FirstEnergy Q2 2025 Earnings Results & Report

FirstEnergy EPS Results

• Actual EPS: $0.52
• Consensus EPS: $0.50
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: $0.56
• EPS Beat Rate: 4 of last 8 quarters

FirstEnergy Revenue Results

• Actual Revenue: $3.40 billion
• Expected Revenue: $3.45 billion
• Beat/Miss: Missed by -$49.11 million
• YoY Revenue Growth: N/A

FirstEnergy (NYSE:FE) Corp. is an electric utility holding company focused primarily on regulated electricity transmission and distribution. Through its operating companies, the company delivers electricity to residential, commercial and industrial customers and maintains the infrastructure needed to support reliable service.

FirstEnergy’s utility subsidiaries include Ohio Edison, The Illuminating Company and Toledo Edison in Ohio; Met-Ed, Penelec, Penn Power and West Penn Power in Pennsylvania; Jersey Central Power & Light in New Jersey; and Mon Power and Potomac Edison in West Virginia and Maryland. The company also operates one of the nation’s larger electric transmission systems through its transmission businesses.

Headquartered in Akron, Ohio, FirstEnergy was formed in 1997 through the merger of Ohio Edison and Centerior Energy. Its operations are concentrated in the Mid-Atlantic and Midwest, serving customers across Ohio, Pennsylvania, New Jersey, West Virginia and Maryland.

FirstEnergy Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Second quarter core earnings of $0.52/share versus $0.51 last year and Q2 GAAP earnings of $0.46/share underscore FirstEnergy’s trajectory toward the upper half of its 2025 guidance range ($2.4–2.6).
• Positive Sentiment: Year-to-date $2.5 billion invested under Energize365, on pace for $5 billion in 2025 capex and a $28 billion 2025–29 plan to enhance system resiliency, reliability and customer service.
• Positive Sentiment: Data center pipeline grew over 80% to 11.1 GW since February, with contracted load up ~25% to 2.7 GW, reflecting robust customer demand and signaling further transmission needs.
• Positive Sentiment: Transmission investments forecast at a 15% CAGR through 2029, with potential up to 20% additional upside from PJM open windows, data center growth and other expansion opportunities.
• Negative Sentiment: The 2026–27 PJM capacity auction cleared at the administrative price cap with no new dispatchable generation, underscoring market shortcomings and spurring state-level advocacy for capacity reforms.

Presentation

[Operator]

Hello, and welcome to the FirstEnergy Corp second quarter 2025 earnings conference call. As 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.

[Karen Sagot, VP of Investor Relations at FirstEnergy Corp]

Thank you. Good morning, everyone, and welcome to FirstEnergy's second quarter 2025 earnings reveal. 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 two and three of the presentation. Our Chair, President, and Chief Executive Officer, Brian Tierney, will lead our call today. He will be joined by Jon Taylor, our Senior Vice President and Chief Financial Officer.

[Karen Sagot, VP of Investor Relations at FirstEnergy Corp]

They will discuss our strong performance on each of our key financial metrics, our progress delivering on our target of 2025 core earnings in the upper half of our guidance range, FirstEnergy's excellent position to enable the economic growth and investment highlighted at the recent Pennsylvania Energy and Innovation Summit, the significant long-term investment opportunities within our well-situated transmission operations, and our progress on strategic, regulatory, and legislative activities. Now it's my pleasure to turn the call over to Brian.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Thank you, Karen. Before we get started, I would like to express my condolences to those who are impacted by the tragic events earlier this week in New York City. On behalf of the FirstEnergy family, please accept our thoughts, prayers, and love as you grieve the loss and celebrate the lives of your loved ones. This morning, I'll provide an update on our second quarter and year-to-date performance and key developments that we believe are transforming FirstEnergy into a premier electric company. GAAP earnings for the second quarter were $0.46 per share, compared to $0.08 in the second quarter of 2024. Core earnings were $0.52 per share for the quarter, compared to $0.51 in the second quarter of last year. We are on track to deliver results in the upper half of our full year 2025 guidance range of $2.40 to $2.60 per share.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Second quarter core earnings benefited from the strong execution of our investment strategy, reflecting new base rates in Pennsylvania that went into effect in January. Quarterly results also reflect increased investments in our transmission system, which benefit from formula-based rates. Our team continues to demonstrate strong financial discipline on operating expenses. Jon will speak more about this in a moment. Through the first six months of 2025, we invested $2.5 billion in our infrastructure through Energize365. We are on pace to deploy $5 billion in capital this year, and we have confidence in our $28 billion capital investment plan through 2029 to improve system resiliency and reliability and to support the level of service customers expect. Providing reliable service is at the heart of our mission. This summer, severe weather strained the system in several of our locations.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

