Earnings call transcript: FirstEnergy meets Q2 2025 EPS forecast, stock stable

FirstEnergy Corp reported its second-quarter earnings for 2025, meeting analysts’ expectations with an earnings per share (EPS) of $0.52, matching the forecast. The company also reported a slight revenue beat, with actual revenue of $3.4 billion compared to the forecast of $3.39 billion. According to InvestingPro data, the company’s current trading price suggests it may be overvalued relative to its Fair Value, though analysts maintain price targets between $43 and $47. The stock showed minor fluctuations, closing with a 1.36% increase at $41.79, but experiencing a slight dip in premarket trading the following day, consistent with its historically low volatility profile (Beta: 0.37).

Key Takeaways

• FirstEnergy’s Q2 2025 EPS met expectations at $0.52.
• Revenue slightly exceeded forecasts at $3.4 billion.
• Stock price increased by 1.36% post-earnings but dipped 0.55% in premarket trading.
• The company is on track to hit the upper half of its full-year earnings guidance.
• Significant growth in data center pipeline and transmission investments.

Company Performance

FirstEnergy demonstrated stable performance in Q2 2025, maintaining its EPS forecast and slightly surpassing revenue expectations. The company’s core earnings per share increased to $0.52 from $0.51 in the same quarter last year, indicating steady growth. InvestingPro analysis reveals the company maintains a GOOD overall Financial Health Score of 2.5, though it operates with a significant debt burden. The utility’s strategic investments and operational efficiencies are contributing to its robust financial health, with a notable 28-year track record of consistent dividend payments. For deeper insights into FirstEnergy’s financial health metrics and additional ProTips, subscribers can access the comprehensive Pro Research Report, part of InvestingPro’s coverage of over 1,400 US stocks.

Financial Highlights

• Revenue: $3.4 billion, a slight increase over the forecast of $3.39 billion.
• Earnings per share: $0.52, meeting the forecast and up from $0.51 in Q2 2024.
• Year-to-date core earnings: $1.19 per share, reflecting a 19% growth from 2024.
• Operating expenses were 4% below plan.
• Cash from operations increased by 60% to $1.7 billion.

Earnings vs. Forecast

FirstEnergy’s actual EPS of $0.52 matched the forecast, resulting in no surprise factor. Revenue slightly exceeded expectations, with a modest surprise of 0.29%. This performance aligns with the company’s historical trend of meeting or slightly exceeding quarterly forecasts.

Market Reaction

Following the earnings announcement, FirstEnergy’s stock price rose by 1.36%, closing at $41.79. In premarket trading, the stock experienced a slight decrease of 0.55%, trading at $41.56. The stock trades at a P/E ratio of 22.45, which InvestingPro analysts note is high relative to near-term earnings growth. The stock remains within its 52-week range, with a high of $44.97 and a low of $37.58, demonstrating the characteristically low price volatility that has attracted defensive investors.

Outlook & Guidance

FirstEnergy is tracking towards the upper half of its full-year 2025 core earnings guidance of $2.4 to $2.6 per share. The company plans significant investments, including $15 billion in Pennsylvania through 2029 and a potential 20% increase in transmission capital expenditures. Long-term growth is targeted at a compound annual rate of 6-8% through 2029.

Executive Commentary

Brian Tierney, CEO, stated, "We are on track to deliver results in the upper half of our full year 2025 guidance range." This confidence is supported by the company’s strategic investments and operational efficiencies. CFO John Taylor emphasized, "Our investment program is funded with internally generated cash flow and utility debt issuances," highlighting the company’s strong financial position.

Risks and Challenges

• Regulatory challenges in Ohio and West Virginia could impact operations.
• Economic downturns may affect energy demand and pricing.
• Supply chain disruptions could delay infrastructure projects.
• Increasing competition in the energy sector may pressure margins.
• Environmental regulations could necessitate additional compliance costs.

Q&A

During the earnings call, analysts inquired about the potential for increased transmission capital expenditures, which could rise from $2.3 billion to $4 billion. Executives also addressed the ongoing regulatory proceedings in Ohio and West Virginia, providing insights into future operational strategies.

