FIRSTENERGY CORP
For the period ended Mar 31, 2025. Filed Apr 30, 2025.
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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.
Mar 31, 2025 · Filed Apr 30, 2025
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Jersey Central Power & Light Company
MANAGEMENT’S NARRATIVE DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS
JCP&L is a wholly owned subsidiary of FE. JCP&L conducts business in New Jersey by providing regulated electric transmission and distribution services in northern, western and east central New Jersey. JCP&L procures electric supply to serve its BGS customers through a statewide auction process approved by the NJBPU. JCP&L is subject to regulation by the NJBPU and FERC.
JCP&L's reportable operating segments are comprised of the Distribution and Transmission segments.
The Distribution segment, representing $3.3 billion in rate base as of December 31, 2024, distributes electricity to approximately 1.2 million customers in New Jersey across its distribution footprint and procures electric supply to serve its BGS customers through a statewide auction process approved by the NJBPU. The segment’s results reflect the costs of securing and delivering electric generation to customers, including the deferral and amortization of certain costs.
The Transmission segment includes transmission infrastructure owned and operated by JCP&L and used to transmit electricity, representing $1.4 billion in rate base as of December 31, 2024. The segment’s revenues are primarily derived from forward-looking formula rates, pursuant to which the revenue requirement is updated annually based on a projected rate base and projected costs, which is subject to an annual true-up based on actual rate base and costs. The segment’s results also reflect the net transmission expenses related to the delivery of electricity on JCP&L’s transmission facilities.
For additional information with respect to JCP&L, please see the information contained in FirstEnergy’s Management’s Discussion and Analysis of Financial Condition and Results of Operations under the following subheadings, which information is incorporated by reference herein: Executive Summary and Recent Developments, Regulatory Assets and Liabilities, Capital Resources and Liquidity, Guarantees and Other Assurances, Market Risk Information, Credit Risk, Outlook and New Accounting Pronouncements.
Summary of Results of Operations—First Quarter 2025 Compared with First Quarter 2024
Financial results for JCP&L's business segments for the three months ended March 31, 2025 and 2024, were as follows:
| For the Three Months Ended March 31, 2025 · Reconciling | ||||
|---|---|---|---|---|
| (In millions) | Distribution | Transmission | Adjustments | JCP&L |
| Revenues | $548 | $61 | $(43) | $566 |
| Operating Expenses: | ||||
| Purchased power | 298 | — | — | 298 |
| Other operating expenses | 174 | 14 | (43) | 145 |
| Provision for depreciation | 53 | 12 | — | 65 |
| Deferral of regulatory assets, net | (22) | — | — | (22) |
| General taxes | 6 | — | — | 6 |
| Total operating expenses | 509 | 26 | (43) | 492 |
| Other Income (Expense): | ||||
| Miscellaneous income, net | 12 | — | — | 12 |
| Interest expense - other | (22) | (7) | — | (29) |
| Interest expense - affiliates | (1) | — | — | (1) |
| Capitalized financing costs | 3 | 6 | — | 9 |
| Total other expense | (8) | (1) | — | (9) |
| Income taxes | 7 | 9 | — | 16 |
| Net Income | $24 | $25 | $— | $49 |
| For the Three Months Ended March 31, 2024 · Reconciling | ||||
|---|---|---|---|---|
| (In millions) | Distribution | Transmission | Adjustments | JCP&L |
| Revenues: | $452 | $52 | $(38) | $466 |
| Operating Expenses: | ||||
| Purchased power | 248 | — | — | 248 |
| Other operating expenses | 211 | 14 | (38) | 187 |
| Provision for depreciation | 50 | 11 | — | 61 |
| Deferral of regulatory assets, net | (39) | — | — | (39) |
| General taxes | 5 | — | — | 5 |
| Total operating expenses | 475 | 25 | (38) | 462 |
| Other Income (Expense): | ||||
| Miscellaneous income, net | 11 | — | — | 11 |
| Interest expense - other | (23) | (7) | — | (30) |
| Interest expense - affiliates | (4) | — | — | (4) |
| Capitalized financing costs | 2 | 5 | — | 7 |
| Total other income (expense) | (14) | (2) | — | (16) |
| Income taxes (benefits) | (11) | 7 | — | (4) |
| Net Income (loss) | $(26) | $18 | $— | $(8) |
| Changes Between Three Months Ended March 31, 2025 and 2024 Financial Results · Reconciling | ||||
|---|---|---|---|---|
| (In millions) | Distribution | Transmission | Adjustments | JCP&L |
| Revenues | $96 | $9 | $(5) | $100 |
| Operating Expenses: | ||||
| Purchased power | 50 | — | — | 50 |
| Other operating expenses | (37) | — | (5) | (42) |
| Provision for depreciation | 3 | 1 | — | 4 |
| Deferral of regulatory assets, net | 17 | — | — | 17 |
| General taxes | 1 | — | — | 1 |
| Total operating expenses | 34 | 1 | (5) | 30 |
| OPERATING INCOME | 62 | 8 | — | 70 |
| Other Income (Expense): | ||||
| Miscellaneous income, net | 1 | — | — | 1 |
| Interest expense - other | 1 | — | — | 1 |
| Interest expense - affiliates | 3 | — | — | 3 |
| Capitalized financing costs | 1 | 1 | — | 2 |
| Total other income (expense) | 6 | 1 | — | 7 |
| Income taxes (benefits) | 18 | 2 | — | 20 |
| Net Income (Loss) | $50 | $7 | $— | $57 |
Distribution - Results of Operations
Net income increased$50 million in the first quarter of 2025, as compared to the same period of 2024, primarily due to higher revenues from the implementation of the base rate case in February 2024, the absence of a $53 million charge in connection with the base rate case settlement agreement, as further discussed below, higher customer usage and demand, and regulated investment programs, partially offset by higher operating expenses.