We are committed to resolving these issues quickly and to making the long-term investments to prevent outages before they happen. Our investment plan supports the customers and communities we are privileged to serve and drives long-term value for our shareholders. Turning to slide six. At the recent Energy and Innovation Summit in Pittsburgh hosted by Senator McCormick, I had the opportunity to address a distinguished group of government and business leaders about our significant investments in and commitment to Pennsylvania. A larger, resilient, and reliable electric grid is essential to all of the energy and technology investments announced at the summit. We are proud to be the largest electric utility in the state, which has a constructive regulatory environment to support investment and economic growth.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Between our distribution operations and the Pennsylvania portion of our standalone transmission business, the Commonwealth represents approximately 35% of our total rate base and earnings, and FirstEnergy Pennsylvania is our largest utility subsidiary. Through our 2029 planning period, we expect to invest $15 billion in the Commonwealth, consisting of $4.3 billion in distribution capital investments to deliver safe and reliable power, $5.5 billion in transmission capital investments for a modern energy system that can support the growing demand, and over $5 billion in operating expenses that support good-paying electric industry jobs. Our Pennsylvania capital investment plans are designed to improve reliability and resiliency and drive economic development. These investments are recovered through constructive rate mechanisms such as forward-looking base rates, distribution investment surcharges, and forward-looking transmission formula rates. Governor Shapiro's economic development strategy is fueling innovation and growth in sectors like AI and energy.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

As Pennsylvania's economic development strategy materializes, it will require incremental electric infrastructure investments well beyond our current plan. Slide seven illustrates the remarkable growth we are experiencing in our data center pipeline and contracted data center load. Since February of this year, our long-term pipeline for data center load has increased over 80% to 11.1 GW from 6.1 GW. Our contracted data center load through 2029 has increased approximately 25% since February of this year to 2.7 GW from 2.2 GW. This year, we have received requests for 40 new large load studies, greater than 500 MW each. Since the beginning of 2024, we have received requests for over 95 GW of large load studies. For reference, the FirstEnergy system coincident peak load for this summer was approximately 33,475 MW. Much of the increase in large load studies this year is coming from the states of Pennsylvania and Ohio.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Data center growth, both in our system and from those adjacent to our footprint, is likely to require additional transmission investments. Turning to slide eight, our transmission system represents a significant growth opportunity for FirstEnergy. The combination of our standalone transmission and integrated transmission systems spans six states and about 24,000 line miles. FirstEnergy is one of the largest transmission asset owners in PJM. Organic investments in our transmission system are expected to drive rate-based growth at a 15% compound annual growth rate between now and 2029. During this period, our annual transmission CapEx is expected to grow from $2.4 billion to $3.4 billion. In addition, our transmission system is ideally located geographically in the middle of PJM to garner incremental investment associated with data center load growth, both on our own wires and on systems adjacent to ours.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Over the last three years, FirstEnergy has secured approximately $3.1 billion of investments through competitive open windows through Valley Link and in our standalone transmission and integrated segments. We see the incremental transmission expansion associated with load growth as a recurring opportunity for our company. PJM recently initiated the 2025 open window for reliability investment opportunities that we believe are comparable to those in the 2024 RTEP. Our proposals will seek to build on our record of success in the RTEP process. With the need for a more resilient and reliable electric grid to support economic development and data center growth, we expect transmission investment to increase up to 20% in our next five-year plan. Moving on to slide nine on regulatory and legislative updates. In Ohio, our State President, Torrence Hinton, and his team have done an excellent job moving our base rate case forward.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

We believe a decision from the PUCO is likely by the end of the year. We are also preparing for the upcoming transition to Ohio's new regulatory framework, which includes multi-year rate cases and forward test years. The new framework supports important capital investments to benefit customers and greater transparency and predictability for our business and investors. In West Virginia, we are preparing to file our 10-year integrated resource plan by October 1. In that plan, we will provide an updated load forecast and our recommendations to address generation requirements. We expect the IRP will highlight the need for new dispatchable generation in the state. Last week, PJM announced the results from its capacity auction for the 2026 to 2027 delivery year. Prices cleared at the administratively set cap, which is 22% higher than the 2025 to 2026 delivery year, with no new dispatchable coal, gas, or nuclear generation.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