Full transcript - FirstEnergy Corporation (FE) Q2 2025:

Conference Operator: Hello, and welcome to the FirstEnergy Corp. Second Quarter twenty twenty five Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Karen Segoe, Vice President of Investor Relations. Please go ahead, Karen.

Karen Segoe, Vice President of Investor Relations, FirstEnergy: Thank you. Good morning, everyone, and welcome to FirstEnergy’s second quarter twenty twenty five earnings review. Our earnings release, presentation slides and related financial information are available on our website at firstenergycorp.com/ir. Today’s discussion will include the use of non GAAP financial measures and forward looking statements, which are subject to risks and uncertainties. Factors discussed in our earnings news release, during today’s conference call and in our SEC filings could cause our actual results to differ materially from these forward looking statements.

The appendix of today’s presentation includes supplemental information along with the reconciliation of non GAAP financial measures. Please read our cautionary statement and discussion of non GAAP financial measures on Slides two and three of the presentation. Our Chair, President and Chief Executive Officer, Brian Tierney, will lead our call today. He will be joined by John Taylor, our Senior Vice President and Chief Financial Officer. They will discuss our strong performance on each of our key financial metrics, our progress delivering on our target of 2025 core earnings in the upper half of our guidance range FirstEnergy’s excellent position to enable the economic growth and investment highlighted at the recent Pennsylvania Energy and Innovation Summit the significant long term investment opportunities within our well situated transmission operations and our progress on strategic, regulatory and legislative activities.

Now it’s my pleasure to turn the call over to Brian.

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Thank you, Karen. Before we get started, I would like to express my condolences to those who are impacted by the tragic events earlier this week in New York City. On behalf of the FirstEnergy family, please accept our thoughts, prayers, and love as you grieve the loss and celebrate the lives of your loved ones. This morning, I’ll provide an update on our second quarter and year to date performance and key developments that we believe are transforming FirstEnergy into a premier electric company. GAAP earnings for the second quarter were $0.46 per share compared to $08 in the 2024.

Core earnings were $0.52 per share for the quarter compared to $0.51 in the second quarter of last year. We are on track to deliver results in the upper half of our full year 2025 guidance range of $2.4 to $2.6 per share. Second quarter core earnings benefited from the strong execution of our investment strategy, reflecting new base rates in Pennsylvania that went into effect in January. Quarterly results also reflect increased investments in our transmission system, which benefit from formula based rates. Our team continues to demonstrate strong financial discipline on operating expenses.

John will speak more about this in a moment. Through the 2025, we invested $2,500,000,000 in our infrastructure through Energize three sixty five. We are on pace to deploy $5,000,000,000 in capital this year and we have confidence in our $28,000,000,000 capital investment plan through 2029 to improve system resiliency and reliability and to support the level of service customers expect. Providing reliable service is at the heart of our mission. This summer, severe weather strained the system in several of our locations.

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

We are proud to be the largest electric utility in the state, which has a constructive regulatory environment to support investment and economic growth. Between our distribution operations and the Pennsylvania portion of our standalone transmission business, the Commonwealth represents approximately 35% of our total rate base and earnings and FirstEnergy Pennsylvania is our largest utility subsidiary. Through our 2029 planning period, we expect to invest $15,000,000,000 in the Commonwealth consisting of $4,300,000,000 in distribution capital investments to deliver safe and reliable power 5,500,000,000 in transmission capital investments for a modern energy system that can support the growing demand and over $5,000,000,000 in operating expenses that support good paying electric industry jobs. Our Pennsylvania capital investment plans are designed to improve reliability and resiliency and drive economic development. These investments are recovered through constructive rate mechanisms such as forward looking base rates, distribution investment surcharges and forward looking transmission formula rates.

Governor Shapiro’s economic development strategy is fueling innovation and growth in sectors like AI and energy. As Pennsylvania’s economic development strategy materializes, it will require incremental electric infrastructure investments well beyond our current plan. Slide seven illustrates the remarkable growth we are experiencing in our data center pipeline and contracted data center load. Since February, our long term pipeline for data center load has increased over 80% to 11.1 gigawatts from 6.1 gigawatts. Our contracted data center load through 2029 has increased approximately 25% since February to 2.7 gigawatts from 2.2 gigawatts.

