Q4 2023 FirstEnergy Corp Earnings Call

Question and answer session will follow the formal presentation, if anyone should require operator assistance during the conference.

Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Irene, Brazil, Vice President Investor Relations and communications for first Energy Corp.

Thank you good morning, everyone and welcome to the Firstenergy as fourth quarter 2023 earnings review, our President and Chief Executive Officer, Brian Tierney will lead our call today and he will be joined by John Haley, Our senior Vice President and Chief Financial Officer, our earnings release.

Presentation slides and related financial information are available on our website at Firstenergy Corp, Dotcom and we plan to file our Form 10-K next week. Today's discussion will include the use of non-GAAP financial measures and forward looking statements.

Greetings and welcome to the Firstenergy Corp, fourth quarter 'twenty to 'twenty three earnings conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.

Factors that could cause our results to differ materially from these statements can be found in our SEC filings via.

Speaker Change: If anyone should require operator assistance during the conference.

Speaker Change: Please press star zero on your telephone keypad.

The appendix of today's presentation includes supplemental information along with the reconciliation of non-GAAP financial measures now, it's my pleasure to turn the call over to Brian.

Speaker Change: As a reminder, this conference is being recorded.

Speaker Change: It is now my pleasure to introduce your host Irene <unk>, Vice President Investor Relations and communications for first Energy Corp.

Thank you Irene.

Morning, everyone. Thank you for joining us today and for your interest in Firstenergy.

Irene: Thank you good morning, everyone and welcome to the Firstenergy fourth quarter 2023 earnings review, our President and Chief Executive Officer, Brian Tierney will lead our call today and he will be joined by John Haley, Our senior Vice President and Chief Financial Officer, our earnings release.

It's hard for me to believe that I've been with the company for eight months already.

It's flown by as I've gotten to know the fantastic employees of this company, who are dedicated to serving our customers every day.

Some of you have heard me say previously that I consider myself to be a good Taylor of great stories.

Employees have given me a great story to tell for 2023 and I'll do my best to tell it well.

Irene: Presentation slides and related financial information are available on our website at Firstenergy Corp, Dotcom and we plan to file our Form 10-K next week. Today's discussion will include the use of non-GAAP financial measures and forward looking statements.

This morning, I'll provide an overview of our financial performance for the fourth quarter and full year of 2023 I'll.

Ill discuss some regulatory milestones that we recently achieved.

Irene: Factors that could cause our results to differ materially from these statements can be found in our SEC filings.

We are also unveiling today, an exciting capital investment program focused almost entirely on our wires business.

Irene: The appendix of today's presentation includes supplemental information along with the reconciliation of non-GAAP financial measures now, it's my pleasure to turn the call over to Brian.

Over the next five years, we plan to invest $26 billion and our regulated system to improve reliability and the customer experience.

Brian X. Tierney: Thank you Irene.

This represents an increase of more than 44% compared to our last five year plan.

Brian X. Tierney: Morning, everyone. Thank you for joining us today and for your interest in Firstenergy.

Brian X. Tierney: It's hard for me to believe that I've been with the company for eight months already.

We will maintain our vigilance on affordability as our current rates are below our instate peers, John will provide more detail on this later.

Brian X. Tierney: It's flown by as I've gotten to know the fantastic employees of this company, who are dedicated to serving our customers every day.

For the fourth quarter of 2023, Firstenergy delivered GAAP earnings from continuing operations of <unk> 30 per share compared to a loss of <unk> 71 per share in the fourth quarter of 2022.

Brian X. Tierney: Some of you have heard me say previously that I consider myself to be a good teller of great stories.

Brian X. Tierney: Employees have given me a great story to tell for 2023 and I'll do my best to tell it well.

Operating earnings for the quarter was <unk> 62 per share, which was above the midpoint of our quarterly guidance range and compared to <unk> 50 per share in the fourth quarter of 2022.

Brian X. Tierney: This morning, I will provide an overview of our financial performance for the fourth quarter and full year of 2023.

Brian X. Tierney: I will discuss some regulatory milestones that we recently achieved.

For the year 2023, the company delivered GAAP earnings from continuing operations of $1 96 per share and operating earnings of $2 56 per share <unk> <unk> above the midpoint of our guidance range.

Brian X. Tierney: We are also unveiling today, an exciting capital investment program focused almost entirely on our wires business.

Brian X. Tierney: Over the next five years, we plan to invest $26 billion and our regulated system.

Brian X. Tierney: Prove reliability and the customer experience.

Employees worked diligently throughout the year to overcome significant headwinds the impact of market conditions on our pension plan, creating an earnings drag of <unk> 30 per share an unusually mild weather impacted earnings by <unk> 28 per share.

Brian X. Tierney: This represents an increase of more than 44% compared to our last five year plan.

Brian X. Tierney: We will maintain our vigilance on affordability as our current rates are below our instate peers, John will provide more detail on this later.

Brian X. Tierney: For the fourth quarter of 2023, Firstenergy delivered GAAP earnings from continuing operations of <unk> 30 per share compared to a loss of 71 per share in the fourth quarter of 2022.

Through our continuous improvement program employees were able to drive base O&M down over $200 million or 14% versus 2022.

Half of those savings are sustainable and this tremendous effort buoyed our full year results by 32 per share, allowing us to meet our operating earnings targets.

Brian X. Tierney: Operating earnings for the quarter was <unk> 62 per share, which was above the midpoint of our quarterly guidance range and compared to <unk> 50 per share in the fourth quarter of 2022.

In 2023, the company put three $7 billion of Capex to work to improve reliability and the customer experience.

Brian X. Tierney: For the year 2023, the company delivered GAAP earnings from continuing operations of $1 96 per share and operating earnings of $2 56 per share <unk> <unk> above the midpoint of our guidance range.

16% more than was invested in 2022, 9% more than budget.

93% of the 2020 through Capex was invested directly into our wires businesses.

Employees worked diligently throughout the year to overcome significant headwinds the impact of market conditions on our pension plan, creating an earnings drag of <unk> 30 per share an unusually mild weather impacted earnings by <unk> 28 per share.

Our projects in construction organizations, we're able to take advantage of the improving supply chain environment and the mild weather to put incremental dollars to work.

Brian X. Tierney: Through our continuous improvement program employees were able to drive base O&M down over $200 million or 14% versus 2022.

2023, with a game changing year for the company in terms of strengthening its balance sheet to enable future investment and growth and are mostly wires regulated business.

Brian X. Tierney: Half of those savings are sustainable and this tremendous effort buoyed our full year results by <unk> 32 per share, allowing us to meet our operating earnings targets.

In February 2023, the company announced the second transaction with Brookfield to sell 30% of SVT for $3 $5 billion.

With the successful completion of our Pennsylvania consolidation and the anticipated order approving the filed settlement of the transaction. We are on track to close on this asset sale by the end of March.

Brian X. Tierney: In 2023, the company put three $7 billion of Capex to work to improve reliability and the customer experience.

Brian X. Tierney: 16% more than was invested in 2022, 9% more than budget.

At that time, we will receive the majority of the proceeds in cash with the balance to be paid before the end of the year.

Brian X. Tierney: 93% of the 2020 through Capex was invested directly into our wires businesses.

In May we successfully executed a $1 5 billion convertible debt issuance at a 4% coupon we.

Brian X. Tierney: Our projects in construction organizations, we're able to take advantage of the improving supply chain environment and the mild weather to put incremental dollars to work.

We use these proceeds to pay down debt and make a $750 million contribution to our pension assets.

Brian X. Tierney: Yeah.

Brian X. Tierney: 2023, with a game changing year for the company in terms of strengthening its balance sheet to enable future investments and growth and are mostly wires regulated business.

In late December we executed a $700 million pension lift out representing over 8% of our total pension liability and reducing volatility in our pension plan by 10%.

In February of 2023, the company announced a second transaction with Brookfield to sell 30% of SVT for $3 $5 billion.

Our improved financial condition gave the board the confidence to raise the targeted dividend payout ratio to 60% to 70% of operating earnings in.

Brian X. Tierney: With the successful completion of our Pennsylvania consolidation daily anticipated order approving the filed settlement of the transaction. We are on track to close on this asset sale by the end of March.

In September the board had the confidence to raise the quarterly dividend for the first time in more than three years.

Of course subject to board approval. Our 2024 plan includes dividend declarations of $1 70 per share versus $1 60 per share in 2023.

Brian X. Tierney: At that time, we will receive the majority of the proceeds in cash with the balance to be paid before the end of the year.

Brian X. Tierney: In May we successfully executed a $1 5 billion convertible debt issuance at a 4% coupon.

This represents a 625% increase.

Going forward, we anticipate growing our dividend with operating earnings growth.

Brian X. Tierney: We use these proceeds to pay down debt and make a $751 million contribution to our pension assets.

The significant improvement in our balance sheet puts firstenergy and a growth and investment mode. The fact that we do not expect incremental equity to fund our capex growth beyond our employee benefit programs differentiates firstenergy for many of our peers.

Brian X. Tierney: In late December we executed a $700 million pension lift out representing over 8% of our total pension liability and reducing volatility in our pension plan by 10%.

Brian X. Tierney: Our improved financial condition gave the board the confidence to raise the targeted dividend payout ratio to 60% to 70% of operating earnings.

We are introducing a 26 billion five year capital investment program to improve reliability and our customers experience.

Brian X. Tierney: In September the board had the confidence to raise the quarterly dividend for the first time in more than three years.

We are branding this program energized $3 65, and John will provide more details in his remarks.

Brian X. Tierney: Of course subject to board approval. Our 2024 plan includes dividend declarations of $1 70 per share versus $1 60 per share in 2023.

These investments should enable 9% average annual growth in rate base over the period.

We are guiding to $4 $3 billion of investment in 2024, an increase of 15% over 2023.

Brian X. Tierney: This represents a 625% increase.

Brian X. Tierney: Going forward, we anticipate growing our dividend with operating earnings growth.

Energized $3 65 represents a significant increase in our investments and rate base with improved earnings quality.

Brian X. Tierney: The significant improvement in our balance sheet puts firstenergy and a growth and investment mode. The fact that we do not expect incremental equity to fund our capex growth beyond our employee benefit programs differentiates firstenergy for many of our peers.

We expect to maintain a strong customer affordability position versus our instate peers.

We are reaffirming our 6% to 8% long term annual operating earnings growth rate.

Firstenergy plans to execute on our long term growth rate year by year.

Brian X. Tierney: We are introducing a $26 billion five year capital investment program to improve reliability and our customers experience.

This is why we are announcing a 2024 operating earnings guidance range of $2 61 per share to $2 81 per share.

Brian X. Tierney: We are branding this program energized $3 65, and John will provide more details in his remarks.

The midpoint is 7% above 2020, Three's operating earnings guidance midpoint.

Brian X. Tierney: These are investments shouldnt be one 9% average annual growth in rate base over the period.

Turning to slide six let's take a look at our regulatory calendar.

Brian X. Tierney: We are guiding to $4 $3 billion of investment in 2024, an increase of 15% over 2023.

One of the questions investors have asked is how would we know with firstenergy can obtain fair and reasonable regulatory outcomes the answer.

John Kiani: Energized $3 65 represents a significant increase in our investments in rate base with improved earnings quality.

We have given is to look for milestones and our near term results.

In 2023 in early 2024, we have achieved several milestones demonstrating constructive regulatory outcomes.

