FIRSTENERGY CORP

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 of 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 3,604 MWs of net maximum generation capacity.

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 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.

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 3,604 MWs of regulated net maximum generation 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 two solar generation sites were completed and placed in-service in January and September 2024, representing 24 MWs of net maximum generation capacity. Construction of the remaining three sites is expected to be completed no later than the end of 2025. The remaining three sites are expected to provide 26 MWs of net maximum generation capacity.

Previous 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.

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 generation capacity, representing AE Supply’s OVEC capacity entitlement. As of September 30, 2024, Corporate/Other had approximately $6.1 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. 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.

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 $24 million for the nine months ended September 30, 2024 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

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 wording

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. During the third quarter of 2024, FirstEnergy determined that an additional site became applicable under the CCR rules, which resulted in a $25 million increase to the ARO, with a corresponding increase to the asset retirement cost.

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.

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. 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:

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. 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.

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 was denied by operation of law as the PUCO did not rule on the applications for rehearing within 30 days of filing. Due to the risks and uncertainty resulting from the Ohio Companies’ application for rehearing being denied by operation of law, on October 29, 2024, the Ohio Companies filed a notice of their intent to withdraw ESP V and proposed the terms under which they would resume operating under ESP IV. The Ohio Companies’ application is subject to PUCO review and approval. The Ohio Companies expect to file an application with the PUCO for ESP VI by early next year in an effort to align with the ongoing base distribution rate case proceedings.

Previous wording

•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 wording

•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 was required no later than October 15, 2024, however, the parties submitted a stipulation to extend this deadline to October 31, 2024, which was approved on October 15, 2024. On October 18, 2024, the parties entered into and filed with the NJBPU a stipulation of settlement, wherein the parties agreed to a budget of $816.9 million for EE&C Plan II, including $784 million of investments that will earn a return on equity of 9.6%, with an equity ratio of 52%, and be recovered over 10 years. The NJBPU is expected to address this matter at its October 30, 2024 meeting.

Previous wording

•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 wording

•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, if approved as amended, will result in the investment of approximately $930.5 million of total estimated costs over five years. JCP&L and various parties are engaged in settlement discussions with respect to the pending EnergizeNJ petition.

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 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.

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. On September 13, 2024, FE PA and the active parties to the proceeding filed a joint settlement agreement requesting that the administrative law judges to approve FE PA’s requested distribution base rate case increase subject to the terms and conditions of the settlement, which includes, among other things, an annual net revenue increase of $225 million. Other key components of the settlement agreement includes recovery of costs incurred for storms and COVID-19, additional cost recovery of ongoing storm costs, inspection and maintenance of overhead lines and transformers, and rate case expenses, as well as an enhanced vegetation management program. On October 15, 2024, the administrative law judges issued a decision recommending that the PPUC approve, without modification, the September 13, 2024 settlement agreement. The settlement agreement is pending PPUC approval. A PPUC decision is expected in December 2024, with new rates becoming effective in January 2025.

Previous wording

•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 wording

•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 the end of October 2024 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. The Ohio Companies would expect to update their application for an increase in base distribution rates after the PUCO issues its order with respect to the Ohio Companies’ withdrawal of ESP V.

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, 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).

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 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

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.

Current wording

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, 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 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, which was subsequently appealed. 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

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.

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 cooperated fully with the SEC investigation, and on September 12, 2024, the SEC issued a settlement order that concluded and resolved the investigation in its entirety. Under the terms of the settlement, FE agreed to pay a civil penalty of $100 million and to cease and desist from committing or causing any violations and any future violations of specified provisions of the federal securities laws and rules promulgated thereunder. The civil penalty was paid on September 25, 2024. FE previously recognized a loss contingency of $100 million in the second quarter of 2024 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, 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., noted below 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.

