Q4 2025 Earnings Call Transcript

Hello, and welcome to FirstEnergy Corp. Fourth Quarter 2025 Earnings Call. A reminder, this conference is being recorded. It is now my pleasure to turn the call over to Karen Sagot, Vice President of Investor Relations. Please go ahead, Karen. Thank you.

Morning, everyone, and welcome to FirstEnergy Corp. year end 2025 earnings review. Our earnings release, presentation slides, and related financial information are available on our website at firstenergycorp.com/ir. Today’s discussion will include the use of non-GAAP financial measures and forward-looking statements, which are subject to risks and uncertainties. Factors discussed in our earnings news release, during today’s conference call, and in our SEC filings could cause our actual results to differ materially from these forward-looking statements.

The appendix of today’s presentation includes supplemental information, along with the reconciliation of non-GAAP financial measures. Please read our cautionary statement and discussion of non-GAAP financial measures on Slides 2 and 3 of the presentation. Our Chairman, President, and Chief Executive Officer, Brian Tierney, will lead our call today. He is joined by K.

Jon Taylor, our Senior Vice President and Chief Financial Officer. Now it is my pleasure to turn the call over to Brian.

Thank you, Karen. Good morning, everyone. Thank you for joining us today and for your interest in FirstEnergy Corp. 2025 was a transformative year for our company. We executed on our plan, achieved several important milestones, and positioned FirstEnergy Corp. for long-term success in one of the most dynamic periods in our industry’s history.

We delivered strong financial results across all of our key metrics. We advanced key regulatory strategies in Ohio, and we reinforced our foundation for sustainable financial growth, resulting in a positive ratings action at S&P. In addition, we are announcing a $36,000,000,000 five-year capital investment program focused on improving customer reliability and grid resiliency.

This positions the company to deliver a core earnings per share compounded annual growth rate near the top end of 6% to 8% from 2026 to 2030. We are also pursuing significant incremental investment opportunities over the planning horizon. These include new generation investments that will provide meaningful benefits to customers in West Virginia and additional regional transmission investments that are critical to maintaining grid stability. Today, we are reporting 2025 GAAP earnings of $1.77 per share compared to $1.70 per share in 2024. Core earnings were $2.55 per share, at the top end of our revised and increased guidance range for the year, and an increase of 7.6% compared to 2024. We deployed $5,600,000,000 in customer-focused capital investments in 2025, an increase of nearly 25% versus last year and approximately 12% higher than our original plan for the year.

Our distribution reliability metrics improved 10% across the system compared to 2024. Notably, this includes significant year-over-year improvement in our New Jersey and Pennsylvania service territories, where we have commission-approved investment programs.

Finally,

we declared quarterly dividends totaling $1.78 per share, a 5% increase from 2024. This growth is consistent with our plan of providing a solid dividend yield and an attractive total shareholder return. Are pleased with our performance in 2025, and we are committed to building on the success as we deliver on our long-term financial plan. Our $36,000,000,000 capital program represents a nearly 30% increase from our previous five-year plan. It requires only modest amounts of equity to fund growth, which John will talk about later.

This capital program was designed through a coordinated approach that aligns enterprise strategy with insights from our five business units. It addresses state-mandated policies and local needs, and it reflects our commitment to affordability while meeting customer expectations for reliable service. The updated plan includes $19,000,000,000 of total transmission investments across our stand-alone transmission and integrated segments, a 35% increase from our previous plan. Companywide, expect our updated investment plan to translate into 10% rate base growth over the planning period.

Our strategy, focused on prioritizing investments for our customers and supported by constructive regulatory jurisdictions, positions us well to deliver a core earnings CAGR near the top end of 6% to 8%, through 2030. Turning to Slide 7. We see opportunities for incremental investments that will further support our customers in the region. This includes our planned generation investment in West Virginia. Last week, we filed our request for the 1.2 gigawatt combined cycle natural gas generating facility, which will be located in Maysville, West Virginia. We ran the build-own-transfer RFP and considered that option against our self-build engineering, procurement, and construction plan.

From that analysis, we determined using an EPC approach is the most prudent and cost-effective solution for our West Virginia customers. We anticipate receiving approval in the second half of the year, and we expect the new facility to be operational in 2031. Once approved by the West Virginia Public Service Commission, we will include this $2,500,000,000 investment in our financial plan. This will increase our consolidated rate base CAGR from 10% to 11%. When we announced this investment last November, Governor Morrissey challenged us to do more.

I accept that challenge.

And with approval of this project, we will seek to add additional generation in the state to support growing data center activity. Moving to Slide 8, we also see incremental opportunities in our transmission business. Our transmission operations are among the largest in PJM and encompass critical interconnections with strategic high voltage corridors and will require ongoing investment to support load growth. Began our transmission investment program in 2014. Over the last twelve years, we have deployed $17,000,000,000 to replace aging equipment and upgrade the health of the system.

This work has addressed about one third of our transmission lines and major substation assets. Substantial investment will be required as approximately 70% of the lines and 30% of substation assets are expected to reach end of life over the next decade. Additionally, we have an ongoing opportunity for growth associated with the regulatory required projects, such as investments awarded to FirstEnergy Corp., as part of the most recent PJM open window process. Since 2022, our stand-alone transmission and integrated segments have been awarded approximately $5,000,000,000 in competitive transmission projects.

