Q1 2024 FirstEnergy Corp Earnings Call

April 26, 2024

Brian X. Tierney: It is important to note that higher revenues from investments to better serve our customers and more favorable weather compared to last year were offset by higher planned O&M expenses and the expected decrease in signal peak earnings, which resulted in higher quality utility earnings for the quarter. John will provide additional details later in the call. During the last earnings call, we announced our five-year, $26 billion investment program to better serve our customers, branded as Energize 365.

Operator: Hello, and welcome to the FirstEnergy Corp. first quarter 2024 earnings call. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed on a question queue at any time by pressing star 1 on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Irene Prezelj, Vice President of Investor Relations and Communications.

Hello, and welcome to the Firstenergy Corp, first quarter 2024 earnings call. If anyone should require operator assistance. Please press star zero on your telephone keypad.

Brian X. Tierney: That plan, combined with our ongoing regulatory updates and our continuous improvement program, gives us the confidence to affirm our 6-8% long-term operating growth rate. We are also affirming our operating earnings guidance range of $2.61 to $2.81 per share for 2024. We are providing guidance of $0.50 to $0.60 per share for the second quarter of this year. Our confidence in the future gave us the opportunity to increase our dividend again to 42.5 cents per share, payable in June. On an annual basis, this would represent an increase of 6.25 percent versus dividends declared in 2023.

A question and answer session will follow the formal presentation.

He may be placed to the question queue at any time by pressing star one on your telephone keypad.

As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to Irene <unk>, Vice President of Investor Relations and Communications. Please go ahead Irene.

Irene M. Prezelj: Thank you. Good morning, everyone, and welcome to FirstEnergy's First Quarter 2024 Earnings Review. Our President and Chief Executive Officer, Brian Tierney, will lead our call today, and he will be joined by John Taylor, our Senior Vice President and Chief Financial Officer. Our earnings release, presentation slides, and related financial information are available on our website at firstenergycorp.com. Today's discussion will include the use of non-GAAP financial measures and forward-looking statements. Factors that could cause our results to differ materially from those forward-looking statements can be found in our SEC filings. 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.

Irene: Thank you good morning, everyone and welcome to the Firstenergy <unk> first quarter 2024 earnings review.

Irene: 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.

Irene: Our earnings release presentation slides and related financial information are available on our website at Firstenergy Corp Dotcom.

Brian X. Tierney: We are continuing to make progress on recruiting and hiring executives to run our five primary businesses. We expect to make announcements in the near term. Earlier this month, we announced the hiring of John Combs as our Senior Vice President of Shared Services. John was most recently an SBP and Chief Technology Officer at JPMorgan Chase. John's deep background in technology and leadership, as well as his financial acumen, make him the perfect person to lead our IT, supply chain, flight operations, and corporate and cybersecurity organizations. We are thrilled to welcome John to the team.

Irene: Today's discussion will include the use of non-GAAP financial measures and forward looking statements.

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

Irene: <unk> 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.

Brian X. Tierney: Thank you, Irene. Good morning, everyone.

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

Brian X. Tierney: Thank you for joining us today and for your interest in FirstEnergy. This morning, I will review financial performance and highlights for the first quarter, provide some updates on key regulatory developments, and discuss FirstEnergy's shareholder value proposition. For the first quarter, FirstEnergy delivered gap earnings of $0.44 per share compared to $0.51 per share in 2023. Operating earnings were $0.55 per share, $0.02 higher than the midpoint of guidance for the quarter, versus $0.60 per share last year.

Brian X. Tierney: On March 25th, FirstEnergy closed on the final phase of our multi-year $7 billion equity raise to improve our balance sheet and fuel our growth. We received $2.3 of the $3.5 billion proceeds with the balance and interest-bearing notes that are expected to be repaid this year. We are excited to have Brookfield as our partner in the fast-growing transmission segment of our business. The impact of this transaction on FirstEnergy as the final phase of the $7 billion equity raise cannot be overstated. The total equity on the balance sheet increased by 25% in the three months ended March 31st.

Brian X. Tierney: This morning, I will review financial performance and highlights for the first quarter provide some updates on key regulatory developments and review firstenergy shareholder value proposition.

Brian X. Tierney: For the first quarter Firstenergy delivered GAAP earnings of 44 per share compared to <unk> 51 per share in 2023 opt.

Brian X. Tierney: Operating earnings were <unk> 55 per share <unk> <unk> higher than the midpoint of guidance for the quarter versus <unk> 60 per share last year.

Brian X. Tierney: It is important to note that higher revenues from investments to better serve our customers and more favorable weather compared to last year were offset by higher planned O&M expenses and the expected decrease in signal peak earnings resulted in higher quality utility earnings for the quarter John will provide additional details later in the call.

Brian X. Tierney: That's truly remarkable for a company of FirstEnergy's size. For the first time in this company's history, we are fully regulated, mostly wires, with a strong balance sheet that enables organic investment in our utility companies to improve reliability and our customers' experience. Following the closing of the transaction, Moody's recognized the impact of the company by upgrading FirstEnergy Corp.'s senior unsecured rating to investment grade. On Tuesday, S&P upgraded FirstEnergy's corporate credit rating to BBB and our senior unsecured rating to investment grade with a positive outlook.

Brian X. Tierney: During the last earnings call, we announced our five year 'twenty 6 billion dollar investment program to better serve our customers branded as energized $3 65.

Brian X. Tierney: That plan, combined with our ongoing regulatory updates and our continuous improvement program, gives us the confidence to affirm our 6 to 8 percent long-term operating growth rate. We are also affirming our operating earnings guidance range of $2.61 to $2.81 per share for 2024. We are providing guidance of $0.50 to $0.60 per share for the second quarter of this year. Our confidence in the future gave us the opportunity to increase our dividend again to 42.5 cents per share, payable in June. On an annual basis, this would represent an increase of 6.25 percent versus dividends declared in 2023.

Brian X. Tierney: That plan combined with our ongoing regulatory updates and our continuous improvement program.

Brian X. Tierney: Give us the confidence to affirm our 6% to 8% long term operating its growth rate.

Brian X. Tierney: We are also affirming our operating earnings guidance range of $2 61 to.

Brian X. Tierney: The balance sheet strength and clean business model represented on this slide capture a lot of what excited me to come to FirstEnergy. Now, let me provide some updates on key regulatory initiatives. People have asked us how they will know when we are making progress on a regulatory plan. I tell them to look for milestones where we are getting fair and reasonable regulatory outcomes. During the quarter, we proved that we can obtain constructive regulatory outcomes across our jurisdiction. We received approval of our rate case settlement in New Jersey, authorizing a 9.6% ROE and a 52% equity capitalization ratio. Even with this increase, JCP&L's rates remain 26% below our in-state peers.

Brian X. Tierney: To $2 81 per share for 2024.

Brian X. Tierney: We are providing guidance of 50 to 60 per share for the second quarter of this year.

Brian X. Tierney: Our confidence in the future gave us the opportunity to increase our dividend again to <unk> 42, and a half cents per share payable in June.

Brian X. Tierney: On an annual basis. This would represent an increase of $6 two 5% versus dividends declared in 2023.

Brian X. Tierney: We are continuing to make progress on recruiting and hiring executives to run our five primary businesses, we expect to make announcements in the near term.

Brian X. Tierney: Earlier this month, we announced the hiring of John Combs, as our senior Vice President of shared services.

John William Somerhalder: John was most recently, an SVP and Chief Technology Officer at J P. Morgan Chase.

John William Somerhalder: John's deep background in technology and leadership as well as his financial acumen make him the perfect person to lead our I T supply chain flight operations, and corporate and cyber security organizations, we're thrilled to welcome John to the team.

Brian X. Tierney: The West Virginia Public Service Commission approved constructive depreciation and the base rate case settlement. In addition, they approved an expanded net energy fuel charge settlement for recovery of about a quarter of a billion dollars through 2026 with no disallowances. For investors looking for milestones that FirstEnergy can obtain fair and reasonable regulatory outcomes, we provided several examples during the quarter. John will provide additional detail on the results in his remarks.

John William Somerhalder: On March 25th Firstenergy closed on the final phase of our multi year $7 billion equity raise to improve our balance sheet and fuel our growth.

John William Somerhalder: We received 2.3 of the $3 5 billion proceeds with the balance of interest bearing notes that are expected to be repaid this year.

John William Somerhalder: We are excited to have Brookfield as a partner in the fast growing transmission segment of our business.

Brian X. Tierney: For the balance of the year, we have an active regulatory schedule. In Ohio, we filed a settlement in our Grid Mod 2 case, asking for the opportunity to complete our advanced meter infrastructure rollout over four years. A hearing is scheduled for June 5th.

John William Somerhalder: Okay.

John William Somerhalder: The impact of this transaction on Firstenergy as the final phase of the $7 billion equity raise cannot be overstated.

John William Somerhalder: The total equity on the balance sheet increased 25% in the three months ended March 31.

Brian X. Tierney: Approval of this non-controversial settlement will bring us to parity with our in-state peers. We are expecting approval of our ESP-5 filing this quarter, and we will file a base rate case next month. That case will seek a modest increase in base rates but will reset a number of riders since the last base rate case. Earlier this month in Pennsylvania, we filed a base rate case requesting an 11.3% ROE and a 53.8% equity ratio. We expect a decision in December, with rates effective in January of next year.

John William Somerhalder: That's truly remarkable for a company of Firstenergy size.

John William Somerhalder: For the first time in this company's history, we're fully regulated mostly wires with a strong balance sheet that enables organic investment in our utility companies to improve reliability and our customers experience.

John William Somerhalder: Following the closing of the transaction Moody's recognize the impact of the company by upgrading Firstenergy Corp, 's senior unsecured rating to investment grade.

John William Somerhalder: On Tuesday, S&P upgraded Firstenergy corporate credit rating to Triple B, and our senior unsecured rating to investment grade with a positive outlook.

John William Somerhalder: The balance sheet strength and cleaning business model represented on this slide capture a lot about what excited me to come to Firstenergy.

Brian X. Tierney: Before I turn the call over to John, I would like to highlight the value proposition that FirstEnergy offers to shareholders. We have completed a multi-year overhaul of our balance sheet and have achieved investment-grade status at both Moody's and S&P. Our strong balance sheet differentiates FirstEnergy from many of our industry peers in that we do not anticipate incremental equity needs to fund our $26 billion investment plan. Our long-term annual operating earnings growth rate, combined with our dividend yield, represents a total shareholder return potential of 10 to 12 percent.

John William Somerhalder: Let me provide some updates on key regulatory initiatives.

John William Somerhalder: People have asked us how they will know when we are making progress on our regulatory plan.

John William Somerhalder: I would tell them to look for milestones, where we are getting fair and reasonable regulatory outcomes.

John William Somerhalder: During the quarter, we proved that we can obtain constructive regulatory outcomes across our jurisdictions.

John William Somerhalder: We just received approval of a rate case settlement in New Jersey, authorizing a nine 6% our O E and a 52% equity capitalization ratio.

John William Somerhalder: Even with this increase JC P&L as rates remained 26% below our instate peers.

Brian X. Tierney: Our earnings quality is vastly improved, driven by growth in our core regulated businesses, and our customers' affordability remains strong throughout the investment period. FirstEnergy represents a high quality and attractive risk value proposition to our shareholders. With that, I will turn the call over to John.

John William Somerhalder: The West Virginia Public Service Commission approved constructive depreciation and base rate case settlements.

John William Somerhalder: In addition, they approved an expanded net energy fueled charged settlement for recovery of about a quarter of a $1 billion through 2026 with no disallowances.

John William Somerhalder: For investors looking for milestones that Firstenergy can obtain fair and reasonable regulatory outcomes. We provided several examples during the quarter.