So far this year, we have received requests for 40 new large load studies greater than 500 megawatts each. And since the beginning of 2024, we have received requests for over 95 gigawatts of large load studies. For reference, the first energy system coincident peak load for this summer was approximately 33,475 megawatts. Much of the increase in large load studies this year are coming from the states of Pennsylvania and Ohio. Data center growth both in our system and from those adjacent to our footprint is likely to require additional transmission investments.

Turning to Slide eight. Our transmission system represents a significant growth opportunity for FirstEnergy. The combination of our standalone transmission and integrated transmission systems span six states and about 24,000 line miles. FirstEnergy is one of the largest transmission asset owners in PJM. Organic investments in our transmission system are expected to drive rate base growth at a 15% compound annual growth rate between now and 2029.

During this period, our annual transmission CapEx is expected to grow from $2,400,000,000 to $3,400,000,000 In addition, our transmission system is ideally located geographically in the middle of PJM to garner incremental investment associated with data center load growth both on our own wires and on systems adjacent to ours. Over the last three years, FirstEnergy has secured approximately $3,100,000,000 of investments through competitive open windows through ValleyLink and in our standalone transmission and integrated segments. We see the incremental transmission expansion associated with load growth as a recurring opportunity for our company. PJM recently initiated the 2025 open window for reliability investment opportunities that we believe are comparable to those in the 2024 RTEP. Our proposals will seek to build on our record of success in the RTEP process.

With the need for a more resilient and reliable electric grid to support economic development and data center growth, we expect transmission investment to increase up to 20% in our next five year plan. Moving on to Slide nine on regulatory and legislative updates. In Ohio, our state president, Torrence Hinton, and his team have done an excellent job moving our base rate case forward. We believe a decision from the PUCO is likely by the end of the year. We are also preparing for the upcoming transition to Ohio’s new regulatory framework, which includes multiyear rate cases and forward test years.

The new framework supports important capital investments to benefit customers and greater transparency and predictability for our business and investors. In West Virginia, we are preparing to file our ten year integrated resource plan by October 1. In that plan, we will provide an updated load forecast and our recommendations to address generation requirements. We expect the IRP will highlight the need for new dispatchable generation in the state. Last week, PJM announced the results from its capacity auction for the twenty twenty six to twenty twenty seven delivery year.

Prices cleared at the administratively set cap, which is 22% higher than the twenty twenty five to twenty twenty six delivery year with no new dispatchable coal, gas or nuclear generation. It is clear that the capacity auction construct does not provide the incentives necessary to finance and build the much needed dispatchable generation in deregulated states. We will continue to advocate on our customers’ behalf for cost effective solutions that actually add needed generating capacity to meet growing demand and drive economic development in our states. Moving to Slide 10. Our progress so far this year reflects our work to optimize FirstEnergy for performance, growth and financial strength.

Our leadership team is charged with energizing our culture, delivering improved service to the 6,000,000 customers who depend on us and creating significant value for our investors. Greater accountability means faster results. We are seeing this in the financial discipline that is helping us drive more efficiencies structure and in a workforce that is more agile and responsive to customers’ needs. We are on track for a successful year. We are reaffirming our 2025 core earnings guidance range of $2.4 to $2.6 per share and are on track to deliver results in the upper half of the range.

We are also reiterating our five year $28,000,000,000 base capital investment program with no incremental equity needs in the plan. These customer focused investments drive our targeted compound annual growth rate of 6% to 8% through 2029. It is our goal to be recognized as a premier electric company that operates at a high level and consistently delivers growth at or above the midpoint of our guidance range. We offer shareholders a compelling value proposition with a strong growth outlook, demonstrated financial discipline, attractive risk profile and a targeted shareholder return opportunity of 10% to 12% with upside potential. We are committed to operating at a high level, delivering stable growth and realizing our bright future for our customers, communities and investors.