Our ideally situated transmission system and our transmission planning expertise position us to continue our success with the competitive open window process. We expect the upcoming 2026 open window solicitation will be similar in scope and scale to what we have seen in the past years. We expect the PJM board to vote and approve the next round of projects in the 2027. At that time, we will update our investment plan to include any awards. Turning to Slide 9. We make the necessary investments in a reliable and resilient grid that drives economic growth for our communities, we are actively addressing affordability.

On average, we control just 32% of the total customer electric bill in our deregulated states. The generation component represents about 60% of the total bill. Across these states, our customer bills are approximately 20% below the in-state peer average and remain at or below 2.5% of our customers’ share of wallet. In fact, with our capital plan, by the time we get to 2030, our bills are expected to remain below the current rates of our in-state peers.

We are proud of the value we provide, and affordability is top of mind. We are committed to doing what we can to manage customer bill impacts. This includes continued discipline, controllable costs, which is reflected in our baseline O&M savings of 15% or over $200,000,000 since 2022. We are also working with state regulators and leaders to identify opportunities to mitigate bill increases. We are advocating for initiatives to ensure generation supply better aligns with customer demand, and we are reviewing all programs that can provide relief to customers.

In Ohio, a recent legislative change reduces property tax assessments for our utilities by about $100,000,000 in 2027, which will have a positive impact on customer bills in our upcoming three-year rate plan. As we make critical investments to provide reliable and resilient service, we are committed to ensuring our rates remain affordable. I am confident in our plan, our management team, and our ability to deliver on our commitment. Our execution in 2025 was strong, and we are focused on continuing that momentum.

Now turn the call over to John. Thanks, Brian, and good morning, everyone. Today, I will review our financial accomplishments and results for 2025 and plan regulatory proceedings for 2026.

But spend most of my time reviewing the expectations and key assumptions in our five-year plan. As Brian mentioned, 2025 was a very important and successful year for FirstEnergy Corp.

We delivered on key financial metrics, including core EPS,

base O&M,

capital investments,

and cash from operations. Can review more details about our results, including reconciliations for core earnings and business segment drivers, the strategic and financial highlights presentation that was posted to our IR website yesterday afternoon. Core earnings for the year came in at $2.55 per share, which is close to 8% above our 2024 results, and 2% above our original guidance midpoint of $2.50 per share. This was largely driven by new base rates

and formula rate investments.

Residential customer demand that was 3% above 2024 levels, and strong financial discipline in our operating expenses that allowed us to execute on significant additional maintenance work that was originally scheduled for future years. On a consolidated basis, our return on equity in 2025 was 9.8% on rate base of $27,800,000,000.

Versus 9.4% on $25,600,000,000 in 2024. Investments were $5,600,000,000 for the year, which are 25% above 2024 levels, and 12% above plan.

These include nearly 75% in formula rate investments, with 50% in FERC-regulated transmission investments where total FEO and transmission rate base increased 11% year over year.

Our financing plan included cash from operations of $3,700,000,000 was more than $800,000,000 above 2024 levels,

subsidiary debt issuances of $3,400,000,000, a $2,500,000,000 convertible debt transaction in the second quarter. In November, we received constructive regulatory outcomes in Ohio, including in our 2024 base rate case, which paved the way for an upgrade from S&P to BBB flat at FE Corp on a senior unsecured basis. 2025 was a pivotal year for FirstEnergy Corp. in terms of delivering on our plan,

and we remain focused on meeting our commitments to investors going forward.

Turning to our regulatory strategy. Plan to file traditional base rate cases later this year in both Maryland and West Virginia. In West Virginia, we plan to file in the second quarter to reflect a $1,000,000,000 increase in rate base since 2022. Our current rates are based on a rate base of $3,200,000,000,

an equity layer of 50% and an allowed ROE of 9.8%.

In Maryland, we plan to file in the second half of the year to reflect investments we have made since 2022,

Our current rates include rate base of nearly $700,000,000 with an equity layer of 53% and allowed return of 9.5%. In Ohio, we expect to file our three-year rate plan early in the second quarter,

While we appreciate getting to a conclusion in our 2024 base rate case, are looking forward to filing under the three-year rate plan with four test years to ensure timely recovery of critical investments we need to make on behalf of our customers. All three of these cases, we anticipate requested rate increases at or below annual inflation as compared to the current residential bill, where on average, our monthly bills are approximately 20% below the in-state peer average. Lastly, in West Virginia, our pro proposed cost recovery for the generation investment consists of two phases. First, during the construction phase, we are proposing a generation surcharge based on precedent in the state designed to recover our total financing cost with a requested equity return at our current authorized return of 9.8%.

Then after the power plant is placed in service, we would look to transition the recovery from a surcharge to base rates at a future base rate case. As part of the financing plan for this investment, we filed an application with the U.S. Department of Energy, seeking a low-interest loan under the Energy Dominance Financing Program. Expect approval before the end of the year, which would save customers more than $200,000,000 over the thirty-year life of the loan versus traditional financing.