John William Somerhalder: Thank you, Brian, and good morning, everyone. Despite another mild winter, we are off to a good start this year with strong execution and financial discipline from our team that resulted in operating earnings above the midpoint of our guidance. And we are reaffirming our full-year operating earnings guidance range of $2.61 to $2.81 a share, which represents a 7% increase versus the midpoint of our 2023 guidance. Today, I'll review financial performance for the quarter, our progress on key strategic regulatory initiatives, and close with some details on the balance sheet.

John William Somerhalder: John will provide additional detail on the results in his remarks.

Brian X. Tierney: For the balance of the year, we have an active regulatory schedule. In Ohio, we filed a settlement in our GridMod 2 case, asking for the opportunity to complete our advanced meter infrastructure rollout over four years. A hearing is scheduled for June 5th.

John William Somerhalder: For the balance of the year, we have an active regulatory schedule.

John William Somerhalder: In Ohio, we filed a settlement in our grid Mod to case asking for the opportunity to complete our advanced meter infrastructure rollout over four years. A hearing is scheduled for June 5th approval of this noncontroversial settlement will bring us to parity with our instate peers.

John William Somerhalder: We're expecting approval of our ESP five filing this quarter and we will file a base rate case next month that.

John William Somerhalder: That case will seek a modest increase in base rates, but will reset a number of riders since the last base rate case.

John William Somerhalder: Looking at our financial performance for the quarter, operating earnings were $0.55 a share, which is above the midpoint of our guidance, despite the mild temperatures this winter that impacted retail sales, and includes a planned increase in operating expenses as discussed on the fourth quarter call. This compares to 2023 first quarter operating earnings of $0.60 a share. As we also mentioned on the fourth-quarter call, earnings growth this year will be back in line, given the effective dates of rate cases in West Virginia and New Jersey and planned increases in operating expenses in the first half of this year associated with the timing of maintenance work.

John William Somerhalder: Earlier this month in Pennsylvania, we filed a base rate case requesting an 11, 3% our O E and a 53, 8% equity ratio. We expect a decision in December with rates effective in January of next year.

Okay.

Speaker Change: Before I turn the call over to John I would like to highlight the value proposition that first energy offers to shareholders.

Speaker Change: We have completed the multiyear overhaul of our balance sheet and have achieved investment grade status at both Moody's and S&P.

John: Our strong balance sheet differentiates firstenergy for many of our industry peers and that we do not anticipate incremental equity needs to fund our $26 billion investment plan.

John: Our long term annual operating earnings growth rate combined with our dividend yield represent a total shareholder return potential of 10% to 12%.

Brian X. Tierney: Our earnings quality is vastly improved, driven by growth in our core regulated businesses, and our customers' affordability remains strong throughout the investment period. At the end of a significant business transition led by our Board of Directors of Management, FirstEnergy represents a high quality and attractive risk value proposition to our shareholders. With that, I will turn the call over to John.

John William Somerhalder: Our first quarter results are detailed in the Strategic and Financial Highlights document we posted to our IR website last night. At a consolidated level, first quarter earnings of $0.55 per share were impacted by higher planned operating expenses and improved earnings quality from an expected decrease in earnings from signal peak, partially offset by increases from new base rates and rate-based growth in formula rate programs. And although customer demand was not a significant driver year over year, given the mild winter in the first quarter of 2023, retail sales were down 6% versus plan, primarily associated with heating degree days that were 14% below normal, impacting results by 7 cents a share versus our plan.

John: Our earnings quality is vastly improved driven by growth in our core regulated businesses and our customers' affordability remains strong throughout the investment period.

John: At the end of a significant business transition led by our board of directors and management team Firstenergy represents a high quality and attractive risk value proposition to our shareholders.

With that I will turn the call over to John.

John William Somerhalder: Thank you, Brian, and good morning, everyone. Despite another mild winter, we are off to a good start this year with strong execution and financial discipline from our team that resulted in operating earnings above the midpoint of our guidance. And we are reaffirming our full-year operating earnings guidance range of $2.61 to $2.81 a share, which represents a 7% increase versus the midpoint of our 2023 guidance. Today I'll review financial performance for the quarter, our progress on key strategic regulatory initiatives, and close with some details on the balance sheet.

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

Despite another mild winter we are off to a good start this year with strong execution and financial discipline from our team that resulted in operating earnings above the midpoint of our guidance and.

John: And we are reaffirming our full year operating earnings guidance range of $2 61 to.

John: To $2 81, a share.

John: Which represents a 7% increase versus the midpoint of our 2023 guidance.

John: Today, I'll review financial performance for the quarter, our progress on key strategic regulatory initiatives and close with some details around the balance sheet.

John: Looking at our financial performance for the quarter operating earnings were <unk> 55, a share which is above the midpoint of our guidance. Despite the mild temperatures. This winter that impacted retail sales and includes a planned increase in operating expenses as discussed on the fourth quarter call. This compares to 2023 first quarter operating earnings.

John William Somerhalder: Well, let's also take a few minutes to review our segment results, which you will notice in our filings and presentation, the segment reporting change consistent with how we're managing the business. We are now organized into easy-to-follow segments of distribution, integrated, standalone transmission, and corporate. This streamlined and transparent reporting places entire companies in individual segments, Simplifying Reporting and Eliminating Reconciliation.

John: <unk> 60 a share.

John: As we also mentioned on the fourth quarter call earnings growth. This year will be backend loaded given the effective date of rate cases in West, Virginia, and New Jersey and planned increases in operating expenses in the first half of this year associated with the timing of maintenance work.

John William Somerhalder: In our distribution business, operating earnings were $0.30 a share versus $0.33 per share in the first quarter of last year, impacted largely by the planned increase in operating expenses I mentioned earlier, specifically around vegetation management work, partially offset by an increase in rates from capital investment programs and lower rate credits in Ohio. And our integrated segment operating earnings were $0.15 a share compared to $0.14 per share in the first quarter of last year.

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

John: At a consolidated level first quarter earnings of 55 per share were impacted by higher planned operating expenses and improved earnings quality from an expected decrease in earnings from signal peak.

John: Partially offset by increases from new base rates and rate base growth and formula rate programs.

John: And although customer demand was not a significant driver of year over year, given the mild winter in the first quarter of 2023.

John William Somerhalder: Results increased largely due to the implementation of base rates in all three jurisdictions in this business and rate-based growth in formula rate programs, including integrated transmission investment, partially offset by planned increases in operating. In our standalone transmission segment, operating earnings were $0.18 a share versus $0.17 per share in the first quarter of 2023, resulting from a 9% year-over-year rate-based growth from our Formula Rate Transmission Capital Investment Program. And finally, in our corporate segment, losses were $0.08 per share versus $0.04 per share in the first quarter of 2023, primarily reflecting the lower planned earnings contribution from our one-third ownership interest in the Signal Peak mining operation, decreasing from $0.08 per share in the first quarter of last year to $0.03 per share in the first quarter of this year.

John: Retail sales were down 6% versus plan, primarily associated with heating degree days that were 14, 14% below normal impacting results by <unk> <unk> or <unk>.

John: <unk> versus our plan.

But let's also take a few minutes to review our segment results, which you will notice in our filings and presentation. This segment reporting change consistent with how we're managing the business we're.

John: We are now organized into easy to follow segments of distribution integrated standalone transmission and corporate.

John: This streamlined and transparent reporting places entire companies and individual segments.

Simplifying reporting and eliminating reconciliations.

John William Somerhalder: In our distribution business, operating earnings were $0.30 a share versus $0.33 per share in the first quarter of last year, impacted largely by the planned increase in operating expenses I mentioned earlier, specifically around vegetation management work, partially offset by an increase in rates from capital investment programs and lower rate credits in Ohio. In our integrated segment, operating earnings were $0.15 a share compared to $0.14 per share in the first quarter of last year.

John: And our distribution business operating earnings were <unk> 30, a share versus 33.

John: For sure in the first quarter of last year.

John: Impacted largely by the planned increase in operating expenses I mentioned earlier, specifically around vegetation management work, partially offset by an increase in rates from capital investment programs and lower rate credits in Ohio.

John: And our integrated segment operating earnings were <unk> 15, a share compared to <unk> 14 per share in the first quarter of last year.

John William Somerhalder: Turning briefly to capital investments, the first quarter capex totaled just under $900 million, an increase of nearly 22% versus 2023 levels and slightly ahead of our plan across each of our businesses focusing on grid modernization, transmission, and infrastructure renewal investments. As a reminder, CapEx for this year is planned at $4.3 billion versus $3.7 billion in 2023. Turning to regulatory activity, we are very pleased with the outcomes in the recent base rate case wars, consistent with our plan that allows for solid regulated returns for investors while keeping rates affordable for customers.

John William Somerhalder: Results increased largely due to the implementation of base rates in all three jurisdictions in this business and rate-based growth in formula rate programs, including integrated transmission investment, partially offset by planned increases in operating. For our standalone transmission segment, operating earnings were $0.18 a share versus $0.17 per share in the first quarter of 2023, resulting from a 9% year-over-year rate-based growth from our Formula Rate Transmission Capital Investment Program. And finally, in our corporate segment, losses were $0.08 per share versus $0.04 per share in the first quarter of 2023, primarily reflecting the lower planned earnings contribution from our one-third ownership interest in the Signal Peak mining operation, decreasing from $0.08 per share in the first quarter of last year to $0.03 per share in the first quarter of this year.

John: Results increased largely due to the implementation of base rates in all three jurisdictions in this business and rate base growth and formula rate programs, including integrated transmission investments, partially offset by planned increases in operating expenses.

John: And our Standalone transmission segment operating earnings were <unk> 18 cents, a share versus <unk> 17 per share in the first quarter of 2023, resulting from a 9% year over year rate base growth from our formula rate transmission capital investment program.

John: And finally in our corporate segment losses were <unk> <unk> per share versus <unk> <unk> per share in the first quarter of 2023, primarily reflecting the lower planned earnings contribution from our one third ownership interest in the signal peak mining operation decreasing from <unk> <unk> per share in the first quarter of last year to <unk> <unk> per.

Speaker Change: Sure in the first quarter of this year.

John William Somerhalder: Turning briefly to capital investments, first quarter CapEx totaled just under $900 million, an increase of nearly 22% versus 2023 levels and slightly ahead of our plan across each of our businesses focusing on grid modernization, transmission, and infrastructure renewal investments. As a reminder, CapEx for this year is planned at $4.3 billion versus $3.7 billion in 2023. Turning to regulatory activity, we are very pleased with the outcomes in the recent base rate case wars, consistent with our plan that allows for solid regulated returns for our investors while keeping rates affordable for customers.

Speaker Change: Turning briefly to capital investments first quarter Capex totaled just under $900 million, an increase of nearly 22% versus 2023 levels and slightly ahead of our plan across each of our businesses focusing on grid modernization transmission and infrastructure renewal investments.

John William Somerhalder: And we're committed to our customers and our communities to enhance reliability performance and support the energy transition through our Energize 365 capital investment program. As Brian mentioned, in mid-February, the New Jersey BPU issued a final order on JCP&L's base rate case. The new rates, which customers will see effective June 1st, and continue to be well below our in-state peer average, represent an $85 million rate adjustment on a rate base totaling $3 billion, an ROE of 9.6%, and a 52% equity capitalization ratio.

Speaker Change: As a reminder, capex for this year is planned at $4 3 billion versus $3 7 billion in 2023.

Speaker Change: Turning to regulatory activity, we are very pleased with the outcomes and the recent base rate case orders consistent with our plan that allows for solid regulated returns for our investors, while keeping rates affordable for customers.

John William Somerhalder: And we're committed to our customers and our communities to enhance reliability, performance, and support the energy transition through our Energize 365 capital investment program. As Brian mentioned, in mid-February, the New Jersey BPU issued a final order on JCP&L's base rate case. The new rates, which customers will see effective June 1st, and continue to be well below our in-state peer average, represent an $85 million rate adjustment on a rate base totaling $3 billion, an ROE of 9.6%, and a 52% equity capitalization ratio.

Speaker Change: And we're committed to our customers and our communities to enhance reliability performance and support the energy transition through our energized $3 65 capital investment program.

