KINDER MORGAN INC

In order to maintain a cost effective capital structure, it is our policy to borrow funds using a mix of fixed-rate debt and variable-rate debt. Fixed-to-variable interest rate swap agreements are entered into for the purpose of converting a portion of the underlying cash flows related to long-term fixed-rate debt securities into variable-rate debt in order to achieve our desired mix of fixed and variable-rate debt. Variable-to-fixed interest rate swap agreements are entered into primarily for the purpose of managing our exposure to changes in interest rates on our debt balances that are subject to variable interest rates and adjusting, on a short-term basis, our mix of fixed-rate debt and variable-rate debt based on changes in market conditions. The market risk inherent in our debt instruments and positions is the potential change arising from increases or decreases in interest rates as discussed below.

For fixed-rate debt, changes in interest rates generally affect the fair value of the debt instrument, but not our earnings or cash flows. Conversely, for variable-rate debt, changes in interest rates generally do not impact the fair value of the debt instrument, but may affect our future earnings and cash flows. Generally, there is not an obligation to prepay fixed-rate debt prior to maturity and, as a result, changes in fair value should not have a significant impact on the fixed-rate debt. We are generally subject to interest rate risk upon refinancing maturing debt. Below are our debt balances, including debt fair value adjustments, and sensitivity to interest rates:

(a)Fair values were determined using Level 2 inputs.

(b)A hypothetical 10% change in the average interest rates applicable to such debt as of December 31, 2024 and 2023, would result in changes of approximately $1,416 million and $1,889 million, respectively, in the estimated fair values of these instruments.

(c)A hypothetical 10% change in the weighted average interest rate on all of our borrowings (approximately 58 basis points in both 2024 and 2023) when applied to our outstanding balance of variable rate debt as of December 31, 2024 and 2023, including adjustments for the notional swap amounts described in the table above, would result in changes of approximately $21 million and $48 million, respectively.

We monitor our mix of fixed-rate and variable-rate debt obligations in light of changing market conditions, and we may alter that mix from time to time by, for example, refinancing outstanding balances of variable rate debt with fixed rate debt (or vice versa) or by entering into interest rate swap agreements or other interest rate hedging agreements. As of December 31, 2024, including debt converted to variable rates through the use of interest rate swaps but excluding our debt fair value adjustments, approximately 11% of our debt balances were subject to variable interest rates.

For more information on our interest rate risk management and on our interest rate swap agreements, see Note 13 “Risk Management” to our consolidated financial statements.