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 understood that the OOCIC’s investigation was 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. On August 12, 2024, FirstEnergy entered into a settlement with the OOCIC, the Ohio Attorney General’s Office, and the Summit County Prosecutor’s Office to resolve both the investigation 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., noted below. The settlement includes, among other things, a non-prosecution agreement and a payment of $19.5 million, which was recorded as a loss contingency in the second quarter of 2024 in FirstEnergy’s Consolidated Statements of Income at Corporate/Other for segment reporting. The civil penalty was paid on August 16, 2024.

Previous 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:

Current wording

Earnings attributable to FE from continuing operations was $419 million or $0.73 per share (basic and diluted) in the third quarter of 2024 compared to $421 million or $0.74 per basic share ($0.73 diluted) in the third quarter of 2023, representing a decrease of $2 million that was primarily due to the following:

Previous wording

•Higher net discrete income tax charges of $25 million related to the PA Consolidation, partially offset by income tax benefits related to updates to deferred taxes on the sale of equity interest in FET in the first quarter of 2024 and the absence of a $9 million discrete income tax charge recognized in 2023 due to the remeasurement of a valuation allowance for the expected utilization of certain state NOL carryforwards.

Current wording

•A higher effective tax rate due to the absence of discrete tax benefits related to the reduction in state income taxes and release of a valuation allowance recognized in 2023, partially offset by discrete tax benefits associated with certain equity method investments and remeasurement of excess deferred income taxes in 2024.

Previous wording

•The implementation of base rate case settlements in Maryland, New Jersey and West Virginia;

Current wording

•The implementation of base rate cases in Maryland, New Jersey, and West Virginia;

Previous wording

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 wording

Residential and commercial distribution deliveries were impacted by higher customer usage as a result of the weather. Cooling degree days in the third quarter of 2024 were 15% above the same period of 2023 and 7% above normal.

Previous wording

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 wording

Earnings attributable to FE from continuing operations was $717 million or $1.25 per basic share ($1.24 diluted) in the first nine months of 2024 compared to $948 million or $1.66 per basic share ($1.65 diluted) in the first nine months of 2023, representing a decrease of $231 million that was primarily due to the following:

Previous wording

•Proceeds from the shareholder derivative lawsuit settlement as described below in “Outlook - Other Legal Proceedings”;

Current wording

•Net proceeds from the shareholder derivative lawsuit settlement, as described below in “Outlook - Other Legal Proceedings”;

Previous wording

•The absence of expenses associated with the cancellation of a sponsorship agreement in the first quarter of 2023;

Current wording

•The absence of expenses associated with the cancellation of sponsorship agreements in 2023; and

Previous 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.

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 nine months of 2024 were 38% above the same period of 2023 and 16% above normal. Heating degree days in the first nine months of 2024 were 1% below the same period of 2023 and 17% below normal.

Previous wording

Summary of Results of Operations — Second Quarter 2024 Compared with Second Quarter 2023

Current wording

Summary of Results of Operations — Third Quarter 2024 Compared with Third Quarter 2023

Previous wording

Financial results for FirstEnergy’s business segments for the second quarter of 2024 and 2023 were as follows:

Current wording

Financial results for FirstEnergy’s business segments for the third quarter of 2024 and 2023 were as follows:

Previous wording

•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 wording

Distribution segment’s earnings attributable to FE from continuing operations increased $18 million in the third quarter of 2024, as compared to the same period of 2023, primarily resulting from higher customer usage as a result of the weather, partially offset by lower weather-adjusted customer usage and demand and lower revenues due to changes in the Ohio DCR that became effective June 1, 2024.

Previous wording

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 wording

Distribution services revenues increased $80 million in the third quarter of 2024, as compared to the same period of 2023, primarily resulting from higher customer usage as a result of the weather, lower customer credits associated with the PUCO-approved Ohio Stipulation, and higher rider revenues associated with a Pennsylvania regulated investment program, partially offset by lower rider revenues associated with changes to the Ohio DCR as a result of the PUCO’s ESP V order that became effective June 1, 2024, and lower weather-adjusted customer usage and demand. Additionally, revenues increased due to the higher recovery of transmission expenses, and other FE PA rider rate adjustments, which have no material impact to earnings.