It is clear that the capacity auction construct does not provide the incentives necessary to finance and build the much-needed dispatchable generation in deregulated states. We will continue to advocate on our customers' behalf for cost-effective solutions that actually add needed generating capacity to meet growing demand and drive economic development in our states. Moving to slide 10, our progress so far this year reflects our work to optimize FirstEnergy for performance, growth, and financial strength. Our leadership team is charged with energizing our culture, delivering improved service to the six million customers who depend on us, and creating significant value for our investors. Greater accountability means faster results. We are seeing this in the financial discipline that is helping us drive more efficiencies in our cost structure and in a workforce that is more agile and responsive to customers' needs. We are on track for a successful year.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

We are reaffirming our 2025 core earnings guidance range of $2.40 to $2.60 per share and are on track to deliver results in the upper half of the range. We are also reiterating our five-year $28 billion base capital investment program with no incremental equity needs in the plan. These customer-focused investments drive our targeted compound annual growth rate of 6% to 8% through 2029. It is our goal to be recognized as a premier electric company that operates at a high level and consistently delivers growth at or above the midpoint of our guidance range. We offer shareholders a compelling value proposition with a strong growth outlook, demonstrated financial discipline, attractive risk profile, and a targeted shareholder return opportunity of 10% to 12% with upside potential. We are committed to operating at a high level, delivering stable growth, and realizing our bright future for our customers, communities, and investors.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

With that, I will turn the call over to Jon.

[Jon Taylor, SVP and CFO at FirstEnergy Corp]

Thanks, Brian, and good morning, everyone. We are very pleased with our progress so far this year. Through the first half, we have delivered on each of our key financial metrics, including core earnings, capital investments, base O&M, which reflects discipline with our operating expenses, and cash from operations, our low-cost funding source for capital allocation. You can view more details about our results, including reconciliations for core earnings and drivers for individual business segments in the strategic and financial highlights document posted to our IR website yesterday afternoon. Looking at our second quarter, core earnings were $0.52 per share versus $0.51 per share in the second quarter of 2024.

[Jon Taylor, SVP and CFO at FirstEnergy Corp]

Our results, which are ahead of plan, reflect the new base rates in Pennsylvania that went into effect at the start of the year, formula rate transmission rate-based growth of 10% when combining our transmission investments at our standalone transmission and integrated businesses, as well as financial discipline with operating expenses in our distribution and integrated segments. Full details for each of our business segments are available in our highlights document. Through the first half of the year, core earnings of $1.19 per share reflect strong growth of 19% versus the first half of 2024, with meaningful increases in our distribution and integrated businesses that reflect execution of our regulated strategies, strong financial discipline, and higher customer demand reflecting more normal weather versus the same period of last year.

[Jon Taylor, SVP and CFO at FirstEnergy Corp]

Our financial performance resulted in a consolidated return on equity of 9.7% on a trailing 12-month basis, which is in line with our targeted ROE of 9.5% to 10% and is a 30 basis point improvement since the end of last year. We are very pleased with our results through the first six months and remain focused on execution to achieve core earnings per share at the upper half of our guidance range. As Brian mentioned, we continue to focus on financial discipline and continuous improvement, including reducing maintenance costs through more strategic capital investments, focusing on efficiency in our maintenance plans, and enhancing customer processes that will drive better service at a reduced cost. Our year-to-date O&M expenses are lower than planned by nearly 4%. We expect to continue this trend through the balance of the year.

[Jon Taylor, SVP and CFO at FirstEnergy Corp]

The team is fully committed to identifying sustainable solutions in our cost structure that offset inflation, as well as building in flexibility to our financial plans as needed. Our $5 billion investment plan for 2025 is on track with capital deployment of more than $1.4 billion in the quarter and slightly more than $2.5 billion through the first half of the year. This is 29% ahead of the first six months of 2024, with more than 2/3 of the increase in transmission investments in our standalone transmission and integrated segments. As Brian mentioned, we continue to see significant needs to invest in our system to improve reliability and resiliency and to support expected increases in customer demand and economic development. Our investment program is funded with internally generated cash flow and utility debt issuances.

[Jon Taylor, SVP and CFO at FirstEnergy Corp]

Through June 30, our cash from operations was $1.7 billion, an increase of 60% as compared to 2024. This reflects recovery of our capital investments and financial discipline, not only with our operating expenses, but also with discipline around working capital, including managing customer collections, vendor payables, and inventory levels. Through the first six months of the year, we completed six subsidiary debt transactions totaling $1.6 billion, with an average coupon of 5%. This includes $1 billion in new money to fund our capital programs. We expect to complete the remaining two transactions in our 2025 financing plan later this year. In addition, in June, FE Corp opportunistically executed a $2.5 billion convertible debt offering in two tranches at a three- and five-year tenor at an average coupon of 3.75% with a 20% conversion premium. This transaction priced 125 basis points lower as compared to the unsecured debt at FE Corp.