Based on our forecast, once in service, this investment is expected to have minimal impact to customer bills.

Moving to our five-year plan. Our $36,000,000,000 capital investment plan is an increase of $8,000,000,000 or nearly 30% from our prior five-year plan. As Brian discussed, this program results in expected rate base growth of 10% through 2030, led by transmission investments totaling $19,000,000,000, customer-focused distribution investments to strengthen and modernize the grid. 100% of our capital plan is focused on improving customer reliability and resiliency of the system, and only consists of awarded, approved, and contracted projects. We increased transmission investments by $5,000,000,000 or 35 from our previous five-year plan.

This includes transmission investments in both our stand-alone transmission and integrated segments. The plan also includes regional transmission projects from the 2025 and prior PGM open windows totaling $4,000,000,000. Total distribution investments in our distribution and integrated segments are increasing 25% or $3,000,000,000 from the prior plan.

This largely reflects increases for reliability investments and core infrastructure upgrades,

the largest increase in Pennsylvania, where we are accelerating investments under the LTIP program, and are recovered through the existing distribution system improvement surcharge. This investment plan includes targeted customer benefits both on the transmission and distribution systems and excludes the significant incremental investments we are planning in West Virginia and additional upside in transmission. Moving to core earnings, we are well positioned to deliver compounded annual earnings growth near the top end of our 6% to 8% growth rate from 2026 to 2030.

This sustainable long-term growth starts with our $36,000,000,000 capital investment plan,

with 75% in formula rate programs, and 10% rate based growth. Targeting a consolidated ROE of 9.5% to 10% through the planning period. Our load forecast includes active and contracted customers, resulting in 2% customer demand growth, which is largely driven by a 5% increase from industrials, that typically are on a demand-based not volume-based charge. As our data center pipeline becomes contracted, this will be incremental to this forecast both from a customer demand and capital investment perspective.

As we have demonstrated in the past, our plan includes financial discipline with our base O&M expenses,

with modest increases of 1% to 1.5% per year.

Operating expenses will continue to be a focus of the management team, as we look to deploy technology, artificial intelligence, and continuous improvement initiatives to further help offset planned increases. Finally, our financing plan targets strong investment-grade credit metrics

through cash from operations,

long-term debt issuances, and modest levels of equity or equity-like securities. That we have discussed previously. Our cash from operation funds 65% of our total investment plan and includes a modest impact

from expected deductions from tax repairs on the corporate alternative minimum tax.

Because of our tax position, including existing AMT deductions, the expected impact of tax repairs on cash flow is less than 2% and does not change our overall plan. Our debt financing plan includes $16,000,000,000 in new long-term debt issuances with FE Corp debt as a percentage of total debt at 20% versus 25% at the end of last year. And our equity needs are up to $2,000,000,000, which includes a $100,000,000 annual DRIP program, which has historically been in place.

We will explore all options to fund our equity needs, including hybrid instruments,

and anticipate any annual common equity issuances

including for the DRIP

to be approximately 1% of current market cap

on average through the forecast period.

In closing, we believe we have a compelling story and value proposition. Our plan is strong, focused on critical investments with significant incremental opportunities. We have a proven track record of executing on regulatory strategies that are focused on the customer and provide solid returns to our investors. And we have demonstrated our ability to be disciplined with our cost structure not only to minimize regulatory lag, but to provide benefits to customers.

We believe we provide a compelling low-risk value proposition to investors, with a total shareholder return opportunity of approximately 12% with upside potential. We are committed to meeting our commitments for our customers, our communities, and our investors and are excited about the future. Thank you for your time. Now let us open the call to Q&A.

Thank you. We will now be conducting a question and answer session. May I ask you please limit yourself to one question and one follow-up to allow as many as possible to ask questions? If you like to ask a question at this time, you may press star 1 on your telephone keypad.

A confirmation tone indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Thank you.

And our first question comes from the line of Nick Campanella with Barclays. Please proceed with your questions.

Hey. Good morning. Thanks for all the updates.

Good morning, Nick.

Hey. Morning.

So appreciate, the disclosure, six to eight at the high end now. You

West Virginia could be another $1,200,000,000.0 incremental to the plan and that would bring your wrap CAGR to 11%. Just what is the incremental financing that would be associated with that? Given my understanding is there is kind of a proposal for, cash CWIP. And would this kinda put you comfortably above the 6% to 8% range?

You know, say by 2029, or how should we kinda think about that? Thanks. Yeah. Nick, this is John.

I will take the financing piece of that. So

you know, obviously, the cash recovery will help. Pretty significantly. So I expect that to be 15% of the total investment. We will target 50% of the total investment with the Department of Energy loan with the rest likely being new equity to fund the investment.

And and then on the growth Nick, as as we get these incremental investment opportunities coming in, whether it is generation or transmission, we will be updating, what growth looks like, as we put those in the plan.

Okay. Okay. So I will take 15% of that CapEx. Thank you for that.