John Kiani: We expect to maintain a strong customer affordability position versus our instate peers.

John Kiani: We are reaffirming our 6% to 8% long term annual operating earnings growth rate.

We highlight a few.

As we mentioned in our last call we received a reasonable outcome in our Maryland distribution rate case.

John Kiani: First energy plans to execute on our long term growth rate year by year.

The commission there approved a $29 million revenue increase that supports equity returns of nine 5% and an equity ratio of 53%.

John Kiani: This is why we are announcing a 2024 operating earnings guidance range of $2 61 per share to $2 81 per share.

We are pleased to serve and invest in Maryland to provide reliable.

The midpoint is 7% above 2020, Three's operating earnings guidance midpoint.

And affordable electricity to our customers.

In West, Virginia, We filed a settlement in our case.

John Kiani: Turning to slide six let's take a look at our regulatory calendar.

Case with staff have brought intervenor support for recovery of $255 million over three years with a carrying cost after year one.

John Kiani: One of the questions investors have asked is how would we know with firstenergy can obtain fair and reasonable regulatory outcomes the answer.

<unk> has no disallowances.

John Kiani: We have given is to look for milestones and our near term results.

In January of this year, we filed a settlement in our base rate case with staff and brought in a leader support.

John Kiani: In 2023 in early 2024, we have achieved several milestones demonstrating constructive regulatory outcomes.

$105 million rate adjustment based on a nine 8% allowed Roe.

John Kiani: We highlight a few.

And a 49, 6% equity ratio.

John Kiani: As we mentioned in our last call we received a reasonable outcome in our Maryland distribution rate case.

The settlement reflects the $700 million increase in rate base since our last.

John Kiani: The commission there approved at $29 million revenue increase that supports equity returns of nine 5% and an equity ratio of 53%.

Base rate case in 2014.

Of course, we did not get everything we ask for but the settlement is fair and constructive and it demonstrates west Virginia is an attractive place to invest for our customers.

John Kiani: We are pleased to serve and invest in Maryland to provide reliable.

John Kiani: And affordable electricity to our customers.

In New Jersey, JC P&L filed a base rate case settlement last Friday with staffing broad intervenor support that reflects an $85 million rate adjustment based on an ROE of nine 6% and 52% equity ratio.

John Kiani: In West, Virginia, We filed a settlement in our <unk> case with staff abroad, intervenor support for recovery of $255 million over three years with a carrying cost after year one.

The settlement has no disallowances and.

The settlement reflects the $400 million increase in rate base since our last base rate case in 2021.

In January of this year, we filed a settlement in our base rate case with staff and brought in a leader support for $105 million rate adjustment based on a nine 8% allowed Roe.

The settlement will have a modest three 4% increase in the average residential bill and JC P&L rates will be 26% below our instate peers.

John Kiani: And a $49.

John Kiani: 6% equity ratio.

John Kiani: This settlement reflects the $700 million increase in rate base since our last.

If approved the settlement would be a fair and reasonable outcome that will incentivize JC P&L to make investments to improve customer reliability.

John Kiani: Base rate case in 2014.

John Kiani: Of course, we did not get everything we ask for but the settlement is fair and constructive and it demonstrates west Virginia is an attractive place to invest for our customers.

Yeah.

In Pennsylvania, we received an order in December approving the consolidation of our Pennsylvania operating companies and approving the transfer of West Penn power transmission assets to capture.

John Kiani: In New Jersey, JC P&L filed a base rate case settlement last Friday with stack with broad intervenor support that reflects some $85 million rate adjustment based on an ROE of nine 6%.

Both transactions were executed on January 1st of this year.

Our waiting commission approval of the filed settlement for the minority interest sale, which as anticipated soon we anticipate filing a base rate case in Pennsylvania by April.

John Kiani: 52% equity ratio.

John Kiani: The settlement reflects a $400 million increase in rate base since our last base rate case in 2021.

For investors looking for milestones of Firstenergy is ability to receive reasonable and constructive regulatory outcomes. These recent examples provide convincing evidence.

John Kiani: The settlement will have a modest three 4% increase in the average residential bill and JC P&L rates will be 26% below our instate peers.

In Ohio, we are actively working our way through our ESP filing grid Mod. Two cases, we are fully engaged in the regulatory process with staff and intervenors and expect constructive outcomes in both cases, we plan to file a base rate case in may.

John Kiani: If approved the settlement would be a fair and reasonable outcome that will incentivize JC P&L to make investments to improve customer reliability.

John Kiani: Yeah.

John Kiani: In Pennsylvania, we received an order in December approving the consolidation of our Pennsylvania operating companies and approving the transfer of West Penn power transmission assets to capture.

Turning to slide seven I want to briefly review of the new segment reporting that Firstenergy will adopt in 2024 to reflect how we are managing the company.

John Kiani: Both transactions were executed on January 1st of this year. We are awaiting commission approval of the filed settlement so that minority interest.

Individual companies will not be split among the segments, leading to simplicity and transparency and reporting as well as accountability and management.

John Kiani: Interest sale, which as anticipated soon we anticipate filing a base rate case in Pennsylvania by April.

Our distribution segment, Weyerhaeuser, Ohio, and Pennsylvania.

John Kiani: For investors looking for milestones of Firstenergy is ability to receive reasonable and constructive regulatory outcomes. These recent examples provide convincing evidence.

Or play distribution only companies are.

Our Pennsylvania consolidation and the transfer of the West Penn power transmission assets to Cat <unk>.

This segment transparent and clean.

John Kiani: In Ohio, we are actively working our way through our ESP filing grid Mod. Two cases, we are fully engaged in the regulatory process with staff and intervenors and expect constructive outcomes in both cases, we plan to file a base rate case in may.

This segment will represent about $10 $9 billion in rate base served $4 2 million customers and account for about 45% of forecasted 2020 for operating earnings.

Senior executive when we each of FTE, Pennsylvania and Ohio.

John Kiani: Turning to slide seven I want to briefly review of the new segment reporting that Firstenergy will adopt in 2024 to reflect how we are managing the company.

Our integrated business segment will report on <unk>, Potomac Edison and Mon power are companies with combinations of distribution transmission and generation.

John Kiani: Individual companies will not be split amongst the segments, leading to simplicity and transparency and reporting as well as accountability and management.

This segment will represent about $8 $7 billion in rate base serve 2 million customers and account for about 35% of forecasted 2020 for operating earnings.

John Kiani: Our distribution segment, Weyerhaeuser, Ohio, and Pennsylvania.

John Kiani: Short play distribution only companies are.

Our senior executive will lead JC, P&L and another would lead Mon power and Potomac Edison.

John Kiani: Our Pennsylvania consolidation and the transfer of the West Penn power transmission assets to Cat co.

Our last major business segment will be Standalone transmission and it will house, our pure play transmission only companies consistent of our ownership interest in <unk>.

John Kiani: This segment transparent and clean.

John Kiani: This segment will represent about 10 $9 billion in rate base served $4 2 million customers and account for about 45% of forecasted 2024 operating earnings are.

As well as cat cover.

This segment will represent about seven 7 billion and consolidated rate base.

John Kiani: Senior executive will lead each of FTE, Pennsylvania and Ohio.

Count for about 20% of forecasted 2020 for operating earnings.

John Kiani: Our integrated business segment will report on <unk>, Potomac Edison and Mon power are companies with combinations of distribution transmission and generation.

<unk> executives, who will be responsible for these businesses.

Finally, corporate and other segment will be similar to the current segment with that name.

It will report holding company interest legacy investments, former subsidiaries and pension and OPEC.

John Kiani: This segment will represent about $8 $7 billion in rate base served 2 million customers and account for about 35% of forecasted 2020 for operating earnings.

A recast of 2023 into the new segments is available in our fact book and we will provide quarterly and year to date reconciliations throughout 2024.

John Kiani: Senior executive would lead JC, P&L and another would be Mon power and Potomac Edison.

So let me provide some key updates on slide eight.

John Kiani: Our last major business segment will be Standalone transmission and it will house, our pure play transmission only companies consistent of our ownership interest in <unk> as well as <unk>.

In regard to the Ohio organized crime Investigations Commission Theres nothing new to report we continue to cooperate with the commission and answer any questions. They ask that.

FERC prosecution agreement with the Doj details Firstenergy his involvement and Theres nothing new with respect to the company.

This segment will represent about seven 7 billion and consolidated rate base account for about 20% of forecasted 2024 operating earnings one executives will be responsible for these businesses.

Okay.

And the updated climate strategy published to our corporate responsibility website yesterday, we are providing an update to our greenhouse gas emissions goals.

John Kiani: Finally, corporate and other segment will be similar to the current segment with that name.

In 2020, we set a goal of achieving net carbon neutrality by 2050 with an interim goal of reducing our scope on greenhouse gas emissions by 30% by 2030.

John Kiani: It will report holding company interest legacy investments, former subsidiaries and pension and OPEC.

John Kiani: A recast of 2023 into the new segments is available in our fact book and we will.

Achieving the 2030 interim goal was predicated on meaningful emissions reductions at our Fort Martin Harrison power plants in West, Virginia, which account for approximately 99% of our greenhouse gas emissions.

John Kiani: We'll provide quarterly and year to date reconciliations throughout 2024.

John Kiani: Let me provide some key updates on slide eight.

John Kiani: In regard to the Ohio organized crime Investigations Commission Theres nothing new to report we continue to cooperate with the commission and answer any questions. They ask.

We've identified several challenges to our ability to meet that interim goal, including resource adequacy concerns in the PJM region and state energy policy initiatives.

John Kiani: FERC prosecution agreement with the Doj details Firstenergy his involvement and Theres nothing new with respect to the company.

Given these challenges we have decided to remove our 2030 interim goal.

John Kiani: Yeah.

Through regulatory filings in West, Virginia, We had forecast at the end of the useful life of Port Martin in 2035 and for Harrison in 2040.

John Kiani: Okay.

John Kiani: And the updated climate strategy published to our corporate responsibility website yesterday, we are providing an update to our greenhouse gas emissions goals.

We remain focused on achieving our aspirational goal of net carbon neutrality by 2050.

John Kiani: In 2020, we set a goal of achieving net carbon neutrality by 2050 with an interim goal of reducing our scope, one and greenhouse gas emissions by 30% by 2030.

In the fourth quarter of last year, we made two key additions to our leadership team.

In November we announced our hiring of Toby Thomas as Chief operating Officer.

John Kiani: Achieving the 2030 interim goal was predicated on meaningful emissions reductions at our Fort Martin Harrison power plants in West, Virginia, which account for approximately 99% for greenhouse gas emissions.

Toby joined Us from American electric power.

Sent more than two decades in various leadership positions, including growing in managing one of the largest wires businesses in the country.

John Kiani: We've identified several challenges to our ability to meet that interim goal, including resource adequacy concerns in the PJM region and state energy policy initiatives.

Is responsible for system planning and protection transmission substation, and engineering project and construction management and system operations.

John Kiani: Given these challenges we have decided to remove our 2030 interim goal.

Wade Smith joined the company in December as the President of Firstenergy utilities. He was previously the chief operating officer of Puget Sound Energy.

John Kiani: Through regulatory filings in West, Virginia, we have forecast at the end of the useful life of Port Martin in 2035 and for Harrison and 2040.

Wade brings more than three decades of experience running large scale multistate transmission and distribution companies.

John Kiani: We remain focused on achieving our aspirational goal of net carbon neutrality by 2050.

