WECWEC Energy Group

Our operations are subject to extensive and evolving federal, state, and local environmental laws, regulations, and permit requirements related to, among other things, air emissions (including, but not limited to: to CO2, methane, mercury, SO2, NOx, ozone and NOx), other pollutants), protection of natural resources, water quality, wastewater discharges, and management of hazardous and toxic substances and solid wastes and soils. The EPA has recently adopted soils, and implemented new environmental regulations, which include regulations that govern the emission of NOx, ozone, fine particulates, and other air pollutants under the CAA through the NAAQS, climate change, other air quality regulations, and water quality regulations. For example, in 2024, the EPA revised the effluent guidelines for steam electric generating plants, published a final rule lowering the PM limit under the MATS, lowered the primary (health-based) annual PM 2.5 NAAQS, published the Greenhouse Gas Power Plant Rule for fossil-fired steam generating units, issued a final Mandatory Greenhouse Gas Reporting Rule, and finalized a rule for CCR that applies to landfills, historic fill sites, and projects where CCR was placed at a power plant site. Some change. Many of these rules could be challenged or reviewed are now the subject of a large deregulatory effort by agencies under the EPA and have resulted, and are expected to continue to result in, the adoption of new presidential administration, which creates additional uncertainty. As a result of these potential challenges and reviews, existing environmental federal, state, and/or local level laws and regulations may regulations. Any EPA actions will require formal rulemaking proceedings and are likely to be revised or new laws or regulations may be adopted subject to legal challenges. In addition, at the federal, state, or local level. end of 2025, the President issued executive orders directing the DOE to issue orders keeping certain coal plants running for grid reliability despite utilities' plans to retire them. Future orders impacting our planned retirements of coal plants could impact our ability to execute on our capital plan and to meet our environmental goal. We continue to monitor the evolving regulatory landscape and standards for impacts on our business operations and financial condition.

Our capital plan includes the planned retirement of older, fossil-fueled generation, to be replaced with natural gas, gas-fired generation and Weston Unit 3. zero-carbon-emitting renewables. We have retired nearly 2,500 MWs of fossil-fueled generation since the beginning of 2018. We expect to retire approximately 900 MWs of additional coal-fired generation by the end of 2031. In conjunction with our new capital plan, we and the other co-owners of Columbia Units 1 and 2 currently plan to continue coal operations at these units through at least 2029, and continue to evaluate the conversion of both units to natural gas. See Note 7, Property, Plant, and Equipment, for more information related to Columbia Units 1 and 2 and our planned power plant retirements. In May 2021, we announced goals We have a long-term goal to achieve reductions in carbon emissions from our net carbon-neutral electric generation fleet by 60% by the end of 2025 and by 80% by the end of 2030, both from a 2005 baseline. 2050. We expect to achieve these goals this goal by continuing to make operating refinements, retiring less efficient generating units, and executing our capital plan. Over As part of our path toward this goal, we started implementing co-firing with natural gas at the longer term, ERGS coal-fired units and at Weston Unit 4 in 2025. We expect to use coal only as a backup fuel by the target for our generation fleet is end of 2030 and to be net carbon neutral by 2050. We also believe we will be in a position to eliminate coal as an energy source by the end of 2032.

•Through the SMP, PGL •PGL had been working to replace old iron pipes and facilities in Chicago’s natural gas delivery system with modern polyethylene pipes to reinforce the long-term safety and reliability of the system. In November 2023, the ICC ordered PGL to pause spending on the SMP these projects until the ICC completed a proceeding to determine the optimal method for replacing aging natural gas infrastructure and a prudent investment level. The ICC granted PGL In a limited-scope rehearing related to of this order, PGL was authorized spending for the completion of SMP projects that had started in 2023 and the authorized spending for emergency repairs needed to ensure the safety and reliability of PGL's delivery system. On May 30, 2024, 2023. In February 2025, the ICC issued an order setting expectations for PGL's prospective retirement of its aging natural gas infrastructure. The ICC directed us to focus on retiring all cast and ductile iron pipe that has a written order on the rehearing, approving $28.5 million diameter of additional spending for emergency work, which represents a $1.6 million increase less than 36 inches by January 1, 2035. PGL is working to PGL's annual revenue requirement. retire this cast and ductile iron pipe through its PRP. For more information, see Note 26, Regulatory Environment, and Factors Affecting Results, Liquidity, and Capital Resources - Regulatory, Legislative, and Legal Matters - Illinois Proceedings.

jurisdictions. When it becomes probable that part of the cost of recently completed plant will be disallowed for rate-making purposes, we assess whether (3) Represents a reasonable estimate of the amount of the disallowance can be made. The estimated amount of the probable disallowance will then be deducted from the reported cost of the plant and recognized as an impairment loss. In 2024, we recorded a non-cash impairment loss of $12.1 million driven by an ICC order received in August 2024 related to the 2016 annual prudency review of PGL's 2016 Rider QIP, which included a disallowance of certain capital costs. In 2023, we recorded a non-cash impairment loss of $178.9 million related to the disallowance of certain previously incurred capital costs resulting from PGL's and NSG's November 2023 rate orders from the ICC. See Note 26, Regulatory Environment, for more information.