And then maybe just I guess there is just been a bigger focus on Pennsylvania from investors given the various comments out of Governor Shapiro. And I know the distribution plan across the company is up. Pennsylvania, I think you are doing $6,700,000,000.0. I also understand your rates are below average there. But just how is the increase CapEx impacting your earned returns in the state?

Just relative to that 10 that you show on the slides? And do you think you are going to be going back in for a case there?

Thanks.

Yes.

So, Nick, it is not that long that we have come out of a rate case there. And, and and the big part of that rate case was investment in the distribution system. And so the increases that we got were to fund that investment, and we are actively doing that. We have a very targeted long-term investment program there.

That has been approved as well. So the focus for us in Pennsylvania has been incremental investment

in

the distribution system to drive improvements and reliability. And that is what we are seeing in the plan. So, that that is the the what our focus has been. We are going to go in when we need to again.

To to reflect that increased rate base that we have been adding to since the last rate case. But the focus in both Pennsylvania and New Jersey has always been we want to see the investment coming from the company in those states to drive reliability, and that is what we are doing. And that does leave us in a position where we have to keep going in for rate cases, to update the rate base and and our cost structure as well. But you know, in whether it is in Pennsylvania, New Jersey, all of our states, we are keenly focused on affordability, and that has us focused on things like our own O&M and then other bills charges.

We mentioned tax in Ohio coming down that are flowing through the rates, but you know, investment and affordability are the things that are top of mind for us in Pennsylvania. And our other states.

Yeah. Nick, and I would just add on that roughly 45% of the that we are making in Pennsylvania is under the LTIP program. Which is recovered through the DISC surcharge. So that provides for know, interim recovery of our investments and really helps us kinda with base rate case planning and that type of thing.

Thanks for all the thoughts.

Thanks, Nick.

The next question comes from the line of Shar Pourreza with Wells Fargo. Please proceed with your question.

Hey, guys. Good morning. Morning, Shar. Morning. Brian, I just want to make sure we we have the numbers correct here. So the CapEx numbers were obviously healthy. The rate base growth is likely

little bit closer to 10.4%, right? Just as you are adding West Virginia remind us, does that sort of get you to closer

to 11.4%? Because I know we are getting quoted on 11%. But I think West Virginia is probably a 100 basis points accretive to that. And then how do we sort of think about the delta between 11.4% when you add West Virginia in it and your EPS growth where you are already at the higher end.

So I guess another way to ask it is, what is the amount of lag between rate based growth and the newly guided let us just say, 11.4% rate based growth when you add West Virginia in there.

Yeah. So, Nick, as we are looking at this, you know, we are trying to give transparency and insight into what is in the plan today and then what are the things that could be added to the plan and what that those additions would look like. Your math is about right on the 10.4 to eleven point four. And we have always said we will update the CapEx plan.

We will update earnings as things like and incremental transmission comes in. But what what we are not going to do is put things in there that are speculative and not approved yet and then have to take them out of the plan. So our idea is what the plan is today. What the incremental could be.

And if we need to change what the earnings growth rate is, as we add things to the plan. We will do that at that time.

Got it. Okay. Thanks for clarifying that because I know

Brian, there is a lot of confusion out there with 10% versus 10.4%. There is a big difference between 10% and 10.4 And then just lastly on West Virginia, can you just expand on the incremental opportunities post the current project? So what is the potential timing there, the turbine supplies, where the DC conversations etcetera. Thanks.

Yeah. Thanks for that, Shar. So as we look at our state

and we look at states that are wanting us to invest in regulated generation, West Virginia stands at the top of that. I mentioned the governor’s challenge to us. To do more. He has a 50 gigawatts by 2050 goal that he is, searching for. And if we get

know, constructive regulatory approval here,

we are going to be going back into West Virginia and looking at ways that we can add another 1,200 megawatts, hopefully dedicate that to data center load talking with hyperscalers, with developers about doing that. And the relationships that we are beginning now with suppliers like Siemens on the turbine side, in terms of what we are doing with the first EPC that we are going forward. We will leverage those relationships, going forward for the incremental build. But when we look at our universe of opportunity to invest in generation, West Virginia said to us, we are open for business.

Want you to invest here. And as a regulated, fully integrated utility there, looking to drive economic development we want to be a key part of that for our customers and and the state of West Virginia.

Got it. Appreciate it. Thank you, guys.

Thanks, John.

Our next question comes from the line of David Arcaro with Morgan Stanley.

Please proceed with your question.

Hey. Thanks so much. Good morning.

Good morning, David.

Wondering if you could touch on New Jersey and the backdrop there, kind of expectations, you know, for, timing of your next rate case and just overall your perspective following the executive orders and some of the changes we could see ahead in the regulatory backdrop?

Yes. So, obviously, affordability is front and center for, Governor Sherrill. We have been working with her and her staff to look at ways that we can address affordability in the states, what are items on the bill that we can either reduce or eliminate, but, again, when we were in our last rate case there, the the real focus of that was the worst performing circuits that we had and the big point of that rate case was, are we going to make the incremental investment to drive increased reliability in those circuits? We have been doing that since the last rate case, and we are seeing related improvement in reliability there, which is what New Jersey wanted from that case.