The presidents of our five operating businesses, who will report to him.

Ohio, Pennsylvania.

John Kiani: In the fourth quarter of last year, we made two key additions to our leadership team.

P&L, our standalone transmission business, and Mon power and Potomac Edison.

John Kiani: November we announced our hiring of Toby Thomas as Chief operating Officer.

We are actively reviewing internal and external candidates to run these businesses and expect to make hiring announcements in the coming months.

John Kiani: Toby joined US from American Electric power, where he spent more than two decades in various leadership positions, including growing and managing one of the largest wires businesses in the country.

Wait until <unk> key additions to the leadership team that will grow and transform this company into a premier electric utility.

He is responsible for system planning and protection transmission substation, and engineering project and construction management and system operations.

In 2023, and continuing into 2024, we have made transformational strides to improve the financial strength of Firstenergy.

Wayne Smith joined the company in December as the President of Firstenergy utilities. He was previously the chief operating officer of Puget Sound Energy.

We have organized our company with a singular focus on growing our five regulated mostly wires companies.

John Kiani: Wade brings more than three decades of experience running large scale multi state transmission and distribution companies the <unk>.

We are making the investments needed to improve reliability and the customer experience our strong.

<unk> balance sheet and organic investment opportunities differentiate firstenergy for many of our peers.

John Kiani: President of our five operating businesses, who will report to him.

John Kiani: <unk>, Pennsylvania, J C P&L, our standalone transmission business, and Mon power and Potomac Edison.

With that I will turn the call over to John.

Thank you, Brian and good morning, everyone.

John Kiani: We are actively reviewing internal and external candidates to run these businesses and expect to make hiring announcements in the coming months.

I'm also very proud of our performance in 2023, and I am excited to turn a new page in our company's history.

Today I'll briefly review, our 2023 results, but more importantly discuss our enhanced five year plan in 2020 for guidance.

John Kiani: Wait and Toby are key additions to the leadership team that will grow and transform this company into a premier electric utility.

Our results in 2023 speak to our employees dedication and tremendous performance.

John Kiani: In 2023, and continuing into 2024, we have made transformational strides to improve the financial strength of Firstenergy.

Which included strategic and transformational initiatives, while doing the hard work to meet our financial commitments and a very challenging year and emerge as a stronger more nimble company.

John Kiani: We have organized our company with a singular focus on growing our five regulated mostly wires companies.

Since I've been at the company I can't recall, a more challenging year in terms of the financial headwinds, we faced including the most abnormal weather conditions that I can remember.

John Kiani: We are making the investments needed to improve reliability and the customer experience our strong.

John Kiani: <unk> balance sheet and organic investment opportunities differentiate firstenergy for many of our peers.

Streamline volatile interest rate environment, and a significant impact on our pension plan from the interest rate and equity market performance in 2022.

John Kiani: With that I will turn the call over to John.

But at the same time, our employees demonstrated their grit and resiliency to overcome these adversities, while making strategic advancements to improve our operational and financial performance.

John: Thank you, Brian and good morning, everyone.

John: I'm also very proud of our performance in 2023, and I'm excited to turn a new page in our company's history.

John: Today I'll briefly review, our 2023 results, but more importantly discuss our enhanced five year plan in 2020 for guidance.

Fourth quarter operating earnings were <unk> 62, a share which is above the midpoint of our guidance. This compares to 2022 fourth quarter operating earnings of <unk> 50. This year.

John: Our results in 2023 speak to our employees dedication and tremendous performance, which included strategic and transformational initiatives, while doing the hard work to meet our financial commitments and a very challenging year and emerge as a stronger more nimble company.

For the year operating earnings were $2 56, a share also above the midpoint of our guidance range.

This represents 7% growth off 2020, twos guidance midpoint and compares favorably to operating earnings of $2 41. This year in 2022.

John: So I've been at the company I can't recall, a more challenging year in terms of the financial headwinds, we faced including the most abnormal weather conditions that I can remember the extremely volatile interest rate environment and a significant impact on our pension plan from the interest rate and equity market performance in 2022.

Fourth quarter and full year results are detailed in the strategic and financial highlights document we posted to our IR website last night.

As we pointed to throughout the year, we largely offset the headwinds I mentioned earlier through a strong focus on reduced operating expenses across each of our business units.

John: But at the same time, our employees demonstrated their grit and resiliency to overcome these adversities, while making strategic advancements to improve our operational and financial performance.

Deployment of proceeds from the low cost convertible debt offering in the spring.

And certain tax benefits realized in the third quarter.

Our focus on operating expenses across the company resulted in a 14% or over $200 million reduction year over year, representing a 32 per share year over year benefit.

John: Fourth quarter operating earnings were <unk> 62, a share which is above the midpoint of our guidance. This compares to 2022 fourth quarter operating earnings of 50 this year.

As we've discussed about 50% of that represents unique items or work that was accelerated in 'twenty two from 'twenty three.

John: For the year operating earnings were $2 56, a share also above the midpoint of our guidance range.

The other 50%, which largely includes productivity improvements across the company lower contractor usage and reduced corporate spending on areas such as branding and advertising are sustainable reductions to our cost structure.

John: This represents 7% growth off 2020, twos guidance midpoint and compares favorably to operating earnings of $2 41. This year in 2022.

John: Fourth quarter and full year results are detailed in the strategic and financial highlights document we posted to our IR website last night.

Our 2023 results benefited from our formula rate investment programs across our transmission and distribution businesses.

John: As we pointed to throughout the year, we largely offset the headwinds I mentioned earlier through a strong focus on reduced operating expenses across each of our business units.

Which resulted in a <unk> 20 per share improvement year over year.

As Brian mentioned, we successfully deployed $3 $7 billion of capital in 2023 about $300 million or close to 10% above our original capital investment plan for the year.

John: Appointment of proceeds from the low cost convertible debt offering in the spring.

John: And certain tax benefits realized in the third quarter.

John: Our focus on operating expenses across the company resulted in a 14% or over $200 million reduction year over year.

In our transmission business earnings increased <unk>, <unk>, a share or close to 10% for the year, primarily from our investment programs, which resulted in rate base growth of 9% compared to 2022.

John: Presenting at <unk> 32 per share year over year benefit.

John: As we've discussed about 50% of that represents unique items or work that was accelerated in 'twenty two from 'twenty three the.

Following the right investments in our transmission business were $1 8 billion, an increase of 28% compared to 2022 and $100 million or 6% above our original plan due to our margin projects.

John: The other 50%, which largely includes productivity improvements across the company lower contractor usage and reduced corporate spending on areas such as branding and advertising are sustainable reductions to our cost structure.

And our distribution business earnings declined year over year, primarily from the lower weather related distribution sales and a lower pension credit I spoke of earlier, but also reflect the impact of our formula rate investment programs new rates that went into effect in Maryland in mid October higher weather adjusted demand and lower operating costs that I spoke of.

John: Our 2023 results benefited from our formula rate investment programs across our transmission and distribution businesses.

John: Which resulted in a <unk> <unk> per share improvement year over year.

John: As Brian mentioned, we successfully deployed $3 $7 billion of capital in 2023 about $300 million or close to 10% above our original capital investment plan for the year.

Distribution capex of $1 $9 billion represents an increase of 5% compared to 2022.

And exceeded our original plan by $220 million or 13% as part of our plan increases we announced last year.

John: In our transmission business earnings increased eight cents, a share or close to 10% for the year, primarily from our investment programs, which resulted in rate base growth of 9% compared to 2022.

Finally in our corporate segment 23 results benefited from lower O&M and a consolidated effective tax rate of about 16% versus nearly 21% in 2022, mostly as a result of planned use of state net operating loss carryforwards.

John: For them the right investments in our transmission business were $1 8 billion, an increase of 28% compared to 2022 and $100 million or 6% above our original plan due to our margin projects.

And a final point on 'twenty three as Brian discussed, we executed a $700 million pension lift out in December representing.

John: And our distribution business earnings declined year over year, primarily from the lower weather related distribution sales and a lower pension credit I spoke of earlier, but also reflect the impact of our formula rate investment programs new rates that went into effect in Maryland in mid October.

Representing about 8% of our total pension liability associated with our former generation subsidiaries.

Removing this obligation from our balance sheet at a 5% discount will reduce future earnings volatility related to fluctuations in pension assets and liabilities.

John: Weather adjusted demand and lower operating costs that I spoke of.

And lowers overall pension plan costs.

John: Distribution capex of $1 $9 billion represents an increase of 5% compared to 2022.

We will continue pursuing opportunities to further de risk the pension plan through additional lift outs and pursuing pension tracking mechanisms through the regulatory process.

John: And exceeded our original plan by $220 million or 13% as part of our plan increases we announced last year.

Now, let's shift gears and talk about our outlook going forward.

John: Finally in our corporate segment 23 results benefited from lower O&M and a consolidated effective tax rate of about 16% versus nearly 21% in 2022, mostly as a result of planned use of state net operating loss carryforwards.

We are very pleased to introduce our five year financial plan supporting our commitments to our investors, including 6% to 8% long term annual operating earnings growth with.

With significantly improved earnings quality investment grade credit metrics and dividend growth in line with earnings growth.

John: And a final point on 'twenty three as Brian discussed, we executed a $700 million pension lift out in December representing.

The cornerstone of this plan is a robust energized $3 65 grid evolution investment plan of $26 million with approximately 75% of planned investments in formula rate programs that provide real time returns.

John: Representing about 8% of our total pension liability associated with our former generation subsidiaries.

John: Removing this obligation from our balance sheet at a 5% discount will reduce future earnings volatility related to fluctuations in pension assets and liabilities.

The plan includes increasing annual investments in our transmission and distribution system, each year, resulting in 9% average annual rate base growth.

John: And lowers overall pension plan costs.

John: We will continue pursuing opportunities to further de risk the pension plan through additional lift outs and pursuing pension tracking mechanisms through the regulatory process.

Energized 365, supersedes, our longstanding energizing the future transmission program, which we're sunsetting after a decade of strong performance.

Speaker Change: Now, let's shift gears and talk about our outlook going forward.

Our planned target investments that improve the customer experience and supports the energy transition or new load requirements, while ensuring a fair and reasonable regulated return for our investors.

We are very pleased to introduce our five year financial plan supporting our commitments to our investors.

Speaker Change: Including 6% to 8% long term annual operating earnings growth with significantly improved earnings quality investment grade credit metrics and dividend growth in line with earnings growth.

The capital program is 45% weighted in FERC regulated transmission investments in our Standalone transmission and integrated businesses.

It includes investments to enhance and upgrade the transmission system and operational flexibility to support projects like New Jersey offshore wind and new data center load and regulatory required projects.

Speaker Change: The cornerstone of this plan is a robust energized $3 65 grid evolution investment plan of $26 million.

Speaker Change: With approximately 75% of planned investments in formula rate programs that provide real time returns.

On the distribution system. The plan includes investments by our distribution and integrated segments to improve the customer experience through reliability enhancements grid modernization and clean energy investments such as smart meter deployment distribution automation and energy efficiency programs.

The plan includes increasing annual investments in our transmission and distribution system each year.

Speaker Change: <unk>, a 9% average annual rate base growth.

Speaker Change: Energized $3 65, supersedes, our longstanding energizing the future transmission program.

This comprehensive five year investment plan is very solid with flexibility.

Which we're sunsetting after a decade of strong performance.

