What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2026-02-26 compared with 2025-02-28 · 130 added, 79 removed, 451 unchanged (32% of the section changed)

21 unchanged sentences

For example, certain market and operating conditions may require us to purchase electricity in the wholesale market during periods of unusually high prices to meet our supply obligations or to sell electricity in the wholesale market during periods of low prices.

F o r m 10- K Table of Contents

The effects of storms, floods, and other climatic events could disrupt our operations and cause us to incur significant costs in preparing for or responding to these effects.

These or other meteorological changes could lead to increased operating costs, capital expenses, or power purchase costs.

Such climatic events could also affect the availability of a secure and economical water supply in some locations, which is essential for the continued operation of our generation facilities.

Such climatic events could also affect the availability of secure and economical fuel and water supplies in some locations, both of which are essential for the continued operation of our generation facilities.

Furthermore, under PJM’s Capacity Performance model, we may be (and have in the past been) subject to substantial monetary penalties for failing to meet the Capacity Performance requirements set forth by PJM in certain emergency events, including extreme weather events.

1 unchanged sentence

See also “—Regulatory, Environmental, and Legal Risks—We could be impacted by changes in, or state interference with, the structure or operation of the markets in which we operate, including ongoing market restructuring in PJM.” and “—Regulatory, Environmental, and Legal Risks—We may be affected by changes in applicable laws and regulations.”

Form 10-K Table of Contents

Expected demand growth from the technology sector, manufacturing, and other uses of electricity, which has driven recent improvements in the outlook for the competitive wholesale power generation market, may not actually occur or be sustained.

8 unchanged sentences

Market competition may adversely affect our ability to operate profitably and generate positive cash flow.

We sell our capacity, electricity, and ancillary services into competitive wholesale markets through a combination of capacity auctions, day-ahead and real-time spot markets, and bilateral agreements.

We sell our capacity, electricity, and ancillary services into competitive wholesale markets through a combination of capacity auctions, day-ahead and real-time spot markets, and futures contracts.

Our business model depends on us successfully operating in a competitive environment and, unlike regulated utilities, we are not assured of any rate of return on capital investments through a regulated rate structure.

8 unchanged sentences

F o r m 10- K Table of Contents

Our business is subject to extensive regulation, which may increase our costs, reduce our revenues, or limit operation of our facilities.

2 unchanged sentences

Business—Legal, Regulatory, and Environmental Matters.” Some of the key rules and regulations impacting our business include, among others, those set forth by:

(i) FERC, relating to the generation, sale, and transmission of electricity, and its designated Electric Reliability Organization (currently NERC), relating to reliability standards for the bulk power system;

(ii) PJM and ISO-NE, relating to the reliability and performance of generation facilities and operation of the energy and capacity markets;

(i) the FERC, relating to the generation, sale, and transmission of electricity, and its designated Electric Reliability Organization (currently NERC), relating to reliability standards for the bulk power system;

(ii) PJM, relating to the reliability and performance of generation facilities and operation of the energy and capacity markets;

(iii) the NRC, relating to the licensing, operation, and ownership of nuclear facilities;

7 unchanged sentences

See also “—Regulatory, Environmental, and Legal Risks.”

Our business could be adversely affected by events outside of our control, including armed conflicts, war, terrorist attacks or threats, pandemics, natural disasters, cyber-based attacks, or other significant events.

Form 10-K Table of Contents

Our business could be adversely affected by events outside of our control, including armed conflicts, war, terrorist attacks or threats, government shutdowns, pandemics, natural disasters, cyber-based attacks, or other significant events.

Instability and unrest, as well as war, other armed conflicts, economic sanctions, acts of terrorism, or threats thereof may lead to economic disruption that could adversely affect our business through high volatility in fuel and other commodity prices, difficulty obtaining products such as nuclear fuel, disruptions in supply chains, disruptions or volatility in financial markets, or other factors.

Additionally, during periods of federal government shutdowns, many government agencies cease to operate at full capacity or at all, which could result in the suspension of ongoing application processes, significant delays in regulatory approvals or other project timing, and difficulty in conducting any other business requiring government participation or approval.

In addition, we could be adversely affected by an epidemic, an infectious disease outbreak, or other public health events, which could impact our workforce and the availability of other resources, resulting in decreased service levels and increased costs.

14 unchanged sentences

Furthermore, due to rising insurance costs and changes in the insurance markets, we cannot provide any assurance that our insurance coverage will continue to be available at economic rates or at all.

F o r m 10- K Table of Contents

Our activities related to hedging and asset management may result in economic losses and (or) volatility in our financial results.

2 unchanged sentences

See also “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Financial Condition and Results of Operations—Capacity Markets— Capacity Performance Event ” and “—Regulatory, Environmental, and Legal Risks.” Additionally, under the AWS PPA, Susquehanna has committed to certain delivery quantities over time and reliability standards and AWS may be entitled to contractual or other remedies in the event of Susquehanna’s non-performance.