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

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

Our results which are ahead of plan reflect the new base rates in Pennsylvania that went into effect at the start of the year, formula rate transmission rate base growth of 10% when combining our transmission investments at our standalone transmission and integrated businesses, as well as financial discipline with operating expenses in our distribution and integrated segments. Full details for each of our business segments are available in our highlights document. Through the first half of the year, core earnings of $1.19 per share reflect strong growth of 19% versus the 2024 with meaningful increases in our distribution and integrated businesses that reflect execution of our regulated strategies, strong financial discipline and higher customer demand reflecting more normal weather versus the same period of last year. Our financial performance resulted in a consolidated return on equity of 9.7% on a trailing twelve month basis, which is in line with our targeted ROE of 9.5 to 10% and is a 30 basis point improvement since the end of last year. We are very pleased with our results through the first six months and remain focused on execution to achieve core earnings per share at the upper half of our guidance range.

As Brian mentioned, we continue to focus on financial discipline and continuous improvement, including reducing maintenance costs through more strategic capital investments, focusing on efficiency in our maintenance plans and enhancing customer processes that will drive better service at a reduced cost. Our year to date O and M expenses are lower than planned by nearly 4% and we expect to continue this trend through the balance of the year. The team is fully committed to identifying sustainable solutions in our cost structure that offset inflation as well as building in flexibility to our financial plans as needed. Our $5,000,000,000 investment plan for 2025 is on track with capital deployment of more than $1,400,000,000 in the quarter and slightly more than $2,500,000,000 through the first half of the year. This is 29% ahead of the first June 2024 with more than two thirds of the increase in transmission investments in our standalone transmission and integrated segments.

As Bryant mentioned, we continue to see significant needs to invest in our system to improve reliability and resiliency and to support expected increases in customer demand and economic development. Our investment program is funded with internally generated cash flow and utility debt issuances. Through June 30, our cash from operations was $1,700,000,000 an increase of 60% as compared to 2024. This reflects recovery of our capital investments and financial discipline, not only with our operating expenses, but also with discipline around working capital, including managing customer collections, vendor payables and inventory levels. Through the first six months of the year, we completed six subsidiary debt transactions totaling $1,600,000,000 with an average coupon of 5%.

This includes $1,000,000,000 in new money to fund our capital programs. We expect to complete the remaining two transactions in our 2025 financing plan later this year. In addition, in June, Effie Corp opportunistically executed a $2,500,000,000 convertible debt offering in two tranches at a three and five year tenure at an average coupon of 3.75% with a 20% conversion premium. This transaction priced 125 basis points lower as compared to the unsecured debt at FE Corp. Proceeds from this transaction will refinance FE Corp’s $1,500,000,000 convertible bonds expiring May 2026, dollars 300,000,000 in short term borrowings that fully redeemed F E Corp’s March 2025 bond maturity and a $300,000,000 January 2026 bond maturity.

The remaining $400,000,000 will be used to support our capital investment programs or for general corporate purposes. This transaction provides a natural hedge to our overall financing plan as it reduces the company’s 2026 financing risk by more than 40% and has removed all holding company financing requirements for the next two years. Investor demand for our debt remains strong, highlighting the appeal of our core regulated businesses and a solid balance sheet. In our last three utility bond issuances, we received significant interest with transactions oversubscribed by an average of over nine times. We remain committed to a strong balance sheet and investment grade metrics targeting FFO to debt of 14% plus through 2029.

Finally, consistent with our commitment and focus on our core regulated businesses, I am pleased to report that we successfully sold our minority ownership position in the Signal Peak coal mine earlier this month for $47,500,000 This is a full exit and we have no remaining financial or operational liability. Through the first half of the year, we’re executing well on our regulated strategies and investment plan, and I am pleased with the financial discipline demonstrated across the organization. Our key metrics for financial performance through the first six months are better than planned and last year, reflecting our commitment to delivering shareholder value. We look forward to continuing this momentum through the balance of the year and as we execute against our long term plan. We are focused on fulfilling our commitments to all of our stakeholders and delivering on our shareholder value proposition.

Thank you for your time. Now let’s open the call to Q and A.

Conference Operator: Thank you. You. You. And due to the interest of time, we ask that each analyst limit themselves to one question and one follow-up. And the first question comes from the line of Nicolas Cappanella with Barclays.

Please proceed.

Nicolas Cappanella, Analyst, Barclays: Hey, good morning, everyone. Thanks for all the updates.

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Good morning, Nick.

Nicolas Cappanella, Analyst, Barclays: Morning. So, hey. I just wanted to kind of clarify on the, the transmission CapEx upside. Certainly a lot coming here. Just the 20% increase, that you have visibility to in the plan, is that net or gross of the minority interest ownership?

