FIRSTENERGY CORP
For the period ended Jun 30, 2024. Filed Jul 30, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 30, 2024
FE$46.43-1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-25.
0001031296-24-000026
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-30.
0001031296-24-000043
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 381 previous paragraphs and 480 current paragraphs.
174 unchanged; 153 reworded; 129 added; 48 removed; 6 previous and 24 current paragraphs rearranged.
Tables are not compared: 21 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (129)
Current report
During the first quarter of 2024, FirstEnergy’s segment reporting structure was modified to increase transparency for leadership and investors, simplify the presentation to corresponding legal entities, and align FirstEnergy’s earnings, cash flows and balance sheets at the business unit level. FirstEnergy’s reportable segments are as follows:
Current report
Asset Retirement Obligations
Current report
On May 8, 2024, the EPA finalized changes to the CCR regulations addressing inactive surface impoundments at inactive electric utilities, known as legacy CCR surface impoundments. The rule extends 2015 CCR rule requirements for groundwater monitoring and protection procedures, operational and reporting procedures as well as closure requirements for impoundments and landfills that were not originally included for coverage by the 2015 CCR rule. In anticipation of such expenditures, FirstEnergy performed a preliminary assessment of former CCR disposal sites and calculated an initial estimate applying historical experience in remediating comparable sites. As a result, FirstEnergy recorded a $125 million increase to its ARO during the second quarter of 2024, of which $120 million is included in “Other operating expenses” on the Consolidated Statements of Income and was not capitalized as an asset retirement cost since the associated plants do not have future cash flows. In addition, AE Supply continues to evaluate closure options for McElroy’s Run, which request was withdrawn by AE Supply on July 9, 2024, prior to the completion of the technical review by the EPA. As of May 31, 2024, AE Supply ceased accepting waste at the McElroy’s Run CCR impoundment facility from Pleasants Power Station. As of June 30, 2024, AE Supply continues to operate the dry landfill adjacent to McElroy’s Run as a disposal facility for Pleasants Power Station. AE Supply continues to evaluate closure options for McElroy’s Run, including the transfer of the site and remediation obligations to a third-party, as well as other interpretation changes to its closure plans. As a result, during the second quarter of 2024, AE Supply reviewed its ARO and future expected costs to remediate McElroy’s Run, resulting in an increase to the ARO liability and corresponding increase to Other operating expense of $87 million.
Current report
•On July 22, 2024, FE PA filed its application with the PPUC seeking approval for the next phase of its LTIIP program, which is expected to result in approximately $1.6 billion in investments, with approximately $1.4 billion of such investments going in service during the five-year period beginning January 1, 2025 and ending December 31, 2029.
Current report
•On May 31, 2024, the Ohio Companies filed their application for an increase in base distribution rates, based on a 2024 calendar year test period ending May 31, 2024. The Ohio Companies requested a net increase in base distribution revenues of approximately $94 million with a return on equity of 10.8% and capital structures of 44% debt and 56% equity for CEI, 46% debt and 54% equity for OE, and 45% debt and 55% equity for TE, and reflects a roll-in of current riders such as DCR and AMI. The net increase represents a 1.5% average residential monthly bill increase. Key components of the base rate case filing include a proposal to change pension and OPEB recovery to the delayed recognition method and to implement a mechanism to establish a regulatory asset (or liability) to recover (or refund) net differences between the amount of pension and OPEB expense requested in the proceeding and the actual annual amount each year using this method. Additionally, the Ohio Companies request recovery of certain incurred costs, including the impact of major storms, a program to convert streetlights to LEDs, and others. On June 14, 2024, the Ohio Companies filed supporting testimony and expect by month-end to file an update with an adjusted net increase of base distribution revenues and incorporating matters in the rate case as directed by the PUCO’s ESP V Order.
Current report
Second Quarter of 2024 Compared with Second Quarter of 2023
Current report
•Charges related to changes in ARO liabilities associated with final CCR rules and changes in future expected costs to remediate McElroy’s Run;
Current report
•Loss contingencies associated with the SEC and OOCIC investigations as further discussed below in “Outlook - Other Legal Proceedings”;
Current report
•Higher other operating expenses as described below;
Current report
•The dilutive effect of the 30% additional minority equity interest sale in FET that closed in March 2024;
Current report
•The absence of the pension mark-to-market adjustment; and
Current report
•Higher debt redemption costs and interest on short-term borrowings.
Current report
•Proceeds from the shareholder derivative lawsuit settlement as described below in “Outlook - Other Legal Proceedings”;
Current report
•Higher customer usage and demand;
Current report
•Higher transmission rate base;
Current report
•The absence of benefit costs associated with the PEER program and involuntary separations that occurred in the second quarter of 2023; and
Current report
•Lower interest expense from long-term debt redemptions.
Current report
Detailed segment reporting explanations are included below.
Current report
First Six Months of 2024 Compared with First Six Months of 2023
Current report
•Charges related to changes in ARO liabilities associated with final CCR rules and changes in future expected costs to remediate McElroy’s Run;
Current report
•Loss contingencies associated with the SEC and OOCIC investigations as further discussed below in “Outlook - Other Legal Proceedings”;
Current report
•Higher other operating expenses as described below;
Current report
•The absence of the pension mark-to-market adjustment;
Current report
•The dilutive effect of the 30% additional minority equity interest sale in FET that closed in March 2024;
Current report
•Higher net interest expenses and debt redemption costs; and
Current report
•Proceeds from the shareholder derivative lawsuit settlement as described below in “Outlook - Other Legal Proceedings”;
Current report
•Higher customer usage and demand;
Current report
•Higher transmission rate base;
Current report
•The absence of the pension mark-to-market adjustment; and
Current report
•The absence of benefit costs associated with the PEER program and involuntary separations that occurred in the second quarter of 2023.
Current report
Detailed segment reporting explanations are included below.
Current report
(1) Includes street lighting.
Current report
Summary of Results of Operations — Second Quarter 2024 Compared with Second Quarter 2023
Current report
Distribution Segment — Second Quarter of 2024 Compared with Second Quarter of 2023
Current report
Distribution segment’s earnings attributable to FE decreased $77 million in the second quarter of 2024, as compared to the same period of 2023, primarily resulting from higher other operating expenses, including increases in the ARO liability, the absence of the pension mark-to-market adjustment, and higher interest expense, partially offset by higher customer usage and demand, and higher revenues from regulated investment programs.
Current report
Distribution’s total revenues increased $21 million as a result of the following sources:
Current report
Distribution services revenues increased $140 million in the second quarter of 2024, as compared to the same period of 2023, primarily resulting from higher customer usage as a result of the weather, higher weather-adjusted customer usage and demand, higher rider revenues associated with certain investment programs, and lower customer credits associated with the PUCO-approved Ohio Stipulation. Additionally, revenues increased due to the higher recovery of transmission expenses and other rider rate adjustments at FE PA, which have no material impact to earnings.
Current report
Total operating expenses increased $65 million, primarily due to:
Current report
•Other operating expenses increased $108 million in the second quarter of 2024, as compared to the same period of 2023, primarily due to:
Current report
•$46 million charge related to changes in ARO liabilities associated with final CCR rules;
Showing the first 40 of 129 passages. Open the source sections for the rest.