For example, certain of our generation facilities incurred Capacity Performance penalties for failing to meet PJM’s Capacity Performance requirements during Winter Storm Elliott in 2022.

See also “—Regulatory, Environmental, and Legal Risks.” Additionally, under the AWS PPA, we have committed to certain delivery quantities over time with agreed reliability standards and AWS may be entitled to contractual or other remedies in the event of our non-performance.

Because our generation facilities are part of interconnected regional grids, we face the risk of congestion and other interruptions that could impact our operations.

4 unchanged sentences

The rates for transmission capacity from our facilities are set by others and thus are subject to changes outside of our control, some of which could be significant.

F o r m 10- K Table of Contents

Our ownership and operation of Susquehanna subjects us to substantial risks associated with nuclear generation.

8 unchanged sentences

• the technological and financial aspects of modifying or decommissioning nuclear facilities at the end of their useful lives;

Form 10-K Table of Contents

• extensive regulation associated with ownership and operation of nuclear facilities (see also “—Regulatory, Environmental, and Legal Risks—Our ownership and operation of a nuclear power facility subjects us to regulations, costs, and liabilities uniquely associated with these types of facilities.”);

22 unchanged sentences

Any draw down on these or other financial assurances in an event of default could adversely affect our financial position and liquidity, credit ratings, and compliance with our debt agreements and other contractual obligations.

F o r m 10- K Table of Contents

We are exposed to credit risk, concentrations of credit risk, and counterparty risk from RTOs and ISOs, other customers, commercial counterparties, financial institutions, suppliers, and other parties.

6 unchanged sentences

See Note 2 to the Annual Financial Statements for additional information.

Form 10-K Table of Contents

We purchase fuel, other required consumables, equipment and parts, and other critical products from a number of suppliers.

4 unchanged sentences

Completed, pending, and potential retirements of our coal assets could result in additional costs and adverse effects on our operating results.

Since 2016, we have retired three economically nonviable coal-fired units, while our remaining coal-fired generation assets continue to be impacted by changing environmental regulations and power market economics.

Although we recently reached a settlement agreement for the continued RMR operation of our Brandon Shores (a coal asset) and H.A.

Wagner (formerly a coal asset, now operating primarily on fuel oil) facilities through May 2029, we do not currently anticipate that those assets will run beyond that date unless PJM continues to require their operation to maintain grid reliability.

Since 2016, we have retired three uneconomic coal-fired units, while our remaining coal-fired generation assets continue to be impacted by changing environmental regulations and power market economics.

Although we reached a settlement agreement for the continued RMR operation of our Brandon Shores (a coal asset) and H.A.

Wagner (formerly a coal asset, now operating primarily on fuel oil) facilities through May 2029, those assets may not continue to run beyond that date unless PJM continues to require their operation to maintain grid reliability.

In addition, although our Brunner Island facility has been converted and can now run on either coal or natural gas, it remains a legacy coal facility with associated remediation obligations.

18 unchanged sentences

Any of these events could adversely impact us, our joint operations, or our ability to enter into future joint operations.

F o r m 10- K Table of Contents

Form 10-K Table of Contents

Our success depends on our ability to attract and retain an appropriately qualified workforce.

Our ability to attract and retain key employees is important to both our operational and financial performance.

We cannot guarantee that any member of our leadership or workforce will continue to serve in any capacity for any particular period of time.

We could have difficulty retaining certain key members of management beyond May 2026, when a significant portion of our outstanding long-term equity-based incentive compensation is scheduled to vest.

In addition, effective succession planning is also important to our long-term success.

We cannot guarantee that any member of our leadership or workforce will continue to serve in any capacity for any particular period of time and we could have difficulty retaining certain key members of management beyond their currently agreed employment and compensation arrangements, many of which expire in early 2027.

Failure to timely and effectively ensure the transfer of knowledge and smooth transitions involving senior management and other key personnel could hinder our strategic planning and execution.

Furthermore, an aging workforce with significant retirement eligibility, mismatch of skill set, expectation of future needs, uncertainty around the future of our aging assets, or unavailability of short-term contract employees or contractors may lead to difficulty retaining our workforce, operating challenges, and increased costs.

1 unchanged sentence

In particular, our operations at Susquehanna largely depend on highly specialized personnel whose absence may adversely impact our ability to operate.

We are also subject to the risk of organized actions by unionized employees which, as of December 31, 2024, represented approximately 43% of our workforce.

We are also subject to the risk of organized actions by unionized employees which represent a significant proportion of our workforce.

If we are unable to negotiate future collective bargaining agreements on favorable terms, or if our union employees were to engage in strikes, work stoppages, slowdowns, or other forms of labor disruption, we would be responsible for obtaining replacement labor and could experience increased costs, reduced power generation, outages, other operational disruptions, or reputational harm.

27 unchanged sentences

In addition, any disposition would likely decrease our earnings and cash flows.