Revenues
The $96 million increase in total revenues resulted from the following sources:
| For the Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| Revenues by Type of Service | 1 | 2025 | 2024 | Increase / (Decrease) | ||
| (In millions) | ||||||
| Distribution services | $266 | $216 | $50 | |||
| Generation sales: | ||||||
| Retail | 277 | 228 | 49 | |||
| Wholesale | 1 | 2 | (1) | |||
| Total generation sales | 278 | 230 | 48 | |||
| Other | 4 | 6 | (2) | |||
| Total Revenues | $548 | $452 | $96 | |||
Distribution services revenue increased $50 million during the first quarter of 2025, as compared to the same period of 2024, primarily due to higher revenues from the implementation of the base rate case in February 2024, higher customer usage as a result of colder weather temperatures, higher weather-adjusted customer usage and demand, and higher rider revenues associated with certain regulated investment programs.
Generation sales revenues increased $48 million during the first quarter of 2025, as compared to the same period of 2024, primarily due to higher retail sales volumes and non-shopping generation auction rates. Retail generation sales have no material impact to earnings.
Operating Expenses
Total operating expenses increased by $34 million primarily due to:
Purchased power costs, which have no material impact to earnings, increased by $50 million during the first quarter of 2025, as compared to the same period of 2024, primarily due to higher unit costs and sales volumes.
Other operating expenses decreased $37 million in the first quarter of 2025, as compared to the same period of 2024, primarily due to:
The absence of a $53 million pre-tax charge at JCP&L in the first quarter 2024 associated with certain corporate support costs recorded to capital accounts from the FERC Audit that were determined, as a result of the base rate case settlement agreement, to be disallowed from future recovery; and
Lower storm restoration expenses of $5 million, which were deferred for future recovery.
The decrease was partially offset by:
Higher severance and related costs of $4 million associated with FirstEnergy’s organizational changes announced in the first quarter of 2025;
Higher uncollectible expenses of $4 million, which were deferred for future recovery; and
Higher energy efficiency and other state mandated program costs of $13 million, which were deferred for future recovery, resulting in no material impact to earnings.
Depreciation expense increased $3 million in the first quarter of 2025, as compared to the same period of 2024, primarily due to a higher asset base.
Deferral of regulatory assets, net decreased $17 million in the first quarter of 2025, as compared to the same period of 2024, primarily due to a $5 million decrease from lower deferral of storm related expenses, a $3 million net decrease from lower generation and transmission related deferrals, and $9 million related to net decreases in other deferrals.
Other Expenses
Total other expenses decreased $6 million in the first quarter of 2025, as compared to the same period of 2024, primarily due to lower interest on short-term borrowings and higher capitalized interest.
Income Taxes
The distribution segment's effective tax rate for the three months ended March 31, 2025 and 2024, was 22.6% and 29.7%, respectively. The decrease in the effective tax rate is primarily due to an increase in the tax benefit from AFUDC equity flow-through.
Transmission - Results of Operations
Net income increased$7 million in the first quarter of 2025, as compared to the same period of 2024, primarily due to higher revenues from regulated investment programs as further discussed below.
Revenues
Transmission revenue increased $9 million during the first quarter of 2025, as compared to the same period of 2024, primarily due to a higher rate base from regulated investments and recovery of higher transmission operating expenses.
Operating Expenses
Total operating expenses increased by $1 million during the first quarter of 2025, as compared to the same period of 2024, primarily due to higher depreciation expenses from a higher asset base. Nearly all operating expenses are recovered through formula rates, resulting in no material impact on current period earnings.
Other Expenses
Total other expenses decreased by $1 million during the first quarter of 2025, as compared to the same period of 2024, primarily due to higher capitalized financing costs.
Income Taxes
The transmission segment's effective tax rate for the three months ended March 31, 2025 and 2024, was 26.5% and 28.0%, respectively. The decrease in the effective tax rate is primarily due to an increase in the tax benefit from AFUDC equity flow-through.
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