Removed paragraphs (48)
Previous report
As further discussed above, in 2024, FirstEnergy changed its reportable segments to include the following:
Previous report
First Three Months of 2024 Compared with First Three Months of 2023
Previous report
•A charge at JCP&L in the first quarter 2024 associated with the disallowance of certain corporate support costs as a result of the NJBPU-approved settlement agreement;
Previous report
•Lower earnings related to FEV’s equity method investment in Global Holding;
Previous report
•Higher other operating expenses related to planned vegetation management, uncollectible expense, and non-deferred storm expense; and
Previous report
•Higher interest expense associated with new long-term debt issuances, and higher revolver borrowings and interest rates.
Previous report
•Higher customer usage, primarily due to less mild weather temperatures;
Previous report
•A credit in the first quarter of 2024 associated with the WVPSC base rate case settlement approval that allowed for the recovery of certain retired generation stations costs;
Previous report
•The Ohio Companies plan to file a base rate case in the second quarter of 2024.
Previous report
SEGMENT RESULTS OF OPERATIONS
Previous report
Distribution Segment — First Three Months of 2024 Compared with First Three Months of 2023
Previous report
Total operating expenses decreased $26 million, primarily due to the following:
Previous report
•Other operating expenses increased $84 million in the first three months of 2024, as compared to the same period of 2023, primarily due to:
Previous report
◦Higher storm expenses of $23 million, which were deferred for future recovery, resulting in no material impact on current period earnings;
Previous report
◦Higher uncollectible expenses of $8 million, of which $3 million was deferred for future recovery.
Previous report
•Depreciation expense increased $8 million in the first three months of 2024, as compared to the same period of 2023, primarily due to a higher asset base.
Previous report
◦$57 million net increase due to higher generation and transmission related deferrals; and
Previous report
◦$17 million decrease due to lower deferral of certain Tax Act savings to Pennsylvania customers.
Previous report
•General taxes increased $4 million in the first three months of 2024, as compared to the same period of 2023, primarily due to higher gross receipts taxes.
Previous report
Other expense was flat in the first three months of 2024, as compared to the same period of 2023, primarily due to higher net interest expense associated with new long-term issuances and higher short-term borrowings being offset by higher interest income on investments in the regulated money pool.
Previous report
Distribution’s effective tax rate was 19.9% and 19.1% for the three months ended March 31, 2024 and 2023, respectively.
Previous report
Integrated Segment — First Three Months of 2024 Compared with First Three Months of 2023
Previous report
Integrated’s total revenues increased $67 million as a result of the following sources:
Previous report
Distribution services revenues increased $5 million in the first three months of 2024, as compared to the same period of 2023, primarily resulting from higher customer usage as a result of the weather, higher revenues from the rate case settlement in Maryland, and higher rider revenues associated with certain investment programs, partially offset by lower weather-adjusted customer usage and demand.
Previous report
Total operating expenses increased $28 million, primarily due to the following:
Previous report
•Purchased power costs, which have no material impact on current period earnings, decreased $13 million during the first three months of 2024, as compared to the same period of 2023, primarily due to lower capacity expenses.
Previous report
•Other operating expenses increased $94 million in the first three months of 2024, as compared to the same period of 2023.
Previous report
◦Higher storm expenses of $25 million, of which $18 million was deferred for future recovery;
Previous report
•Depreciation expense increased $9 million in the first three months of 2024, as compared to the same period of 2023, primarily due to a higher asset base.
Previous report
•Deferral of regulatory assets increased $38 million in the first three months of 2024, as compared to the same period of 2023, primarily due to:
Previous report
•General taxes increased $4 million in the first three months of 2024, as compared to the same period of 2023, primarily due to higher gross receipts taxes.
Previous report
Integrated’s effective tax rate was 29.9% and 22.2% for the three months ended March 31, 2024 and 2023, respectively, the increase was primarily due to an update to a valuation allowance associated with the expected utilization of certain state NOL carryforwards related to the sale of equity interest in FET.
Previous report
Stand-Alone Transmission Segment — First Three Months of 2024 Compared with First Three Months of 2023
Previous report
Corporate / Other — First Three Months of 2024 Compared with First Three Months of 2023
Previous report
(1)KATCo may not draw on the KATCo Credit Facility until the satisfaction of certain conditions, including the availability of first quarter financial statements, which are expected to be completed during the second quarter of 2024.
Previous report
(3)KATCo may not draw on the KATCo Credit Facility until the satisfaction of certain conditions, including the availability of first quarter financial statements, which are expected to be completed during the second quarter of 2024.
Previous report
(1) KATCo may not draw on the KATCo Credit Facility until the satisfaction of certain conditions, including the availability of first quarter financial statements, which are expected to be completed during the second quarter of 2024.
Previous report
On March 28, 2024, Moody’s upgraded FE’s corporate credit ratings from Ba1 to Baa3.
Previous report
On April 23, 2024, S&P issued one-notch upgrades of FE and several subsidiaries.
Previous report
Cash used for operating activities was $40 million and $112 million in the first three months of 2024 and 2023, respectively. Cash flows from operating activities were a net outflow in the first quarter of 2024, primarily due to working capital, including prepaid and accrued tax payments associated with Pennsylvania gross receipts tax payments and timing of property tax payments. Compared to the same period of 2023, the decrease in cash used for operating activities is primarily due to:
Showing the first 40 of 48 passages. Open the source sections for the rest.
Reworded paragraphs (153)
Previous wording
FirstEnergy is dedicated to integrity, safety, reliability and operational excellence and is principally involved in the transmission, distribution and generation of electricity through its reportable segments: Distribution, Integrated and Stand-Alone Transmission. Its electric distribution companies form one of the nation's largest investor-owned electric systems, serving over six million customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York. FirstEnergy’s transmission subsidiaries operate more than 24,000 miles of transmission lines that connect the Midwest and Mid-Atlantic regions and two regional transmission operation centers. AGC and MP control 3,599 MWs net maximum capacity.
Current wording
FirstEnergy is dedicated to integrity, safety, reliability and operational excellence and is principally involved in the transmission, distribution and generation of electricity through its reportable segments: Distribution, Integrated and Stand-Alone Transmission. Its electric distribution companies form one of the nation's largest investor-owned electric systems, serving over six million customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York. FirstEnergy’s transmission subsidiaries operate more than 24,000 miles of transmission lines that connect the Midwest and Mid-Atlantic regions and two regional transmission operation centers. AGC and MP control 3,599 MWs of net maximum capacity.
Previous wording
On January 1, 2024, FirstEnergy consolidated the Pennsylvania Companies into FE PA, including OE subsidiary, Penn, making FE PA a new, single operating entity and the successor-in-interest to all assets and liabilities of the Pennsylvania Companies. FE PA, as of January 1, 2024, is FE’s only regulated distribution utility in Pennsylvania encompassing the operations previously conducted individually by the Pennsylvania Companies and FE PA serves an area with a population of approximately 4.5 million and operates under the rate districts of the former Pennsylvania Companies. FirstEnergy is also evaluating the legal, financial, operational and branding benefits of consolidating the Ohio Companies into a single Ohio utility company.