F o r m 10- K Table of Contents

Form 10-K Table of Contents

We could also engage in mergers, business combinations, or similar corporate transactions.

10 unchanged sentences

No assurance can be provided that any such transaction will result in the anticipated benefits to our business or stockholders.

See also “—Risks Related to the Cornerstone Acquisition.”

Regulatory, Environmental, and Legal Risks

Our business is subject to extensive energy-related regulation and oversight.

We are subject to regulation by federal and state agencies and other bodies that exercise regulatory authority in the various regions where we conduct business, including but not limited to FERC;

We are subject to regulation by federal and state agencies and other bodies that exercise regulatory authority in the various regions where we conduct business, including but not limited to the FERC;

the Department of Energy;

3 unchanged sentences

Business—Legal, Regulatory, and Environmental Matters—Energy Regulation” and “—Our ownership and operation of a nuclear power facility subjects us to regulations, costs, and liabilities uniquely associated with these types of facilities.”

Certain of our subsidiaries sell electricity into the wholesale markets and are subject to rate, financial, and organizational regulation by FERC.

FERC has authorized us to sell energy, capacity, and ancillary services at wholesale at market-based rates and has granted us various related customary waivers and blanket approvals, including a blanket authorization to issue securities and to assume liabilities.

FERC retains the authority to modify or withdraw our market-based rate authority and impose cost-based rates if it determines that the market is not competitive, we possess market power in one or more markets, we are not charging just and reasonable and not unduly discriminatory rates, or we have violated FERC’s market behavior rules or engaged in market manipulation.

Any reduction by FERC in the rates that we may receive, revocation of FERC’s waivers and blanket authorizations, or unfavorable changes to the regulation of our business by federal or state regulators could materially adversely affect our business.

Delivery “behind-the-meter” of more than 300 MW of power under the AWS PPA requires that FERC approve an amended ISA between Susquehanna, PPL, and PJM.

Without an amendment we will be unable to deliver the full amount of contract volume under the AWS PPA on a behind-the-meter basis, which may require a contract renegotiation to deliver the additional power “in-front-of-the-meter.” See "Item 3.

Legal Proceedings” for additional information on the Susquehanna ISA Amendment.

In addition, if we were found to have violated FERC’s market behavior rules or other FERC requirements, FERC could impose civil penalties or order us to disgorge associated profits.

Our generation assets are also subject to the reliability standards promulgated by the FERC-designated Electric Reliability Organization (currently NERC) and approved by FERC.

Certain of our subsidiaries sell electricity into the wholesale markets and are subject to rate, financial, and organizational regulation by the FERC.

The FERC has authorized us to sell energy, capacity, and ancillary services at wholesale at market-based rates and has granted us various related customary waivers and blanket approvals, including a blanket authorization to issue securities and to assume liabilities.

The FERC retains the authority to modify or withdraw our market-based rate authority and impose cost-based rates if it determines that the market is not competitive, we possess market power in one or more markets, we are not charging just and reasonable and not unduly discriminatory rates, or we have violated the FERC’s market behavior rules or engaged in market manipulation.

Any reduction by the FERC in the rates that we may receive, revocation of the FERC’s waivers and blanket authorizations, or unfavorable changes to the regulation of our business by federal or state regulators could materially adversely affect our business.

In addition, if we were found to have violated the FERC’s market behavior rules or other requirements of the FERC, the FERC could impose civil penalties or order us to disgorge associated profits.

Our generation assets are also subject to the reliability standards promulgated by the FERC-designated Electric Reliability Organization (currently NERC) and approved by the FERC.

If we fail to comply with the mandatory reliability standards, we could be subject to sanctions, including substantial monetary penalties and increased compliance obligations.

15 unchanged sentences

and monetary penalties, increased compliance obligations, or other types of sanctions.

F o r m 10- K Table of Contents

Form 10-K Table of Contents

Furthermore, certain of our operations pose risks of liability due to leakage, migration, emissions, releases, or spills of hazardous or otherwise regulated substances to the air, surface or subsurface soils, surface water, or groundwater.

11 unchanged sentences

We do not own or control the transmission facilities required to deliver the wholesale power from our generation facilities to load.

FERC has issued regulations that require wholesale electricity transmission services, even when offered by parties other than RTOs and ISOs, to be offered on an open-access, non-discriminatory basis.

The FERC has issued regulations that require wholesale electricity transmission services, even when offered by parties other than RTOs and ISOs, to be offered on an open-access, non-discriminatory basis.

Although these regulations are designed to encourage competition in wholesale markets, there can be no assurance that transmission capacity will be available in the amounts we require.

9 unchanged sentences

Ongoing market reforms have caused delays in the PJM Base Residual Auctions, which determine capacity prices in upcoming years, leading to unpredictability around capacity revenues due to lack of reliable pricing and on-schedule BRAs.

While PJM has established dates for certain upcoming PJM BRAs based upon FERC orders establishing rules for such capacity markets, we cannot guarantee those auctions will take place on those dates or at all.