To adjust this projects and programs emerge.

Speaker Change: Our planned targets investments that improve the customer experience and supports the energy transition or new load requirements, while ensuring a fair and reasonable regulated return for our investors.

Over the next couple of years, we anticipate an increase in earnings from our Formula rate investment programs and as we re rate base distribution rates for over $19 billion of state regulated rate base.

Speaker Change: The capital program is 45% weighted in FERC regulated transmission investments in our Standalone transmission and integrated businesses and.

Our plan builds off the approved or settled base rate cases in Maryland, West, Virginia, and New Jersey are integrated segment.

Speaker Change: That includes investments to enhance and upgrade the transmission system and operational flexibility to support projects like New Jersey offshore wind and new data center load and regulatory required projects.

Representing $7 billion in rate base that was earning 400 basis points below the allowed returns.

As well as scheduled base rate cases in Pennsylvania, and Ohio later this year.

Speaker Change: On the distribution system. The plan includes investments by our distribution and integrated segments to improve the customer experience through reliability enhancements grid modernization and clean energy investments such as smart meter deployment distribution automation and energy efficiency programs.

We have $12 billion in projected rate base in our distribution segment and is also forecasting to be underwritten.

The true up of returns will allow us to earn closer to our allowed regulated returns and to significantly improve the earnings quality of the company with expected declines and the earnings contribution from signal peak.

Speaker Change: This comprehensive five year investment plan is very solid with flexibility.

Speaker Change: To adjust this projects and programs emerge.

And longer term annual rate base growth with planned investments in formula rate programs more timely recover recovery of base capital investments and cost discipline with our operating expenses will result in less regulatory lag than we've seen historically with modest and reasonable customer bill impacts we expect.

Speaker Change: Over the next couple of years, we anticipate an increase in earnings from our formula rate investment programs.

Speaker Change: And as we re rate base distribution rates for over $19 billion of state regulated rate base.

Speaker Change: Our planned builds off the approved or settled base rate cases in Maryland, West, Virginia, and New Jersey are integrated segment.

Our utilities to maintain their strong affordability position.

Keep rates at or below our instate peers.

Representing $7 billion in rate base that was earning 400 basis points below the allowed returns.

<unk> 365 will be funded with cash from operations, which we expect to average $4 billion plus annually building off our 2024 cash flow projections.

Speaker Change: As well as scheduled base rate cases in Pennsylvania, and Ohio later this year.

Speaker Change: We have $12 billion in projected rate base in our distribution segment.

As well as regulated long term debt issuances and a portion of the $3 5 billion in proceeds from the transaction.

Speaker Change: Also forecasting to be Undrawn.

Speaker Change: The true up of returns will allow us to earn closer to our allowed regulated returns and to significantly improve the earnings quality of the company with expected declines and the earnings contribution from signal peak.

And our plan does not include any incremental equity needs beyond our existing employee equity programs and it supports the <unk> to debt of 14% to 15% in.

Speaker Change: And longer term annual rate base growth with planned investments in formula rate programs more timely recover recovery of base capital investments and cost discipline with our operating expenses will result in less regulatory lag than we've seen historically with modest and reasonable customer bill impacts we expect our.

<unk> Corp debt at or below 20% of total debt.

Our 2024 guidance range of $2 61 to $2 81 a share.

<unk> represents a 7% increase off the midpoint of our 2023 guidance.

Which will largely be backend loaded given the timing of new rates in West, Virginia, and New Jersey, and O&M Mark plan for Q1 of this year.

Speaker Change: Utilities to maintain their strong affordability position.

Speaker Change: Keep rates at or below our instate peers.

With this in mind, our projections for the first quarter, our operating earnings of 48 this year to 58% this year.

Speaker Change: Energized 365 will be funded with cash from operations, which we expect to average $4 billion plus annually building off our 2024 cash flow projections.

To give you some color on the year over year increase our midpoint of $2 71, a share reflects 12% consolidated regulated growth offset by a decline in signal peak earnings contribution.

Speaker Change: As well as regulated long term debt issuances and a portion of the $3 5 billion in proceeds from the transaction.

The increase reflects new rates and investments largely from approved or settle base rate cases in our integrated segment, where we anticipate new rates for our West, Virginia, and New Jersey settlements to be implemented late in the first quarter and ongoing formula rate investments in each of our businesses.

Speaker Change: And our plan does not include any incremental equity needs beyond our existing employee equity programs and it supports the <unk> to debt of 14% to 50%.

Speaker Change: And that's a corp debt at or below 20% of total debt.

Speaker Change: Our 2024 guidance range of $2 61 to $2 81 a share.

A return to normal weather related customer demand.

Higher operating expenses, reflecting the timing of O&M activities that I spoke of earlier and new depreciation rates on our fossil generating facilities as part of the settlement. We reached we reached in West Virginia.

Speaker Change: <unk> represents a 7% increase off the midpoint of our 2023 guidance.

Speaker Change: Which will largely be backend loaded given the timing of new rates in West, Virginia, and New Jersey, and O&M work plan for Q1 of this year.

It's important to note that our 2024 planned O&M is $140 million or 10% below 2022 levels.

Speaker Change: With this in mind, our projection for the first quarter, our operating earnings of 48 this year to 58% this year.

Speaker Change: To give you some color on the year over year increase our midpoint of $2 71, a share reflects 12% consolidated regulated growth offset by a decline in signal peak earnings contribution.

And when you adjust for timing such as planned generation outages, our O&M is $100 million or 6% below 2022, reflecting permanent cost reductions.

Other drivers include improve earnings quality.

The increase reflects new rates and investments largely from approved or settle base rate cases in our integrated segment, where we anticipate new rates for our West, Virginia, and New Jersey settlements to be implemented late in the first quarter and ongoing formula rate investments in each of our businesses.

The lower earnings contribution from our signal peak mining asset and a higher effective tax rate.

The dilution from the <unk> transaction is largely offset by lower interest expense representing planned debt retirements and interest income from the vendor take back as part of the transaction.

Speaker Change: A return to normal weather related customer demand.

Our $4 3 billion capital investment plan for this year represents a 16% increase compared to 2023 and is largely funded with $4 billion in cash from operations, which has improved year over year from several unique items that occurred in 2023 such.

Speaker Change: Higher operating expenses, reflecting the timing of O&M activities that I spoke of earlier and new depreciation rates on our fossil generating facilities as part of the settlement we reached in West Virginia.

Speaker Change: It is important to note that our 2024 planned O&M is $140 million or 10% below 2022 levels.

Such as the $750 million pension contribution.

Contract termination costs, and severance and employee separation costs.

Speaker Change: And when you adjust for timing such as planned generation outages, our O&M is $100 million or 6% below 2022, reflecting permanent cost reductions.

As well as increases from growth.

Cost recovery in our regulated businesses and improved working capital.

With the improvement in cash flow closing on our <unk> minority interest sale in deployment of those proceeds were targeting 14% to 15% <unk> to debt by.

Speaker Change: Other drivers include improve earnings quality.

Speaker Change: The lower earnings contribution from our signal peak mining asset and a higher effective tax rate.

By year end.

Speaker Change: The dilution from the <unk> transaction is largely offset by lower interest expense representing planned debt retirements and interest income from the vendor take back note as part of the transaction.

2023 was a challenging but remarkable year, a year of significant transition innovation and improvement with outstanding operational and financial execution from our 12000 employees today.

Speaker Change: Our $4 3 billion capital investment plan for this year represents a 16% increase compared to 2023 and is largely funded with $4 billion in cash from operations, which has improved year over year from several unique items that occurred in 2023.

Today, our company is in a much stronger position and we have a comprehensive plan for continued growth.

Thank you for your time today, but before we go to Q&A I'll turn the call back over to Brian.

Thank you all for joining us today I am excited about our company. We're building a strong track record of execution, we have a fantastic business model and a robust plan for the future.

Speaker Change: Such as the $750 million pension contribution.

Speaker Change: Contract termination costs, and severance and employee separation costs.

Speaker Change: As well as increases from growth.

Starting with the initial Brookfield and Blackstone investments announced in late 2021, we have significantly improved the balance sheet via $7 billion and equity capital and it was raised in a very shareholder friendly manner.

Speaker Change: Recovery in our regulated businesses and improved working capital.

Speaker Change: With the improvement in cash flow closing on our <unk> minority interest sale in deployment of those proceeds were targeting 2014% to 15% <unk> to debt by year end.

Equivalent of issuing common equity at $87 per share.

Speaker Change: 2023 was a challenging but remarkable year, a year of significant transition innovation and improvement with outstanding operational and financial execution from our 12000 employees.

In the past year, we've achieved several important regular regulatory milestones representing constructive outcomes for firstenergy and our customers.

Speaker Change: Our company is in a much stronger position and we have a comprehensive plan for continued growth.

This includes $219 million of increased revenues through base rate cases that will fuel our investments and reliable and affordable service.

Thank you for your time today, but before we go to Q&A I will turn the call back over to Brian.

Energized $3 65, our five year $26 billion investment plan is an increase of more than 44% from our previous five year capital investment plan and its funded with organic internal cash flow and utility debt.

Brian X. Tierney: Thank you all for joining us today I am excited about our company. We're building a strong track record of execution, we have a fantastic business model and a robust plan for the future.

Brian X. Tierney: Starting with the initial Brookfield and Blackstone investments announced in late 2021.

Not incremental equity.

We have a long term, 6% to 8% annual operating earnings growth trajectory with significantly improved earnings quality.

Brian X. Tierney: Have significantly improved the balance sheet via $7 billion and equity capital and it was raised in a very shareholder friendly manner, the equivalent of issuing common equity at $87 per share.

This tremendous work together with the cultural changes and focused on continuous improvement has transformed our company.

Brian X. Tierney: In the past year, we've achieved several important regular regulatory milestones representing constructive outcomes for firstenergy and our customers.

We have accomplished a lot and we're committed to executing on our plan to deliver the full value of this company to shareholders.

This includes $219 million of increased revenues through base rate cases that will fuel our investments and reliable and affordable service.

Now, let's open the call to your questions.

Thank you.

At this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Energized $3 65, our five year $26 billion investment plan is an increase of more than 44% from our previous five year capital investment plan and its funded with organic internal cash flow and utility debt.

A confirmation tone will indicate your line is in the question queue.

May press star two if you'd like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Brian X. Tierney: Not incremental equity.

We have a long term, 6% to 8% annual operating earnings growth trajectory with significantly improved earnings quality.

Our first question comes from Shar <unk> with Guggenheim Partners. Please proceed with your question.

Brian X. Tierney: This tremendous work together with the cultural changes and focused on continuous improvement has transformed our company.

Hey, guys. Good morning, good morning sure.

Morning morning, just Brian good to see the roll forward of the six to eight as I guess as we're thinking about some of the sort of the earnings headwinds like signal peak, becoming sort of immaterial next year and potential maybe future pension drag I guess any sense on how we should think about the linearity of that growth off the 24 base.

Brian X. Tierney: We have accomplished a lot and we're committed to executing on our plan to deliver the full value of this company to shareholders.

Speaker Change: Now, let's open the call to your questions.

Speaker Change: Thank you.

Speaker Change: At this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

We see some maybe near term gyrations around six to eight or you have enough contingencies to maintain that linearity.

Speaker Change: A confirmation tone will indicate your line is in the question queue.

Sure, it's going to be really.

Linear.