Current wording
On January 1, 2024, FirstEnergy consolidated the Pennsylvania Companies into FE PA, including OE subsidiary, Penn, rendering FE PA a new, single operating entity and the successor-in-interest to all assets and liabilities of the Pennsylvania Companies. As of January 1, 2024, FE PA is FE’s only regulated distribution power company in Pennsylvania encompassing the operations previously conducted individually by the Pennsylvania Companies. FE PA serves an area with a population of approximately 4.5 million and operates under the rate districts of the former Pennsylvania Companies. FirstEnergy continues to evaluate the legal, financial, operational and branding benefits of consolidating the Ohio Companies into a single Ohio power company.
Previous wording
The Distribution segment, which consists of the Ohio Companies and FE PA, representing $10.9 billion in 2023 rate base, distributes electricity through FirstEnergy’s utility operating companies in Ohio and Pennsylvania. The Distribution segment serves approximately 4.2 million customers in Ohio and Pennsylvania across its distribution footprint and purchases power for its provider of last resort, SOS, standard service offer and default service requirements. The segment’s results reflect the costs of securing and delivering electric generation from transmission facilities to customers, including the deferral and amortization of certain costs.
Current wording
The Distribution segment, which consists of the Ohio Companies and FE PA, representing $10.9 billion in 2023 rate base, distributes electricity through FirstEnergy’s electric operating companies in Ohio and Pennsylvania. The Distribution segment serves approximately 4.2 million customers in Ohio and Pennsylvania across its distribution footprint and purchases power for its provider of last resort, SOS, standard service offer and default service requirements. The segment’s results reflect the costs of securing and delivering electric generation to customers, including the deferral and amortization of certain costs.
Previous wording
The Integrated segment includes the distribution and transmission operations under JCP&L, MP and PE, as well as MP’s regulated generation operations, representing $8.7 billion in 2023 rate base. The Integrated segment distributes electricity to approximately 2 million customers in New Jersey, West Virginia and Maryland across its distribution footprint; provides transmission infrastructure in New Jersey, West Virginia, Maryland and Virginia to transmit electricity and operates 3,599 MWs of regulated net maximum capacity located primarily in West Virginia and Virginia. The segment will also include MP and PE’s 50 MWs of solar generation at five sites in West Virginia once complete. The first solar generation site, located in Maidsville, West Virginia, was completed and placed in-service on January 8, 2024, representing 19 MWs of net maximum capacity. Construction of the remaining four sites is expected to be completed no later than the end of 2025. The remaining four sites are expected to provide 31 MWs of net maximum capacity.
Current wording
The Integrated segment includes the distribution and transmission operations under JCP&L, MP and PE, as well as MP’s regulated generation operations, representing $8.7 billion in 2023 rate base. The Integrated segment distributes electricity to approximately two million customers in New Jersey, West Virginia and Maryland across its distribution footprint; provides transmission infrastructure in New Jersey, West Virginia, Maryland and Virginia to transmit electricity and operates 3,599 MWs of regulated net maximum capacity located primarily in West Virginia and Virginia. The segment will also include MP and PE’s 50 MWs of solar generation at five sites in West Virginia once complete. The first solar generation site, located in Maidsville, West Virginia, was completed and placed in-service on January 8, 2024, representing 19 MWs of net maximum capacity. Construction of the remaining four sites is expected to be completed no later than the end of 2025. The remaining four sites are expected to provide 31 MWs of net maximum capacity.
Previous wording
Corporate/Other reflects corporate support and other costs not charged or attributable to the Utilities or Transmission Companies, including FE’s retained pension and OPEB assets and liabilities of former subsidiaries, interest expense on FE’s holding company debt and other investments or businesses that do not constitute an operating segment, including FEV’s investment of 33-1/3% equity ownership in Global Holding. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. Also included in Corporate/Other for segment reporting is 67 MWs of net maximum capacity, representing AE Supply’s OVEC capacity entitlement. As of March 31, 2024, Corporate/Other had approximately $6.5 billion of FE’s holding company debt.
Current wording
Corporate/Other reflects corporate support and other costs not charged or attributable to the Electric Companies or Transmission Companies, including FE’s retained pension and OPEB assets and liabilities of former subsidiaries, interest expense on FE’s holding company debt and other investments or businesses that do not constitute an operating segment, including FEV’s investment of 33-1/3% equity ownership in Global Holding. Additionally, reconciling adjustments for the elimination of inter-segment transactions are included in Corporate/Other. Also included in Corporate/Other for segment reporting is 67 MWs of net maximum capacity, representing AE Supply’s OVEC capacity entitlement. As of June 30, 2024, Corporate/Other had approximately $6.3 billion of FE’s holding company debt.
Previous wording
On February 2, 2023, FE, along with FET, entered into the FET P&SA II with Brookfield and the Brookfield Guarantors, pursuant to which FE agreed to sell to Brookfield at the closing, and Brookfield agreed to purchase from FE, an incremental 30% equity interest in FET for a purchase price of $3.5 billion. The FET Equity Interest Sale closed on March 25, 2024 and FET continues to be consolidated in FirstEnergy’s financial statements. The purchase price was paid in part by the issuance of two promissory notes at closing having an aggregate principal amount of $1.2 billion with: (i) one promissory note having an aggregate principal amount of $750 million, at an interest rate of 5.75% per annum, with a maturity date of September 25, 2025 and (ii) one promissory note having an aggregate principal amount of $450 million, at an interest rate of 7.75% per annum, with a maturity date of December 31, 2024. Both notes are expected to be repaid in 2024. The remaining $2.3 billion of the purchase price was paid in cash at closing. Brookfield Corporation has guaranteed the full amount of the promissory notes. As a result of the consummation of the transaction, Brookfield’s interest in FET increased from 19.9% to 49.9%, while FE retained the remaining 50.1% ownership interests of FET.
Current wording
On February 2, 2023, FE, along with FET, entered into the FET P&SA II with Brookfield and the Brookfield Guarantors, pursuant to which FE agreed to sell to Brookfield at the closing, and Brookfield agreed to purchase from FE, an incremental 30% equity interest in FET for a purchase price of $3.5 billion. The FET Equity Interest Sale closed on March 25, 2024 and FET continues to be consolidated in FirstEnergy’s financial statements. The purchase price was paid in part by the issuance of two promissory notes at closing having an aggregate principal amount of $1.2 billion with: (i) one promissory note having an aggregate principal amount of $750 million, at an interest rate of 5.75% per annum, with a maturity date of September 25, 2025 and (ii) one promissory note having an aggregate principal amount of $450 million, at an interest rate of 7.75% per annum, with a maturity date of December 31, 2024. The remaining $2.3 billion of the purchase price was paid in cash at closing. On July 17, 2024, Brookfield paid FE approximately $1.2 billion in full satisfaction of the promissory notes. Interest income associated with the promissory notes was $20 million and $21 million for the three and six months ended June 30, 2024, respectively, and is reported within “Miscellaneous income, net” on FirstEnergy’s Consolidated Statements of Income. As a result of the consummation of the transaction, Brookfield’s interest in FET increased from 19.9% to 49.9%, while FE retained the remaining 50.1% ownership interests of FET.
