, financial regulation, rating agency treatment or other factors could result in higher interest rates, which would increase interest expense on our existing variable rate debt and new debt we expect to issue in the future, and thus increase the cost and/or reduce the amount of funds available to us for our current plans.

Changes in economic conditions, monetary policy, fiscal policy, financial regulation, rating agency treatment and/or other factors could result in higher interest rates, which would increase interest expense on our existing variable rate debt and new debt we expect to issue in the future, and thus increase the cost and/or reduce the amount of funds available to us for our current plans.

Additionally, an increase in our leverage, whether as a result of these factors or otherwise, could adversely affect us by:

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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