Previous wording

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 wording

Generation sales revenues decreased $59 million in the third quarter of 2024, as compared to the same period in 2023, primarily due to lower retail generation sales as a result of higher shopping in Ohio, which lowered sales volumes, partially offset by higher non-shopping generation auction rates. Total generation provided by alternative suppliers as a percentage of total MWh deliveries for the Ohio Companies and FE PA in the third quarter of 2024, as compared to the same period of 2023, increased to 90% from 89% in Ohio and decreased slightly to 61% from 62% in Pennsylvania. Retail and wholesale generation sales revenue have no material impact to earnings.

Previous wording

•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 wording

•Purchased power costs, which have no material impact to earnings, decreased $131 million during the third quarter of 2024, as compared to the same period of 2023, primarily due to decreased generation sales volumes as described above, decreased capacity expenses and lower unit costs.

Previous wording

•Higher network transmission expenses of $39 million, which are deferred for future recovery, resulting in no material impact to earnings;

Current wording

•Higher network transmission expenses of $40 million, which are deferred for future recovery, resulting in no material impact to earnings;

Previous wording

•Higher planned vegetation management expenses of $31 million;

Current wording

•Higher planned vegetation management expenses of $18 million;

Previous wording

•Higher planned vegetation management costs of $6 million, which were deferred for future recovery resulting in no material impact to earnings;

Current wording

•Higher energy efficiency and other state mandated program costs of $6 million, which were deferred for future recovery, resulting in no material impact to earnings.

Previous wording

•Higher network transmission expenses of $9 million, which were deferred for future recovery, resulting in no material impact to earnings;

Current wording

•Lower uncollectible expenses of $9 million, of which $2 million was deferred for future recovery.

Previous wording

Integrated segment’s earnings attributable to FE increased $33 million in the second quarter of 2024, as compared to the same period of 2023, primarily from the implementation of base rate cases, higher customer usage and demand, partially offset by higher other operating expenses, including increases in the ARO liability, a higher effective tax rate due to discrete tax charges discussed below, and the absence of pension mark-to-market adjustment.

Current wording

Integrated segment’s earnings attributable to FE from continuing operations increased $52 million in the third quarter of 2024, as compared to the same period of 2023, primarily due to higher revenues from regulated investment programs, the implementation of base rate cases and higher customer usage and demand, partially offset by higher operating expenses.

Previous wording

Integrated segment’s total revenues increased $222 million as a result of the following sources:

Current wording

Integrated segment’s total revenues increased $186 million as a result of the following sources:

Previous wording

Distribution services revenues increased $70 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 revenues from the implementation of base rate cases, and higher rider revenues associated with certain investment programs. Additionally, revenues increased due to the higher recovery of transmission expenses, which have no material impact to earnings.

Current wording

Distribution services revenues increased $59 million in the third quarter of 2024, as compared to the same period of 2023, primarily resulting from higher revenues from the implementation of base rate cases, and higher rider revenues associated with certain regulated investment programs. Additionally, revenues increased due to the higher recovery of transmission expenses, which have no material impact to earnings.

Previous wording

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 wording

Generation sales revenues increased $107 million in the third quarter of 2024, as compared to the same period of 2023, primarily due to higher retail revenues and lower wholesale revenues.

Previous wording

•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 wording

•Retail generation sales increased $115 million in the third quarter of 2024, as compared to the same period in 2023 primarily due to higher non-shopping generation auction rates and higher customer usage as a result of the weather. Retail generation sales, other than those in West Virginia, have no material impact to earnings.

Previous wording

•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 wording

•Wholesale generation revenues decreased $8 million in the third quarter of 2024, as compared to the same period in 2023, primarily due to lower capacity revenues and market prices. The difference between current wholesale generation

Previous wording

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 wording

Transmission revenues increased $12 million in the third quarter of 2024, as compared to the same period of 2023, primarily due to higher rate base from regulated investment programs.