Speaker Change: May press star two if you'd like to remove your question from the queue.

We're not going to see much volatility.

We're getting back to where our normal utility should look like where we're going to be investing in our regulated properties.

Speaker Change: For participants using speaker.

Obviously, a lot of that recovery is going to come through formula based rates. So that is tends to be linear.

75% through Formula base rates, and then we're going to be regularly going in for rate cases, and it's just the normal cadence of how a utility operator.

You operate you recover in your finance and.

That's the cadence that we're going to be on.

Got it and then the 9% rate base growth is obviously very solid.

Is there still I guess, some incremental capex opportunities, we should be thinking about in the five year plan I know, obviously, John highlighted some flexibility there in the prepared.

Any sort of rule of thumb, we should think about if there is incremental equity.

Incremental capex could it come with incremental equity or you have enough cushion in the credit metrics and not have to tap the equity markets, even if there's incremental capex.

I think we have enough cushion for sure and we're seeing things like the PJM.

<unk> Windows three that we responded to where the team worked really hard to put together a solution in a short period of time, and we were able to garner over $800 million of incremental investment through that opportunity I see more of those coming they're not in our capital plan, yet and they won't be until we.

When the projects, but there's significant amounts of.

New Capex, that's not in our plan that I anticipate will.

C coming down and we will be able to fund that through a combination of cash flow from operations.

That equity issuances and things like the $3 5 billion of equity that's going to come into our system in 2024 from the transactions. So we're ready to fund these incremental capex.

<unk> traditional utility would without having to see much.

Access for.

Equity from the equity capital markets.

Okay.

<unk>.

Alright.

No no.

Just reiterate kind of what you said I mean.

Had we not done the transactions over the course of the last couple of years, raising $7 billion of equity capital.

At the equivalent of a 36 times PE multiple.

Wouldn't be in this position today.

I think a lot of it depends on a formula rate Capex versus base capital I think if you look at some of our utility capital structures.

Equity layers that are a little bit better than our targeted.

Equity capital structure. So we have some flexibility in the plan.

Perfect and just real quick lastly, on just Brian I think you've answered this but on the CIC process. It doesn't sound like there's any updates at <unk>.

That is close so is it fair to assume I haven't seen the K yet, but when it is released we shouldnt see anything surprising in that.

Yes, no surprises it offshore status quo, they ask questions, we answered them and nothing new.

Yes.

With regards to the company from what was disclosed in the deferred prosecution agreement Fannie.

Fantastic guys really Brian.

Awesome awesome execution appreciate it.

Thanks sure.

Our next question is from Gregg <unk> with UBS. Please proceed with your question.

Yes.

Yes, thanks, congratulations on.

Rolling out the new plan.

Thank you Greg.

So just on the cash from operations guidance.

Is the guidance that.

The new base for growth is $4 billion and you you grow off of that or it. That's the average over the plan and there is sort of.

At least we shouldnt see anything surprising in that.

It's down and then you are above that level towards the end of the plan.

Yes, no surprises it offshore status quo.

Yeah.

Greg This is John on all years, it'll be $4 billion.

Questions, we answered them and nothing new.

More.

<unk>.

Cash from operations.

With regards to the company from what was disclosed in the deferred prosecution agreement Fannie.

Some of it will be just growth in our regulated programs offset by maybe some changes in working capital, but on average over the five year period, it'll be north of $4 billion.

Fantastic guys really Brian.

Awesome awesome execution appreciate it.

Thanks sure.

Our next question is from Gregg <unk> with UBS. Please proceed with your question.

Okay.

Yes, thanks, congratulations on.

Maybe just a follow up for Brian.

Rolling out the new plant.

<unk>.

How do you sort of reconcile.

Thank you Greg.

So just on the cash from operations guidance is is the guidance that.

The idea of.

Coming forward with.

The new plan that ads.

The new base for growth is 4 billion in and you you grow off of that or it. That's the average over the plan and there is sort of.

Such a significant amount of new capital.

To the prior plan.

We're in a different place Greg.

The work that's been done on the balance sheet since 2021, as we laid out has been truly transformative.

It it's down and then you're above that level towards the end of the plan.

Yeah, Greg This is John on all years, it'll be $4 billion or more.

For the first time I think in the company's history.

Cash from operations.

Not distracted by M&A, we do.

Some of it will be just growth in our regulated programs offset by maybe some changes in working capital, but on average over the five year period, it'll be north of $4 billion.

Don't have a competitive arm, we have a strong balance sheet with the opportunity to invest in our regulated mostly wires companies.

But to be honest with you.

Okay.

We got behind on the capital investment in them and Thats why our rate base is lower it's why are rates are lower and it's why we have some significant opportunities with regards to <unk>.

Maybe just a follow up for Brian.

How do you sort of reconcile.

The idea of of you know coming forward with.

Reliability and the customer experience. We are here for the first time ready willing and able to put the money into our regulated properties for the benefit of our customers.

You know the new plan that ads.

Such a significant amount of new capital.

To the prior plan.

And it is a significant difference from what <unk> seen in the past.

We're in a different place Greg the work that's been done.

Okay. Thanks, a lot I appreciate it.

On the balance sheet since 2021, as we laid out has been truly transformative.

Thank you.

Yes.

Our next question is from Nicholas Campanella with Barclays. Please proceed with your question.

For the first time I think in the company's history, we're not distracted by M&A.

Hey, good morning, Happy Friday, Thanks for all the updates.

I guess just to follow up on Greg's question, because the Capex range is pretty material across the board obviously, it's good to see just how.

We don't have a competitive arm.

We have a strong balance sheet with the opportunity to invest in our regulated mostly wires companies.

How should we kind of think about customer <unk> growth to achieve this plan.

But to be honest with we got behind.

As it relates to just the upcoming filings and then just through the plan as well please.

And on the capital investment in them and that's why our rate base is lower it's why are rates are lower and it's why we have some significant opportunities with regards to.

Yes, so we think the increases will be in the single digit.

For most of the time for the five year period.

Reliability and the customer experience. We are here for the first time ready willing and able to put the money into our regulated properties for the benefit of our customers.

If you look Nicholas at page 23 in the fact book that we put out there.

In New Jersey through West, Virginia, and Maryland are rates are 22% to 30% below our instate peers and in Ohio.

And it is a significant difference from what you've seen in the past.

Okay. Thanks, a lot I appreciate it.

In Pennsylvania, the 3% to 7% below our instate peers.

Thank you.

Our next question is from Nicholas Campanella with Barclays. Please proceed with your question.

A lot of that in New Jersey, West, Virginia, Maryland represents opportunities.

Hey, good morning, Happy Friday, and thanks for all the updates.

Opportunities to invest in the rate base or improve the customer experience.

But also more importantly, if you look at things like customer affordability between 97997 and 2022, our customers' electricity share of wallet has decreased to one 3% from one 6%. So when we talk to <unk>.

Yes.

To follow up on Greg's question, because the Capex range is pretty material across the board obviously, it's good to see just.

How should we kind of think about customer <unk> growth to achieve this plan.

As it relates to just the upcoming filings and then just through the plant as well please.

So we think the increases will be in the single digit.

People, who cover our industry and they say that you need to start getting concerned when you are at 4% to 5% share of your customers' wallet.

For most of the time for the five year period.

If you look Nicholas.

Speaker Change: <unk> 23 in the fact book that we put out there.

We're nowhere near that.

In electricity, whether it's for home heating, whether it's power your vehicles or whatever still represents a considerable value for the customers in the states we serve.

Speaker Change: In New Jersey through West, Virginia, and Maryland are rates are 22% to 30% below our instate peers and in Ohio.

Hey, Nick this is John and I'll, just add onto that if you look at the cases, where we have approvals or settlements on file in our integrated business. If you just kind of compared to where we were since the last rate case, it's an average of 1% or 1% lower than the last time, if you do that on an.

Irene: And in Pennsylvania that 3% to 7% below our in state peers.

Irene: A lot of that in New Jersey, West, Virginia, Maryland represents.

Irene: Opportunities to invest in the rate base or improve the customer experience.

Irene: But also more importantly, if you look at things like customer affordability between 97, 1997, and 2022, our customers' electricity share of wallet has decreased to one 3% from one 6%. So when we talk to <unk>.

The annual basis and in fact, if you step back a little bit more and just look at the increases in customer bills over the last couple of years most of that is generation related.

And if we were to snap the line today with New generation service for instance, in Ohio, and Pennsylvania, you would see build decreases.

Irene: People, who cover our industry and they they say that you need to start getting concerned when youre at 4% to 5% share of your customers' wallet.

Somewhere between 4% and 8%.

Got it that's helpful.

Irene: We're nowhere near that.

Brian X. Tierney: And electricity, whether it's for home heating, whether it's power your vehicles or whatever still represents a considerable value for the customers in the states we serve.

And then I guess just kind of similar question on what's embedded in the plan here.

I'm just thinking about earned ROE is obviously, new Jersey's pretty low here that will improve with the settlement how do we think about kind of Ohio.

Brian X. Tierney: Hey, Nick this is John and I will just add onto that if you look at the cases, where we have approvals or settlements on file in our integrated business. If you just kind of compared to where we were since the last rate case, it's an average of 1% and 1% lower than the last time, if you do that on an.

If you get an improvement versus your slides here or is that baked into the plan or just how should we kind of think about that.

Yes, as we talked about.

The next couple of years will be very important as we true up our.

State regulated returns to more of their allowed return so I think about Ohio, and Pennsylvania, which will be next to file.

Brian X. Tierney: Annual basis and in fact, if you step back a little bit more and just look at the increases in customer bills over the last couple of years most of that is generation related.

Ohio, right now is earning sub 6% some of that is weather driven.

Brian X. Tierney: And if we were to snap the line today with New generation service for instance, in Ohio, and Pennsylvania, you would see build decreases.

But we.

We do see an opportunity to true up the return there.

And in Pennsylvania, although it's above 9% a lot of the O&M, that's coming back in the system will be in our Pennsylvania company, which will reduce the row, there and we use a projected test year for our Pennsylvania company, So youll be adding about $1 billion of rate base between where it is today and the.

Brian X. Tierney: Somewhere between 4% and 8%.

Speaker Change: Got it that's helpful.

Speaker Change: And then I guess just kind of similar question on what's embedded in the plan here.

Brian X. Tierney: I'm just thinking about earned ROE is obviously, new Jersey's pretty low here that will improve with the settlement how do we think about kind of Ohio.

The filing that we'll make later this year.

Brian X. Tierney: If you get it.

Brian X. Tierney: The improvement versus your slides here or is that baked into the plan or just how should we kind of think about that.

Okay, and then just one last one just on the load growth, 1% embedded in the plan places like PJM have just continued to see demand revisions higher and I'm just wondering if that's conservative at all.

John Kiani: Yeah, as we talked about.

Brian X. Tierney: The next couple of years will be very important as we true up our.

Brian X. Tierney: State regulated returns to more of their allowed return so I think about Ohio, and Pennsylvania, which will be next to file.

So like capital projects and other things, we don't want to put.

Forecast growth in until we're seeing it and we're seeing it at about that 1% range as things develop and go forward like <unk> seen data centers in PJM and the like we think we're going to get that here youre seeing it to the south of us Youre seeing it to the east of Us and I think that migration will continue.

Brian X. Tierney: Ohio, right now is earning sub 6% some of that is weather driven.

Brian X. Tierney: But we.