Previous wording
Powered by its employees and guided by its experienced leadership team and engaged FE Board, FirstEnergy is accelerating its transformation into a premier utility. The FE Board and FirstEnergy’s executive management team are aligned behind a business model grounded in investing, operating, recovering costs and financing our regulated utility operations. This business model aims to create a “virtuous cycle” that in turn serves to improve reliability and the customer experience, grow rate base, engage employees, improve returns and maintain a strong balance sheet. Along with an unwavering commitment to ethics and integrity, performance excellence and continuous improvement, FirstEnergy anticipates that strong execution of this model will help achieve its strategic objectives and deliver value to its investors.
Current wording
Powered by its employees and guided by its experienced leadership team and engaged FE Board, FirstEnergy is accelerating its transformation into a premier electric company. The FE Board and FirstEnergy’s executive management team are aligned behind a business model grounded in investing, operating, recovering costs and financing our regulated electric company operations. This business model aims to create a “virtuous cycle” that in turn serves to improve reliability and the customer experience, grow rate base, engage employees, improve returns and maintain a strong balance sheet. Along with an unwavering commitment to ethics and integrity, performance excellence and continuous improvement, FirstEnergy anticipates that strong execution of this model will help achieve its strategic objectives and deliver value to its investors.
Previous wording
A robust plan for customer-focused growth, Energize365 is the centerpiece of FirstEnergy’s regulated distribution and transmission capital investment strategy that aims to utilize all investments to support our EESG and strategic priorities including clean energy, improving grid reliability and resiliency, and supports the clean energy transition. Through the Energize365 program, FirstEnergy expects to spend approximately $26 billion in system-wide capital investments from 2024 through 2028. FirstEnergy expects that these investments will comprise the Distribution segment (29%), the Integrated segment (39%), and the Stand-Alone Transmission segment (32%), focusing on the following:
Current wording
A robust plan for customer-focused growth, Energize365 is the centerpiece of FirstEnergy’s regulated distribution and transmission capital investment strategy that aims to utilize all investments to support our EESG and strategic priorities including clean energy, improving grid reliability and resiliency, and supports the clean energy transition. Through the Energize365 program, FirstEnergy expects to spend approximately $26 billion in system-wide capital investments from 2024 through 2028.
Previous wording
•Energy Transition: FirstEnergy expects to make Distribution and Transmission investments in order to support improvements in grid reliability and resiliency and support interconnection of renewable sources, including:
Current wording
•Energy Transition: FirstEnergy expects to make Distribution and Transmission investments in order to support improvements in grid reliability and resiliency and support interconnection of renewable sources, including through:
Previous wording
▪Clean Energy: West Virginia solar generation, energy efficiency, electric vehicle infrastructure and energy storage; and
Current wording
▪Clean Energy: West Virginia solar generation, energy efficiency, electric vehicle infrastructure and energy storage;
Previous wording
•Revitalizing its leadership team. FirstEnergy recently announced the hiring of John Combs as its Senior Vice President of Shared Services and FirstEnergy continues to make progress in filling several key executive positions in an organization that will be structured to allow greater execution at the business unit level.
Current wording
•Revitalizing its leadership team. During the second quarter of 2024, FirstEnergy appointed four executives to oversee the Ohio, Pennsylvania, New Jersey and Transmission operations. FirstEnergy anticipates naming an executive to oversee its combined West Virginia and Maryland operations in the near term. FirstEnergy continues to make progress in filling several key executive positions in an organization that will be structured to allow greater execution at the business unit level.
Previous wording
•On January 13, 2023, MP and PE filed a request with the WVPSC seeking approval of new depreciation rates for existing and future capital assets. On August 22, 2023, the parties filed a unanimous settlement of the case recommending a $33 million annual increase in depreciation expense, effective April 1, 2024. An order was issued on March 26, 2024 approving the settlement without modification.
Current wording
•On January 13, 2023, MP and PE filed a request with the WVPSC seeking approval of new depreciation rates for existing and future capital assets. On August 22, 2023, the parties filed a unanimous settlement of the case recommending a $33 million annual increase in depreciation expense, effective April 1, 2024, but deferred issues related to a change in the net energy metering credit. An order was issued on March 26, 2024 approving the settlement without modification.
Previous wording
•On March 16, 2023, JCP&L filed a base rate case in New Jersey, requesting a $185 million increase in base distribution revenues to support investments to strengthen the energy grid, enhance the customer experience and provide assistance to low-income and senior citizen customers. February 1, 2024, JCP&L, joined by various parties, filed a stipulated settlement with the NJBPU resolving JCP&L’s request for a distribution base rate increase. The settlement, which was approved by the NJBPU on February 14, 2024, provides for an $85 million annual base distribution revenue increase for JCP&L, which will become effective for customers on June 1, 2024.
Current wording
•On March 16, 2023, JCP&L filed a base rate case in New Jersey, requesting a $185 million increase in base distribution revenues to support investments to strengthen the energy grid, enhance the customer experience and provide assistance to low-income and senior citizen customers. February 1, 2024, JCP&L, joined by various parties, filed a stipulated settlement with the NJBPU resolving JCP&L’s request for a distribution base rate increase. The settlement, which was approved by the NJBPU on February 14, 2024, provides for an $85 million annual base distribution revenue increase for JCP&L, which became effective for customers on June 1, 2024.
Previous wording
•On April 5, 2023, the Ohio Companies sought approval from the PUCO for its ESP V. The proposed plan would maintain an eight-year term beginning June 1, 2024, and seeks to continue riders recovering costs associated with distribution infrastructure investments and approved grid modernization investments. ESP V additionally proposes new riders that would support reliability, and includes provisions supporting affordability and enhancing the customer experience.
Current wording
•On April 5, 2023, the Ohio Companies sought approval from the PUCO for its ESP V. The proposed plan would maintain an eight-year term beginning June 1, 2024, and seeks to continue riders recovering costs associated with distribution infrastructure investments and approved grid modernization investments. ESP V additionally proposes new riders that would support reliability, and includes provisions supporting affordability and enhancing the customer experience. On May 15, 2024, the PUCO issued an order approving ESP V with modifications, which are described below in “Outlook - State Regulation - Ohio”. On June 14, 2024, the Ohio Companies filed an Application for Rehearing, which is pending before the PUCO.
Previous wording
•On April 2, 2024, FE PA filed a base rate case with the PPUC seeking a net increase in base distribution revenues of approximately $502 million with a return on equity of 11.3% and capital structure of 46.2% debt and 53.8% equity, and reflects a roll-in of several current riders such as DSIC, Tax Act, and smart meter. Additionally, FE PA requests recovery of certain incurred costs, including the impact of major storms, COVID-19, a program to convert streetlights to LEDs, and others. A PPUC decision is expected in December 2024, with new rates becoming effective in January 2025. FE PA also plans to request approval for the continuation of its LTIIP program by the end of the third quarter of 2024.