So we are going to continue with that activity. We are going to work constructively with the governor and and her staff with the BPU and others to address affordability. But, ultimately, we will have to go back in for another rate case to keep that investment coming. Our rates in New Jersey are significantly below our in-state peers, and even with the investment that we have planned there, we anticipate to still be below

our in-state peers.

But we have to improve reliability. We are singularly focused on that. And affordability at the same time. So we are going to work constructively with everyone to time a next rate case, and and try and maintain that affordability as well.

Got it. Okay. Thanks. That is helpful.

And then could you touch on the outlook that is embedded in your plan for ROEs? I guess, looks like you are you are assuming, you know, basically flattish, kinda holding ROEs steady throughout the plan. I wanted to confirm that if you are around a 9.8 now and you are you are planning on just holding that essentially between 9.5 and 10 going forward. I guess, could you touch on kind of the key levers there, key moving pieces, as you are, the out the outlook for earned ROEs?

Yes. So thank you for that, David. We are we are continuing to be in that target in that 9.5% to 10% range. Our goal is to be as close to our authorized returns as possible.

Given the amount that we are investing, we are going to be going in regularly for rate cases, because of the magnitude and the investment that we are making to drive reliability. But we are confident that we will be able to stay in that nine and a half to 10% range with the flight of rate cases that we have and the investment that we are making today.

Okay. Great. Thanks so much.

Thank you, David.

Our next question is from the line of Ryan Levine with Citi. Please proceed with your question.

Was hoping you would be able to give some color around the execution ability of your $36,000,000,000 CapEx plan. To sufficient internal engineering and project management capability to deliver on the

step up of CapEx, especially in transmission.

Given labor tightness? And how are you seeing in house versus contractor labor relations to be able to deliver on this?

Yeah. So thank you for the question, Ryan.

We are very confident in our ability to deliver against the plan especially the transmission, side of it. We are we are having considerable growth. We have been investing in that side of the business significantly since 2014. We have the relationships with contractors, labor, suppliers, to allow us to do that. And we are ramping up those relationships as our, investment is ramping up.

But project management, discipline, supplier relationships, all those things are key to us executing against our plan. And Mark Marzynski and his team on the transmission side are laser-like focused on our ability to deliver, and, and things are going according to plan there. So, it is a heavy lift, no doubt. But, we have the expertise and relationships, to deliver.

So we are very confident in our ability to make it happen.

On that front, are there certain to ask aspects that you are most constrained on? And are there any external

external markers that we could track the progress around the execution?

I do not think so. I mean, we are starting this see on the distribution side, we are starting to see the tightness in the supplier market is starting to ease. Suppliers are looking for people that they will view as strategic partners that they can look to be, you know, delivering significant volumes of demand to them going forward. And we are obviously going to be one of those players.

We have we have done things like made orders out in time, things that are no regrets. On the transmission and distribution side. And then we have Chris Beam who is working very hard on the generation side, fostering relationships with Siemens as our OEM on the key component of the generation that we have. So it is tight out there.

It is not as tight as it was during COVID. But, but we believe we have the the relationships, to get us through, what we need to do to drive the growth that we have planned.

Okay. And then one last unrelated question. How are you assessing the potential impacts from the Maryland Lower Bills Act? And the worse, similar affordability driven legislation in that state?

Yeah. So

you know, we are seeing this across our system where people are very, very focused on affordability, and we are engaging all of our jurisdictions and legislatures in that discussion. We are well positioned relative to our peers on that. We talked about on the call that

you know, our part of the bill in our deregulated states, it is only about

32% of the bill with generation being about 60%. So there are some obvious places to focus on where the increases in the bill have come on, which is why we are supportive of

extending the, the capacity auction caps

I think it would be beneficial to our customers to even lower

those caps for existing generation, and we have been supportive of things like a second auction that would that would bring new generation, to the fore, which is what is needed. So

we have been focused on affordability on our cost structure.

And looking for ways to engage with all stakeholders to make sure that electricity is affordable, to our customers going forward.

Thank you.

Thank you, Ryan.

The next question is from the line of Steve Fleishman with Wolfe Research.

Please proceed with your questions.

Hey. Good morning. Thanks for the update.

Morning, Steve.

So just to follow-up on the West Virginia maybe just a little more specifics on what what do they actually need to approve? In this order?

Just just

that the plan is needed and

the cost levels and and, I guess, the CWIP rate making? Are those the key items that need approval? Yeah. So it is a certificate the exact timing.

The exact timing to, like, any rough sense of when in the second half?

Yeah. So

what they are going to approve is is a certificate of need in public necessity. We are asking for the interim financing, in the plan. Where we get AFUDC, CWIP we have asked for. So what that will be during the plan, and we have also proposed what our financing plan will be for the plan both on an interim basis and and a long-term basis.

And so that is why we are moving forward with the DOE approval there. I think the commission has up to, a year to act on this. We have heard that they are interested in acting much quicker than that. To get the plant online even sooner.

And so we do anticipate that it will be again, I cannot be more specific than the second half,

and we are expecting a procedural schedule on the, filing within the next month. So, they are

I would say West Virginia is fast tracking the investment because they know how important it is to the economic development in the state. And I think you are seeing that everywhere from the governor’s interest in making sure that the investment is made right down to the commission. I think they are going to do things right, I think they are going to make sure it is it is it is needed and dot their i’s and cross their t’s, but I think they are going to be moving with dispatch.