While PJM has established dates for certain upcoming PJM BRAs based upon the FERC’s orders establishing rules for such capacity markets, we cannot guarantee those auctions will take place on those dates or at all.

In addition, under PJM’s Capacity Performance model, we may be (and have in the past been) subject to substantial monetary penalties for failing to meet the Capacity Performance requirements set forth by PJM in certain emergency events.

9 unchanged sentences

See also “—We may be affected by changes in applicable laws and regulations.”

F o r m 10- K Table of Contents

Form 10-K Table of Contents

There is uncertainty related to the future profitability of our fossil fuel-fired power generation business and the amount and timing of associated environmental costs.

3 unchanged sentences

Any resulting changes to the legal and regulatory framework governing electric generation could materially impact our business.

For example, new air, waste, and water rules finalized by the EPA in 2024 could require us to incur significant costs if they withstand legal challenges and potential rescission or revision by the Trump administration.

For example, air, waste, and water rules finalized by the EPA in 2024 could require us to incur significant costs if they withstand legal challenges and potential rescission or revision by the Trump administration.

These costs include ARO revisions, potential asset modifications, including investments in environmental control equipment, premature retirement or reduced operations, and increased public reporting requirements.

1 unchanged sentence

Furthermore, any new legislation or regulatory programs could also increase the cost of electricity production or make certain units unavailable or restricted, overall reducing the amount of reliable and affordable power available to meet our nation’s growing electricity demand.

For example, compliance with the recently revised EPA MATS Rule will require either investment in additional control equipment at Colstrip or retirement of the plant by 2027.

We and the other Colstrip co-owners have not yet determined whether to install the equipment necessary to comply with the new EPA MATS Rule;

meanwhile, we and others are actively challenging the EPA MATS Rule in ongoing litigation as well as advocating for changes administratively.

Furthermore, if we and our co-owners elect to install additional control equipment at Colstrip, the recently revised EPA GHG Rule could still force the plant to retire by 2032, before the costs of installing the equipment can be recovered.

We operate an aging fossil fuel fleet and many of our facilities require periodic maintenance and repair.

If we significantly modify a unit such that regulated pollutants are increased beyond thresholds set by the EPA pursuant to New Source Review guidelines promulgated under the Clean Air Act, we may be required to install the best available control technology or to achieve the lowest achievable emission rates, which would likely result in substantial additional capital expenditures or premature retirement.

However, the EPA MATS, GHG, CCR, and ELG Rules are currently subject to ongoing litigation.

As a result, future implementation and enforcement of these rules remains uncertain.

To the extent that new or amended laws or regulations further restrict emissions from the combustion of coal, natural gas, or oil, such requirements could result in further capital expenditures or premature retirements.

Existing and emerging legal and regulatory requirements related to coal-fired generation operations and CCR could adversely affect our business.

8 unchanged sentences

See Note 8 to the Annual Financial Statements for additional information on AROs.

In addition, the EPA recently finalized standards under the EPA GHG Rule for new and certain existing power plants.

In addition, the EPA finalized standards under the EPA GHG Rule in 2024 for new and certain existing power plants.

These regulations primarily affect baseload units in the national power fleet, including our coal-fired generation facilities that have not set near-term retirement dates (e.g., Colstrip).

1 unchanged sentence

Recently, certain state legislatures have considered bills that could materially affect our ability to operate our coal-fueled generation facilities.

Furthermore, other recent EPA rules (e.g., the EPA MATS, CCR, and ELG Rules) could have a significant impact on our business as discussed herein.

Furthermore, other EPA rules (e.g., the CCR and ELG Rules) could have a significant impact on our business as discussed herein.

Each of these rules are currently subject to ongoing legal challenges.

In addition, in January 2025, President Trump issued an executive order directing the heads of all federal agencies to identify and begin the processes to suspend, revise, or rescind all agency actions, including existing regulations, that are unduly burdensome on the identification, development, or use of domestic energy resources.

Under the Trump Administration, the EPA is currently reconsidering many of the regulations that impact fossil fuel-fired power plants.

Consequently, future implementation and enforcement of these rules remains uncertain at this time.

F o r m 10- K Table of Contents

Our ownership and operation of a nuclear power facility subjects us to regulations, costs, and liabilities uniquely associated with these types of facilities.

9 unchanged sentences

The current facility operating licenses for our two units at Susquehanna expire in 2042 and 2044.

Form 10-K Table of Contents

The NRC could temporarily or permanently shut down Susquehanna, require it to modify its operations, or refuse to permit a unit to restart after any planned or unplanned outage.

12 unchanged sentences

Uninsured losses and other liabilities and expenses resulting from an incident at Susquehanna, to the extent not recovered from insurers or the nuclear industry, could be borne by us.