Current wording
•On April 2, 2024, FE PA filed a base rate case with the PPUC seeking a net increase in base distribution revenues of approximately $502 million with a return on equity of 11.3% and capital structure of 46.2% debt and 53.8% equity, and reflects a roll-in of several current riders such as DSIC, Tax Act, and smart meter. Additionally, FE PA requests an enhanced ten year vegetation management program and recovery of certain incurred costs, including the impact of major storms, COVID-19, a program to convert streetlights to LEDs, and others. A PPUC decision is expected in December 2024, with new rates becoming effective in January 2025.
Previous wording
•On April 12, 2024, the Ohio Companies and certain of the parties filed a stipulation that modified the Ohio Companies’ application for phase two of its grid modernization plan. The stipulation, which is subject to PUCO approval, provides for the deployment of smart meters to the balance of the Ohio Companies’ customers or approximately 1.4 million meters. Phase two of the distribution grid modernization plan, as modified by the stipulation would be completed over a four-year budget period with estimated capital investments of approximately $421 million. On April 16, 2024, the PUCO scheduled the stipulation hearing for June 5, 2024.
Current wording
•On April 12, 2024, the Ohio Companies and certain of the parties filed a stipulation that modified the Ohio Companies’ application for phase two of its grid modernization plan. The stipulation, which is subject to PUCO approval, provides for the deployment of smart meters to the balance of the Ohio Companies’ customers or approximately 1.4 million meters. Phase two of the distribution grid modernization plan, as modified by the stipulation would be completed over a four-year budget period with estimated capital investments of approximately $421 million. Evidentiary hearings began on June 5, 2024 and concluded on July 2, 2024.
Previous wording
FirstEnergy aims to do this through a strengthened financial position. Since 2021, FirstEnergy has raised $7 billion in equity capital and issued $1.5 billion in convertible notes in May 2023 to significantly improve its balance sheet. The strength of FirstEnergy’s balance sheet supports its plan to fund Energize365 investments through organic internal cash flows and utility debt rather than incremental equity. FirstEnergy has also de-levered risk associated with its pension plan and optimized its financing plan to retain flexibility in an uncertain interest rate environment.
Current wording
FirstEnergy aims to do this through a strengthened financial position. Since 2021, FirstEnergy has raised $7 billion in equity capital and issued $1.5 billion in convertible notes in May 2023 to significantly improve its balance sheet. The strength of FirstEnergy’s balance sheet supports its plan to fund Energize365 investments through organic internal cash flows and electric company debt rather than incremental equity. FirstEnergy has also de-levered risk associated with its pension plan and optimized its financing plan to retain flexibility in an uncertain interest rate environment.
Previous wording
As part of our Climate Strategy, we are committed to addressing company-wide emissions within our direct operational control, also known as Scope 1 emissions, across our transmission, distribution and regulated generation operations. Today, with the climate, our business, and our stakeholders in mind, our Climate Strategy is two-fold:
Current wording
As part of our Climate Strategy, we are committed to addressing company-wide emissions within our direct operational control, also known as Scope 1 emissions, across our transmission, distribution and regulated generation operations. With the climate, our business, and our stakeholders in mind, our Climate Strategy is two-fold:
Previous wording
Currently, emissions from our West Virginia power stations – Fort Martin and Harrison – serve as the primary source of our Scope 1 emissions – representing approximately 99% of our overall GHG emissions as of December 31, 2023 – and greatly outnumber the emissions from our transmission and distribution operations. We have publicly stated through various filings with the WVPSC that the end of useful life date is 2035 for Fort Martin and 2040 for Harrison. These dates are based on our assessment of when it is projected to no longer be cost effective and beneficial to customers to make the capital investments needed to keep these facilities operating effectively and in compliance with evolving environmental regulations. FirstEnergy is currently assessing the impact of the final EPA rules issued on April 25, 2024, on these projected dates. In 2025, FirstEnergy will submit an Integrated Resource Plan to the WVPSC that will include our analysis of market conditions and identify how we believe we can best fulfill our obligation to supply our generation customers with reliable and cost-effective energy through 2040 (a requirement every five years in the state of West Virginia).
Current wording
Currently, emissions from our West Virginia power stations – Fort Martin and Harrison – serve as the primary source of our Scope 1 emissions – representing approximately 99% of our overall GHG emissions as of December 31, 2023 – and greatly outnumber the emissions from our transmission and distribution operations. We have publicly stated through various filings with the WVPSC that the end of useful life date is 2035 for Fort Martin and 2040 for Harrison. These dates are based on our assessment of when it is projected to no longer be cost effective and beneficial to customers to make the capital investments needed to keep these facilities operating effectively and in compliance with evolving environmental regulations, and are subject to our ongoing evaluation of recently-finalized EPA rules relating to CCR regulations that are discussed elsewhere in this Form 10-Q. In 2025, FirstEnergy plans to submit an Integrated Resource Plan to the WVPSC that will include our analysis of market conditions and identify how we believe we can best fulfill our obligation to supply our generation customers with reliable and cost-effective energy through 2040 (a requirement every five years in the state of West Virginia).
Previous wording
In addition to moving beyond our two West Virginia power stations, key steps in working toward carbon neutrality by 2050 include:
Current wording
In addition to moving beyond our two coal-fired West Virginia power stations, key steps in working toward carbon neutrality by 2050 include:
Previous wording
•Reducing sulfur hexafluoride emissions: We're working to repair or replace, as appropriate, transmission breakers that leak sulfur hexafluoride, which is a gas commonly used by energy companies as an electrical insulating material and arc extinguisher in high-voltage circuit breakers and switchgear. If escaped to the atmosphere, it acts as a potent GHG with a global warming potential significantly greater than CO 2; and
Current wording
•Reducing sulfur hexafluoride emissions: We are working to repair or replace, as appropriate, transmission breakers that leak sulfur hexafluoride, which is a gas commonly used by energy companies as an electrical insulating material and arc extinguisher in high-voltage circuit breakers and switchgear. If escaped to the atmosphere, it acts as a potent GHG with a global warming potential significantly greater than CO 2; and
Previous wording
•Electrifying our vehicle fleet: We’re targeting 30% electrification of our light-duty and aerial truck fleet by 2030 and 100% electrification by 2050. To reach our electrification goal, we’re striving for 100% electric or hybrid vehicle purchases for our light-duty and aerial truck fleet moving forward.
Current wording
•Electrifying our vehicle fleet: We are targeting 30% electrification of our light-duty and aerial truck fleet by 2030 and 100% electrification by 2050. To reach our electrification goal, we are striving for 100% electric or hybrid vehicle purchases for our light-duty and aerial truck fleet moving forward.
Previous wording
On July 21, 2021, FE entered into a three-year DPA with the U.S. Attorney’s Office that, subject to court proceedings, resolves the U.S. Attorney’s Office investigation into FirstEnergy relating to FirstEnergy’s lobbying and governmental affairs activities concerning HB 6 related to the federal criminal allegations made in July 2020, against former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. Among other things under the DPA, FE paid a $230 million monetary penalty in 2021 and agreed to the filing of a criminal information charging FE with one count of conspiracy to commit honest services wire fraud. The $230 million payment will neither be recovered in rates or charged to FirstEnergy customers, nor will FirstEnergy seek any tax deduction related to such payment. The criminal information will be dismissed after FirstEnergy fully complies with its obligations under the DPA, which is expected to be July 2024.