John William Somerhalder: And we are currently working through our Energize New Jersey infrastructure improvement proposal initially filed in November, including over $900 million in capital investments over five years aimed to enhance reliability and modernize the distributions. In West Virginia, on March 26th, we received a final order from the Public Service Commission on our base rate case, with rates effective March 27. The case resulted in a $105 million rate adjustment on a rate base of $3.2 billion, an allowed ROE of 9.8%, and a 49.6% equity ratio. However, rates for our West Virginia customers remain about 22% below our in-state peers.

Speaker Change: As Brian mentioned in mid February the New Jersey Btu issued a final order on <unk> base rate case, the new rates, which customers will see effective June one.

Speaker Change: And continue to be well below our in state peer average represent an $85 million rate adjustment on rate base totaling $3 billion.

Speaker Change: And ROE of nine 6%.

Speaker Change: A 52% equity capitalization ratio.

And we are currently working through our energize New Jersey infrastructure improvement proposal initially filed in November including over $900 million in capital investments over five years aimed to enhance reliability and modernize the distribution system.

John William Somerhalder: And we are currently working through our Energize New Jersey infrastructure improvement proposal, initially filed in November, including over $900 million in capital investments over five years aimed to enhance reliability and modernize the distributions. In West Virginia, on March 26th, we received a final order from the Public Service Commission on our base raid case, with rates effective March 27. The case resulted in a $105 million rate adjustment on a rate base of $3.2 billion, an allowed ROE of 9.8%, and a 49.6% equity ratio. However, rates for our West Virginia customers remain about 22% below our in-state peers.

Speaker Change: In West Virginia on March 26, we received a final order from the public Service Commission on our base rate case with rates effective March 27th.

John William Somerhalder: Additionally, as Brian mentioned, in West Virginia, we received an order on our ENEC case for an increase of $55 million. We have been successful in reducing the $255 million deferral down to $168 million, with full recovery expected by 2026. Now, let's move on to current activity with Pennsylvania.

Speaker Change: The case resulted in a $105 million rate adjustment on rate base of $3 2 billion, an allowed ROE of nine 8% and a 49, 6% equity ratio.

Speaker Change: Rates for our West Virginia customers remain about 22% below our instate peers.

Speaker Change: Additionally, as Brian mentioned in West, Virginia, We received an order on our <unk> case for an increase of $55 million.

Speaker Change: We have been successful in reducing the $255 million deferral down to $168 million with full recovery expected by 2026.

Speaker Change: Now, let's move on to current activity with Pennsylvania.

Speaker Change: Earlier this month, we thought a base rate case requesting of $502 million rate adjustment.

Speaker Change: On rate base of $7 2 billion.

Speaker Change: And 11, 3% proposed return on equity and a 53, 8% equity capitalization ratio.

John William Somerhalder: Additionally, as Brian mentioned, in West Virginia, we received an order on our E&EC case for an increase of $55 million. We have been successful in reducing the $255 million deferral down to $168 million, with full recovery expected by 2026. Now, let's move on to current activity with Pennsylvania.

Speaker Change: The case built on our service reliability enhancements in the state with additional investments in a smart modern energy grid and customer focused programs, while keeping rates comparable to other Pennsylvania utilities.

Speaker Change: Key components of the case include implementing a 10 year enhanced vegetation management program to reduce <unk> caused outages.

John William Somerhalder: Recovery of cost associated with major storms, COVID-19 and LED streetlight conversions, and changing pension and OPEB recovery to the Delayed Recognition Method, which is based on traditional pension expense with amortization of previously recognized cumulative actuarial loss. The case also includes a blended federal-state statutory tax rate of approximately 27%, but it also continues to provide customer savings from previous changes to federal and state tax rates. Additionally, the application proposes a pension OPEB normalization mechanism to track and defer differences between actual and test-year expenses using the delayed recognition method.

Speaker Change: <unk> outage restoration time and reduce future maintenance costs.

John William Somerhalder: Earlier this month, we filed a base rate case requesting a $502 million rate adjustment on a rate base of $7.2 billion, an 11.3% proposed return on equity, and a 53.8% equity capitalization rate. The case builds on our service reliability enhancements in the state with additional investments in a smart, modern energy grid and customer-focused programs while keeping rates comparable to other Pennsylvania utilities. Key components of the case include implementing a 10-year enhanced vegetation management program to reduce tree-caused outages, reduce outage restoration time, and reduce future maintenance costs; recovery of costs associated with major storms COVID-19 and LED streetlight conversions; and changing pension and OPEB recovery to the Delayed Recognition Method, which is based on traditional pension expense with amortization of previously recognized cumulative actuarial loss.

Speaker Change: Recovery of costs associated with major storms, COVID-19, and led streetlight conversions and.

Speaker Change: And changing pension and OPEC recovery to the delayed recognition method, which is based on traditional pension expense with the amortization of previously recognized recognized cumulative actuarial losses.

Speaker Change: The case also includes a blended federal and state statutory tax rate of approximately 27%.

Speaker Change: But also continues to provide customers savings from previous changes to federal and state tax rates.

Speaker Change: Additionally, the application proposes a pension and OPEC normalization mechanism to track and defer differences between actual and test your expense.

Speaker Change: Using the delayed recognition method.

John William Somerhalder: In addition to the base rate case, we plan to file a third phase of our long-term infrastructure improvement program this summer, which will include capital investment programs to improve reliability for the customers of Pennsylvania. And finally, turning to Ohio, earlier this month, we filed a settlement for the second phase of our distribution grid modernization plan, GridMod2. The settlement includes a $421 million, four-year capital investment program to continue modernizing the distribution electric system by completing the deployment of 1.4 million smart meters to our customers in Ohio. Finally, next week, we plan to file a pre-filing notice of our Ohio-based rate case with a full application and supporting schedules by the end of May.

Speaker Change: In addition to the base rate case, we plan to file a third phase of our long term infrastructure improvement program. This summer, which will include capital investment programs to improve reliability for the customers in Pennsylvania.

Speaker Change: And finally, turning to Ohio earlier. This month, we filed a settlement for the second phase of our distribution grid modernization plan grid mine too.

Speaker Change: The settlement includes a $421 million four year capital investment program to continue modernizing the distribution electric system by completing the deployment of $1 4 million smart meters to our customers in Ohio.

John William Somerhalder: The case also includes a blended federal-state statutory tax rate of approximately 27% but also continues to provide customer savings from previous changes to federal and state tax rates. Additionally, the application proposes a pension OPEB normalization mechanism to track and defer differences between actual and test-year expense using the delayed recognition method.

Speaker Change: Finally next week, we plan to file a pre filing notice of our Ohio base rate case, with a full application and supporting schedules by the end of May.

John William Somerhalder: Key highlights of the case will include a 2024 test year with over $4.3 billion in rate base and an equity capitalization ratio reflecting the actual capital structure of the companies. I plan to recover investments in Riders DCR and AMI, which includes the grid mod capital investments and base rates, and reset those riders to zero, and some of the same other features that we included in other rate case applications, including pension recovery and pension tracking mechanisms.

Speaker Change: Key highlights of the case will include a 2024 test year with over $4 3 billion in rate base and equity capitalization ratio, reflecting the actual capital structure of.

Speaker Change: Of the companies.

John William Somerhalder: In addition to the base rate case, we plan to file a third phase of our long-term infrastructure improvement program this summer, which will include capital investment programs to improve reliability for the customers of Pennsylvania. And finally, turning to Ohio, earlier this month, we filed a settlement for the second phase of our distribution grid modernization plan, Grid Mod 2. The settlement includes a $421 million, four-year capital investment program to continue modernizing the distribution electric system by completing the deployment of 1.4 million smart meters to our customers in Ohio. Finally, next week, we plan to file a pre-filing notice of our Ohio-based rate case with a full application and supporting schedules by the end of May.

Speaker Change: I plan to recover investments and writers VCR in Ami, which includes the grid Mod capital investments in base rates and reset those writers to zero.

Speaker Change: And some of the same other features that we included in other rate case applications, including pension recovery and pension tracking mechanisms the.

John William Somerhalder: The current expectation is a proposal of a modest net increase to customers of less than $100 million compared to current revenues and an overall average impact of less than 5% of total revenues across all customers, which will be refined over the coming months.

Speaker Change: The current expectation is a proposal of a modest net increase to customers of less than $100 million compared to current revenues and.

Speaker Change: On an overall average impact of less than 5% of total revenues across all customers, which will be refined over the coming months.

John William Somerhalder: And finally, just to touch on the balance sheet and the closing of the FET transaction. Obviously, a lot of hard work goes into any transaction like this, but this was a great team effort, and we couldn't be more pleased with the results. Of the $3.5 billion in total proceeds, $2.3 billion was received at the end of March and was deployed immediately, consistent with our plan to pay off short-term debt and to redeem long-term debt totaling close to $1.4 billion, of which $460 million was at FE Corp. We expect to receive the remaining $1.2 billion later this year, which will be used to fund our capital programs and additional liability management, depending on market conditions.

And finally, just to touch on the balance sheet and the closing of the transaction. Obviously a lot of hard work goes into any transaction like this but this was a great team effort and we couldnt be more pleased with the results.

Speaker Change: Of the $3 $5 billion in total proceeds to $3 billion was received at the end of March and was deployed immediately consistent with our plan to pay off short term debt and to redeem long term debt totaling close to $1 4 billion of which $460 million was it Effie Corp.

Speaker Change: We expect to receive the remaining $1 $2 billion later, this year, which will be used to fund our capital programs and additional liability management, depending on market conditions.

John William Somerhalder: This transaction completes a series of transactions over the last two and a half years that resulted in over $3 billion in high-cost debt redemptions at FECorp, close to $2 billion in utility long-term debt redemptions, and $2 billion to pay off short-term debt that would have otherwise been financed with long-term debt at our utility. And we are pleased to be back, with an investment grade credit rating from all three rating agencies and understand, appreciate, and respect the importance of this to all of our stakeholders. Thank you for your time today. We're off to a solid start this year with strong execution and a significantly stronger balance sheet to fuel our growth going forward. Now, let's open the call to Q&A.

Speaker Change: This transaction completes a series of transactions over the last two two and a half years that resulted in over $3 billion in high cost debt redemptions at Etsy Corp, close to $2 billion in utility long term debt redemptions.

Speaker Change: And $2 billion to pay our short term debt that would have otherwise been financed with long term debt at our utilities.

Speaker Change: And we are pleased to be back.

Speaker Change: With an investment grade credit rating with all three rating agencies and understand and appreciate and respect the importance of this to all of our stakeholders.

Speaker Change: Thank you for your time today, we're off to a solid start this year with strong execution and a significantly stronger balance sheet to fuel our growth going forward.

Speaker Change: Now, let's open the call to Q&A.

Unknown Executive: Thank you, and I'll be conducting your question and answer session. If you would like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. One moment, please. Our first question is coming from Shahriar Pourreza from Guggenheim Partners. Your line is now active.

Speaker Change: Thank you, we'll now be conducting a question and answer session.

Speaker Change: That should be placed in the question queue. Please press star one on your telephone keypad.

Speaker Change: Information tone will indicate your line is in the question queue. You May press star two it feels like to remove your question from the Q1 moment. Please our first question is coming from Shar <unk> from Guggenheim Partners. Your line is that a lot.

Shahriar Pourreza: Good morning, good morning. So, Brian, I know, obviously, John and Brian, thanks for the color on the Ohio case. I think it touched on some of the questions I had about that. But, you know, look, the state's likely going to become sort of this epicenter for hyperscalers. So I guess I'm curious if there's going to be any sort of kind of data center focus rate design or tariff filing in this case to maybe account kind of for these opportunities, especially trying to balance the impact to other customers while trying to track this business. And then maybe just as a follow up there, Brian, how's the dialogue going with data centers in general? Thanks.

Shar: Hey, guys good morning.