[Jon Taylor, SVP and CFO at FirstEnergy Corp]

Proceeds from this transaction will refinance FE Corp's $1.5 billion convertible bonds expiring May 2026, $300 million in short-term borrowings that fully redeemed FE Corp's March 2025 bond maturity, and a $300 million January 2026 bond maturity. The remaining $400 million will be used to support our capital investment programs or for general corporate purposes. This transaction provides a natural hedge to our overall financing plan as it reduces the company's 2026 financing risk by more than 40% and has removed all holding company financing requirements for the next two years. Investor demand for our debt remains strong, highlighting the appeal of our core regulated businesses and a solid balance sheet. In our last three utility bond issuances, we received significant interest, with transactions oversubscribed by an average of over nine times. We remain committed to a strong balance sheet and investment-grade metrics targeting FFO to debt of 14% plus through 2029.

[Jon Taylor, SVP and CFO at FirstEnergy Corp]

Finally, consistent with our commitment and focus on our core regulated businesses, I am pleased to report that we successfully sold our minority ownership position in the Signal Peak coal mine earlier this month for $47.5 million. This is a full exit, and we have no remaining financial or operational liability. Through the first half of the year, we're executing well on our regulated strategies and investment plan, and I am pleased with the financial discipline demonstrated across the organization. Our key metrics for financial performance through the first six months are better than planned and last year, reflecting our commitment to delivering shareholder value. We look forward to continuing this momentum through the balance of the year and as we execute against our long-term plan. We are focused on fulfilling our commitments to all of our stakeholders and delivering on our shareholder value proposition. Thank you for your time.

[Jon Taylor, SVP and CFO at FirstEnergy Corp]

Now let's open the call to Q&A.

[Operator]

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys. Due to the interest of time, we ask that each analyst limit themselves to one question and one follow-up. Thank you. Please hold while we pull for questions. The first question comes from the line of Nicholas Campanella with Barclays. Please proceed.

[Nicholas Campanella, Director at Barclays]

Hey, good morning, everyone. Thanks for all the updates. Good morning, Nick. Morning. I just wanted to kind of clarify on the transmission CapEx upside. Certainly a lot coming here.

[Nicholas Campanella, Director at Barclays]

Just the 20% increase that you have visibility to in the plan. Is that net or gross of the minority interest ownership? Maybe you can just clarify just from an FE shareholder perspective, just how much CapEx has been identified that's kind of upside to your five-year plan today? Is it roughly $2 billion, or is it more than that? I'll leave it there. Thanks.

[Jon Taylor, SVP and CFO at FirstEnergy Corp]

Hey, Nick, this is Jon. To answer your first question, we show our CapEx gross. In the $28 billion, that $14 billion is our consolidated CapEx. That 20% would be on that same basis.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

What was your second question? I didn't catch that.

[Nicholas Campanella, Director at Barclays]

Just if you were to kind of add up all the visibility that you have across the portfolio, across our tech processes and various other things, just on a dollar figure, how much CapEx has now been identified to FE shareholders in this coming five-year plan?

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Yeah. That could be incrementally, it could be $2.3 to almost $4 billion.

[Nicholas Campanella, Director at Barclays]

You've done a good job de-risking the balance sheet with the various asset sales. How are you kind of thinking about balance sheet capacity at this point and when you would have to start to lean on equity?

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

We look at that all the time, Nick. When we think about it, we'd like to keep all the options on the table. We look at investments that would support growth in the balance sheet, and we could include equity and equity-like instruments as we think about it.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

A lot of the increase that we have in the CapEx is associated with formula-looking rates with no regulatory lag. When we look at the overall portfolio, we'll make decisions based on the reality at that time, but not very concerned about it at all.