Current wording
On July 21, 2021, FE entered into a three-year DPA with the U.S. Attorney’s Office that, subject to court proceedings, resolves the U.S. Attorney’s Office investigation into FirstEnergy relating to FirstEnergy’s lobbying and governmental affairs activities concerning HB 6 related to the federal criminal allegations made in July 2020, against former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. Among other things under the DPA, FE paid a $230 million monetary penalty in 2021 and agreed to the filing of a criminal information charging FE with one count of conspiracy to commit honest services wire fraud. The $230 million payment will neither be recovered in rates or charged to FirstEnergy customers, nor will FirstEnergy seek any tax deduction related to such payment. As of July 21, 2024, FirstEnergy has successfully completed the obligations required within the three-year term of the DPA. Under the DPA, FirstEnergy has an obligation to continue (i) publishing quarterly a list of all payments to 501(c)(4) entities and all payments to entities known by FirstEnergy operating for the benefit of a public official, either directly or indirectly; (ii) not making any statements that contradict the DPA; (iii) notifying the U.S. Attorney’s Office of any changes in FirstEnergy’s corporate form; and (iv) cooperating with the U.S. Attorney’s Office until the conclusion of any related investigation, criminal prosecution, and civil proceeding brought by the U.S. Attorney’s Office. Within 30 days of those matters concluding, and FirstEnergy’s successful completion of its remaining obligations, the U.S. Attorney’s Office will dismiss the criminal information.
Previous wording
The OAG, certain FE shareholders and FE customers filed several lawsuits against FirstEnergy and certain current and former directors, officers and other employees, each relating to the allegations against the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. On February 9, 2022, FE, acting through the SLC, agreed to a settlement term sheet to resolve multiple shareholder derivative lawsuits that were filed in the S.D. Ohio, the N.D. Ohio, and the Ohio Court of Common Pleas, Summit County. On March 11, 2022, the parties executed a stipulation and agreement of settlement, and filed a motion the same day requesting preliminary settlement approval in the S.D. Ohio, which was granted on May 9, 2022. On August 23, 2022, the S.D. Ohio granted final approval of the settlement. On September 20, 2022, a purported FE stockholder filed a motion for reconsideration of the S.D. Ohio’s final settlement approval. The parties filed oppositions to that motion on October 11, 2022, and the S.D. Ohio denied that motion on May 22, 2023. On June 15, 2023, the purported FE stockholder filed an appeal in the U.S. Court of Appeals for the Sixth Circuit. The N.D. Ohio issued a stay of the case pending the appeal in the U.S. Court of Appeals for the Sixth Circuit. On February 16, 2024, the U.S. Court of Appeals for the Sixth Circuit affirmed the district court’s final settlement approval. On April 12, 2024, the N.D. Ohio acknowledged the completion of the appeal and instructed the parties to file any further argument or information they wish to be considered by the N.D. Ohio no later than April 25, 2024. Once all appeal options are exhausted the judgment will become final. The settlement agreement is expected to fully resolve these shareholder derivative lawsuits.
Current wording
The OAG, certain FE shareholders and FE customers filed several lawsuits against FirstEnergy and certain current and former directors, officers and other employees, each relating to the allegations against the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. On February 9, 2022, FE, acting through the SLC, agreed to a settlement term sheet to resolve multiple shareholder derivative lawsuits that were filed in the S.D. Ohio, the N.D. Ohio, and the Ohio Court of Common Pleas, Summit County. On March 11, 2022, the parties executed a stipulation and agreement of settlement, and filed a motion the same day requesting preliminary settlement approval in the S.D. Ohio, which was granted on May 9, 2022. On August 23, 2022, the S.D. Ohio granted final approval of the settlement. On September 20, 2022, a purported FE stockholder filed a motion for reconsideration of the S.D. Ohio’s final settlement approval. The parties filed oppositions to that motion on October 11, 2022, and the S.D. Ohio denied that motion on May 22, 2023. On June 15, 2023, the purported FE stockholder filed an appeal in the U.S. Court of Appeals for the Sixth Circuit. The N.D. Ohio issued a stay of the case pending the appeal in the U.S. Court of Appeals for the Sixth Circuit. On February 16, 2024, the U.S. Court of Appeals for the Sixth Circuit affirmed the district court’s final settlement approval. All appeal options were exhausted on May 16, 2024, and the judgment and settlement became final, resolving the derivative lawsuits. On May 17, 2024, the N.D. Ohio granted the parties’ motion to dismiss based upon the approval of the settlement by the S.D. Ohio. The state court action was also dismissed on September 2, 2022.
Previous wording
The settlement includes a series of corporate governance enhancements and a payment to FE of $180 million, to be paid by insurance after the judgment has become final, less approximately $36 million in court-ordered attorney’s fees awarded to plaintiffs.
Current wording
The above settlement included a series of corporate governance enhancements and a payment to FE of $180 million, less approximately $36 million in court-ordered attorney’s fees awarded to plaintiffs, and a $7 million net return on deposited funds, which was received in the second quarter of 2024. The judgment and settlement are final and, therefore, the derivative lawsuits are now fully resolved.
Previous wording
On August 10, 2020, the SEC, through its Division of Enforcement, issued an order directing an investigation of possible securities laws violations by FE, and on September 1, 2020, issued subpoenas to FE and certain FE officers. On April 28, 2021, July 11, 2022, and May 25, 2023, the SEC issued additional subpoenas to FE, with which FE has complied. While no contingency has been reflected in its consolidated financial statements, FE believes that it is probable that it will incur a loss in connection with the resolution of the SEC investigation. Given the ongoing nature and complexity of the investigation, FE cannot yet reasonably estimate a loss or range of loss that may arise from the resolution of the SEC investigation.
Current wording
On August 10, 2020, the SEC, through its Division of Enforcement, issued an order directing an investigation of possible securities laws violations by FE, and on September 1, 2020, issued subpoenas to FE and certain FE officers relating to the conduct described in the DPA. On April 28, 2021, July 11, 2022, and May 25, 2023, the SEC issued additional subpoenas to FE, with which FE has complied. FirstEnergy has cooperated fully with the SEC investigation. FE is working to finalize an agreement-in-principle with the staff of the SEC based upon facts set forth in the DPA that would fully resolve the investigation, which proposed settlement remains subject to approval of the SEC. FE believes that it is probable that it will incur a loss in connection with the resolution of the SEC investigation, and in the second quarter of 2024, a loss contingency of $100 million was recorded and included in “Other Operating expenses” on the Consolidated Statements of Income at Corporate/Other for segment reporting.
