AEP: 10-K Risk Factor Changes

More frequent and severe drought conditions, extreme swings in amount and timing of precipitation, changes in vegetation, unseasonably warm temperatures, very low humidity, stronger winds and other factors have increased the duration of the wildfire season and the potential impact of an event. AEP’s infrastructure could pose risks to safety and system reliability and wildfire mitigation initiatives may not be successful or effective in preventing or reducing wildfire-related events. Wildfires can occur even when effective mitigation procedures are followed. Despite AEP’s early-stage wildfire mitigation initiatives, a wildfire could be ignited, spread and cause damages, which could subject AEP to significant liability. Other potential risks associated with wildfires include the inability to secure sufficient insurance coverage, increased costs for insurance and mitigation efforts, regulatory recovery risk, litigation risk, and the potential for a credit downgrade and subsequent additional costs to access capital markets.