Brian X. Tierney: We do see an opportunity to true up the return there.

Brian X. Tierney: And in Pennsylvania, although it's above 9% a lot of the O&M, that's coming back in the system will be in our Pennsylvania company, which will reduce the row, there and we use a projected test year for our Pennsylvania company, So you'll be adding about $1 billion of rate base between where it is today and the.

Our service territory in fact.

We fully believe it will and then as you see other things like electrification of transportation and alike. I think there is some upside in the load growth. We just don't want to bake it into the plan until we're seeing it in our confidence that it's coming.

Brian X. Tierney: The filing that we'll make later this year.

Alright, Thanks, a lot have a great day.

Speaker Change: Okay, and then just one last one just on the load growth, 1% embedded in the plan at places like PJM have just continued to see demand revisions higher and I'm just wondering if that's conservative at all.

Thank you Nicholas.

Our next question is from Michael Sullivan with Wolfe Research. Please proceed with your question.

Hey, everyone. Good morning, Yeah, Hey, guys. Thanks for all the new disclosures.

Brian X. Tierney: So like capital projects and other things, we don't want to put.

Just in terms of you mentioned kind of milestones on the regulatory front, how should we think about grid.

Brian X. Tierney: Forecast growth in until we're seeing it and we're seeing it at about that 1% range as things develop and go forward like you've seen datacenters in PJM and the like we think we're going to get that here youre seeing it to the south of us Youre seeing it to the east of Us and I think that migration will continue.

<unk> in the ESP playing out over the next couple of months and how if any that can inform.

The base rate filing coming in May and Ohio.

So we're working those regulatory processes and youre going to see that from us you're going to see certain things are in flight and certain things are coming and look for us to be making progress on what's in flight and that will foreshadow.

Brian X. Tierney: Into our service territory in fact.

Speaker Change: We fully believe it will and then as you see other things like electrification of transportation and alike. I think there is some upside in the load growth. We just don't want to bake it into the plan until we're seeing it in our confidence that it's coming.

What's coming down the road.

ESP five and grid Mod to we're working through those regulatory processes.

Reviewing last night, and we will file today, our post hearing briefing on ESP five and we expect a constructive outcome there as we do in grid mod to but.

Speaker Change: Alright, Thanks, a lot have a great day.

Speaker Change: Thank you Nicholas.

Brian X. Tierney: Our next question is from Michael Sullivan with Wolfe Research. Please proceed with your question.

Regulatory tends not to move very fast these are months long processes, and we think that the processes in both.

Michael Lapides: Hey, everyone. Good morning, Yeah, Hey, guys. Thanks for all the new disclosures.

Michael Lapides: Just in terms of you mentioned kind of milestones on the regulatory front, how should we think about grid.

ESP five and <unk> two are constructive and we anticipate it'll be the same but and actually longer process for our base rate case, which we will file in April of this year. So.

Michael Lapides: <unk> in the ESP playing out over the next couple of months and how if any that can inform.

Brian X. Tierney: The base rate filing coming in May and Ohio.

We're just <unk>.

Brian X. Tierney: So we're working those regulatory processes and youre going to see that from us you're going to see certain things are in flight and certain things are coming and look for us to be making progress on what's in flight and that will foreshadow.

Moving along things are happening as they should.

And we're getting these constructive outcomes.

Okay great.

And then just on <unk>.

Pension and limiting volatility there can you just give a sense on.

Brian X. Tierney: What's coming down the road.

Where would you go.

ESP five and grid Mod to we're working through those regulatory processes.

Forward, how much more lift out it can potentially be done and then just how youre feeling about ability to implement mechanisms I know there were some some language around that and some of the cases, you already had but nothing.

Brian X. Tierney: Reviewing last night, and we will file today are post hearing briefing on ESP five and we expect a constructive outcome there as we do in grid mod to but regulatory tends not to move very fast. These are months long processes, and we think that the processes in both.

Too prescriptive I don't think so yes, just the path forward on limiting pension volatility.

Yeah, Michael So so we have another.

$700 million.

Former generation pension liabilities that were looking at right now as to whether or not we should execute a lift out transaction something that we'll likely do this year, if the market conditions warrant that and then on the regulatory front as we've talked about before some of these things take a couple of bites at the.

Brian X. Tierney: <unk>.

Brian X. Tierney: ESP five and grid months, who are constructive and we anticipate it'll be the same but and actually longer process for our base rate case, which we will file in April of this year. So.

Brian X. Tierney: We're just.

Moving along things are happening as they should.

Brian X. Tierney: And we're getting these constructive outcomes.

Apple before we can get them in place.

Speaker Change: Okay great.

Speaker Change: And then just on on.

Did get authority to at least.

Speaker Change: Pension and limiting volatility there can you just give a sense on.

Make a filing in West, Virginia, and New Jersey as part of the settlements.

And we will be thoughtful once we go through that process and get a final order on the cases as to the next steps there.

Brian X. Tierney: There we go.

Brian X. Tierney: Forward, how much more lift out it can potentially be done and then just how you are feeling about ability to implement mechanisms I know there were some some language around that and some of the cases, you already had but nothing.

Okay, great. Thanks, and just last one maybe a little more philosophical, but just seeing kind of how the.

Brian X. Tierney: Through prescriptive I don't think so yes, just the path forward on limiting pension volatility.

Reporting season has gone so far I think we've seen a lot of your peers kind of going.

Speaker Change: Yeah, Michael So so we have another.

Other direction in terms of dividend payout.

$700 million.

And growth.

Former generation pension liabilities that were looking at right now as to whether or not we should execute a lift out transaction something that we'll likely do this year, if the market conditions warrant that and then on the regulatory front as we talked about before some of these things take a couple of bites at the.

And I know you are coming from like a different starting point, but maybe just how you think about that in the context of the.

Sector not trading well.

And just other levers that you have how you thought about.

Continuing to grow the dividend with earnings and the payout where you have it.

Yes, so we are at a different place than our peers.

Brian X. Tierney: Apple before we can get them in place.

Announcing the increase that we did in September the first in over three years, it's time to start rewarding our shareholders with dividend increases.

Brian X. Tierney: Did get authority to at least.

Brian X. Tierney: Make a filing in West, Virginia, and New Jersey as part of the settlements.

Brian X. Tierney: And we will be thoughtful once we go through that process and get a final order on the cases as to the next steps there.

And we felt that now is the time to do that so September and anticipated in 2024.

Speaker Change: Okay, great. Thanks, and just last one maybe a little more philosophical, but just seeing kind of how the.

Increases there as well it's time for us to treat our shareholders. The way utility companies traditionally do and we are in a place where we're going to be growing.

John Kiani: Reporting Shane has gone so far I think we've seen a lot of your peers kind of going.

The dividend with earnings over time, our balance sheet is healthy we don't have the equity needs that some of our peers do because of the transactions that we've done over the last three years or so so we're in a different place than where some of our peers are we.

John Kiani: The other direction.

John Kiani: In terms of dividend payout.

John Kiani: Payout.

John Kiani: And growth.

Speaker Change: And I know you are coming from like a different starting point, but maybe just how you think think about that in the context of.

John Kiani: The sector not trading well.

John Kiani: And just other levers that you have how you thought about.

We think it's a really good place.

John Kiani: Continuing to grow the dividend with earnings.

Great. Thank you.

Thank you.

John Kiani: <unk> out where you have it.

John Kiani: So we are at a different place than our peers.

Our next question is from Jeremy Tonet with J P. Morgan. Please proceed with your question.

John Kiani: <unk> the increase that we did in September the first in over three years, it's time to start rewarding our shareholders with dividend increases.

Hi, good morning good.

Good morning, Jeremy how are you today.

Good good thank you.

Just wanted to dive in a little bit more on the guide here talking about rate base shake up 9% relative to 6% to 8% EPS CAGR.

John Kiani: And we felt that now is the time to do that so September and anticipated in 2024.

Without additional equity needs. So I was just looking to kind of marry those two data points.

John Kiani: Increases there as well it's time for us to treat our shareholders. The way utility companies traditionally do and we are in a place where we're going to be growing.

Given the stronger pace of rate base growth there if theres anything else, we should be thinking about especially the signal peak and pension <unk> become a smaller part of the equation.

John Kiani: The dividend with earnings over time, our balance sheet is healthy we don't have the equity needs that some of our peers do because of the transactions that we've done over the last three years or so so.

It's really the things that we mentioned in our remarks, it's going in for base rate cases and updating.

Rate base updating returns cost structure and those things that haven't been done in some time.

John Kiani: We're in a different place than where some of our peers are.

John Kiani: We think it's a really good place.

The three cases Marilyn.

Speaker Change: Great. Thank you.

John Kiani: <unk>.

New Jersey, and West Virginia that we've just been in Pennsylvania, and Ohio coming up this year.

John Kiani: Our next question is from Jeremy Tonet with J P. Morgan. Please proceed with your question.

It's a significant amount of updating the regulatory process in recovery and then increasing as we've announced today with energized 365, the capex that we're going to be investing in our regulated properties going forward. So.

Jeremy Bryan Tonet: Hi, good morning.

Jeremy Bryan Tonet: Good morning, Jeremy how are you today.

Jeremy Bryan Tonet: Good good thank you.

Jeremy Bryan Tonet: Just wanted to dive in a little bit more on the guide here talking about rate base CAGR of 9% relative to 6% to 8% EPS CAGR.

Jeremy Bryan Tonet: Without additional equity needs. So I was just looking to kind of marry those two data points.

It's it's the way utility operation should work.

I repeat this over and over again internally you invest in your properties and your people you operate safely reliably affordably you go in for recovery and if you've done invest and operate well the recovery component goes better when youre in front of our regulators and then we come before investors.

Jeremy Bryan Tonet: Given the stronger pace of rate base growth there if there's anything else, we should be thinking about especially the signal peak and pension <unk> become a smaller part of the equation.

John Kiani: It's really the things that we mentioned in our remarks, it's going in for base rate cases and updating.

John Kiani: Rate base updating returns cost structure and those things that haven't been done in some time.

And we tell them the story that we put together on those first three components and financing the company's easier as well so we're in a place where.

Speaker Change: The three cases Marilyn.

John Kiani: New Jersey, and West Virginia that we've just been in Pennsylvania, and Ohio coming up this year.

We're at the beginning of what I call that virtuous cycle and the success that we've had in the rate cases that I discussed in my prepared remarks show that we're getting those fair and constructive outcomes and we anticipate that.

John Kiani: It's a significant amount of updating the regulatory process and recovery.

John Kiani: Then increasing as we've announced today with energized 365, the capex that we're going to be investing in our regulated properties going forward. So.

Going forward in the plan as well it all it all holds together as a as a credible.

John Kiani: It's it's the way utility operation should work.

The story, where we're having success.

At the beginning point of that.

John Kiani: I repeat this over and over again internally you invest in your properties and your people you operate safely reliably affordably you go in for recovery and if you've done invest and operate well the recovery component goes better when youre in front of our regulators and then we come before investors.

Got it maybe to rephrase. The question slightly just if the rate base CAGR is 9% are there any other drags besides lag to make EPS growth only 6% to 8% or is that a degree of conservatism.

So Jeremy I would say this year just as you saw in 'twenty four 'twenty four guide you saw the step down in signal peak from 24 to 12, Youll see another step down from 24% to 25, but.

And we tell them the story that we put together on those first three components and financing the company's easier as well so we're in a place where.