[Nicholas Campanella, Director at Barclays]

That's great. That's great. Maybe just a lot of focus on Pennsylvania here, especially with the data points this past quarter. What are your views on pursuing a GenCo similar to some of what your peers in PJM announced? How are you kind of viewing the auction clearing at the Cap now in PJM informing legislation in Pennsylvania for rate-based generation? Thanks.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Yeah. Let me start by saying God bless Governor Shapiro for saving the customers in PJM billions of dollars by negotiating the collar that he did.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Again, the $16 billion that customers are going to spend during that capacity delivery year add no new dispatchable generation to the system. You could build an awful lot of 1 GW power plants for $16 billion. We're going to be constructive in terms of how we engage with the states that are fully deregulated. We would be willing to build on a regulated-like basis or a fully contracted basis with creditworthy counterparties. In the meantime, we're going to focus on West Virginia, where we do have the opportunity to invest on an integrated basis. We're anticipating our IRP will call for new dispatchable generation, and we are ready, willing, and able to make those investments for the benefits of our customers in West Virginia and for incremental economic development in that state.

[Operator]

The next question comes from the line of Jeremy Tonet with JPMorgan. Please proceed.

[Jeremy Tonet, Managing Director and Research Analyst at JPMorgan]

Hi, good morning.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Good morning, Jeremy.

[Jeremy Tonet, Managing Director and Research Analyst at JPMorgan]

Just wanted to dig in on the data center pipeline a little bit more, if I could. Just wanted to kind of understand what drives the pace of negotiations there. Are there any blocking items to getting capacity online sooner or anything left to do for the contracts to get more of those gigawatts? Just wondering what drives the pace of conversions. I

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

t's really customer demand, and how quickly people are willing to put their dollars to work is the thing that's allowing us to move as fast as we are. We're seeing there are legitimate large-scale data center developers who have control of land, who have access to equipment, who are willing to sign contracts with us to keep their data centers moving forward.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

We're also seeing a lot of others who are out there running these studies trying to see if they can put something together. We're talking to any and all of them, trying to make as much of that happen in reality as we can as quickly as possible for the demand that we're seeing. It's really customer demand that sets the pace for how quickly we're able to move.

[Jeremy Tonet, Managing Director and Research Analyst at JPMorgan]

Got it. That makes sense there. Maybe pivoting to West Virginia ahead of the integrated resource plan filing, could you speak to the scope for incremental generation needs there and what level of load growth do you see in the state? Just wondering any color you might be able to provide there, particularly as it relates to coal plant retirements and how you think about that at this point.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Yeah.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

We'll be updating those load projections in the integrated resource plan that we're going to file. I don't want to front-run that filing today, but we have about 3,500 MW of generation. 3,000 of it is coal-fired generation in the state of West Virginia. That currently, according to our current forecast, would have those retiring in the 2035 and the 2040 timeframe. We'll update that as we get into the IRP. I could see us incrementally adding over a period of time 1,000 megawatts of dispatchable gas combined cycle over the next 10 years. That would support both giving flexibility to those plans that we have with the coal-fired power plants and attracting new data center load and other load that's looking to relocate in West Virginia. West Virginia has a real competitive advantage given that it's an integrated resource plan state.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

We've talked to the governor about that. We've talked to the chair of the commission about that. We think there would be support for adding generation in the state.

[Jeremy Tonet, Managing Director and Research Analyst at JPMorgan]

Got it. That's helpful. Thank you.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Thank you, Jeremy.

[Operator]

The next question comes from the line of Carly Davenport with Goldman Sachs. Please proceed.

[Carly Davenport, VP at Goldman Sachs]

Hey, good morning. Thanks for taking the questions. Maybe just to start on results, you're tracking ahead of the plan on a number of key items here. Just curious if you can flush out what is driving that upside versus the plan, and then curious if you'd revisit the guidance range as we get through 3Q or shift that target within the range given the strong results thus far.

[Jon Taylor, SVP and CFO at FirstEnergy Corp]

Yeah. Hey, Carly. This is Jon. Most of the favorability to plan year to date is just discipline around operating expenses.

[Jon Taylor, SVP and CFO at FirstEnergy Corp]

As I said in my prepared remarks, our operating expenses are about 4% below plan. We see that continuing for the balance of the year. It's really just around financial discipline and continuing to deploy capital on time and on plan. That's what's really driving that. I think as we get out to the third quarter call, obviously, we'll look at where we are for the year. If it makes sense, we'll adjust the guidance range at that time.

[Carly Davenport, VP at Goldman Sachs]

Great. Thank you for that. I just wanted to follow up on the next question earlier on the transmission upside. Could you just talk a little bit about what's embedded in that 20% opportunity that you've highlighted? Is that just the PJM open window, or are there any other drivers there that we should be thinking about?