And maybe you could just clarify just from an FE shareholder perspective, just how much CapEx has been identified that’s kind of upside Is it roughly $2,000,000,000 or is it more than that? And I’ll leave it there. Thanks.

John Taylor, Senior Vice President and Chief Financial Officer, FirstEnergy: Hey, Nick. This is John. So to answer your first question, we show our CapEx gross. So in the 28,000,000,000 that $14,000,000,000 is our consolidated CapEx. So we that 20% would be on that same basis.

And then what was your second question? I didn’t catch that.

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

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Yes. So that could be incrementally, it could be 2,300,000,000.0 to almost $4,000,000,000

Nicolas Cappanella, Analyst, Barclays: then just you’ve done a good job derisking the balance sheet with the various asset sales. Just how are you kind of thinking about balance sheet capacity at this point and when you would have to start to lean on equity?

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: We look at that all the time, Nick. And when we think about it, we’d like to keep all the options on the table. So we look at investments that would support growth in the balance sheet, and we could include equity and equity like instruments as we think about it. A lot of the increase that we have in the CapEx is associated with formula looking rates with no regulatory lag. But when we look at the overall portfolio, we’ll make decisions based on the reality at that time, but not very concerned about it at all.

Nicolas Cappanella, Analyst, Barclays: That’s great. That’s great. And then, maybe just a lot of focus on Pennsylvania here, especially, with the data points this past quarter. You know, what are your views on, pursuing a genco similar to some of what your your peers in PJM announced? And, you know, how are you kind of viewing, the auction clearing at the cap now in in PJM informing legislation in Pennsylvania for rate based generation?

Thanks.

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Yes. So let me start by saying, God bless Governor Shapiro for saving the customers and PJM billions of dollars by negotiating the collar that he did. Again, the $16,000,000,000 that customers are going to spend during that capacity delivery year add no new dispatchable generation to the system. You could build an awful lot of one gigawatt power plants for $16,000,000,000 We’re going to be constructive in terms of how we engage with the states that are fully deregulated. We would be willing to build on a regulated like basis or a fully contracted basis with creditworthy counterparties.

In the meantime, we’re going to focus on West Virginia where we do have the opportunity to invest on an integrated basis. We’re anticipating our IRP will call for new dispatchable generation, and we are ready, willing and able to make those investments for the benefits of our customers in West Virginia and for incremental economic development in that state.

Conference Operator: The next question comes from the line of Jeremy Tonet with JPMorgan. Please proceed. Hi, good morning.

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Good morning, Jeremy.

Jeremy Tonet, Analyst, JPMorgan: Just want to dig in on the data center pipeline a little bit more, if you could. Just want to kind of understand what drives the pace of negotiations there. Are there any blocking items to getting capacity online sooner or anything left to do for the contracts to get more of those that go out? Just wondering what drives the pace of conversions?

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: It’s really customer demand and how quickly people are willing to put their dollars to work is the thing that’s allowing us to move as fast as we are. We’re seeing there are legitimate large scale data center developers who have control of land, who have access to equipment, who are willing to sign contracts with us to keep their data centers moving forward. We’re also seeing a lot of others who are out there running these studies trying to see if they can put something together. And we’re talking to any and all of them, trying to make as much of that happen in reality as we can as quickly as possible for the demand that we’re seeing. But it’s really customer demand that sets the pace for how quickly we’re able to move.

Jeremy Tonet, Analyst, JPMorgan: Got it. That makes sense there. Maybe pivoting to West Virginia ahead of the IRP filing. Could you speak to the scope for incremental generation needs there? And what level of load growth do you see in the state?

Just wondering any color you might be able to provide there, particularly as it relates to coal plant retirements and how you think about that at this point?

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Yes. So we’ll be updating those load projections in the IRP that we’re going to follow. I don’t want to front run that filing today. But we have about 3,500 megawatts of generation, 3,000 of it is coal fired generation in the state of West Virginia that currently, according to our current forecast, would have those retiring in the 2035 and the 2040 time frame. Again, we’ll update that as we get into the IRP.