But at the same time, that's when we're Truing up. These these rate basis that I mentioned in my prepared remarks, the $7 billion. This year with $12 million that we will file in Pennsylvania, and Ohio for this year.

John Kiani: We're at the beginning of what I call that virtuous cycle and the success that we've had in the rate cases that I discussed in my prepared remarks show that we're getting those fair and constructive outcomes and we anticipate that.

And then after that its more traditional rate base growth a little bit of regulatory lag, but we're going to do everything we can to minimize any difference between our earned returns in our allowed returns I think it is important to note that.

John Kiani: Going forward in the plan as well it all it all holds together as a as a credible stu.

John Kiani: Story, where we're having success.

John Kiani: At the beginning point of that.

The part that John mentioned about.

John Kiani: Got it maybe to rephrase. The question slightly just if the rate base CAGR of 9% are there any other drags besides lag to make EPS growth only 6% to 8% or is that a degree of conservatism.

Pension in signal peak decreasing.

As they decrease and as the traditional regulatory component of our growth increases.

John Kiani: So Jeremy I would say this year just as you saw in 'twenty four 'twenty four guide you saw the step down in signal peak from 24 to 12 since Youll see another step down from 24% to 25, but.

Our earnings quality improves and that happens really really quickly in our plant. So that's also a benefit it's not just growing earnings it's a reduced risk profile as well.

Got it. Thank you for that very helpful. And then just wanted to go back I guess to customer Bill impacts I think you quoted some helpful numbers, there as far as share of wallet.

John Kiani: But at the same time Thats when were Truing up. These these rate basis that I mentioned in my prepared remarks, the $7 billion. This year with $12 million that we'll file in Pennsylvania, and Ohio for this year.

Bill will represent.

New Jersey, but just wanted to see I guess in Pennsylvania, Ohio or is it kind of similar share of wallet expectations over the forecast period or any color you can provide there.

John Kiani: And then after that its more traditional rate base growth a little bit of regulatory lag, but we're going to do everything we can to minimize any difference between our earned returns in our allowed returns I think it's important to note that.

It is that was the numbers that I gave you of share of wallet was an average across our five states.

And it's not significantly different in any one of those.

John Kiani: The part that John mentioned about.

But it's it's very very low.

Pension in signal peak decreasing.

Got it very helpful I'll leave it there thanks.

John Kiani: As they decrease and as the traditional regulatory component of our growth increases.

Thanks, Jeremy.

Due to time constraints, we ask that you please limit to one question.

John Kiani: Our earnings quality improves and that happens really really quickly in our plant. So that's also a benefit it's not just growing earnings it's a reduced risk profile as well.

Our next question comes from Michael <unk> with Evercore ISI. Please proceed with your question.

Hi, Good morning, Thanks for taking my question good morning.

Michael.

Speaker Change: Got it. Thank you for that very helpful. And then just wanted to go back I guess to customer Bill impacts I think you quoted some helpful numbers, there as far as share of wallet.

So you've talked about.

So some sustainable O&M, you've taken out of your business and a larger increase this year and then after that are calling for less than 2% increases over time.

John Kiani: Bill will represent in New Jersey, but just wanted to see I guess in Pennsylvania, Ohio is it kind of similar share of wallet expectations over the forecast period or any color you can provide there.

Given the significant ramp up in capex over over the years of your planning period.

John Kiani: It is that was the numbers that I gave you of share of wallet was an average across our five states.

Presumably you would have to expand your your workforce or use of contractors.

John Kiani: And it's not significantly different in any one of those.

It is my guess.

Work on complete all those projects I was just wondering how are you planning on managing your O&M within that 2% increased level is there room to take out more existing costs out of the business.

But it's it's very very low.

Speaker Change: Got it very helpful I'll leave it there thanks.

Speaker Change: Jeremy.

Speaker Change: Due to time constraints, we ask that you please limit to one question.

So.

I'll say this a lot of what we talked about is actually capex that we're increasing so it is not directly related to O&M. We recognize there is an O&M tail that's associated with any incremental capex, but we're going to be very very focused on continuous improvement and it's going to be part of our story that we're going to tell ever.

Speaker Change: Our next question comes from Michael <unk> with Evercore ISI. Please proceed with your question.

Michael: Hi, good morning, Thanks for taking my question.

Michael: Good morning, Michael.

Michael: So you've talked about.

Speaker Change: Some sustainable O&M, you've taken out of your business in <unk>.

Any time, we're getting together going forward about how what we've been able to do and how we've been able to.

John Kiani: <unk> increase this year and then after that are calling for less than 2% increases over time.

<unk> O&M through continuous improvement and it's just going to be part of our story going forward like it was in 2023.

John Kiani: Given the significant ramp up in Capex.

John Kiani: Over over the years of your planning period.

John Kiani: Presumably you would have to expand your your workforce or use of contractors.

You see well functioning premium utilities are always talking about what they're doing in that regard.

John Kiani: At my guess work on complete all those projects I was just wondering how are you planning on managing your O&M within 2% increased level is there room to take out more existing costs out of the business.

And we've had success here in our recent past doing that and we anticipate that going forward.

Great. Thank you very much.

Thank you Michael.

Our next question comes from Andrew <unk> with Seaport Global. Please proceed with your question.

Speaker Change: So I'll say, there's a lot of what we talked about is actually capex that we're increasing so it's not directly related to O&M. We recognize there is an O&M tail that's associated with any incremental capex, but we're going to be very very focused on continuous improvement and it's going to.

Good morning.

And again, it's just a big uptick good morning, a bigger picture question. So investors can seem excited about.

The loan growth.

Accelerating loan growth associated with data centers.

John Kiani: Part of our story that we're going to tell every time, we're getting together going forward about how what we've been able to do and how we've been able to.

The.

Ill just way to play as this play this trend is for generation companies that also through vertically integrated utilities that actually own generation.

John Kiani: Reduce O&M through continuous improvement.

Etc.

Wireless on the business and I'm just wondering if you do expect to have.

John Kiani: It's just going to be part of our story going forward like it was in 2023.

This is Sam.

Secondary benefit associated with the lost gross I can't.

John Kiani: You see well functioning premium utilities are always talking about what they're doing in that regard and we've had success here in our recent past doing that and we anticipate that going forward.

Translating into either higher T&D capex or.

Maybe.

Affordability because of higher volumes I mean, you name. It just wondering if you.

C C that benefit the current team as well and thank you for the question Angie, we absolutely do and Youre right being mostly a wires company.

Speaker Change: Great. Thank you very much.

Speaker Change: Thank you Michael.

Speaker Change: Our next question comes from Andrew <unk> with Seaport Global. Please proceed with your question.

Certainly in four of our five states, we don't have as much of the generation opportunity, but I mentioned in my remarks.

Andrew: Good morning.

Andrew: Good morning, and just a bigger picture good morning, a bigger picture question. So investors seem excited about.

John Kiani: The loan growth.

In answer to an earlier question the opportunity that we had.

John Kiani: Accelerating loan growth associated with data centers.

Associated with the PJM open windows III for incremental transmission investment over $800 million.

John Kiani: The.

John Kiani: Ill just way to play as this play this trend this third generation companies that also through.

I had the pleasure of going out to our Maryland service territory.

John Kiani: Vertically integrated utilities that actually own generation, you guys et cetera.

Late last year and got to go see what's going on at that Quanta loophole datacenter development. It is unbelievable whats going on out there.

Speaker Change: <unk> on the business and I'm just wondering if you do expect to have.

Speaker Change: Yes.

Speaker Change: Secondary benefit associated with the lost gross I can't translating into either higher T&D capex or.

They are re creating something thats on the scale of the data center footprint in Northern Virginia.

Speaker Change: Maybe.

Speaker Change: Yes.

Ability because of higher volumes I mean, you name. It just wondering if you see.

Kind of in the in the hills of Western Maryland, and its at a site of a former aluminum smelter out. There. So you have these high voltage transmission lines that go and just stop in the middle of space, where the smelter used to be and where they're investing they're turning dirt theyre moving ground right.

Speaker Change: See that benefit the current team as well.

Speaker Change: Thank you for the question Angie, we absolutely do and Youre right being mostly a wires company.

John Kiani: Certainly in four of our five states, we don't have as much of the generation opportunity, but I mentioned in my remarks.

Now to build one of the largest data center complex in the complex is in the world. So we're seeing it in Maryland, it's going to be coming to Pennsylvania.

John Kiani: The answer to an earlier question.

John Kiani: The opportunity that we had associated with the PJM open windows III for incremental transmission investment over $800 million.

Ohio for us as well.

We're hopeful for New Jersey, and West Virginia over time, so, it's coming and it's real and it does create incremental investment opportunities for us.

John Kiani: I had the pleasure of going out to our Maryland service territory late.

John Kiani: Late last year and got to go see what's going on at that Quanta loophole datacenter development.

And then just one one last follow up so you mentioned affordability.

John Kiani: It is on believable, what's going on out there.

You are right. There is so much lower than your peers you.

John Kiani: They are re creating something thats on the scale of the data center footprint in Northern Virginia out kind of in the in the hills of Western Maryland, and its at a site of a former aluminum smelter out there. So you have these high voltage transmission lines that go in.

Assets under invested when you look at rate base per customer, but I'm. Just wondering does it does all of these investments so acceleration of investments happens in a low power price environment.

Given the low growth low power price environment is not sustainable so I'm, just wondering what happens to that investment plan.

John Kiani: Just stop in the middle of space, where the smelter used to be and where they're investing they're turning dirt theyre moving ground right now to build one of the largest data center complex in the complex in the world. So we're seeing it in Maryland, it's going to be coming to Pennsylvania.

<unk> go up meaningfully.

The customer Bill.

<unk> increases because of that commodity components.

So that's a good question Angie I think we've already seen some of that.

Associated with things like the war in Ukraine, and the like and we saw that in some of the polar prices that we had when we went out for auctions during the period. When we thought prices were going to be really really high because of what's going on in Europe.

John: In Ohio for Us as well and we're hopeful for New Jersey, and West Virginia overtime, So, it's coming and it's real and it does create incremental investment opportunities for us.

And then just one last follow up so you mentioned affordability.

Some of those price spikes went through to our customers really in Ohio, beginning like the day I started on June <unk> of last year.

Speaker Change: You are right. There is so much lower than your peers you assets under invested when you to cut rate base per customer but.

So we saw some of those.

Price spikes go through the customer rates and now Theyre coming off as John mentioned.

Speaker Change: I'm just wondering does it does all of these investments of acceleration of investments happens in a low power price environment.

Earlier, we're having auctions that are printing lower prices in those lower prices or passing through to our customers. So.

John: Given the low growth low power price environment is not sustainable so I'm, just wondering what happens to that investment plan.

I don't see that as being a big concern there are some things that are moderating that impact in.

John: Power prices go up meaningfully.

John: The customer bill meaningfully increases because of that commodity components.

And again, our prices are so low the share of wallet is so low for us.

<unk> electricity still represents a significant value to customers in all five of our states.

Speaker Change: So that's a good question Angie I think we've already seen some of that.

Speaker Change: Associated with things like the war in Ukraine, and the like and we saw that in some of the polar prices that we have when we went out for auctions during the period. When we thought prices were going to be really really high because of what's going on in Europe.

Okay. Thank you.

Thank you Angie.

Our next question comes from Paul Patterson with Glen Rock Associates. Please proceed with your question.