See also “—Industry and Market Risks—Operation of power generation facilities involves significant risks and hazards customary to the power industry, which we cannot assure our insurance will be adequate to cover.” Additionally, an accident or other significant event at a nuclear facility within the United States or abroad, whether owned by us or others, could result in increased regulation and reduced public support for nuclear-fueled energy.

See also “—Commercial and Operational Risks—Operation of power generation facilities involves significant risks and hazards customary to the power industry, which we cannot assure our insurance will be adequate to cover.” Additionally, an accident or other significant event at a nuclear facility within the United States or abroad, whether owned by us or others, could result in increased regulation and reduced public support for nuclear-fueled energy.

If an incident did occur at Susquehanna, any resulting operational loss, damages, and injuries would likely have a material adverse effect on our business.

7 unchanged sentences

Business—Legal, Regulatory, and Environmental Matters—Environmental Regulation” and Note 9 to the Annual Financial Statements for additional information on new water, waste, air, and climate rules recently finalized by the EPA.

F o r m 10- K Table of Contents

The availability and cost of emission allowances could negatively impact our operating costs.

6 unchanged sentences

See Note 9 to the Annual Financial Statements for additional information on the EPA CSAPR and nitrogen oxides requirements.

Changes in tax law (including any elimination of the Nuclear PTC), the implementation regulations of certain tax provisions, adverse decisions by tax authorities, or the imposition of tariffs may adversely affect our business.

Form 10-K Table of Contents

Changes in tax law, the implementation regulations of certain tax provisions, adverse decisions by tax authorities, or changes to (and uncertainty surrounding) U.S.

and international tariffs and trade may adversely affect our business.

The laws and rules pertaining to U.S.

2 unchanged sentences

It cannot be predicted whether, when, in what form, or with what effective dates tax laws, regulations, and rulings may be enacted, promulgated, or issued, which could result in changes in the estimated values of recorded deferred tax assets and liabilities and future income tax assets and liabilities and an increase in our effective tax rate and tax liability.

For example, the Inflation Reduction Act was signed into law in August 2022.

Among the Inflation Reduction Act’s provisions are changes to the U.S.

corporate income tax system, including a one percent excise tax on certain repurchases of stock (and economically similar transactions) after December 31, 2022.

The Inflation Reduction Act also includes amendments to the Internal Revenue Code of 1986, as amended (the “Code”), to create a nuclear production tax credit program.

While electricity produced and sold by Susquehanna through December 31, 2032 may qualify for the Nuclear PTC, which is subject to potential adjustments, these provisions are subject to implementation regulations, the terms of which are not yet fully known.

Accordingly, we cannot fully predict the impacts that any such tax credits may have on our liquidity or results of operations.

Additional guidance expected to be issued from the U.S.

Treasury and IRS may impact the credit value recognized, and any elimination of the Nuclear PTC may adversely affect our business and financial condition.

See Note 2 to the Annual Financial Statements for our accounting policy related to Nuclear PTC and Note 6 to the Annual Financial Statements for Nuclear PTC revenue recognized.

Additionally, the imposition of new tariffs by government authorities or the increase of existing tariffs could materially increase the prices we pay for fuel, materials, supplies, equipment, parts, and (or) other critical products that are integral to our operations.

For example, the Inflation Reduction Act includes amendments to the Internal Revenue Code of 1986, as amended (the “Code”) to, among other things, create the Nuclear PTC program which, if eliminated, could negatively impact our business.

Our tax reporting is subject to audit by tax authorities.

3 unchanged sentences

This could result in a material and adverse effect on our consolidated income tax provision, financial position, and net income/loss for the period for which such determinations are made.

Our ability to utilize our tax attributes, including net operating loss carryforwards, remaining following Emergence, if any, may be limited.

As of December 31, 2024, we had $0.8 billion of U.S.

federal net operating loss carryforwards and $1.4 billion of disallowed business interest expense carryforwards under Section 163(j) of the Code and certain other tax attributes (including significant tax basis in assets).

Because the consummation of the Plan of Reorganization resulted in an ownership change for purposes of Sections 382 and 383 of the Code, our ability to utilize any remaining tax attributes after reduction and disallowed business interest expense carryforwards is subject to limitation under Sections 382 and 383 of the Code.

As a result, certain of our tax attributes have been substantially reduced, eliminated, or otherwise restricted.

Additionally, United States and international laws, rules, and practices pertaining to trade are currently undergoing frequent changes, including the imposition of new or expanded tariffs on international trade by U.S.

and foreign governments.

Moreover, President Trump has directed various federal agencies to further evaluate key aspects of U.S.

trade policy, and discussion is ongoing regarding other potentially significant changes to U.S.

and international trade policies, treaties, and tariffs.

Accordingly, there continues to exist significant uncertainty about the future relationship between the U.S.

and international trade partners.

We cannot predict the timing or scope of any potential changes to, or the volatility of governmental decisions around, tariffs or other trade policies.