Shar: Good morning, Joe.

Shar: Good morning, good morning.

Shar: So Brian obviously, Jonathan Thanks for the color on the Ohio case that you touched on some of the questions I had on that but.

Shar: Look at the states likely going to become sort of this epicenter for hyperscale. So I guess im curious if theres going to be any sort of kind of data center focus right designer tariff filings in this case to maybe account for these opportunities, especially if you're trying to balance the impact to other customers about China attractive business.

Shar: And then maybe just as a follow up there Brian how is the dialogue going with data centers in general thanks.

Brian X. Tierney: So let me start with the second one. The dialogue with data centers is really positive. We've been out to see Josh Snowhorn and his team at Quantum Loophole right outside of Frederick, Maryland. It's amazing what they have going on there. It's kind of fascinating to see.

Brian X. Tierney: So let me start with the second one the dialog with data centers really positive we've been out to see Josh No horn and his team at quantum loophole right outside of Frederick Maryland, It's amazing what they have going on there it's kind of fascinating to see we have $2 230 kv lines that in an open field, where there used to be in aluminum.

Brian X. Tierney: We have two 230 kV lines that end in an open field where there used to be an aluminum smelter, and now Josh and his team are building that huge data center complex. So we're in direct dialogue with them. They'll be one of our biggest customers over time, and we look forward to continuing that dialogue. We're also seeing things like expand out from data center hubs in Northern Virginia, now you're seeing in the panhandle of Maryland, the Quantum Loophole folks; we're seeing the same thing in Ohio.

Brian X. Tierney: Smelter and now Josh and his team are building that huge data center complex. So we are in direct dialogue with them there'll be one of our biggest customers over time and look forward to continuing continuing that dialogue. We're also seeing is things like expand out from data center hubs from Northern Virginia, now Youre seeing.

Operator: Thank you. Now we're conducting a question and answer session. If you would like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. One moment, please. Our first question is coming from Shahriar Pourreza from Guggenheim Partners. Your line is now live.

Brian X. Tierney: In the Panhandle, Maryland.

Brian X. Tierney: Quantum loophole folks we're seeing the same thing in Ohio, and as things expand out from central Ohio, The place where I used to work, it's coming up into our service territory as well and we're also seeing interest in Pennsylvania.

Brian X. Tierney: And as things expand out from Central Ohio, the place where I used to work, it's coming into our service territory as well. And we're also seeing interest in Pennsylvania. Given what happened with a number of power plant retirements over the years, our service territory has ample brownfield sites that have land available and connectivity to the high-voltage transmission system. So we think we're well-positioned for some of that growth. We're continuing to invest as we go forward, and PJM Open Data Center 3 that we're able to fund about $800 million to help enable that growth. We're excited about the opportunity going forward. John, I don't know, are we doing anything tariff-wise to attract them, or are we well set up given the tariffs that we have?

Shahriar Pourreza: Good morning, good morning. So, Brian, I know, obviously, John and Brian, thanks for the color on the Ohio case. I think it touched on some of the questions I had about that. But, you know, look, the state's likely going to become sort of this epicenter for hyperscalers. So I guess I'm curious if there's going to be any sort of data center-focused rate design or tariff filing in this case to maybe account kind of for these opportunities, especially trying to balance the impact to other customers while trying to track this business. And then maybe just as a follow-up there, Brian, how's the dialogue going with data centers in general? Thanks.

Brian X. Tierney: Given what's happened with a number of power plant retirements over the years. Our service territory has ample brownfield sites that are have land available and connectivity to the high voltage transmission system. So we think we're well positioned for some of that growth we're continuing to.

Brian X. Tierney: Invest as we go forward.

JM open data center III.

Brian X. Tierney: We're able to fund about $800 million to help enable that growth.

Brian X. Tierney: We're excited about the opportunity going forward John I don't know, we're doing anything tariff wise to attract these are well set up given the tariffs that we have.

John: Sure. That's a really good question I think it's something that we will take a look at over over time, our tariffs are set up where such that some of these customers would be transmission.

John: Related customers so.

John: The revenue uplift to the distribution companies wouldn't be as significant as you would see maybe.

John: Our residential customer and Thats by design. So it is something that I think over time.

John William Somerhalder: So it is something that, over time, you know, we'll take a look at as well as I'm sure other utilities will take a look at. But at this point in time, we don't have anything that we're planning for. Okay, that's perfect.

John: We will take a look at as well as I'm sure. Other utilities will take a look at but at this point in time, we don't have anything.

John: That we're planning for.

John: Okay. That's perfect and then Bryan Lastly for me and sorry, I got to ask this but it is causing a little bit of angst. This morning with investors.

Shahriar Pourreza: And then, Brian, lastly for me, and sorry I have to ask this, but it's causing a little bit of angst this morning with investors. There's some new language in the queue kind of mentioning potential fines coming from the OOCIC. I guess, how do you bookend the range of outcomes there? I know, obviously, the language is not going to be super material. But is there any kind of sort of read-throughs or knock-on effect on the ongoing PCO investigations or any other investigations there? Thanks.

Bryan: Some new language in the Q kind of mentioning on potential fines coming from the OCI.

Bryan: I guess, how do you book in the range of outcomes. There I know obviously the language is not going to be super material, but is there any kind of sort of read throughs or knock on effects on the ongoing <unk> investigations or any other investigations there. Thanks.

Brian X. Tierney: I don't think so, Shahriar. Thanks for the question. There are two new things that we raised in that OOCIC disclosure. One was at the beginning of the disclosure, we talked about We had traditionally talked about there being nothing that we were aware of that was outside of the DPA. Well, during the quarter, the OOCIC brought indictments against Householder for things that had nothing to do with the DPA, and we were unaware of that activity, which they found and obtained indictments on.

Speaker Change: I don't think so Sean thanks for the question there are two new things that we.

Speaker Change: Raised in that or CIC.

Speaker Change: Disclosure one was at the beginning of the disclosure we talked about we had traditionally.

Speaker Change: Talked about there being nothing that we were aware of that was outside of the BPA well during the quarter.

Speaker Change: The OS CIC brought indictments against householder for things that had nothing to do with the BPA and we were unaware of that activity, which they found and obtain indictments on.

John William Somerhalder: You know, Shahriar, that's a really good question. I think it's something that we will take a look at over time. You know, our tariffs are set up such that some of these customers would be transmission-related customers. So, you know, the revenue uplift to the distribution companies wouldn't be as significant as you would see, maybe, in a residential customer. And that's by design. So it is something that I think, over time, you know, we'll take a look at as well as I'm sure other utilities will take a look at. But at this point in time, we don't have anything that we're planning for.

Brian X. Tierney: And the other component is, you know, in regards to that investigation, as well as the Attorney General's civil suit against the company. We'd like to put both those past us, and we may have to put a little bit of money on the table to do that. So we don't think it will be material, but we'd like to put a period on both those issues as they relate to the company and move on.

Speaker Change: And the other component is.

In regards to that investigation as well as the attorney General has a civil suit against the company, we'd like to put both of those past us and we may have to put a little bit of money on the table to do that so we don't think it will be material, but we'd like to put a period on.

Speaker Change: On both those issues as it relates to the company and move on.

Brian X. Tierney: I think some of you saw the language that the Attorney General used in the prior indictments when he complimented the company on its cooperation with his office and viewed us as a victim of the offenses that took place. So we think it's a constructive relationship, and we'd just like to put a period on it and move on from there.

Speaker Change: I think some of you saw the language that the attorney general used.

Shahriar Pourreza: Okay, that's perfect. And then, Brian, lastly for me, and sorry, I have to ask this, but it's causing a little bit of angst this morning with investors. There's some new language in the queue kind of mentioning potential fines coming from the OOCIC. I guess, how do you bookend the range of outcomes there? I know, obviously, the language is not going to be super material, but is there any kind of sort of read-throughs or knock-on effect on the ongoing PCO investigations or any other investigations there? Thanks.

Speaker Change: In the prior indictments when you're complemented the company on its cooperation with his office and viewed us as a victim of the offenses that took place. So we think it's a constructive relationship and we just like to put a period on it and.

Speaker Change: And move on from there.

Shahriar Pourreza: Okay, great. Thank you guys so much. I appreciate it. And Brian, thanks for addressing that. Thanks, guys. Have a good day.

Speaker Change: Okay, great. Thank you guys. So much appreciate it and Brian Thanks for addressing that thanks, guys have a good day. Thank you. Thank you Sir.

Unknown Executive: Thank you, thanks Shahriar. Thank you.

Unknown Executive: Thank you. The next question today is coming from Michael Sullivan from Wolf Research. Your line is now live.

Speaker Change: Thank you next question today is coming from Michael Sullivan from Wolfe Research. Your line is now live.

Michael P. Sullivan: Hey, everyone, good morning. Good morning, Michael. Hey, Brian. Maybe just, I know you're about to file this here, and I appreciate all the kind of upfront detail on Ohio, but maybe if you could just give a little more on how you are able to keep the rate hike request so low in Ohio after being out for so long?

Michael Sullivan: Hey, everyone. Good morning.

Michael Sullivan: Good morning, Michael.

Michael Sullivan: Hey, Brian maybe just I know you're about to file this year and I appreciate all the kind of upfront detail in Ohio, but maybe if you could just give a little more on how you are able to keep the rate hike.

Brian X. Tierney: I don't think so, Shahriar. Thanks for the question. There are two new things that we raised in that OOCIC disclosure. One was at the beginning of the disclosure; we had traditionally talked about there being nothing that we were aware of that was outside of the DPA. Well, during the quarter, the OOCIC brought indictments against Householder for things that had nothing to do with the DPA, and we were unaware of that activity, which they found and obtained indictments on.

Michael Sullivan: Requests so low.

Michael Sullivan: Io after being out for so long.

Brian X. Tierney: Yeah, so a lot of the activity that we're doing is taking things that have been handled by riders during that interim period and putting them in base rates. So, things that customers were always paying for, but they weren't in base rates. So, there's no customer increase associated with that. And then we're looking at refreshing the ROE, some cost structures, and we anticipate that those things will be, you know, $100 million or less in terms of gross increase. And we expect the net impact on customer rates to be less than 5%.

So a lot of the activity that we're doing is taking things that had been handled in riders during that interim period and putting it in base rates. So things that customers were always painful but they weren't in base rates. So there is no customer increase associated with that and then we're looking at.

Michael Sullivan: Threshing.

Michael Sullivan: Rowe some cost structures and we anticipate that those things will be.

Michael Sullivan: $100 million or less in terms of gross increase and we expect the net impact on customer rates to be less than 5%, yes, Michael I'll expand just a little bit if you think about rider ECR that's been in place.

John William Somerhalder: Yeah, Michael, I'll expand just a little bit. If you think about Rider DCR, that's been in place for over 10 years now, and we've been able to make a profit on pretty much all of our investments in the distribution system over those 10 years. And to give you a sense of magnitude, that rider alone is close to $400 million annually. And then if you look at the GridMod rider that, you know, probably got kicked off a few years ago with our GridMod 1 implementation, it's close to $100 million.

Michael Sullivan: For over 10 years, now and we've been able to earn on pretty much all of our investments in the distribution system over those 10 years and to give you a sense of magnitude that rider alone is close to $400 million annually and then if you look at the grid Mod rider.

Shahriar Pourreza: Okay, great. Thank you guys so much. I appreciate it. And Brian, thanks for addressing that. Thanks guys. Have a good day. Thank you.

Michael Sullivan: That probably got kicked off a few years ago with our grid Mod one implementation, it's close to $100 million. So.

John William Somerhalder: So, you know, over the years, even though base rates haven't changed in over 10 plus years, we've been able to increase the returns on our investments through those riders. And a lot of this case is just moving those riders into base rates.

Michael Sullivan: Over the years, even though base rates haven't changed.

Brian X. Tierney: Thank you. Thanks, Shahriar.