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

It's both the open windows that we have, and then it's incremental to actually add the data centers that are on our system are a component of that. There's some additional incremental that we found that's not related to either one of those going forward. It's all three of those parts that add up to the upside that we're seeing.

[Carly Davenport, VP at Goldman Sachs]

Great. Thank you so much for the time.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Thanks, Carly.

[Operator]

The next question comes from the line of David Arcaro with Morgan Stanley. Please proceed.

[David Arcaro, Executive Director at Morgan Stanley]

Oh, hey. Thanks so much. Good morning.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Good morning, David.

[David Arcaro, Executive Director at Morgan Stanley]

Just on that same transmission CapEx topic, signaling the up to 20% increase. We're only halfway through the year, and it seems like the data center load conversations are progressing fairly rapidly anyway. I'm just wondering, could there be further opportunities for upside as you get closer to your roll-forward period?

[David Arcaro, Executive Director at Morgan Stanley]

Could that CapEx outlook rise further in the coming months, essentially?

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Yeah, I think so, David. We're not. Putting in our plan, things that we don't feel fairly certain about. For it to be in the plan, it has to be contracted with the customer, or we have to have had the award or feel fairly certain of the award from a competitive process, or we have to have line of sight that the investment is. Period that we're talking about. Against that backdrop, I think there will be additional customers who will come forward and sign contracts with us. I do think there will be awards coming out of the current open window. I think there will be additional open windows that happen.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

I see upside to the plan, but we're not going to be frivolous in putting upside that we don't see line of sight to in our plan. I do think there will be upside as we go forward in time.

[David Arcaro, Executive Director at Morgan Stanley]

Great, yeah, it makes sense. Thanks. As we think about just how PJM states are going to be procuring new capacity, I was just wondering if there's been any progression with the discussions around what the framework might be, whether it's contracted generation, regulated generation, and any sense of when we might get clarity as to the direction certain states are going.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Not a ton of clarity on that, David, in deregulated states. I am encouraged by the PJM state-led technical conference that's going to happen on September 23, where all five of our states' governors are going to be participating in that.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

I think the capacity auction situation is one that can only be solved by the states themselves. Clearly, the capacity auction construct can't solve it and hasn't solved it. The states can solve it, whether they decide to do so individually or through something like the outcome of the September 23 technical conference. I'm not sure, but I'm very pleased to see the governors engaged, taking a leadership role in this, and I think that's how we're going to get to the right solution here.

[David Arcaro, Executive Director at Morgan Stanley]

Okay. Understood. Thank you.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Thank you.

[Operator]

The next question comes from the line of Ross Fowler with Bank of America. Please proceed.

[Ross Fowler, Managing Director at Bank of America]

Morning, Brian.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Morning, John. How are you?

Morning, morning.

[Ross Fowler, Managing Director at Bank of America]

A lot of my questions have been asked, but maybe we could just cycle back to or circle back to Ohio regulation for a minute.

[Ross Fowler, Managing Director at Bank of America]

You're in this process with the PUCO for a forward test year. We're thinking about affordability pressures with PJM also coming through the system. As you move from the ESP and as you go into the forward test year, maybe one piece is what intervenors seem most concerned about through that process. How would that shift your ability to have an opportunity to earn your allowed ROE and think about regulatory lag?

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

We're in the midst of our current base rate case, which we've had the testimony briefs have been filed, reply briefs, and we're waiting for an answer in the current rate case. All the things that you would anticipate being covered by intervenors are being covered there: cap structure, ROE, the rates themselves, like all of the normal things are being considered in our base rate case.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

I anticipate, Ross, that's going to be the case in these forward-looking test years that we have. When we go in for the next rate case under the new regime, whenever that is, we're going to have a fairly limited period that needs to be reviewed historically. Since we have true-ups on the forward-looking portion of the test year, I don't anticipate those being particularly contentious. I think we'll be able to move through the next rate case relatively easily in a fairly short period of time without many issues that haven't recently been discussed being raised. I think the new regime will be constructive and look forward to transitioning to that as quickly as possible.

[Ross Fowler, Managing Director at Bank of America]

One follow-up to that, just in Ohio, we still have sort of the remaining or the last, hopefully, remaining HB 6-related processes.

[Ross Fowler, Managing Director at Bank of America]

How do you see those progressing from here, and when can we finally think about wrapping and closing that so I don't have to ask the question anymore?

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Yeah. Similar answer. We've been through most of the rate case in that there have been no new issues raised during that period. We anticipate getting an outcome later this year and finally be able to put that chapter behind us. Nothing new was raised in the hearings that wasn't disclosed or accounted for previously. We look forward to getting through that proceeding and putting a final period on that by the end of this year as well.