Any new or increased trade tariffs, restrictions, or controls, as well as any resulting delays or disruptions in global supply chains or shipping channels, could materially increase the prices we pay for, or negatively impact our ability to obtain, on a timely basis or at all, fuel, materials, supplies, equipment, parts, and (or) other products critical to our operations.

Furthermore, any of these developments, or the perception that any of them could occur, may have a material negative impact on the macro-level U.S.

and global economy, which could negatively impact our interest rates, stock price, and ability to access capital markets.

Our ability to utilize our tax attributes, including net operating loss and interest carryforwards, if any, may be limited.

If an "ownership change" (as defined in Sections 382 and 383 of the Code) occurs, the amount of attributes that could be used in any one year following such ownership change could be substantially limited.

In general, an "ownership change" would occur when there is a greater than 50 percentage point increase in ownership of a company's stock by stockholders, each of which owns (or is deemed to own under Section 382) 5 percent or more of such company's stock.

If there is an "ownership change" (including by the normal trading activity of greater than 5% stockholders), the utilization of all NOLs existing at that time would be subject to additional annual limitations based upon a formula provided under Section 382 that is based on the fair market value of the company and prevailing interest rates at the time of the ownership change.

In addition, any ownership change could result in additional limitations on our ability to use certain tax attributes, including interest and depreciation, existing at the time of any such ownership change and have an impact on our tax liabilities.

We are subject to the risk of litigation and similar legal proceedings.

5 unchanged sentences

See Note 9 to the Annual Financial Statements for additional information on our legal matters.

F o r m 10- K Table of Contents

Form 10-K Table of Contents

Financial and Equity Risks

34 unchanged sentences

Any of these events could adversely affect our financial condition and results of operations and (or) cause us to become bankrupt or insolvent.

F o r m 10- K Table of Contents

Form 10-K Table of Contents

TEC is a holding company;

8 unchanged sentences

Notable exceptions include the ability to pay dividends or distributions:

(1) in an amount not to exceed the greater of $420 million and 40% of TES’s consolidated adjusted EBITDA, (2) in an unlimited amount so long as TES’s pro forma consolidated total net leverage ratio is less than or equal to 2.5 to 1.0, and (3) in an amount not to exceed the sum of:

(a) the greater of $525 million and 50% of TES’s consolidated adjusted EBITDA, (b) TES’s consolidated adjusted EBITDA minus 140% of TES’s consolidated interest expense, in each case, for the period beginning June 1, 2023 (subject to compliance with either (x) a pro forma consolidated total net leverage ratio of less than or equal to 3.75 to 1.0 or (y) a fixed charge coverage ratio greater than or equal to 2.0 to 1.0), (c) equity contributions to TES, and (d) other customary “builder basket” components.

(1) in an amount not to exceed the gr eater of $420 million and 40% of TES’s consolidated adjusted EBITDA, (2) in an unlimited amount so long as TES’s pro forma consolidated total net leverage ratio is less than or equal to 2.5 to 1.0, and (3) in an amount not to exceed the sum of:

(a) the greater of $525 million and 50% of TES’s consolidated adjusted EBITDA, (b) TES’s consolidated adjusted EBITDA minus 140% of TES’s consolidated interest expense, in each case, for the period from June 1, 2023 through the most recent fiscal quarter (subject to compliance with either (x) a pro forma consolidated total net leverage ratio of less than or equal to 3.75 to 1.0 or (y) a fixed charge coverage ratio greater than or equal to 2.0 to 1.0), (c) equity contributions to TES, and (d) other customary “builder basket” components.

See also “—The amount and terms of our indebtedness could adversely affect our financial condition and impair our ability to operate our business.”

13 unchanged sentences

Substantial sales of our common stock in the public market, or merely the market perception that large stockholders intend to sell shares (particularly with respect to our affiliates, directors, executive officers, or other insiders), could depress the market price or trading volume of our common stock.

We currently expect a significant number of shares of our common stock to be issued in May 2025 and May 2026 upon the vesting of certain existing awards under equity compensation plans, and those shares will become unrestricted in May 2026.

We currently expect a significant number of shares of our common stock to be issued and (or) become unrestricted in May 2026 upon the vesting and (or) release from lock-up of shares pursuant to certain existing awards under equity compensation plans.

We may also issue additional shares under future grants of equity compensation awards, to raise capital, or in connection with future potential corporate alliances or acquisitions.

For example, we expect to issue, and will be required to register, a substantial amount of common stock in connection with the proposed Cornerstone Acquisition.

Business—Recent Developments—Cornerstone Acquisition” for additional information.

In the future, we may attempt to obtain financing or increase capital by issuing additional shares of our common stock or by offering debt or other equity securities.

2 unchanged sentences

Any debt financing could involve covenants limiting our financial, operational, and strategic flexibility, make it more difficult for us to obtain additional capital, and (or) result in additional financial obligations to which our stockholders are structurally subordinated.

Form 10-K Table of Contents

In addition, the trading market for our common stock is affected by information that industry and financial analysts publish about our business.