Michael P. Sullivan: Thank you. The next question today is coming from Michael Sullivan from Wolf Research. Your line is now live.

Michael Sullivan: Over 10, plus years, we've been able to increase the returns on our investments through those riders and a lot of this cases, just moving those riders into base rates.

Michael P. Sullivan: Hey, everyone. Good morning. Good morning, Michael. Hey, Brian. I mean, maybe just I know you're about to file this here and appreciate all the kind of upfront detail on Ohio, but maybe if you could just give a little more on how you are able to keep the rate hike request so low in Ohio after being out for so long.

Michael P. Sullivan: Okay, that's super helpful. Just a quick follow-up on that. With respect to the riders, does the outcome here in the next month in ESP-5 and how riders are treated there have any impact on how you approach the base rate capes filing?

Speaker Change: Okay. That's super helpful. Just a quick follow up on that with respect to the riders does.

The outcome here in the next month and ESP five and how.

Riders are treated there have any impact on on how you approach the base rate case filing.

Brian X. Tierney: No, I don't think so, Michael. I mean, this is capital that has been prudently spent. It's been on distribution reliability. I think it's been subject to audits in the past. So I think that is simply going to be moved from those riders into base rates. And if you look at the past in other jurisdictions, you really don't have an issue with moving capital that you've deployed in riders into base rates. That's typically fairly straightforward in any type of rate proceeding.

Speaker Change: No I don't think so Michael I mean these this is capital that has been prudently spent it's been on distribution reliability.

Speaker Change: I think it's been subject to audits in the past so I think that is simply going to be.

Speaker Change: Move from those riders into base rates and if you look at the.

Speaker Change: Past in other jurisdictions, you really don't have an issue with moving capital that you've deployed and riders in the base rate is typically fairly straightforward and any type of rate proceeding.

Michael P. Sullivan: Okay, makes sense. Last one for me, John, just the... Congratulations on getting back to IG.

Speaker Change: Okay makes sense and last one for me John just the <unk>.

John: Congrats on getting back to IAG and just.

John William Somerhalder: And just what are we thinking for timing and prospects for maybe even mid-Triple B? Sounds like you have the metrics to support it. Is it doable at both agencies and potential timing there? Yeah, I'm not going to speak for the agency.

Speaker Change: What are we thinking for timing and prospects for for maybe even mid triple B <unk>.

Speaker Change: Sounds like you have the metrics to support it is a doable at both agencies and potential timing there.

John: Yes, I'm not going to speak for the agencies, but S&P left us on positive outlook.

John William Somerhalder: Yeah, I'm not going to speak for the agencies, but, you know, S&P left us on a positive outlook, and I think they're looking for the expiration of the Deferred Prosecution Agreement, which will be in July of this year. I think we also need to build a track record of hitting our forecast, and I think that's going to take some time to do that. And so that's what I think they're looking for, and that's what our plan is. Great, thanks very much.

John: And I think theyre looking for the exploration of the deferred prosecution agreement, which will be in July of this year.

John: I think we also need to build a track record.

John William Somerhalder: So, you know, over the years, even though base rates haven't changed, you know, in over 10 plus years, we've been able to increase the returns on our investments through those riders. And a lot of this case is just moving those riders into base rates.

John: Hitting our forecast and I think that's going to take some time to do that.

John: And so that's what I think they're looking for and Thats, what our plan is.

Speaker Change: Great. Thanks very much.

Unknown Executive: Thank you. The next question is coming from Jeremy Tonet from JP Morgan. Your line is now live.

Speaker Change: Thanks, Michael.

Speaker Change: Thank you. Your next question is coming from Jeremy Tonet from Jpmorgan. Your line is now live.

Jeremy Bryan Tonet: Hi, good morning.

Jeremy Bryan Tonet: Good morning, Jeremy.

Jeremy Bryan Tonet: Thanks for taking my questions. I just wanted to kind of touch base, I guess, on how things are progressing against strategic initiatives to kind of, you know, realign the organization, bring in new hires, decentralize decision making, and assign KPIs, you know, further down the structure. How is that being received? How do you see, I guess, you know, the culture changing? Just wondering any thoughts on, you know, what, how that's progressing? Thank you for that.

Jeremy Bryan Tonet: Hi, Thanks for taking my questions just wanted to kind of touch base I guess on <unk>.

John William Somerhalder: No, I don't think so, Michael. I mean, this is capital that has been prudently spent. It's been on distribution reliability. I think it's been subject to audits in the past. So I think that is simply going to be moved from those riders into base rates. And if you look at the past in other jurisdictions, you really don't have an issue with moving capital that you've deployed in riders into base rates. That's typically fairly straightforward in any type of rate proceeding.

Jeremy Bryan Tonet: How things are progressing against strategic initiatives.

Jeremy Bryan Tonet: We aligned the organization, bringing new hires decentralized.

Jeremy Bryan Tonet: Decision, making and assign kpis further down the structure.

Jeremy Bryan Tonet: How is that being received how do you see I guess the culture changing just wondering any thoughts on how.

Michael P. Sullivan: Okay, makes sense. Last one for me, John, just the... Congratulations on getting back to IG, and just what are we thinking for timing and prospects for maybe even mid-Triple-B? Sounds like you have the metrics to support it. Is it doable at both agencies and potential timing there? Yeah, I'm not going to speak for the agency.

Jeremy Bryan Tonet: How thats progressed.

Speaker Change: Thank you for that question, Jeremy it's progressing really well.

Speaker Change: So we've we've added Toby Thomas as the Chief operating Officer Wade Smith as the head of the utilities, and we just announced John Combs.

Brian X. Tierney: Thank you for that question, Jeremy. It's progressing really well. So, you know, we've added Toby Thomas as the Chief Operating Officer, Wade Smith as the Head of FE Utilities, and we just announced John Combs coming in, and these folks are hitting the ground running, making an impact right away. And so, it's working the way we thought it would. We've transitioned from a CapEx that's kind of a break, fix, repair kind to one that gets our customers ahead in terms of reliability and gives us the opportunity to improve the customer experience rather than just treading water.

Speaker Change: Coming in and these folks are hitting the ground running making an impact right away.

Speaker Change: If you look at how we're managing the company, we're managing it the way we're reporting it in segments now by those.

Speaker Change: Five major operating companies that we have.

Speaker Change: Things like energized $3 65.

Speaker Change: That is organized and planned according to those major business units. So the plans that summarize up to that $26 billion spend over five years are all coming from those major business units and they have the plans to put that capital to work for the benefit of our customers.

Jeremy Bryan Tonet: Thank you. The next question is coming from Jeremy Tonet from J.P. Morgan. Your line is now live.

Speaker Change: By business unit and so it's working the way we thought it would it's weak.

Speaker Change: We've transitioned from a capex, that's kind of break fix repair in kind to one that gets our customers ahead in terms of reliability.

Speaker Change: And it gives us the opportunity to improve the customer experience rather than just treading water.

Brian X. Tierney: And, you know, the transaction that both John and I talked about in our remarks enables that, right? You can't make the type of investments that we're talking about making without the strong balance sheet that we've had through capital raises over time. So, everything's coming together and working as it should. The money's coming in, the balance sheet's strong, and we have plans by business unit to put the dollars to work.

Speaker Change: The transaction that both John and I talked about in our remarks enables that you can't make the type of investments that we're talking about making without with strong balance sheet that we've had through the capital raises over time, so everything's coming together and working as it should the moneys come in the door the balance sheet strong.

Brian X. Tierney: If you look at how we're managing the company, we're managing it the way we're reporting it in segments now by those five major operating companies that we have. And things like Energize 365, that is organized and planned according to those major business units. So the plans that summarize up to that $26 billion spend over five years are all coming from those major business units, and they have the plans to put that capital to work for the benefit of our customers, by business unit.

Speaker Change: And we have the plans by business unit.

Brian X. Tierney: And, you know, you're seeing it from 23 to 24, and we have plans going out for four additional years as well to make this happen. So, it's working the way it should, the way we envisioned it, and we're off and running.

Speaker Change: Put the dollars to work and Youre seeing it from 23 to 24, and we have plans going out.

Speaker Change: For four additional years as well to make this happen. So it's working the way it should the way we envisioned it.

Speaker Change: And we're often running.

Unknown Executive: Got it. That's helpful. Good to see that out there.

Speaker Change: Got it.

Speaker Change: Helpful. Good to know.

Speaker Change: Good to see that there and maybe following up on putting the dollars to work.

Jeremy Bryan Tonet: And maybe following up on, you know, putting the dollars to work with regard to the Energize 365 CapEx plan. Could you walk through the clean energy part a little bit more within the overall plan? And just wondering how that breaks down between solar energy efficiency, EV infrastructure, energy storage, different initiatives, and how you see the timeline for that unfolding? And, you know, where that could go over time, I guess.

Speaker Change: With regards to the energized 365 Capex plan.

Brian X. Tierney: And so it's working the way we thought it would. We've transitioned from a capex that's kind of a break, fix, repair kind to one that gets our customers ahead in terms of reliability and gives us the opportunity to improve the customer experience rather than just treading water. And the transaction that both John and I talked about in our remarks enables that, right? You can't make the type of investments that we're talking about making without the strong balance sheet that we've had through capital raises over time.

Speaker Change: Could you walk through the clean energy part a little bit more within within the overall plan and just wondering how that breaks down between solar energy efficiency EV infrastructure energy storage different initiatives and how you see the timeline for that unfolding and where could that go over time I guess.

Brian X. Tierney: So a lot of it, Jeremy, is things that we're doing on the wire side to enable the energy transition. So you've seen two major pieces of that. One was the PJM open window three, where we were able to put $800 million to work. And the other is the New Jersey offshore wind transmission component, where we're putting, you know, over $700 million to work. So significant components, well over a billion in those initiatives.

Speaker Change: So a lot of it.

Speaker Change: Jeremy as some things that we're doing on the wire side to enable the energy transition. So you've seen two major pieces of that one was the PJM open windows three.

Brian X. Tierney: So everything's coming together and working as it should. The money's coming in the door, the balance sheet's strong, and we have plans by business unit to put the dollars to work. And you know, you're seeing it from 23 to 24, and we have plans going out for four additional years as well to make this happen. So it's working the way it should, the way we envisioned it, and we're off and running.

Speaker Change: Where we're able to put $800 million to work and the other is the.

Speaker Change: New Jersey offshore wind transmission component, where we're putting over $700 million to work so significant components well over $1 billion in those initiatives. In addition to what we're doing with solar.

Brian X. Tierney: In addition to what we're doing with solar generation in the state of West Virginia, we are on our way to rounding out a 50 megawatt commitment that we have there and would like to see two more of those 50 megawatt commitments as we get further subscriptions. But a lot of it, rather than being on the generation side, is really on the wires component of the business. And that's where the bulk of that $26 billion spend is going to be.

Speaker Change: Generation in the state of West, Virginia on our way to rounding out.

Jeremy Bryan Tonet: Got it. That's helpful. Good to see that out there.

Speaker Change: A 50 megawatt.

Speaker Change: Our commitment that we have there and we'd like to see two more of those 50 megawatt commitments.

Speaker Change: As we get further subscriptions, but.

Speaker Change: Lot of it rather than meeting on the generation side is really on the wires component of the business and that's where the bulk of that $26 billion spend is going to be yes, Jeremy I'd, just add with add on a little bit. If you just look at the clean energy component of the 26 billion, it's a little less than 10% of the total portfolio and like Bryan.

John William Somerhalder: Yeah, Jeremy, I just would add on a little bit. If you just look at the clean energy component of the $26 billion, it's a little less than 10% of the total portfolio, and like Brian said, a lot of that is in the state of West Virginia with the expected build-out of additional solar, as well as the Energy Efficiency Investments that we need to make in New Jersey to hit the state-required goals on consumption usage. So we're working through that program right now as we speak, and we should have clarity, I think, later this year on the energy efficiency CapEx in New Jersey sometime later this year.