But I could see us incrementally adding over a period of time 1,000 megawatts of dispatchable gas combined cycle over the next ten years. And that would support both giving flexibility to those plans that we have with the coal fired power plants and attracting new data center load and other load that’s looking to relocate in West Virginia. West Virginia has a real competitive advantage given that it’s an integrated resource plan state. And we’ve talked to the Governor about that. We’ve talked to the Chair of the Commission about that.

And we think there would be support for adding generation in the state.

Jeremy Tonet, Analyst, JPMorgan: Got it. That’s helpful. Thank you.

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Thank you, Jeremy.

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

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

John Taylor, Senior Vice President and Chief Financial Officer, FirstEnergy: Hey, Carla, this is John. So most of the favorability to plan year to date is just discipline around operating expenses. As I said in my prepared remarks, our operating expenses are about 4% below plan, and we see that continuing for the balance of the year. So it’s really just around financial discipline and continuing to deploy capital on time and on plan. So that’s what’s really driving that.

I think as we get out to the third quarter call, obviously, we’ll look at where we are for the year. And then if it makes sense, we’ll adjust the guidance range at that time.

Carly Davenport, Analyst, Goldman Sachs: Great. Thank you for that. And then just wanted to follow-up on Nick’s question earlier on the transmission upside. Could you just talk a little bit about what’s embedded in that 20% opportunity that you’ve highlighted? Is that just the PJM open window?

Or are there any other drivers there that we should be thinking about?

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: It’s both the open windows that we have and then it’s incremental to actually add the data centers that are on our system are a component of that. And then there’s some additional incremental that we found that’s not related to either one of those going forward. So it’s all three of those parts that add up to the upside that we’re seeing.

Carly Davenport, Analyst, Goldman Sachs: Great. Thank you so much for the time.

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Thanks, Karli.

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

David Arcaro, Analyst, Morgan Stanley: Hey, thanks so much. Good morning.

Anthony Crowdo, Analyst, Mizuho Securities: Good morning, David.

David Arcaro, Analyst, Morgan Stanley: Just on that same transmission CapEx topic, signaling the up to 20% increase. We’re only halfway through the year and it seems like the data center load conversations are progressing fairly rapidly anyway. I’m just wondering, could there be further opportunities for upside as you get closer to your roll forward period? Could that CapEx outlook rise further in the coming months essentially?

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Yes. I think so, David. We’re not putting in our plan things that we don’t feel fairly certain about. So for it to be in the plan, it has to be contracted with the customer or we have to have had the award or feel fairly certain of the award from a competitive process or we have to have line of sight that the investment is at the period that we’re talking about. But against that backdrop, I think there will be additional customers will come forward and sign contracts with us.

I do think there will be awards coming out of the current open window. I think there will be additional open windows that happen. So I see upside to the plan, but we’re not going to be frivolous in putting upside that we don’t see line of sight to in our plan. But yes, I do think there will be upside as we go forward in time.

David Arcaro, Analyst, Morgan Stanley: Great. Yes, makes sense. Thanks. And then as we think about just how PJM states are going to be procuring new capacity, was just wondering if there’s been any progression with the discussions around what the framework might be, whether it’s contracted generation, regulated generation? And any sense of when we might get clarity as to the direction certain states are going?

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Not a ton of clarity on that, David, in deregulated states. I am encouraged by the PJM state led technical conference that’s going to happen on September 23, where all five of our state’s governors are going to be participating in that. I think the capacity auction situation is one that can only be solved by the states themselves. Clearly, the capacity auction construct can’t solve it and hasn’t solved it. The states can solve it.

Whether they decide to do so individually or through something like the outcome of the September 23 technical conference, I’m not sure. But I’m very pleased to see the governors engaged, taking a leadership role in this, and I think that’s how we’re going to get to the right solution here.

David Arcaro, Analyst, Morgan Stanley: Okay. Understood. Thank you.

Andrew Wessel, Analyst, Scotiabank: Thank you.

Conference Operator: The next question comes from the line of Ross Ballard with Bank of America. Please proceed.

Karen Segoe, Vice President of Investor Relations, FirstEnergy0: Good morning, Brian. Good morning, John. How are you?

Conference Operator: Good morning, Ross.

Andrew Wessel, Analyst, Scotiabank: Good morning.