4 unchanged sentences

There can be no assurance that analysts will continue to cover our business or that any such coverage will be favorable or accurate.

F o r m 10- K Table of Contents

Stockholders may have a limited ability to influence our business and affairs due to a number of factors.

The three largest TE C stockholders collectively own approximately 30% of our outstanding common stock.

The four largest TE C stockholders collectively own approximately 33% of our outstanding shares of common stock.

Large holders such as these may be able to significantly affect matters requiring approval by our stockholders, including but not limited to the election of directors and the approval of mergers or other business combination transactions.

14 unchanged sentences

The requirements of being a public company may require significant resources, and we may be unable to comply with these requirements in a timely or cost-effective manner.

As a newly public company, we are or will be required to comply with additional laws, regulations, and requirements, including but not limited to applicable SEC rules and regulations, certain provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and Nasdaq rules and requirements.

As an independent, publicly traded company, we are required to comply with additional laws, regulations, and requirements, including but not limited to applicable SEC rules and regulations, certain provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), including maintaining internal control over financial reporting and reporting any material weaknesses in our control, and Nasdaq rules and requirements.

These requirements cover a wide variety of topics including many aspects of disclosure, financial reporting, internal controls, and corporate governance, among others.

Complying with these laws, regulations, and requirements will occupy a significant amount of our time and may strain our resources, increase our costs, and distract management, all of which may inhibit our ability to comply with these requirements in a timely or cost-effective manner.

In particular, the internal controls and procedures required for public company financial reporting under Section 404 of the Sarbanes-Oxley Act are significantly more stringent than those required for a private company.

Fully implementing our internal control framework and testing will require significant resources, and management may not be able to timely and effectively implement the necessary controls and procedures.

Beginning with this Report we are required to furnish a report by management on the effectiveness of our internal control over financial reporting, pursuant to Section 404 of the Sarbanes-Oxley Act.

Additionally, our independent registered public accounting firm is also required to express an opinion as to the effectiveness of our internal control over financial reporting.

We have, and will continue to, design, implement and test the internal control over financial reporting required to comply with this obligation but such process is complex, time-consuming, and costly, and management may not be able to timely and effectively implement the necessary controls and procedures.

At any time, we may conclude that our internal controls, once tested, are not operating as designed or do not address all relevant financial reporting risks.

In addition, once required to attest to control effectiveness, our independent registered public accounting firm may issue a report concluding that our internal controls over financial reporting are not effective.

If we identify material weaknesses in the future or otherwise fail to implement or maintain effective internal controls over financial reporting, we may not be able to accurately or timely comply with our financial reporting obligations, which may subject us to adverse regulatory consequences, negatively affect our business, harm investor confidence, and (or) reduce the market price of our common stock.

Furthermore, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

If we identify material weaknesses in the future or otherwise fail to maintain effective internal controls over financial reporting, we may not be able to accurately or timely comply with our financial reporting obligations, which may subject us to adverse regulatory consequences, negatively affect our business, harm investor confidence, and (or) reduce the market price of our common stock.

Form 10-K Table of Contents

Risks Related to the Cornerstone Acquisition

The proposed Cornerstone Acquisition is subject to a number of conditions which, if not satisfied or waived, could delay or impair our ability to complete the transactions on the agreed terms or at all.

Failure to consummate the Cornerstone Acquisition as contemplated or at all could adversely affect us and the price of our common stock.

Completion of the Cornerstone Acquisition is subject to the satisfaction or waiver of a number of conditions, including:

(i) receipt of approval from the FERC under Section 203 of the Federal Power Act;

(ii) expiration or termination of the applicable waiting period under the HSR Act;

(iii) receipt of approval from the Indiana Utility Regulatory Commission, and (iv) other customary closing conditions, including but not limited to the absence of certain “material adverse events.” We cannot guarantee if or when these conditions will be satisfied or that the proposed Cornerstone Acquisition will be completed on the current terms or at all.

There can also be no assurance as to the cost, scope, or impact of the actions, restrictions, or other conditions that may be required to obtain regulatory consents and approvals, and the Cornerstone Merger Agreement generally does not permit us to terminate the transactions due to the terms of required regulatory consents or approvals.

It is a condition to closing the Cornerstone Acquisition that no governmental law, ruling, or order is in effect that prohibits its consummation.

Although we are not currently aware of any, legal actions relating to the proposed Cornerstone Acquisition could be filed under antitrust, securities, or other laws.

There can be no assurance of the outcome of any such actions and, regardless, defending against them could result in delays, additional costs, or diversion of time and resources.

The Cornerstone Merger Agreement provides that either we or the sellers can terminate the applicable agreement if the respective acquisition is not completed by January 15, 2027 (which may be automatically extended to July 15, 2027 in the case of pending antitrust and (or) regulatory approvals).