Brian X. Tierney: So, a lot of it, Jeremy, is things that we're doing on the wire side to enable the energy transition. So, you've seen two major pieces of that. One was the PJM Open Window 3, where we were able to put $800 million to work, and the other is the New Jersey offshore wind transmission component, where we're putting over $700 million to work. Significant components, well over a billion in those initiatives, in addition to what we're doing with solar generation in the state of West Virginia, on our way to rounding out a 50-megawatt commitment that we have there and would like to But a lot of it, rather than being on the generation side, is really on the wires component of the business, and that's where the bulk of that $26 billion spend is going to be.

Speaker Change: And a lot of that is in the state of West Virginia with the expected build out of additional solar as well as the energy efficiency investments that we need to make in new Jersey to hit.

The state required goes on.

Speaker Change: <unk> usage.

Speaker Change: So we're working through that program right right now as we speak and we should have clarity I think later this year on the energy efficiency.

Speaker Change: Capex in New Jersey sometime later this year one one final piece that we've gotten questions. On also Jeremy is that the grip program and whether or not we've made applications for that.

Brian X. Tierney: One final piece that we've gotten questions on also, Jeremy, is the DOE GRIP program and whether or not we've made applications for that. We proposed five projects, and four of them were asked by the DOE to proceed. And they include everything like distributed energy management, AMI, grid resilience, smart grid, and storage. And so about $500 million worth of projects we're moving forward with in the GRIT program and hope to get some positive results on that later this summer.

Speaker Change: We.

Speaker Change: Proposed five projects and four of them. We were asked by the deal were to proceed.

Speaker Change: And they include everything like distributed energy management.

Speaker Change: Good resilience smart grid.

Storage and so about $500 million worth of projects, we're moving forward with in the grip program and hope to get some positive results on that later this summer.

Jeremy Bryan Tonet: Got it. That's very helpful. And just one last one, if I could, regarding Signal Peak, and I recognize it's a shrinking part of the plan over time here, but I think there's just been some reports out there about BLM delays and, you know, how that impacts operations down the line there, whether it has to shut at a certain time. Just wondering any thoughts you could share with us there?

Speaker Change: Got it that's very helpful and just one last one if I could regarding signal peak and recognize it it's a shrinking part of the plan over time here, but I think there's just been some reports out there about BLM delays and how that impacts operations.

Speaker Change: Down the line there weather has to shot at a certain time, just wondering any thoughts you could share with us there.

Brian X. Tierney: One final piece that we've gotten questions on also, Jeremy, is that the DOE GRIP program and whether or not we've made applications for that. We proposed five projects, and four of them were asked by the DOE to proceed, and they include everything like distributed energy management, AMI, grid resilience, smart grid, and storage. And so about $500 million worth of projects we're moving forward with in the GRIT program and hope to get some positive results on that later this summer.

John William Somerhalder: No, no, no disruptions in the mind that we're aware of. In fact, you know, we have in the plan about twelve cents of earnings contribution for the year. They contributed three cents in the first quarter. So they're on track with their plan.

Speaker Change: No no disruptions in the mind that we're aware of in fact that we have in the plan about 12 cents of earnings contribution for the year.

Speaker Change: They contributed <unk> <unk> in the first quarter. So they are on track with their plan.

Unknown Executive: Got it. That's helpful. I'll leave it there. Thanks.

Speaker Change: So.

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

Carly S. Davenport: Thank you. The next question today is coming from Carly Davenport from Goldman Sachs. Your line is now live.

Speaker Change: Thanks, Jeremy.

Speaker Change: Thank you. Your next question today is coming from Carly Davenport from Goldman Sachs. Your line is my life.

Carly S. Davenport: Hey, good morning. Thanks for taking the questions and for all the details so far. Maybe just on the pension volatility, relative to what you've done so far, how could things like the proposals you've got in the Pennsylvania rate case around pension and OPEB recovery and the normalization mechanism impact the volatility levels that you see going forward?

Carly Davenport: Good morning, Thanks for taking the questions and for all the detail so far.

Carly Davenport: Good morning, just on the maybe just on the pension volatility relative to what you've done so far how good things like the proposals you have gotten the Pennsylvania rate case.

Carly Davenport: Around pension or no pipe recovery and the normalization mechanism impact the volatility levels that you see going forward.

John William Somerhalder: Oh, well, if we're able to successfully get the pension tracking mechanism, that goes a long way in deferring the volatility onto the balance sheet because, essentially, you would be tracking to your test year expense, and any changes from that point forward, both positive or negative, would be deferred on the balance sheet. So the volatility would be significant and significantly reduced if you're able to achieve some of those pension tracking mechanisms. Now, We applied for that in West Virginia, Maryland, and New Jersey last year. However, we were unsuccessful there.

Carly Davenport: Well if you if we're able to successfully get the pension tracking mechanism that goes a long way.

Carly Davenport: In deferring the volatility onto the balance sheet because essentially.

John William Somerhalder: No disruptions in the mine that we are aware of. In fact, we have in the plan about 12 cents of earnings contribution for the year. They contributed 3 cents in the first quarter, so they are on track with their plan.

Carly Davenport: You would be.

Carly Davenport: Tracking to your test year expense and any changes from that point forward, both positive or negative to that would be deferred on the balance sheet. So.

Jeremy Bryan Tonet: Got it. That's helpful. I'll leave it there. Thanks.

Carly Davenport: The volatility would be significant significantly reduced if youre able to achieve some of those pension tracking mechanisms now.

Carly Davenport: We've applied for that in West, Virginia, Maryland, and New Jersey last year, we were unsuccessful there.

Brian X. Tierney: We'll apply for those mechanisms in Pennsylvania and in Ohio this year, but it is something that we'll continually go after, even if we're not successful this year, because I think it's important for us to make sure that we manage that volatility accordingly. I mean, the other thing we did last year is we did the Pension Lift Act, where we looked at our former competitive business and lifted out about half of that liability at favorable prices, about 95% of par, about a 5% discount, which also reduces, you know, the volatility in the pension plan by about 5-10%.

Carly Davenport: We'll apply for those mechanisms in.

Carly Davenport: Pennsylvania, and Ohio this year.

But it is something that we'll continually go after even if we're not successful this year.

Carly Davenport: Because I think it's important for us to make sure that we manage that volatility accordingly, I mean, the other thing we did last year as we did the pension lift out.

Carly Davenport: When we looked at our former competitive business and lifted out about half of that.

Carly Davenport: Liability.

Carly Davenport: Favorable pricing about a 95% of par about a 5% discount which also reduces the volatility in the pension plan by about 5% 10%.

Brian X. Tierney: And we plan to do another pension lift out at some point in time, either later this year or towards the end of the year. So something that we're looking at right now. Carly, the beauty of that tracking mechanism is that... The regulator's never wrong, like there's always the true up, and so we're never making more or less than what we're asking for in rates, and it's always the right amount because it's based on the numbers. So we think it has a virtue that should appeal to the regulators and others in other cases as well.

Carly Davenport: And we plan to do another pension lift out at some point in time, either later this year or towards the end of the year. So something that we're looking at right now.

Carly Davenport: The beauty of that tracking mechanism is.

Carly Davenport: Is that the regulators never wrong.

Carly Davenport: There is always the true up and so we're never making more or less than what we're asking for in rates and it's always the right amount because it's based on.

Carly Davenport: On the numbers so.

Carly Davenport: We think it has a virtue that should be appealing to the regulators and others in our cases as well.

Carly S. Davenport: Got it. Great. That's super helpful. Thank you. And then maybe, just as you think about the balance sheet, are there any factors that we should be thinking about that could push the receipt of those remaining FET proceeds beyond the latter part of this year?

Speaker Change: Got it great. That's super helpful. Thank you and then maybe just as you think about the balance sheet.

Speaker Change: Are there any factors that we should be thinking about that could push the receipt of those remaining.

Speaker Change: Proceeds beyond the latter part of this year.

John William Somerhalder: So they've already filed for an application with the last co-investor, and they've asked for accelerated approval. So I'm not anticipating any delay in that. And my expectation is that we should get the proceeds later this year.

Speaker Change: So they've already filed for application with the last co investor and they've asked for accelerated approval.

Speaker Change: So I'm not anticipating any delay in that.

Speaker Change: So my expectation is that we should get the <unk>.

Speaker Change: <unk> later this year.

Carly S. Davenport: Great! Thank you so much.

Speaker Change: Great. Thank you so much.

Unknown Executive: Thank you, Carly.

Speaker Change: Thank you currently.

David Keith Arcaro: Thank you. The next question today is coming from David Arcaro from Morgan Stanley. Your line is now live.

Speaker Change: Thank you next question today is coming from David Arcaro from Morgan Stanley. Your line is now live.

David Keith Arcaro: Well, hey, good morning. Thanks so much for taking my questions. Good morning, David. Um, maybe back on the Ohio rate case, I was wondering if there are any new mechanisms or new capital programs that we should watch for that might come with the following? It didn't sound like it, but anything new that you would plan to bring into this?

David Keith Arcaro: Hey, good morning, Thanks, so much for taking my questions.

David Keith Arcaro: Good morning, David.

David Keith Arcaro: Hi.

David Keith Arcaro: Maybe back on the Ohio rate case I was wondering are there any new mechanisms or new capital programs that we should watch for that might come with the final when you Didnt sound like it but anything new that you would plan to bring into this case Dave.

Dave: Even though this will be a more traditional.

David Keith Arcaro: David Dowd

Dave: Base rate case, I mean, obviously, we have the <unk> in place, which really covers.

John William Somerhalder: David, this would be a more traditional base rate case. I mean, obviously, we have the DCR in place which really covers most of all of the capital in the Ohio companies, specifically targeting distribution reliability enhancements. So we'll have the grid mod program as well. So no new capital programs in this particular proceeding.

Dave: Most.

Dave: Most of all of the capital in and the Ohio companies.

Dave: Specifically targeting distribution reliability enhancements so.

Dave: And we will have the grid Mod program as well.

Dave: So no new capital programs.

Dave: And this particular proceeding.

Brian X. Tierney: GridMod, you know, which we do have a settlement in, is... a little over 400 million dollars, and that will allow us to get on parity with our in-state peers, in that we're doing just the non-controversial AMI implementation, which we hope to get. I just bought a house here in Akron. I've got a 40-year-old analog meter at my house, and it'd be nice to be able to have that AMI technology in place, and that's not controversial.

Dave: Grid Mod.

Dave: Which we do have a settlement in.

Dave: A little over $400 million.

Dave: And that will allow us to get on parity with our instate peers.

Dave: In that we're doing just the non controversial.

Dave: <unk> implementation, which we hope to get.

Dave: Just bought a house here in Akron I've got.

Dave: 40 year old analog meter on my house, it would be nice to be able to have that Ams technology in place and that's not controversial. The other component of grid Mod to where we hope to be able to put more capital to work is in the distribution automation and we've asked in that case to be able to demonstrate.

Brian X. Tierney: The other component of GridMod 2 where we hope to be able to put more capital to work is the distribution automation, and we've asked in that case to be able to demonstrate the benefits that customers got from distribution automation in GridMod 1, and then come back at a later date and ask to be able to advance that program further.

Dave: The benefits to customers got in grid Mod one from the.

Dave: Distribution automation and then come back at a later date and asked to be able to advance that program further.

David Keith Arcaro: Got it. Got it.

Speaker Change: Got it got it that makes sense.

David Keith Arcaro: That makes sense. And then, back on the topic of data centers, you know, I was wondering how you see the transmission opportunity growing over time in PJM. You know, it sounds like you could be seeing a grid of low growth, whether it's in Ohio or Pennsylvania. Just what is the transmission capex upside opportunity that you're seeing? Is that, you know, growing rapidly, potentially, as we see data centers move to that region? Yeah,

Speaker Change: And then back on the topics on the topic of data centers.

Speaker Change: Wondering how do you see the transmission opportunity growing overtime in PJM it sounds like it could be seen.