Previous wording
On June 29, 2023, the OOCIC served FE a subpoena, seeking information relating to the conduct described in the DPA. FirstEnergy was not aware of the OOCIC’s investigation prior to receiving the subpoena and understands that the OOCIC’s investigation is also focused on the conduct described in the DPA, other than with respect to the March 25, 2024, felony indictment of Mr. Householder brought in Cuyahoga County, Ohio. FirstEnergy is cooperating with the OOCIC in its investigation. On February 12, 2024, and in connection with the OOCIC’s ongoing investigation, an indictment by a grand jury of Summit County, Ohio was unsealed against the former chairman of the PUCO, Samuel Randazzo, and two former FirstEnergy senior officers, Charles E. Jones, and Michael J. Dowling, charging each of them with several felony counts, including bribery, telecommunications fraud, money laundering and aggravated theft, related to payments described in the DPA. FirstEnergy continues to both cooperate with the OOCIC in its investigation and discuss an appropriate resolution of the investigation with respect to FE. While no contingency has been reflected in FirstEnergy’s consolidated financial statements, FE believes that it is reasonably possible that it will incur a loss in connection with the resolution of the OOCIC investigation. Given the ongoing nature of the discussions, while FE cannot yet reasonably estimate a loss or range of loss that may arise from any resolution of the OOCIC investigation with respect to FE, any such payment by FE associated with an OOCIC resolution is not expected to be material.
Current wording
On June 29, 2023, the OOCIC served FE a subpoena, seeking information relating to the conduct described in the DPA. FirstEnergy was not aware of the OOCIC’s investigation prior to receiving the subpoena and understands that the OOCIC’s investigation is also focused on the conduct described in the DPA, other than with respect to the March 25, 2024, felony indictment of Mr. Householder brought in Cuyahoga County, Ohio. FirstEnergy is cooperating with the OOCIC in its investigation. On February 12, 2024, and in connection with the OOCIC’s ongoing investigation, an indictment by a grand jury of Summit County, Ohio was unsealed against the, now-deceased, former chairman of the PUCO, and two former FirstEnergy senior officers, Charles E. Jones, and Michael J. Dowling, charging each of them with several felony counts, including bribery, telecommunications fraud, money laundering and aggravated theft, related to payments described in the DPA. FirstEnergy continues to both cooperate with the OOCIC in its investigation and finalize an appropriate resolution of the investigation with respect to FE, which is expected to include a non-prosecution agreement. FE believes that it is probable that it will incur a loss in connection with the resolution of this matter and State of Ohio ex rel. Dave Yost, Ohio Attorney General v. FirstEnergy Corp., et al. and City of Cincinnati and City of Columbus v. FirstEnergy Corp., and, in the second quarter of 2024, a loss contingency of $19.5 million was recorded and included in “Other Operating expenses” on the Consolidated Statements of Income at Corporate/Other for segment reporting.
Previous wording
Despite the many disruptions FirstEnergy has faced, and continues to currently face, the leadership team remains committed and focused on executing its strategy and running the business. See “Outlook - Other Legal Proceedings” below for additional details on the government investigations, the DPA, and subsequent litigation surrounding the investigation of HB 6. See also “Outlook - State Regulation - Ohio” below for details on the PUCO proceeding reviewing political and charitable spending and legislative activity in response to the investigation of HB 6. The outcome of the government investigations, PUCO proceedings, legislative activity, and any of these lawsuits is uncertain and could have a material adverse effect on FirstEnergy’s financial condition, results of operations and cash flows.
Current wording
Despite the many disruptions FirstEnergy has faced, and continues to currently face, the leadership team remains committed and focused on executing its strategy and running the business. See “Outlook - Other Legal Proceedings” below for additional details on the government investigations, the DPA, and ongoing litigation surrounding the investigation of HB 6. See also “Outlook - State Regulation - Ohio” below for details on the PUCO proceeding reviewing political and charitable spending and legislative activity in response to the investigation of HB 6. The outcome of the government investigations, PUCO proceedings, legislative activity, and any of these lawsuits is uncertain and could have a material adverse effect on FirstEnergy’s financial condition, results of operations and cash flows.
Previous wording
Earnings attributable to FE was $253 million or $0.44 per share (basic and diluted) in the first quarter of 2024 compared to $292 million or $0.51 per share (basic and diluted) in the first quarter of 2023, a decrease of $39 million primarily due to the following:
Current wording
Earnings attributable to FE was $45 million or $0.08 per share (basic and diluted) in the second quarter of 2024 compared to $235 million or $0.41 per share (basic and diluted) in the second quarter of 2023, a decrease of $190 million that was primarily due to the following:
Previous wording
•$26 million (after-tax) of lower investment earnings related to FEV’s equity method investment in Global Holding;
Current wording
•Lower investment earnings related to FEV’s equity method investment in Global Holding;
Previous wording
•The implementation of base rate case settlements during the first quarter of 2024 in Maryland, New Jersey and West Virginia;
Current wording
•The implementation of base rate case settlements in Maryland, New Jersey and West Virginia;
Previous wording
These decreases were partially offset by the following:
Current wording
These were partially offset by the following:
Previous wording
Residential and commercial distribution deliveries were impacted by higher customer usage as a result of the weather. Heating degree days in the first three months of 2024 were 5% above the same period of 2023 but 14% below normal.
Current wording
Residential and commercial distribution deliveries were impacted by higher customer usage as a result of the weather. Cooling degree days in the first six months of 2024 were 131% above the same period of 2023 and 37% above normal. Heating degree days in the first six months of 2024 were flat to the same period of 2023 and 17% below normal.
Previous wording
◦Higher network transmission expenses of $35 million, which are deferred for future recovery, resulting in no material impact on current period earnings;
Current wording
•Higher network transmission expenses of $39 million, which are deferred for future recovery, resulting in no material impact to earnings;
Previous wording
◦$19 million related to net decreases in other deferrals; and
Current wording
•Deferral of regulatory assets were flat to the second quarter of 2024, as compared to the same period of 2023, primarily due to a $32 million net increase from higher generation and transmission related deferrals, partially offset by a $29 million decrease due to lower deferral of storm related expenses, and $3 million related to net decreases in other deferrals.
Previous wording
•Distribution related other operating expenses increased $91 million primarily due to:
Current wording
•Distribution related other operating expenses increased $65 million primarily due to:
Previous wording
◦Higher network transmission expenses of $10 million, which were deferred for future recovery, resulting in no material impact on current period earnings;
Current wording
•Higher uncollectible expenses of $10 million, which were deferred for future recovery, primarily due to a reduction to the allowance during the second quarter of 2023;
Previous wording
◦Higher operating and maintenance expenses. Nearly all transmission related operating expenses are recovered through formula rates, resulting in no material impact on current period earnings.
Current wording
•Transmission related other operating expenses decreased $5 million primarily due to lower operating and maintenance expenses. Nearly all transmission related operating expenses are recovered through formula rates, resulting in no material impact to earnings.
Previous wording
•Increased earnings as a result of regulated distribution and transmission capital investments that increased rate base;
Current wording
Stand-Alone Transmission Segment’s earnings attributable to FE decreased $24 million in the second quarter of 2024, as compared to the same period of 2023, primarily due to the dilutive effect of the 30% additional minority equity interest sale in FET that closed in March 2024, higher short-term borrowings and interest rates, partially offset by increased earnings as a result of regulated capital investments that increased rate base.