Hey, guys.

Congratulations I just wanted to just wanted to sort of touch base again I apologize on this.

John: Some of those price spikes went through to our customers really in Ohio, beginning like the day I started on June <unk> of last year.

This single digit.

Increase is that rates or is it bills and can you be a little bit more specific.

So we saw some of those.

In terms of what that means I mean, obviously, it's a big range there right.

John: Price spikes go through the customer rates and now they are coming off as John mentioned.

Just a little bit more elaboration as to what you see sort of the right trajectory range being associated with.

John: Earlier, we're having auctions that are printing lower prices in those lower prices or passing through to our customers. So.

With the <unk>.

What's your what's your planning long term.

John: I don't see that as being a big concern there are some things that are moderating that impact in.

Well.

So this is John so I would tell you that as we think about the cases that we filed this year.

John: And again, our prices are so low the share of wallet is so low for us.

The increases since the last rate case are single digits by low low single digits. So on average New Jersey was three 4% yet but on an average basis since the last rate case, it's probably less than 1% a year.

John: <unk> electricity still represents a significant value to customers in all five of our states.

Speaker Change: Great. Thank you.

Speaker Change: Thank you Angie.

Speaker Change: Our next question comes from Paul Patterson with Glen Rock Associates. Please proceed with your question.

And Thats, what you see going forward is that correct.

Paul Patterson: Hey, guys.

When you're at low single digits is what you guys paid.

Paul Patterson: Congratulations just wanted to just wanted to sort of touch base again I apologize on this.

Well I think I think you got to think of it. This way we haven't been in for a rate case in Pennsylvania from quite some time, Ohio, we haven't been in.

John: This single digit.

John: Increase is that rates or does it build and can you be a little bit more specific.

And almost a over a decade.

Speaker Change: In terms of what that means I mean, obviously, it's a big range there right.

So I do think there'll be some some increases there, but when you average it out since the time of the last rate case, it's very manageable.

Speaker Change: Just a little bit more elaboration as to what you see sort of the right trajectory range being associated with.

Okay, and then finally on grid Mod do you see any settlement possibility I know you guys sort of thought about that before that was sort of a delay and staff testimony it.

John: With the <unk>.

John: With what's your what's your planning long term.

John: Well.

John: So this is John so I would tell you that as we think about the cases that we filed this year.

It looks like you're now talking about hearings.

Do you expect that to be fully litigated at this point.

We would look we're always open to the settlement option and think Thats always preferable. If we're going to go to hearing like we have an ESP five we're okay with that we think will get positive outcomes in any regard Paul the settlement discussions that we have start to frame people's position.

John: The increases since the last rate case are single digits like low low single digits. So on average New Jersey was three 4%, but on an average basis since the last rate case, it's probably less than 1% a year.

John: And that's what you see going forward is that when you're at low single digits is what you guys paid.

<unk>, four where they'll be at the table at a hearing and so we viewed as being a constructive process. Even if we have to go to hearing.

Speaker Change: Well I think I think you got to think of it. This way we haven't been in for a rate case in Pennsylvania from quite some time, Ohio, we haven't been in.

Okay.

I'll leave it there. Thanks, so much guys have a good weekend. Thank you Paul Thanks, you too.

Speaker Change: And almost a over a decade.

Our next question comes from David Arcaro with Morgan Stanley. Please proceed with your question.

John: So I do think there'll be some some increases there, but when you average it out since the time of the last rate case, it's very manageable.

Oh, Hey, good morning, Thanks for taking the question I was just wondering could you refresh us on any strategic options that might be available for the signal peak business sense as you're thinking about that now.

Speaker Change: Okay, and then finally on grid Mod do you see any settlement possible. The I know you guys sort of thought about that before that was sort of a delay and staff testimony it.

In this environment, there's not a lot of options. Obviously, we look at that quite frequently it's not a core business for us.

John: It looks like you're now talking about hearings.

John: You expect that to be fully litigated at this point.

Speaker Change: Look we're always open to settlement option and think Thats always preferable if we're going to go to hearing like we have an ESP five we're okay with that we think will get positive outcomes in it.

We've looked at that in the past several times its just.

Theres not a lot of buyers out there.

So the options are fairly limited, but if you think about it in the Grand scheme of things, it's going to be such a de minimis part of our company moving forward.

John: In any regard Paul the settlement discussions that we have start to frame people's positions for where they will be at the table at a hearing and so we viewed as being a constructive process. Even if we have to go to hearing.

That is not going to have the same impact that it has had the last couple of years.

Of course, great Yeah that makes sense. Thanks.

Okay.

Thanks, David.

Speaker Change: I'll leave it there. Thanks, so much guys have a good weekend. Thank you Paul Thanks, you too.

Our next question comes from Sophie Karp with Keybanc capital markets. Please proceed with your question.

John: Our next question comes from David Arcaro with Morgan Stanley. Please proceed with your question.

Hi, Good morning, Thank you for squeezing me in here.

David Arcaro: Oh, Hey, good morning, Thanks for taking the question I was just wondering could you refresh us on any strategic options that might be available for the signal peak businesses actually thinking about that now.

Good morning.

Yes, most of my questions have been asked but maybe I can just.

I'll ask you about the balance sheet.

Speaker Change: In this environment, there's not a lot of options. Obviously, we look at that quite frequently it's not a core business for us.

Are you completely happy with their balance sheet shape at this point and if not what are the incremental goal here in terms of that.

John: We've looked at that in the past several times its just.

I know credit, creating incremental balance sheet strength.

Speaker Change: Theres not a lot of buyers out there and so the options are fairly limited, but if you think about it in the Grand scheme of things, it's going to be such a de minimis part of our company moving forward.

But to satisfy.

Okay. Thank you for the question. So we are really pleased with the shape of the balance sheet at this point.

We're going to get the incremental $3 5 billion.

Speaker Change: That is not going to have the same impact that it has had the last couple of years.

In the door in 2020 for most of that coming in March of this year anticipated with the Brookfield.

Speaker Change: Of course, great that makes sense. Thanks.

Transaction.

Speaker Change: Thanks, David.

That caps off what's a total of about a $7 billion raise.

Speaker Change: Our next question comes from Sophie Karp with Keybanc capital markets. Please proceed with your question.

Over the last three years.

Sophie Karp: Hi, Good morning, Thank you Cor as Google named here.

That work has been intentional and purposeful by the board and the management team even before I got here for sure.

Sophie Karp: Good morning.

Sophie Karp: Yes, most of my questions have been asked but maybe I can just.

Speaker Change: I'll ask you about the balance sheet.

To strengthen that balance sheet, so we'd be in a position position that we are today to be able to invest the way that we've laid out for you today and our regulated.

Speaker Change: Are you completely happy with their balance sheet shape at this point and if not what are the incremental goal here in terms of that.

Property, we anticipate by the end of 'twenty four being at 2024 of being at a 14% to 15% <unk> to debt range and we're anticipating rating agency positive actions associated with the strength of our balance sheet. So we're really really pleased with where we are from a balance.

Speaker Change: Credit, creating incremental balance sheet strength.

Speaker Change: But the satisfied.

Speaker Change: Yes. Thank you for the question. So we are really pleased with the shape of the balance sheet at this point.

Speaker Change: We're going to get the incremental $3 5 billion.

Speaker Change: In the door in 2020 for most of that coming in March of this year anticipated with the Brookfield.

Sheet strength situations.

Sophie I would just add if you think about where the company has come from.

Speaker Change: Transaction that caps off what's a total of about $7 billion raise.

With holding company debt, probably in the 30% plus range today, it's 26% with a plan to get it to 20% or better by 2026.

Speaker Change: Over the last three years.

That's a strong story and it really started back in late 2021, when we announced the.

Speaker Change: That work has been intentional and purposeful by the board and the management team even before I got here for sure.

The equity transactions with Blackstone and Brookfield, and then we followed it up with the second transaction with <unk> for another $3 5 billion and we all did that in a in a very shareholder friendly way. So we're excited about where the balance sheet is headed and we wouldn't have this capital plan without a strong balance sheet that we have.

Speaker Change: To strengthen that balance sheet, so we'd be in the position that we are today to be able to invest the way that we've laid out for you today and our regulated.

Speaker Change: <unk>.

Speaker Change: We anticipate by the end of 'twenty four being at 2024 of being at a 14% to 15% <unk> to debt range and we're anticipating rating agency positive actions associated with the strength of our balance sheet. So we're really really pleased with where we are from a balance sheet strength.

Got it. Thank you so much thank.

Thank you Sofia.

Okay.

Our next question is from Anthony <unk> with Mizuho. Please proceed with your question.

Hey, good morning, Thanks for squeezing me in I had had five questions short at the mall, though but just I guess quickly Brian.

Speaker Change: Yes, Sophie I would just add if you think about where the company has come from.

You've had a busy eight months.

Speaker Change: Holding company debt, probably in the 30% plus range today, it's 26% with a plan to get it to 20% or better by 2026.

I appreciate the Capex update it seems that you've accomplished a lot of what you were planning the year ahead.

What should we expect.

Speaker Change: That's a strong story and it really started back in late 2021, when we announced the.

So I think more of the same Anthony. Thank you for the question. So we've talked about how we're reorganizing the company about how we're changing the segment reporting to reflect that.

Speaker Change: The equity transactions with Blackstone and Brookfield, and then we followed it up with the second transaction with <unk> for another $3 5 billion and we all did that in a very shareholder friendly way. So we're excited about where the balance sheet is headed and we wouldn't have this capital plan without a strong balance sheet that we have.

I mentioned some of the key hires that we made at the end of 2023, we have six more key hires that we need to make the five people to run our major businesses and a shared services executive that we're looking for as well so.

Speaker Change: Got it thank you so much.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Our next question is from Anthony <unk> with Mizuho. Please proceed with your question.

As we make progress on that we will then have the team.

Ready to help move in the direction that we've laid out for you and execute against the plan that we described today. So it's really getting the right people in the right seats to manage the company the way that we've laid out for you and execute against a fantastic plan that we have.

Anthony: Hey, good morning, Thanks for squeezing me in I had had five question Sean had asked them, all though but just I guess quickly Brian.

Speaker Change: You've had a bill mudd.

Yes.

Speaker Change: Appreciate the Capex update it seems that you've accomplished a lot of what you were planning.

Speaker Change: The year ahead.

Great again, congrats thanks again for taking the question.

Speaker Change: What should we expect.

Thank you Anthony.

Speaker Change: So I think more of the same Anthony Thank you for the question.

We have reached the end of the question and answer session and this concludes today's conference for today you may disconnect. Your lines at this time and we thank you for your participation.

Speaker Change: We've talked about how we're reorganizing the company about how we're changing our segment reporting to reflect that I mentioned some of the key hires that we made at the end of 2023, we have six more key hires that we need to make the five people to run our <unk>.

Speaker Change: Major businesses and a shared services executive that we're looking for as well so as we make progress on that we will then have the team.

Speaker Change: Ready to help move in the direction that we've laid out for you and execute against the plan that we described today so.

It's really getting the right people in the right seats to manage the company the way that we've laid out for you and execute against a fantastic plan that we have.

Speaker Change: Great again, congrats thanks again for taking the question.

Speaker Change: Thank you Anthony.

Speaker Change: We have reached the end of our question and answer session and this concludes today's conference for today you may disconnect. Your lines at this time and we thank you for your participation.

Speaker Change: Okay.