Speaker Change: Greater load growth, whether it's in Ohio, and Pennsylvania, just whats the transmission Capex upside opportunity that you are seeing is that.

Speaker Change:

Speaker Change: Growing rapidly potentially as we see data centers moved to that region.

David Keith Arcaro: Yes, that's a great question, David. It's, I'll just say this, it's a little lumpy.

Speaker Change: Yes, so it's a great question, David I will just say, it's a little lumpy. So as these things are coming about we're seeing.

Brian X. Tierney: So as these things are coming about, we're seeing things like PJM Open Window 3, right? That was somewhat of an unanticipated opportunity that we don't have opportunities like that in our $26 billion plan, but as they come about, they'll be incremental to that. And so we saw that process play out last year. I anticipate that we'll see more processes through future open windows from PJM as they're looking to, you know, build capacity on the grid to enable the type of load growth that data centers represent.

Speaker Change: Things like the PJM open window, three right that was somewhat of an unanticipated.

Speaker Change:

Speaker Change: Opportunity that we don't have opportunities like that in our $26 billion plan, but as they come about there'll be incremental to that plan.

Speaker Change: So we've seen.

Speaker Change: That process play out last year, I anticipate that we will see more processes.

Speaker Change: Through future open windows from PJM as Theyre looking to bill.

Build capacity on the grid to enable the type of load growth, but data centers represent so you've seen it concentrated like I said before in that Northern Virginia, Central Ohio area and now its branching out into other areas and we anticipate it we know its moving into our service territories.

Brian X. Tierney: So you've seen it concentrated, like I said before, in that Northern Virginia and Central Ohio area, and now it's branching out into other areas. And we anticipate, we know it's moving into our service territories in Maryland, Pennsylvania, and Ohio.

Speaker Change: Maryland, Pennsylvania and Ohio.

David Keith Arcaro: I got it. Thanks. And I guess on that, just a quick follow-up: in your conversations with these data center customers, do you have a sense of the timing of when these are coming in and trying to connect to the grid when we could see a bigger increase in the load and interconnections coming? Yeah, so I

Speaker Change: Got it thanks, and I guess on that just a quick follow.

Follow up in your conversations with these data center customers do you have a sense of the timing of when these are coming in and trying to connect to the grid when we could see.

Speaker Change: A bigger increase in the load.

Speaker Change: And interconnection is coming.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: I'd say, it's in the years timeframe, but they are frequently getting more.

Brian X. Tierney: I'd say it's in the years time frame, but they're frequently getting more aggressive about wanting faster service, and that's all coming into things like their supply chain. Do they have the equipment necessary to put the equipment in, the cooling that they need, the generation that they need, all those things? And so we have time to see it coming, but I think they're getting increasingly aggressive about wanting service sooner and quicker than they had previously.

Speaker Change: Aggressive about wanting sooner.

Speaker Change: Service and that's all coming into things like their supply chain do they have the equipment necessary to put the.

Speaker Change: Equipment in the cooling that they need the generation that they need all of those things and so we have time to see it coming.

Speaker Change: But I think they are getting increasingly aggressive about wanting service sooner and quicker.

Speaker Change: Than what they had previously.

Speaker Change: Yeah, Okay excellent I appreciate all the color. Thanks, so much.

David Keith Arcaro: Okay, excellent. I appreciate all the color.

Unknown Executive: Thank you, David. Thank you. The next question today is coming from Gregg Orrill from UBS. Your line is now live. Yeah, hi, thanks for taking the question.

Speaker Change: Thank you David.

Speaker Change: Thank you. Your next question today is coming from Greg <unk> from UBS. Your line is now live.

Greg: Yeah, Hi, thanks for taking the question.

Greg: Alright.

Just.

Greg: Another follow up regarding the D C R.

Gregg Gillander Orrill: .. .. .. .. Just a follow up regarding the

Greg: How you see that.

Unknown Executive: Thank you. The next question today is coming from Gregg Orrill from UBS. Your line is now live. Yeah, hi, thanks for taking the question.

Greg: Getting getting rolled into.

Greg: Getting recovery around that is it is it going to be sort of along the timeline of the new ESP.

Greg: Five or or will it be tied to the base rate case.

John William Somerhalder: Yeah, so our anticipation is that the accounts that we're recovering in the DCR should be fully recovered in either ESP-5 or the base rates. And there's been some discussion about that in the staff's filing and our responses. The accounts have been fully recovered for the last 12 or so years in ESP-5, and they've been audited and deemed appropriate and approved on an annual basis. So whether all the accounts are in ESP-5 or in the base rate case, we're sort of indifferent to that, but fully believe that what's been approved and recovered and invested in for the last 12 years will continue to be in either one of those venues.

Greg: How does that impact your.

Greg: Guidance.

Greg: Yes, so our anticipation is that the accounts that were recovering in the D. C. R.

Greg: Should be fully recovered in either ESP, five or the base rates and theres been some discussion about that and the SaaS filing and our responses via.

Greg: The accounts have been fully recovered for the last 12 or so years.

Greg: In the ESP five.

Greg: And they've been audited and deemed appropriate.

Greg: An approved on an annual basis.

So whether they're all the accounts or an ESP five or in the base rate case, we're sort of indifferent to that but but fully believe that what's been approved and recovered and invested in for the last 12 years, we will continue to be in either one of those.

Anthony Christopher Crowdell: Thank you. The next question is coming from Anthony Crowdell from Missouho. Your line is now live.

Greg: Venues.

Speaker Change: Sounds good thank you.

Speaker Change: Thank you Greg.

Speaker Change: Thank you next question is coming from Anthony <unk> from Mizuho. Your line is now live.

Anthony Christopher Crowdell: Hey, good morning. Just hopefully, two quick ones. One on the Deferred Prosecution Agreement, is there a date in June where it expires, or will there be an announcement or an office issue a notice?

Speaker Change: Yeah.

Anthony: Hey, good morning, just hopefully two quick ones one on the deferred prosecution agreement is there a date in June where it expires or is it will there will be an announcement or.

Anthony: In office issued.

Anthony: I notice out.

John William Somerhalder: Hey Anthony, it's John. I think that it's late July. It's not June, so it's late July. I think it's like the 20th or something.

Anthony: Hey, Anthony It's John I think Thats late July is not June. So it was late July I think it's like the 20th of 'twenty.

Brian X. Tierney: And if we could make a filing prior to that, we'd like to be able to do that as well. Great, thank you. Sorry Anthony, I just meant not waiting until the absolute terminal date. If we've done everything we need to to allow us to file sooner than that, we will.

John: And if we could make a filing prior to that we'd like to be able to do that as well.

John: Okay.

John: Sorry, Anthony just meaning not waiting until the absolute terminal date.

John: If we've done everything we need to allow us to file sooner than that we will.

Anthony Christopher Crowdell: And if I take that with Shahriar's question earlier, you mentioned to clear that potential lawsuit up, are those the last two items of the third prosecution agreement and that potential lawsuit that Shahriar had brought up earlier?

John: If I take that with sharp question early you mentioned.

Clear that potential suite out suit up are.

Those last two items, a deferred prosecution agreement and that.

John: Potential lawsuit Shaw had brought up earlier.

Brian X. Tierney: There's what we talked about earlier. There's the DPA. There's the securities case. And then there are the audit cases in front of the Ohio Commission, which we asked if they could proceed at this time and, hopefully, get those behind us as well.

Speaker Change: No there is.

Speaker Change: There is what we talked about earlier, there's the DPA.

Speaker Change: The Securities case.

Speaker Change: And then there are the.

Speaker Change: Audit cases in front of the Ohio Commission, which we asked if they could proceed currently and hopefully get those behind us as well.

Anthony Christopher Crowdell: Great. And then just lastly, the move to investment grade, was there any existing debt that maybe was triggered at a higher interest rate because you were sub investment grade? And is there, will that, will those rates maybe trigger lower? And is there any significant interest savings going forward because of that?

Speaker Change: Great and then just lastly, the move to investment grade was was there any existing debt that maybe was triggered.

Speaker Change: A higher.

Speaker Change: Interest rate because it was sub investment grade and is there well.

Speaker Change: Those rates that would be trigger lower and is there any significant interest savings going forward because of that.

Speaker Change: Yes, so not meaningful interest savings but.

John William Somerhalder: Yeah, so not meaningful interest savings, but with the Moody's upgrade, you know, we had an interest rate step up because we were sub-investment grade. Now that's been eliminated, effective with the upgrade, although it will start with the next interest payment later this year. I think on an annual basis, that's less than $10 million.

Speaker Change: With the Moody's upgrade.

Speaker Change: And interest rates step up because we were sub investment grade now.

Speaker Change: Been eliminated effective with the upgrade although it will start with the next interest payment.

Speaker Change: Later this year.

Speaker Change: On an annual basis, that's less than $10 million.

Speaker Change: But nonetheless I mean.

Speaker Change: No.

Speaker Change: Paul.

Anthony Christopher Crowdell: I think we also got some better pricing on the revolving credit facility by about 25 basis points. All those things help. They may not be material in the grand scheme of things, but they are important. Thanks for taking my questions.

Speaker Change: I think we also got some better pricing on the revolving credit facility by about 25 basis points. So I mean.

Speaker Change: All those things help.

Speaker Change: They may not be material in the Grand scheme of things, but it is important to us.

Speaker Change: Okay. Thanks for taking my questions.

Brian X. Tierney: Hey, Anthony, there's one more that I forgot to put on the list. There's the SEC investigation that we'd like to get settled as well.

Speaker Change: Hey, Anthony there is there is one more that I forgot to put on the list. There is the SEC investigation that we'd like to get settled as well.

Unknown Executive: Thank you. The next question today is coming from Paul Patterson from Glenrock Associates. Your line is now live.

Anthony: Great. Thank you.

Thank you.

Thank you. Your next question today is coming from Paul Patterson from <unk> Associates. Your line is now live.

Paul Patterson: But just to follow up, I think it might have been Jeremy's question on Signal Peak. There's discussion about maybe being forced to shut down in 2025. Any thoughts there about how we should think about that? If that happens, is it just a 12 cent maybe not being there, or is there potential for a negative EPS impact or something like that?

Paul Patterson: Hey, good morning.

Paul Patterson: Good morning, Paul.

Paul Patterson: Just a follow up I think it might've been Jeremy's question in signal peak.

Paul Patterson: There was discussion about maybe being forced to shut down in 2025.

Any thoughts there about how we should think about that.

Paul Patterson: If that happens.

Paul Patterson: Is it just a 12% maybe not being there or is there potential for a negative EPS impact or something like that.

John William Somerhalder: Well, so Paul, thanks for the question. You know, as we've kind of outlined in the plan, the signal peak was 12 for this year, but we really had them going to a very de minimis level of earnings contribution beginning in 25 and beyond. So not significant to the plan in the grand scheme of things, and I don't think it would ever go to where we're incurring losses, but just kind of a break-even proposition if it were to have to shut down.

Speaker Change: So Paul Thanks for the question.

Paul Patterson: As we've kind of outlined in the plan.

Speaker Change: Signal peak was 12 since this year, but we really had them going to a very de minimis level of earnings contribution beginning in 'twenty five and beyond so.

Speaker Change: Not significant to the plan in the Grand scheme of things.

Speaker Change: And I don't think you would ever go to where were incurring losses.

Speaker Change: But just kind of a breakeven.

Speaker Change: Proposition if it were to have to shut down.

Brian X. Tierney: And then, with respect to the CREATE MOD settlement, is there any potential for having additional parties sign on to that, or are we just going to go through what I guess has been outlined in the..., in the procedural, the hearing examiners, are we pretty much just going to go down that road, do you think?

Speaker Change: Okay Awesome and then.

Speaker Change: With respect to the grid Mod settlement is there any potential for having additional parties sign on to that.

Speaker Change: Or are we just going to go through what I guess, it's been outlined in the.

Speaker Change: And the procedural.

Speaker Change: The hearing examiners.