[Ross Fowler, Managing Director at Bank of America]

Okay. Perfect. Thank you, guys.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Thanks, Ross.

[Operator]

The next question comes from the line of Michael Sullivan with LOCA Research. Please proceed.

[Michael Sullivan, Director at Wolfe Research]

Hey, good morning. Good morning. Hey, Brian. Had another one on the West Virginia generation plans.

[Michael Sullivan, Director at Wolfe Research]

Are you mainly looking at building new dispatchable generation yourself, or would you consider buying something that someone else may be developing? I think one of your peers is doing that.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

We're going to look at everything, of course. I think what's needed in PJM is new dispatchable generation. My hope is that we'll be able to make investments in that in the state of West Virginia. Of course, we're going to look at everything and select the outcome that makes the most sense for West Virginia for the long term.

[Michael Sullivan, Director at Wolfe Research]

Okay. As a follow-up, I think you mentioned regulated generation, but also considering contracted, maybe unregulated generation. Is that an evolution in your thought process? Would that be something similar to what PPL, Blackstone announced a couple of weeks ago? Would you be looking for a partner similar to that to work on that? Yeah.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

If the risk profile were to look like regulated, I'd be comfortable with it. Meaning, I wouldn't want us to be taking a position in the capacity or energy markets for the benefit of a customer. I wouldn't want us to be long generation that we're looking for a home for. If we were able to make an investment in generation that had a regulated-type risk profile, that's something we consider. I wouldn't say that's an evolution for us. We talked about that type of situation in our deregulated states as being something that we could consider if it could help solve the problem. We're certainly not looking to be a merchant generator with new generation to sell into today's marketplace.

[Michael Sullivan, Director at Wolfe Research]

Okay. Great. Thank you.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Thank you.

[Operator]

The next question comes from the line of Andrew Weisel with Scotiabank. Please proceed.

[Andrew Weisel, Director at Scotiabank]

Hi. Thank you. First question on data centers.

[Andrew Weisel, Director at Scotiabank]

A lot of new disclosures. Appreciate all the details. On slide seven, can you tell us what's the current level of data center demand you're seeing today? It looks like a pretty substantial step up in the blue bar from 2025 to 2026. Is that a specific customer ramping up? Can you give us a little more detail either on who the customer is or where in terms of which service territory?

[Jon Taylor, SVP and CFO at FirstEnergy Corp]

Yeah. So, Andrew, this is Jon. Active customers today are probably 400 MW, but then you see the pipeline continue to increase. Most of this is happening in Ohio, Maryland, and West Virginia. We are starting to see a lot more interest in Pennsylvania. In fact, if you look at our large load studies that are greater than 500 MW.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

I would say that probably a third of what we're seeing just this year alone is in Pennsylvania, which is consistent with what some of the announcements have been over the course of the last few months.

[Andrew Weisel, Director at Scotiabank]

Okay. Great. When would the next CapEx refresh be coming? I think you're alluding to it. Would that be something we'd be seeing with the third quarter in EEI or more like a year-end update in February?

[Jon Taylor, SVP and CFO at FirstEnergy Corp]

I think we want to get clarity on some of the transmission CapEx with respect to this open window. We'll likely provide the longer-term CapEx plan on the fourth quarter call.

[Andrew Weisel, Director at Scotiabank]

Okay. Thank you very much.

[Jon Taylor, SVP and CFO at FirstEnergy Corp]

Thank you, Andrew.

[Operator]

The next question comes from the line of Sophia Karp with KeyBank Capital Markets. Please proceed.

[Sophia Karp, Senior Equity Analyst at KeyBank Capital Markets]

Hi. Good morning. Thank you for taking my question. I have a follow-up on Ohio.

[Sophia Karp, Senior Equity Analyst at KeyBank Capital Markets]

Could you talk a little bit about what your strategy is going to be in Ohio, regulatory strategy, following the conclusion of the current rate case? Kind of like when do you plan to file under the new framework? Will that depend on certain outcomes in the existing rate case, and etc.?

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Yeah. It will depend on outcomes in the existing rate case. If we are allowed to recover on investments that we've made since May of last year when we filed the rate case, that might allow us to push the rate case out a little bit. If we're not allowed to recover on investments we've made since May of 2024, we'll be right back in for a multi-year rate case as soon as practicable after we get the outcome of that rate case. It really depends on the outcome of the current case.