Okay. Great. That is helpful.

Then one other question just on the equity plans.

Could any color on

the $2,000,000,000 up to $2,000,000,000 kind of the the timing

of that.

Is it kind of ratable over the period? Roughly

Any color on that?

Yeah, Steve. It is it is it is pretty much ratable over the over the five-year period. Beginning in 2026 with about 1% of our total market cap with with and that includes the the DRIP program that has been in place historically. But I I would plan on pretty ratable issuances over the five-year planning period.

And, again, you know, that $2,000,000,000 includes potential equity-like securities. Know? So we will look at hybrids to kinda know, reduce the common equity issuance need. And we will look at that over this year.

Okay. Great. Thank you.

Thanks, Steve.

Our next question comes from the line of Carly S. Davenport with Goldman Sachs. Please proceed with your questions.

Hey. Good morning. Thanks for taking the questions. Morning, Carly. Just on the, transmission CapEx piece of the plan. Can you just talk a little bit about what portion of the near-term spend, so say 2026 to 2028, is is tied to projects with right of way or siting and permitting that are in advanced stages versus still in earlier stages?

Yeah. So everything that we have that is

in the plan, Carly, is either approved by a commission, does not need approval, or we have clear line of sight to permitting to getting it done. So if it is in the plan, there is very high confidence that all of the approvals necessary are either received or in flight, and we anticipate getting them in the near term. So if there is a a long putt on something or or we do not have line of sight to that being in service and the dates that we are talking about it, it is not in the plan. And we have a big enough portfolio of projects.

So if something happens on one project in particular, we can advance another and and do the like and have that flexibility over the planning period. But we are extremely confident in what is in the near-term part of that plan. And, if we are still awaiting approvals or the like, what we talk about with the PJM open windows, then it is not in the plan yet.

Great. Okay. That is clear. Thank you. And then just a follow-up on on the affordability questions. I know in the slide you had mentioned that you expect bills to remain below in-state peers throughout the planning period. Is there anything specific that you can provide on a sort of percent bill inflation target that you would expect over the plan period?

Yeah. We we anticipate it to be below inflation. So we anticipate that the share of wallet and the like will stay the same.

But, you know, our our affordability

position is really one of our strengths.

And and it is something we are going to focus on. Peep people are always concerned about oh, my bill is going up x percent. We are focused on making that as small as possible and keeping a very modest share of our customer’s wallet. As we go forward, and that that ranges significantly from places where we have you know,

wealthier customers to

places where we have customers closer to or the mean average income but we are very sensitive to that affordability and doing everything we can on our cost structure side. And on the build components that we are working with the various commissions on to make sure that, the impact to customers is is as low as possible. And certainly trying to keep that below inflation.

Got it. Okay. Thank you so much for the color.

Thanks, Carly.

The next questions are from the line of Jeremy Bryan Tonet with JPMorgan. Please proceed with your questions.

Hi. Good morning.

Good morning, Jeremy.

I just want to, sorry, clarify real quick on the CCGT financing.

As far as the components there. There is 50% DOE loan and then remaining 50% what what are the components there?

Yeah. So so you are right. The the loan, we would target 50% of the total investment value. And then if we get the approval of cash recovery during the construction phase, that would fund about 15% of the overall investment, and then the rest which would be about 35%, would be new equity needs. That we would have to put into the plan.

Got it. Thank you for that.

Then just want to

pivot towards earned ROEs at this point. I am just wondering, I guess, where you see the biggest gap versus allowed in, I guess, key focus going forward, which which jurisdictions have, you know, the earn returns?

Earn returns so low,

authorized.

So it is all all things you would expect Jeremy. The places where you see us going in for rate cases, are the places where our investment has driven down the earned ROE, and that is why you know, clearly why we are going in. John talked about that in his remarks. And then we have also talked about the timing for when we might go in ultimately for New Jersey.

But it it is the places where we are making the incremental investments,

where we

lag a little bit to the incremental investment that we are making, and we just have to refresh that by going in for for

new rate cases. Yeah. The other thing I would say, Jeremy, if you look at our overall plan, I mean, we we are in jurisdictions that have formula rate recovery mechanisms. So 75% of our total investments are in formula rate programs.

So if you think about the impact on growth risk with respect to that those programs. It it drives a healthy amount of of the growth in the plan with base rate cases being you know, less of a contributor the overall scheme of things. So, really, most of the growth in the plan is driven by the formula rate investment programs. With a lesser extent from from base rate cases.

Got it. Thank you for that. And just a last quick one, if I

could. You know, the

obviously continues to be a lot of focus on the PJM auction.

And how this might evolve in the future. Just wondering any thoughts you might share there in Epi’s potential role if a regular generation or otherwise you know, might, you know, become a something that Effie would look at more in the future.

