PEG: 10-K Risk Factor Changes

PJM continues to face significant resource adequacy challenges, driven by a lack of sufficient supply to meet electric demand, which has increased significantly over the past several years and is expected to continue to increase going forward. Increasing demand is caused by data centers, EV adoption, electrification and other factors. Insufficient supply to meet forecasted demand has caused increases in energy and capacity prices which, in turn, have caused the customer rates by which we recover electric supply costs to materially increase. This has resulted in continuing affordability concerns that have caused regulators and other policymakers to consider ways to reduce utility rates, including proposing to mitigate electric rate increases, and create increased regulatory uncertainty for utility investment initiatives and programs. Actions that policymakers could implement in response to these affordability concerns could have a material, adverse impact on our business, strategy, growth rates, cash flows, results of operation, and financial condition. In addition, both lack of supply and increasing demand pose reliability risk for customers. Substantial investments in generation, transmission and distribution will be required to meet current projections of increasing customer demand. Sustained distribution grid modernization will also be required to accommodate increased EE, EV infrastructure, increased penetration of distributed energy resources on the electric system, such as on-site solar generation and also potential deployment of energy storage, fuel cells, and distributed resources technologies. In addition, inability of PJM to procure sufficient capacity to meet demand plus its reserve margin increase future risk of blackouts and load reduction, which may in turn result in litigation, political and regulatory scrutiny and reputational impacts.