[Sophia Karp, Senior Equity Analyst at KeyBank Capital Markets]

This item is still outstanding, so you won't have clarity until you actually have the final decision on it?

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Yeah. I think we'll look to have a final decision on the existing base rate case before we file the new rate case, if that's what you're asking. I anticipate that we'll get an outcome sometime in the fourth quarter based on where we are today with reply briefs filed early in July. My sense is we'll have an outcome in the fourth quarter, and then we'll take some time to understand that, and then we'll make some decisions as to what the next steps are.

[Sophia Karp, Senior Equity Analyst at KeyBank Capital Markets]

Got it. Thank you very much. It's so funny.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Thank you.

[Operator]

The next question comes from the line of Anthony Crowdell with Mizuho Securities. Please proceed.

[Anthony Crowdell, Managing Director at Mizuho Securities]

Hey, good morning, Brian. Good morning, Jon. Morning. Morning, Anthony.

[Anthony Crowdell, Managing Director at Mizuho Securities]

Hey, I want to follow up on one of David Arcaro's questions. Brian, I think you're very clear and you had said, and I hope I heard it correctly, that you think the solution for the PJM capacity issues or the higher prices are likely to be solved at the state level. If that's correct and my understanding is correct, which state that's in the FE footprint do you think is maybe in the lead or going to be one of the first to solve that problem?

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

I don't want to pick one, Anthony. I'd say that Pennsylvania has been very active in demonstrating leadership on that. Ohio clearly just doubled down on the markets solving that problem for them. I think they're going to rely on the PJM capacity construct. I think the other states are somewhere in between what I'd call those extremes.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

West Virginia has an integrated resource plan, and I think Maryland and New Jersey are very concerned about the issue, and their governors are engaged. We're encouraging that engagement. We're participating in that engagement and encouraging states to take the leadership role that we think is the only solution to this issue.

[Anthony Crowdell, Managing Director at Mizuho Securities]

I'm just throwing out, do you think the states or the PJM looks to change maybe compensation different for new generation versus existing generation? Because you highlighted in your open remarks that I think it was $19 billion for no new megawatts or no new dispatchable megawatts.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Yeah. What we're seeing on the current construct is a massive wealth transfer from customers and PJM, retail customers and PJM, to large independent power producers mostly located in Houston, Texas. I don't think that's a good public policy answer. God bless those companies for their recent windfalls.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

That's great for them. It's not solving the problem that we need solved in PJM, and that is new dispatchable generation. If the states finally decide that they've had enough of their customers paying for something that they're not getting, I think we'll get the solutions that help address the problem.

[Anthony Crowdell, Managing Director at Mizuho Securities]

Got it. Then just lastly, you guys talk about the potential, I think, of I think it's $14 billion of more transmission spending, just a significant raise in CapEx. Yesterday, we had other utilities announcing, again, significant raises, I think. Another company today, along with you guys, big raise. I mean, when you see all these numbers, do you worry that maybe you don't have the equipment to deliver that? Do you quickly call your supply team to make sure we have it?

[Anthony Crowdell, Managing Director at Mizuho Securities]

Are there any concerns when you're seeing the whole industry really raise CapEx to a level we haven't seen? Could you procure the equipment, or could you build that much in this short of a time?

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Thank you for the question, Anthony. We're confident that we have the relationships with vendors and suppliers and that they're included in our short, medium, and long-term planning that we will be able to deliver against our commitments.

[Anthony Crowdell, Managing Director at Mizuho Securities]

Great. Thanks for taking my question, guys. Congrats on the quarter.

[Brian Tierney, Chair, President and CEO at FirstEnergy Corp]

Thank you, Anthony.

[Operator]

Thank you. Ladies and gentlemen, this concludes the question and answer session, and this will conclude today's conference as well. You may disconnect your lines at this time, and thank you for your participation.

Participants

Executives

• Karen Sagot, VP of Investor Relations
• Brian Tierney, Chair, President and CEO
• Jon Taylor, SVP and CFO

Analysts

• Nicholas Campanella, Director at Barclays
• Jeremy Tonet, Managing Director and Research Analyst at JPMorgan
• Carly Davenport, VP at Goldman Sachs
• David Arcaro, Executive Director at Morgan Stanley
• Ross Fowler, Managing Director at Bank of America
• Michael Sullivan, Director at Wolfe Research
• Andrew Weisel, Director at Scotiabank
• Sophia Karp, Senior Equity Analyst at KeyBank Capital Markets
• Anthony Crowdell, Managing Director at Mizuho Securities