Karen Segoe, Vice President of Investor Relations, FirstEnergy0: A lot of my questions have been asked, but maybe we could just cycle back to or circle back to Ohio regulation for a minute. So you’re in this process with the Puko for a forward test year. We’re thinking about affordability pressures with PJM also coming through the system. As you move from the ESP and as you go into forward test year, maybe one piece is what would the interveners seem most concerned about through that process? And how would that shift your ability to have an opportunity to earn your allowed ROE and think about regulatory lag?

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: We’re in the midst of our current base rate case, which we’ve had the testimony briefs have been filed, reply briefs, we’re waiting for an answer in the current rate case. And all the things that you would anticipate being covered by interveners are being covered there. Cap structure, ROE, the rates themselves, like all of the normal things are being considered in our base rate case. I anticipate, Ross, that’s going be the case in these forward looking test years that we have. When we go in for the next rate case under the new regime, whenever that is, we’re going to have a fairly limited period that needs to be reviewed historically.

And since we have true ups on the forward looking portion of the test year, I don’t anticipate those being particularly contentious. So I think we’ll be able to move through the next rate case relatively easily in a fairly short period of time without many issues that haven’t recently been discussed being raised. So I think the new regime will be constructive and look forward to transitioning to that as quickly as possible.

Nicolas Cappanella, Analyst, Barclays: And then one follow-up to that.

Karen Segoe, Vice President of Investor Relations, FirstEnergy0: Just in Ohio, we still have sort of the remaining or the last hopefully remaining HP six related processes. How do you see those progressing from here? And when can we finally think about wrapping and closing that so I don’t have to ask the question anymore?

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Yes. So similar answer. We’ve been through most of the rate case in that. There have been no new issues raised during that period. We anticipate getting an outcome later this year and finally be able to put that chapter behind us.

But nothing new was raised in the hearings that wasn’t disclosed or unaccounted for previously, and we look forward to getting through that proceeding and putting a final period on that by the end of this year as well.

Karen Segoe, Vice President of Investor Relations, FirstEnergy0: Okay. Perfect. Thank you guys.

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Thanks, Ross.

Conference Operator: The next question comes from the line of Michael Sullivan with Wolfe Research. Please proceed.

Karen Segoe, Vice President of Investor Relations, FirstEnergy1: Hey, good morning. Good morning. I had another one Hey, Brian. I had another one on the West Virginia generation plans. Are you mainly looking at building new dispatchable generation yourself?

Or would you consider buying something that someone else may be developing? I think one of your peers is doing that.

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: We’re going to look at everything, of course. I think what’s needed in PJM is new dispatchable generation. And my hope is that we’ll be able to make investments in that in the state of West Virginia. But of course, we’re going to look at everything and select the outcome that makes the most sense for West Virginia for the long term.

Karen Segoe, Vice President of Investor Relations, FirstEnergy1: Okay. And as a follow-up, think you mentioned regulated generation, but also considering contracted, maybe unregulated generation. Is that an evolution in your thought process? And would that be something like similar to what DPL Blackstone announced a couple of weeks ago? Would you be looking for a partner similar to that to work on that?

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Yes. If the risk profile were to look like regulated, I’d be comfortable with it. Meaning, I wouldn’t want us to be taking a position in the capacity or energy markets for the benefit of a customer. I wouldn’t want us to be long generation that we’re looking for a home for. But if we were able to make an investment in generation that had a regulated type risk profile, that’s something we consider.

I wouldn’t say that’s an evolution for us. We talked about that type of situation in our deregulated states as being something that we could consider if it could help solve the problem. But we’re certainly not looking to be a merchant generator with new generation to sell into today’s marketplace.

Karen Segoe, Vice President of Investor Relations, FirstEnergy1: Okay, great. Thank you.

John Taylor, Senior Vice President and Chief Financial Officer, FirstEnergy: Thank you.

Conference Operator: The next question comes from the line of Andrew Wessel with Scotiabank. Please proceed.

Andrew Wessel, Analyst, Scotiabank: Hi, thank you. First question on data centers, a lot of new disclosures, appreciate all the details. On Slide seven, can you tell us what’s the current level of data center demand you’re seeing today? But then it looks like a pretty substantial step up in the blue bar from 2025 to 2026. Is that a specific customer ramping up?