If the Cornerstone Acquisition is not consummated, or is consummated on different terms or timing than currently contemplated, we could be subject to a variety of risks, including but not limited to:

(i) being required to pay the sellers a termination fee;

(ii) incurrence of other significant transaction costs;

(iii) inability to realize the anticipated benefits of the proposed acquisition;

(iv) a decline in the market price of our common stock;

(v) reputational harm;

and (vi) diversion of management and employee attention from day-day-matters or other aspects of our business.

If completed, the proposed Cornerstone Acquisition may not achieve its intended results.

Although we currently anticipate that the Cornerstone Acquisition will be accretive to our earnings and cash flow, that expectation is based on preliminary estimates that are subject to change.

We may fail to realize the anticipated benefits of the Cornerstone Acquisition, encounter additional transaction and integration-related costs, or be affected by other factors that impact preliminary estimates, any of which could decrease or delay the expected accretion and (or) contribute to a decrease in the price of our common stock.

We entered into the Cornerstone Merger Agreement with the expectation that the Cornerstone Acquisition would result in various benefits to the Company, including enhanced generation capabilities.

Achievement of the anticipated benefits is subject to a number of uncertainties, including our ability to effectively integrate the acquired assets, which may be complex, costly, and time-consuming.

Additional challenges could include, among others:

(i) achieving the targeted operating or long-term strategic benefits from the acquired assets;

(ii) issues or costs in integrating our key systems, keeping industry, vendor, and other business, relationships, and integrating key hedging and other commercial arrangements;

(iii) possible inconsistencies between our standards, controls, policies, and procedures and those of the acquired assets and the resources required to implement or improve them to meet public company standards;

(iv) potential unknown liabilities and unforeseen expenses, delays, or regulatory conditions, as well as any unexpected write offs or impairment charges;

and (v) the performance of the acquired assets and the related costs to operate and maintain them, including any unanticipated capital expenditures or investments.

Furthermore, the Company will not control the acquired assets until completion of the proposed Cornerstone Acquisition, and the acquired assets or their value could be negatively impacted by conditions occurring while the Cornerstone Acquisition is pending.

Adverse changes could result from, among other things, physical asset damage, legal or regulatory developments, deteriorating general business, market, industry, or economic conditions, and other factors both within and beyond the control of the Company and the sellers.

In addition, there could be potential unknown liabilities or unforeseen expenses not discovered during due diligence and not adequately covered by any representation and warranty insurance we may obtain or otherwise adjusted for in the Cornerstone Merger Agreement.

Any such conditions could cause the value of the acquired assets to decline and (or) reduce the benefits of the Cornerstone Acquisition to the Company and its stockholders.

Any of the foregoing risks could result in failure to achieve the anticipated benefits of the Cornerstone Acquisition, and the expectations of our future financial condition and results of operations following the Cornerstone Acquisition might not be met.

See also “—Commercial and Operational Risks—Acquisitions, divestitures, mergers, or other corporate transactions may expose us to additional risks.”

Form 10-K Table of Contents

We expect to incur a significant amount of indebtedness to finance a portion of the Cornerstone Acquisition.

However, we are obligated to complete the transaction whether or not we have obtained the necessary funding.

We intend to raise approximately $2.55 billion of additional indebtedness to fund the Cornerstone Acquisition, in addition to issuing approximately $900 million in direct stock consideration.

The amount of our indebtedness following the Cornerstone Acquisition could have adverse consequences for us, including, among others:

(i) hindering our ability to adjust to changing market, industry, or economic conditions;

(ii) making us more vulnerable to economic or industry downturns (including interest rate increases);

(iii) limiting the amount of free cash flow available for future operations, acquisitions, dividends, stock repurchases, or other uses;

(iv) reducing our flexibility under the terms of our indebtedness to, among other things, make restricted payments, obtain other financing, operate our business, and (or) take advantage of mergers, acquisitions, or other corporate opportunities;

and (v) placing us at a competitive disadvantage compared to less leveraged competitors.

Increased indebtedness could also impact our credit ratings, borrowing costs, access to capital markets, and ability to comply with our indebtedness.

See also “—Financial and Equity Risks—The amount and terms of our indebtedness could adversely affect our financial condition and impair our ability to operate our business .

The Cornerstone Merger Agreement does not contain a financing condition, and we would be required to complete the proposed Cornerstone Acquisition even if we do not have the required funds on hand.

TEC has issued a parent guaranty in favor of the sellers to guarantee performance of our obligations under the Cornerstone Merger Agreement.

We will be required to raise financing for the Cornerstone Acquisition on the timeline required to close the transaction, which could subject us to less favorable timing, costs, and market conditions than we would otherwise choose.

If we cannot close on any element of our financing plan, we will need to pursue other financing options and certain existing indebtedness of the acquired assets or their affiliates may remain in place, which could result in less favorable financing terms that could negatively impact our costs, credit ratings, financing and operating flexibility, or realization of the anticipated benefits from the acquisition.

See also “—Financial and Equity Risks—We may not have sufficient access to financing for our business.”

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