Speaker Change: Are we pretty much this is going to go down that road do you think.

Brian X. Tierney: We're I think we're just going to go down that road Paul. June 25th is when I think we're expected to have the hearing on it, and we have, you know, a majority of the interveners signed on to the Settlement, and there's, like, really nothing controversial about it. It's we're just trying to deploy the AMI that all the other in-state peers are either at or close to a hundred percent of We're trying to round out and finish the remaining two-thirds of our customers on okay, okay.

Speaker Change: I think we're just going to go down that road Paul.

Speaker Change: June 25th is when I think we're expecting to have the hearing on it and we have Amit.

Speaker Change: A majority of the intervenors signed on to the.

Speaker Change: Settlement and theirs.

Speaker Change: Theres really nothing controversial about it.

Speaker Change: We're just trying to deploy the <unk>.

Speaker Change: That all of the other instate peers are either at or close to a 100% of we're trying to round out and finish the remaining two thirds of our customers on okay. Okay, great and then.

Brian X. Tierney: Okay, okay, great. And then, and then this has been a topic that's been coming up a lot in policy circles about trying to get more great enhancement technologies to be deployed. As opposed to, you know, the substantial build-out and all the issues that are being seen with that, in terms of cost and timing and stuff. I'm just wondering... What do you think about grid-enhancing technologies? Do you have any thoughts about how they might be deployed at FirstEnergy or industry-wide?

Speaker Change: This has been a topic that's been coming up a lot.

Speaker Change: In policy circles about trying to get.

Speaker Change: More grid enhancing technologies.

Deployed.

Speaker Change: As opposed to.

The substantial build out and all the issues that are being seen with that.

Speaker Change: Terms of cost and.

Speaker Change: Timing and so I'm just wondering.

Speaker Change: How do you think about grid enhancing technologies.

Speaker Change: Do you have any thoughts about how they might be deployed at firstenergy or industry wide.

Brian X. Tierney: Yeah, so, you know, there are the Our responses to the GRIP, I think, are grid-enhancing technologies, grid-resilient, smart grid storage, Derms, and the like.

Speaker Change: Yes so.

Speaker Change: There are the.

Speaker Change: Our responses to the grip I think our grid enhancing technologies grid resilient smart grid storage.

Speaker Change: <unk> and the like and so.

Brian X. Tierney: And so, you know, with the Department of Energy, we're looking to take that money that they're looking to help jumpstart some of those initiatives and get our fair share of it for investment for the benefit of our customers. That's about $500 million of investment that we're looking to make. And the Department of Energy is looking to put those dollars to work and make these pilots a reality. And we're looking to take advantage of that for the benefit of our customers. So it's happening. The dollars are being put to work, and we're trying to get our share of those dollars. Okay, but you don't expect any, do you expect?

Speaker Change: With the department of energy, we're looking to take that money that theyre looking to help jump start some of those initiatives and get our fair share of those for investment for the benefit of our customers.

Speaker Change: That's about $500 million of investment that we're looking to add.

The department of energy is looking to put those dollars to work and make these pilots a reality and we're looking to take advantage of that and for the benefit of our customers. So it's happening the dollars are being put to work in.

Speaker Change: And we're trying to get our share of those dollars.

Speaker Change: But you don't expect any do you expect any widespread.

Paul Patterson: Okay, but you don't expect any, do you expect any widespread... Adoption of these in the near term or beyond just the pilots and the DOE funding and what have you? Is there any sense to that? I know it's kind of a big question, so I apologize, but do you see this as the potential opportunity or threat might be associated with these technologies being deployed?

Speaker Change: Adoption of those in the near term or or beyond just the pilots and.

Speaker Change: The deal.

Speaker Change: Funding or what have you is there any.

Speaker Change: Any sense.

Speaker Change: I know, it's kind of a big question.

Speaker Change: But I guess do you see.

Speaker Change: Phoebe.

Speaker Change: How do you see this you see this.

Speaker Change: What the what the potential opportunity or threat might be associated with.

Speaker Change: With the.

Speaker Change: <unk> technology is being deployed.

Brian X. Tierney: You know, I don't see it as being strategically disruptive for our industry. You know, these new technologies. I think it's best to take a crawl, walk, run approach. And you've seen that in other places in the industry, Paul. Not as big of a deal for us.

Phoebe: I don't see it as being strategically disruptive for our industry.

Phoebe: These new technologies.

Phoebe: I think it's best to take a.

Phoebe: Crawl walk run approach.

Phoebe: And you've seen that in other places in the industry, Paul not as big of a deal for us but yes.

Paul Patterson: But you know, things like carbon capture and sequestration, right, to do it at a plant level, I don't think have been done on a commercial scale in this country with a coal-fired power plant. So you look at the new EPA rules, which would either call for that or the retirement of the plant. I think if that rule were to go into effect, I think it would cause a lot of plants to retire because the economic technology just isn't there yet.

Phoebe: Things like.

Phoebe: Carbon capture and sequestration right to do it at a plant level I don't think has been done on a commercial scale in this country with a coal fired power plant. So.

Phoebe: You look at the new EPA rules, which would either call for that or retirement of the plants.

Phoebe: <unk>.

Phoebe: That rule were to go into effect I think it would cause a lot of plans to retire because.

Phoebe: The economic technology, just isn't there some of the things that we're proposing doing on a pilot basis I think our best done on a pilot basis, but I don't see any of these technologies at this point strategically.

Paul Patterson: Some of the things that we're proposing doing on a pilot basis, I think they are best done on a pilot basis, but I don't see any of these technologies at this point strategically disrupting our industry. Okay, great.

Phoebe: Strategically disrupting our industry.

Unknown Executive: Okay, great. Thanks so much. Have a great weekend.

Speaker Change: Great. Thanks, so much have a great weekend.

Agnieszka Anna Storozynski: Thank you. The next question is coming from Agnieszka Storozynski from Seaport Global. Your line is now live.

Speaker Change: Thanks, Paul you too.

Speaker Change: Thank you. Your next question is coming from Andrew stores, an SKU from Seaport Global Your line is now live.

Andrew Marc Weisel: Thank you.

Agnieszka Anna Storozynski: Thank you. So all of these additions of data centers, especially those that are reliant on renewable power, assume that there's a well-functioning grid with minimal congestion issues. That doesn't seem right to me, at least.

Andrew Marc Weisel: I'm just wondering.

Andrew Marc Weisel: So all of these additions of data center.

Andrew Marc Weisel: Actually those that are reliant on renewable power assume that theres, a well functioning great.

Andrew Marc Weisel: De Minimis.

Andrew Marc Weisel: Gesture and issues.

Andrew Marc Weisel: That doesn't seem right to me at least.

Agnieszka Anna Storozynski: And I was starting to hear from other PJM wires-only utilities that they might be forced to build generation assets again, and granted, not maybe the next year or two, but in the foreseeable future. I mean, I understand that that's a major change to a competitive power market, but those utilities think that it might be needed for reliability reasons. Is this something you see as well? Again, it seems like we're trying to manage 24-7 load growth with intermittent resources, and I know transmission upgrades are an answer, but I'm just wondering how you see it going. That's it.

Andrew Marc Weisel: We're starting to hear from other PJM.

Andrew Marc Weisel: Why is the only utilities that they might be forced to build.

Andrew Marc Weisel: Building generation assets again and granted not maybe the next year or two but.

Andrew Marc Weisel: In the foreseeable future.

Andrew Marc Weisel: I understand that that's a major change to the competitive this time market, but those utilities think that that might be needed.

Andrew Marc Weisel: The liability reasons is this is something you see as well.

Andrew Marc Weisel: Hum.

Andrew Marc Weisel: Again, it seems like we're trying to manage at 24 seven months gross went into B.

Andrew Marc Weisel: And I know transmission upgrades are.

Andrew Marc Weisel: And answered, but just wondering how you see it going forward.

Brian X. Tierney: That's a really good question, Angie. We're having more and more discussions with regulators and other companies around the issue that you identify, which we're kind of calling resource adequacy. And certainly, it's something that people are talking more and more about. You can't just have a robust wire system; you have to have a commodity to put on the wires. And so our five states have sort of different stances relative to that.

Speaker Change: Really good question, Angie, we're having more and more discussions with regulators and other companies around.

Speaker Change: The issue that you identify which were kind of calling resource adequacy.

Speaker Change: And certainly it's something that people are talking more and more about it you can't just have a robust wire system.

Speaker Change: You have to have a commodity to put on the wires and so our five states have sort of different.

Speaker Change: Stances relative to that.

Brian X. Tierney: For us in New Jersey and Pennsylvania, we would require legislative changes. In Maryland and Ohio, there is an opportunity for utilities to own generation on a very limited basis. And of course, West Virginia is a traditional integrated resource plan state. But for the region altogether, it is an increasingly talked-about issue: will there be enough coal to put on the wires in the face of the load growth that we're facing and the coal unit retirements that we're facing as well? So there's going to need to be a solution for that.

Speaker Change: US in New Jersey, and Pennsylvania, we would require legislative changes.

Speaker Change: In Maryland.

Speaker Change: And Ohio, Theres, an opportunity to for utilities to own generation on a very limited basis.

Speaker Change: And of course, West, Virginia, as a traditional integrated resource plan.

Speaker Change: State, but for the region all together it is an increasingly.

Speaker Change: <unk> talked about issue is will there be enough commodity to put on the wires in the face of the load growth that we're facing and the.

Speaker Change: Coal unit retirements that were facing as well, so theres going to need to be a solution to it for us in four of our states were mostly wires.

Brian X. Tierney: For us, in four of our states, we're mostly wires. I don't think we'd ever be interested in owning generation in those states on a merchant basis. But if a state were to come to us and ask us to build on a regulated basis for the long term, I think that's something that we'd consider. But I don't think any of our states are near that point right now.

Speaker Change: I don't think we would ever be interested in owning generation in those states on a merchant basis, but if the state were to come to us and ask us to build on a regulated basis, we're a long term.

Speaker Change: I think that's something that we'd consider but I don't think any of our states are near that point right now.

Agnieszka Anna Storozynski: And then changing topics on interest rates. So we're starting to hear from some of the utilities that, you know, they were counting on some tailwind from interest rates in the back half of the year. I mean, that might still happen. But just wondering, you know, how do you see your growth plans and your financing plans, especially from an EPS perspective, if this current interest rate environment were to persist beyond this year?

Speaker Change: And then changing topics on interest rates. So we're starting to hear from some of the utility.

Speaker Change: That date were counting on some tailwind from interest rates in the back half of the year I mean that might still happen.

Speaker Change: But just wondering.

Speaker Change: How do you see your growth plans in your financing plan, especially from an EPS perspective.

If this current interest rate environment with two questions beyond this year.

John William Somerhalder: Yeah, Angie, so so.

Speaker Change: Yeah, Angie so so.

John William Somerhalder: Yeah, Angie, so in our plan for this year, the planned coupon rate for all new debt deals was five and three quarters, and then we had it elevated through the planning period over the next five years. And so, you know, it is something that we'll keep an eye on. If you look at the two bond deals that we've done this year, they are on a blended basis. It's right at five and three quarters. So, you know, we feel good about that, and I think we'll just have to keep an eye on interest rates.

Speaker Change: Our plan for this year.

Speaker Change: The plan coupon rate for all new debt deals was five and three quarters.

Speaker Change: And then we had an elevated through the planning period over the five years.

Speaker Change: And so.

Speaker Change: It is something that we'll keep an eye on if you look at the two bond deals that we've done this year. It's on a blended basis is right at five and three quarters.

Speaker Change: So we feel good about that and I think we'll just have to keep an eye on interest rates.

Unknown Executive: Thank you. We've reached the end of our question and answer session. And, ladies and gentlemen, that does conclude today's teleconference webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you Angie.

Thank you we've reached end of our question and answer session and ladies and gentlemen that does conclude today's teleconference and webcast. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.

Speaker Change: Yeah.

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