FirstEnergy Corp. Q3 FY2025 earnings call

• Capital Investment: Announced a 10% increase to the 2025 capital investment program to $5.5 billion, with year-to-date investment in regulated utilities at $4 billion, a 30% increase from last year. Raised 2025 guidance midpoint to $2.50 to $2.56 per share and narrowed the range.
• Data Centers: Load growth from data centers is transforming the industry, with FirstEnergy's service territory ideally positioned to support demand. Contracted customer demand increased by over 30% since February, and system peak load is expected to increase 15 gigawatts by 2035.
• West Virginia IRP: Submitted an integrated resource plan to keep power affordable, accessible, and reliable, including adding 70 MW of utility scale solar in 2028 and 1.2 GW of dispatchable gas combined cycle generation by 2031, increasing the regulated generation portfolio by 35%.
• Transmission Investments: Transmission investments in the 2026-2030 plan are expected to increase 30% versus the current 5-year plan, with transmission rate base expected to more than double through 2030 at a compound growth rate of up to 18% per year.
• Affordability: Bills average 2.5% of customers' wallet, 19% below in-state peers; generation component driving bill increases in deregulated states, while West Virginia bills remain flat.

In the distribution business, year-to-date earnings improved due to Pennsylvania base rates and lower operating expenses. The Integrated segment's earnings improved $0.05 per share or 7% year-to-date, primarily from formula rate investments in transmission systems and higher demand, offset by higher depreciation. The stand-alone transmission business saw earnings increase approximately 7% from a strong capital investment program, owned rate base growth of 9%, but was partially offset by the impact of new debt at FET Holding Company and the full year dilution impact of the FET minority interest sale. Through the first 9 months of 2025, $4 billion was invested in regulated utilities, a 30% increase from the prior year.

• Raised 2025 guidance midpoint to $2.50 to $2.56 per share and narrowed the range.
• Reaffirmed core earnings compounded annual growth rate of 6% to 8%.
• Increased 2025 capital investment program to $5.5 billion, a 10% increase from prior plans.
• Expect to roll out a higher CapEx plan for the 2026-2030 planning period early next year.

• Regulatory uncertainties: Impact of base rate cases (e.g., Ohio) and PJM open window outcomes on transmission investments.
• Supply chain issues: Potential impact on costs for transmission and generation projects.
• Affordability concerns: Customer bill increases in deregulated states due to generation costs, requiring mitigation efforts.

Q: On the West Virginia generation, can you talk about capital recovery and earnings impact?

A: Build-own-transfer involves filing for CWIP during construction, with earnings component coming after assets are online. For self-build, similar filing for CWIP with earnings during construction.

Q: Thoughts on rate case strategy for 2026 in Maryland, West Virginia, New Jersey?

A: Will look to cadence of prior rate cases, ensuring timely recovery of capital through base rate increases to earn close to allowed returns.

Q: Impact of data center pipeline on transmission CapEx?

A: Estimate $1 billion of CapEx associated with transmission interconnection requests from contracted large load customers, varying by location and size.

Q: Confidence in 30% transmission CapEx increase?

A: 30% increase includes reliability enhancements and regulatory required investments, with a resilient portfolio of projects to fill in as needed.

Q: Generation build in other PJM states?

A: Only West Virginia has a supportive governor, commission, and legislature for long-term generation plans; other states are speculative.

Q: Ohio base rate case?

A: Expect order in fourth quarter, will file multiyear rate plan soon after to recover investments in the state.

Q: Transmission CapEx upside and open window outcomes?

A: Modest amount from pending PJM open window in plan, with a resilient portfolio of projects to adjust as needed.

Q: Consumer energy cost response from policymakers?

A: Policymakers are paying attention, with efforts to mitigate bill increases by addressing PJM capacity auctions and seeking alternative generation mechanisms.

Q: Large load tariffs?

A: Don't see immediate need for large load tariffs as existing tariffs and contract structures can protect existing customers and make data center developers responsible for incremental investments.