So, Jeremy, it is still early days in the stakeholder process. I think it just began, yesterday or the day before, continuing today. You know, the stakeholder process in PJM is a really, really difficult one. But the key things that we are going to be focusing on is affordability for our customers. And so as you look at the key things that are going to play out,

in the stakeholder process, it is going to be

how much generation are they looking for, what the timing is going to be, how it is going to be paid for, and who is going to bear the cost. Like, all the basic things that you would look for. So we are involved in the stakeholder process. We are going to continue to be involved. And and first and foremost, we are going to be looking out for affordability

for our customers as we work our way through that. In terms of FirstEnergy Corp. and our interest in in,

in regulated generation. You you know, look at our states, and you have states where, Ohio just passed legislation saying that the utility cannot own regulated generation. And then I think it would be difficult for us to in places like New Jersey and Maryland. So that really leaves us then with West Virginia where we have told you what our plans are.

We want to get this one approved, and then if West Virginia would like, we are interested in investing incrementally more in that state, and that leaves you with Pennsylvania. And, and, again, we do not have a path to seeing regulated generation in that state yet. But if if they would like us to consider it, we we would be willing to look at it. But our clearest path to helping with that issue is

one, what we are doing in West Virginia, and then, two, what we are doing in the stakeholder process at PJM.

Got it. That is helpful. I will leave it there. Thanks.

Thanks, Jeremy.

The next question is from the line of Paul Patterson with Glenrock Associates. Please proceed with your questions.

Hey. Good morning.

Morning, Paul.

Just on the

on the transmission, when I look at Slide 7,

is

how much of this, I guess, is demand driven I mean, is that part of the 20%? Or is this

really pretty much just

just you know, replacing the aging issue, the the the serve the reliability issue. And also just in respect to New Jersey is is the offshore wind thing still going on there? Is that still part of the plan that that tri collector

project and stuff or

should we think of that? Let me let me start with that last part. We are we are working with New Jersey and PJM to modify what portions of that plan are no regrets and will be beneficial to New Jersey and PJM even without the offshore wind component of that. So we are working to make those modifications that are agreeable to both New Jersey and PJM to make sure that, we are investing in what they want us to invest in, and it is no regrets regardless of

the offshore wind. So that is that is in process, as we speak.

If you look at the rest of the transmission, a lot of it is demand driven, but a lot of it is aging infrastructure as well. So if you look at the $5,000,000,000 that we have gotten from the open window process, since 2022, I I would say that is all demand driven. And so that is what are data centers doing what is happening with just demand across the PJM system. And they are responding to that.

And that is, you know, clearly $5,000,000,000 of of what is in the plan that we have been awarded. And then if you look at the the rest of what we are doing, you know, we have made significant investments since 2014, but have only addressed about 30% of the system. And about you know, 60% to 70% of the system is going to have the end of its useful life in the next ten years. And so that is a huge amount of what we are spending on the, on the transmission investment.

And those are things that we have to do for reliability. We have to do for economic development, and do not require a lot of incremental approvals for us to make those investments.

Yeah. Paul, the other thing I would add is if you if you look at our data center pipeline, if you look at the 13 gigawatts that we have in the pipeline through 2035, obviously, that is not in our plan today. But each gigawatt that is added to you know, the the contracted or or or active demand would probably drive know, $250,000,000 or so of incremental capital investments on the transmission system.

Okay. And and just in terms of the cost allocation, when it and that, I guess, that is determined by basically by by retail jurisdictions. Should we think of a lot of this CapEx being being absorbed by the new demand by the new data center demand growth or should we think about the breakdown of roughly speaking, obviously, it is kind of early, but you follow what I am saying in terms of how how people should sort of think about that

that that that

I I do, Paul. So anything that is directly for that specific customer is being borne by the customer. The regional upgrades are being handled the way PJM, handled those, with, generally, the region that is benefiting from the investment is paying for the investment. So it is a traditional PJM user pays the benefit owner pays most of the cost of what is happening on a regional basis.

Okay.

And then just in terms of the generation proposals that you guys have been making,

a couple years now.

How would you characterize the overall reception

because, you know, it is it is changing how things are currently. This auction and what have you. Mean, you

do you get a feeling that there is some momentum here in terms of your discussions with

with regulators in the in the service territories about about, you know, just opening this thing up and just not relying completely on the capacity auction and

And when do you think we might see some action some tangible action in terms of maybe making some moves on this, which would lower rates. Potentially, not your rate. You know, not not what you technically control, but would lower the wholesale price of power potentially.

Yeah. So

let me talk about that in regards to West Virginia in particular. I I have been doing this a long time,

and I have never had in my career

a a meeting or an announcement like what we had in November in West Virginia. The overall reception was overwhelmingly positive from the governor to legislators to employees to unions, to executive members of the executive branch in in West Virginia. Just overwhelmingly positive. And so I I would just say that in the five states that we are in in terms of addressing resource adequacy, and the generation issues West Virginia is given their integrated nature, is very, very well positioned to address it from an economic standpoint and very welcoming to the investment.

And that is why when we look at how we can help

with

economic development and resource adequacy, West Virginia is the place where first and foremost, we have an opportunity to do that, and that is why we have filed for the first unit that we are talking about putting in there. And that is why we would strongly, consider and look forward to applying for a second unit and maybe a third and maybe a fourth if if, things continue the way they are in West Virginia. Okay. But the other areas?