Previous wording
Stand-Alone Transmission’s total revenues increased $38 million, primarily due to a higher rate base and recovery of higher transmission operating expenses.
Current wording
Stand-Alone Transmission’s total revenues increased $32 million, primarily due to a higher rate base and recovery of higher transmission operating expenses.
Showing the first 40 of 153 pairs. Open the source sections for the rest.
Rearranged current paragraphs (24)
Current report — wording carried from elsewhere
FirstEnergy expects that these investments will comprise the Distribution segment (29%), the Integrated segment (39%), and the Stand-Alone Transmission segment (32%), focusing on the following:
Current report — wording carried from elsewhere
•On December 1, 2023, JCP&L filed a petition with the NJBPU requesting approval of its EE&C Plan II, which covers the January 1, 2025 through June 30, 2027 period and has a proposed budget of approximately $964 million. Public hearings were held on June 11, 2024, and the parties are currently engaged in settlement discussions. On July 1, 2024, the NJBPU suspended the procedural schedule. A final NJBPU decision and order is required no later than October 15, 2024.
Current report — wording carried from elsewhere
•On November 9, 2023, JCP&L filed a petition for approval of its EnergizeNJ with the NJBPU that would, among other things, support grid modernization, system resiliency and substation modernization in technologies designed to provide enhanced customer benefits. On February 14, 2024, the NJBPU approved the stipulated settlement between JCP&L and various parties, resolving JCP&L’s request for a distribution base rate increase. On February 27, 2024, as part of the stipulated settlement, JCP&L amended its pending EnergizeNJ petition following receipt of NJBPU approval of the base rate case settlement, to remove the high-priority circuits that are to be addressed in the first phase of its reliability improvement plan and to include the second phase of its reliability improvement plan that is expected to further address certain high-priority circuits that require additional upgrades. EnergizeNJ, as amended, if approved will result in the investment of approximately $930.5 million of total estimated costs over five years.
Current report — wording carried from elsewhere
These factors were partially offset by the following:
Current report — wording carried from elsewhere
Residential and commercial distribution deliveries were impacted by higher customer usage as a result of the weather. Cooling degree days in the second quarter of 2024 were 131% above the same period of 2023 and 37% above normal. Heating degree days in the second quarter of 2024 were 23% below the same period of 2023 and 28% below normal.
Current report — wording carried from elsewhere
Earnings attributable to FE was $298 million or $0.52 per share (basic and diluted) in the second quarter of 2024 compared to $527 million or $0.92 per share (basic and diluted) in the second quarter of 2023, a decrease of $229 million that was primarily due to the following:
Current report — wording carried from elsewhere
•Lower investment earnings related to FEV’s equity method investment in Global Holding;
Current report — wording carried from elsewhere
•The implementation of base rate case settlements in Maryland, New Jersey and West Virginia;
Current report — wording carried from elsewhere
Distribution services by customer class are summarized in the following table:
Current report — wording carried from elsewhere
Financial results for FirstEnergy’s business segments for the second quarter of 2024 and 2023 were as follows:
Current report — wording carried from elsewhere
Generation sales revenues decreased $112 million in the second quarter of 2024, as compared to the same period in 2023, primarily due to lower retail generation sales as a result of increased customer shopping, partially offset by higher non-shopping generation auction rates. Total generation provided by alternative suppliers as a percentage of total MWh deliveries in the second quarter of 2024, as compared to the same period of 2023, increased to 90% from 72% in Ohio and increased to 65% from 64% in Pennsylvania. Retail and wholesale generation sales revenue have no material impact to earnings.
Current report — wording carried from elsewhere
•Purchased power costs, which have no material impact to earnings, decreased $56 million during the second quarter of 2024, as compared to the same period of 2023, primarily due to decreased generation sales volumes of $131 million as described above and decreased capacity expenses of $2 million, partially offset by higher unit costs of $77 million.
Current report — wording carried from elsewhere
•Higher planned vegetation management expenses of $15 million; and
Current report — wording carried from elsewhere
Generation sales revenues increased $122 million in the second quarter of 2024, as compared to the same period of 2023, primarily due to higher retail revenues, partially offset by lower wholesale revenues.
Current report — wording carried from elsewhere
•Retail generation sales increased $134 million in the second quarter of 2024, as compared to the same period in 2023 primarily due to higher customer usage as a result of the weather and higher non-shopping generation auction rates. Retail generation sales, other than those in West Virginia, have no material impact to earnings.
Current report — wording carried from elsewhere
•Wholesale generation revenues decreased $12 million in the second quarter of 2024, as compared to the same period in 2023, primarily due to lower capacity revenues and market prices, partially offset by higher sales volumes. The difference between current wholesale generation revenues and certain energy costs incurred is deferred for future recovery or refund, with no material impact to earnings.
Current report — wording carried from elsewhere
Transmission revenues increased $30 million in the second quarter of 2024, as compared to the same period of 2023, primarily due to higher rate base from regulated investment programs.
Current report — wording carried from elsewhere
•Fuel costs decreased $12 million during the second quarter of 2024, as compared to the same period of 2023, primarily due to lower unit costs, partially offset by higher generation output. Due to the ENEC, fuel expense has no material impact to earnings.
Current report — wording carried from elsewhere
•Depreciation expense increased $18 million in the second quarter of 2024, as compared to the same period of 2023, primarily due to a higher asset base.
Current report — wording carried from elsewhere
Total operating expenses increased $11 million in the second quarter of 2024, as compared to the same period of 2023, primarily due to higher depreciation and property tax expenses from a higher asset base. Nearly all operating expenses are recovered through formula rates, resulting in no material impact to earnings.
Current report — wording carried from elsewhere
Financial results at Corporate/Other resulted in a $122 million increase in losses attributable to FE in the second quarter of 2024, as compared to the same period of 2023, primarily due to:
Current report — wording carried from elsewhere
•Higher network transmission expenses of $75 million, which are deferred for future recovery, resulting in no material impact to earnings;
Current report — wording carried from elsewhere
Stand-Alone Transmission’s total revenues increased $70 million, primarily due to a higher rate base and recovery of higher transmission operating expenses.
Current report — wording carried from elsewhere
The following table shows revenues by transmission asset owner:
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
•Lower weather-adjusted customer usage and demand;
Previous report — wording carried elsewhere
•Higher pension and OPEB non-service credits; and
Previous report — wording carried elsewhere
•Transmission related other operating expenses increased $3 million primarily due to:
Previous report — wording carried elsewhere
•$23 million increase due to higher deferral of storm related expenses;
Previous report — wording carried elsewhere
On May 15, 2023, the Ohio Companies filed their application for determination of the existence of SEET under ESP IV for calendar year 2022, which demonstrated that each of the individual Ohio Companies did not have significantly excessive earnings. This matter remains pending before the PUCO.
Previous report — wording carried elsewhere
On March 11, 2022, the parties executed a stipulation and agreement of settlement, and filed a motion the same day requesting preliminary settlement approval in the S.D. Ohio, which the S.D. Ohio granted on May 9, 2022. Subsequently, following a hearing on August 4, 2022, the S.D. Ohio granted final approval of the settlement on August 23, 2022.