You it is still up in here?

I I mean, we you know the issues, Paul. I I mean Okay. States are deregulated. They thought the market would provide for it.

The market is not providing for it. It is really it is tough, and that is why we find ourselves in this difficult PJM stakeholder process. But the issues are going to come down to how much do you want, when do you want it, and who is going to pay for it. And and our main interest there is making sure there is enough generation so the lights stay on, and making sure it is a affordable to our customers.

Okay. Great. Thanks so much. Thanks, Paul.

Our next question is from the line of Anthony Christopher Crowdell with Mizuho Securities. Please proceed with your questions.

Hey. Just two quick housecleaning items One is to Shar’s question earlier on the the spread or the difference between

rate base growth and earnings growth, your CAGRs. Just what would cause that to maybe contract or expand as we move out to the forecast period? Or it is very unlikely, whether it is 240 bps or more what would cause that to change throughout the forecast period?

I think the things have that we talked about, and it is, you know, kind of the basic things that you would think of. How much incremental investment can we have and then, how quickly can we get that recovered in rates? And it is just that it is just that simple, Anthony. And so that is why we are showing you what is in the plan.

We are showing you what we think could be incremental, how big it is, when we think we might get approvals for that. And on the recovery side, you are seeing us regularly go in for rate recovery when it is not already in the 75% that is covered in formula rates the way John talked about.

Great. And then just a follow-up to David’s question. I just missed it.

Did you guys state when you plan on filing your next New Jersey case?

We we have not said, and we are we are not being cagey about that. We just have not decided. And, obviously, we will be in discussions with

the governor’s office and the BPU about

when is the right time for us to go in.

Great. That is all I had. Thanks for taking my questions.

Thanks, Anthony.

Thank you. Our last question comes from the line of Andrew Marc Weisel with Scotiabank.

Hey. Good morning, everyone.

Good morning, Anthony. This is Gillette.

Cannot believe it is the last question, but I want to ask about two topics

that received very little airtime today, data centers and Ohio regulations. First on the data centers, I see more additions to the

contracted demand and pipeline disclosure. I appreciate the table with the detailed by

state. I could be wrong. I think that is in the disclosure. Very helpful. My question is relative to the latest updates and and the recent trends, where are you seeing the most activity in which state?

Are the latest additions going to be within this five-year plan, or are those most

going to be more like the early 2030s by the time they ramp up?

Yeah. So we are seeing a lot of activity currently in in our Maryland service territory associated with the data center out outside of, out Frederick and outside of Frederick, Maryland. And then after that, we are seeing significant activity in both Pennsylvania and Ohio.

And you are seeing that

sort of, you know, significant amount of activity between now and, in 2030, 2031. But then a huge amount of activity in terms of load and contracted load by that 2035 time frame, so between 2031 and 2035. So, that is those are the locations. Those are the places where we are seeing most of that data center activity.

Great. Thank you.

In Ohio, obviously, 2025 was a super busy year for you, and the

company got through a lot of important proceedings and dockets. Looking forward, what are the priorities for 2026 in the next few years, whether that is on the regulatory side or execution, And should we expect conference calls to go almost nearly the whole time with barely any talk about Ohio for a while, should it be quiet. In that in that state? You know, the so thank you for that question.

The one thing that we were monitoring in Ohio was the the the commission told us, since I started here, that the business as usual cases gonna go business as usual. And the legacy issues cases would be separate and and not mingled with the business as usual case. Cases. The commission held very much true to that.

And so we were thrilled to be able to get what we think was a constructive order in the base rate case In the punishment phases, there was a significant

penalty that was paid there, and and we are happy to

settle that and get all forms of appeal of that behind us and just move on from that. So what we see is business as usual going forward, in Ohio with the legacy issues behind us. We will be going in in the near term for a three-year rate case to get that moving forward and get us firmly footed in that new regulatory regime that the new legislation has. And, you know, Ohio’s always been

very supportive of

wires’ investment in the state. That drive economic development and improved reliability. And we anticipate that that will continue, going forward. So it was a pivotal year for us, 2025. And, and we will be right back in for the three-year rate case and anticipate constructive dialogue with with the commission and interveners and hope to be able to settle some issues going forward but it it is nice to have, Ohio firmly focused on the future

and and the new regulatory regime and and,

being a constructive standpoint that has been demonstrated with the company. And we hope Torrence and his team will keep that moving forward with the commission staff and all interveners. Thank you for the question, Andrew.

Okay. Good stuff. Thank you for the commentary. Thank you.

Okay. That was the last question. I would like to thank everyone for joining us today. We strengthened FirstEnergy Corp. in 2025 operationally,

financially, and strategically.

We entered 2026 with momentum, a clear business model, and a disciplined plan to work safely, improve reliability, maintain affordability, and deliver sustainable growth. We look forward to updating you on our progress as we go forward throughout the year. Thank you, everyone, and have a good day.

Ladies and gentlemen, thank you for your participation.

This does conclude today’s teleconference. May now disconnect your lines at this time, and have a wonderful day.