And can you give us a little more detail either on who the customer is or where in terms of which service territory?

John Taylor, Senior Vice President and Chief Financial Officer, FirstEnergy: Yes. So Andrew, this is John. So active customers today are probably 400 megawatts, but then you see the pipeline continue to increase. I mean most of this is happening in Ohio, Maryland and West Virginia. We are starting to see a lot more interest in Pennsylvania.

In fact, if you look at our large load studies that are greater than 500 megawatts, I would say that probably onethree of what we’re seeing just this year alone is in Pennsylvania, which is consistent with what some of the announcements have been over the course of the last few months.

Andrew Wessel, Analyst, Scotiabank: Okay. Great. And then when would the next CapEx refresh be coming? I think you’re alluding to it. Would that be something we’d be seeing with the third quarter in EEI or more like year end update in February?

John Taylor, Senior Vice President and Chief Financial Officer, FirstEnergy: Well, I think we want to get clarity on some of the transmission CapEx with respect to this open window. So we’ll likely provide the longer term CapEx plan on the fourth quarter call.

Andrew Wessel, Analyst, Scotiabank: Okay. Thank you very much.

John Taylor, Senior Vice President and Chief Financial Officer, FirstEnergy: Thank you, Andrew.

Conference Operator: The next question comes from the line of Sofia Karp with KeyBanc Capital Markets. Please proceed.

Karen Segoe, Vice President of Investor Relations, FirstEnergy2: Hi, good morning. Thank you for taking my question. I have a follow-up on Ohio. Could you talk a little bit about how what your strategy is gonna be in Ohio, regulatory strategy following the conclusion of the current rate case? Like, kinda like when do you plan to file under the new framework?

Will that depend on certain outcomes in the existing rate case and etcetera?

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Yes. So it will depend on outcomes in the existing rate case. So if we are allowed to recover on investments that we’ve made since May when we filed the rate case, that might allow us to push the rate case out a little bit. If we’re not allowed to recover on investments we’ve made since May 2024, we’ll be right back in for a multiyear rate case as soon as practicable after we get the outcome of that rate case. So it really depends on the outcome of the current case.

Karen Segoe, Vice President of Investor Relations, FirstEnergy2: And this item is still outstanding, so you won’t have prior again until you actually have the final decision on it?

John Taylor, Senior Vice President and Chief Financial Officer, FirstEnergy: Yes. I think we’ll look to have a final decision on the existing base rate case before we file the new rate case, if that’s what you’re asking. And I anticipate that we’ll get an outcome sometime in the fourth quarter based on where we are today with reply briefs filed early in July. So my sense is we’ll have an outcome in the fourth quarter, and then we’ll take some time to understand that, and then we’ll make some decisions as to what the next steps are.

Karen Segoe, Vice President of Investor Relations, FirstEnergy2: Got it. Thank you very much. That’s all for me.

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Thank you.

Conference Operator: The next question comes from the line of Anthony Crowdo with Mizuho Securities. Please proceed.

Anthony Crowdo, Analyst, Mizuho Securities: Hey, good morning, Brian. Good morning, John.

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Good morning. Good morning, Anthony.

Anthony Crowdo, Analyst, Mizuho Securities: Hey, I had a want to follow-up on one of David O’Carlo’s questions. Brian, I think you’re very clear and you had said and I hope I heard it correctly that if you think the solution for the PJM capacity issues or the higher prices are likely to be solved at the state level. If that’s correct and my understanding is correct, which state that’s in the SE footprint do you think is maybe in the lead or going to be one of the first to solve that problem?

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: I don’t want to pick one, Anthony. I’d say that Pennsylvania has been very active in demonstrating leadership on that. Ohio clearly just doubled down on the markets solving that problem for them. So I think they’re going to rely on the PJM capacity construct. And then I think the other states are somewhere in between what I’d call those extremes.

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

Anthony Crowdo, Analyst, Mizuho Securities: And I’m just throwing out, do you think the states or the PGM looks to change maybe compensation different for new generation versus existing generation? Because you highlighted in your opening remarks that I think it was $19,000,000,000 brought no new megawatts with no new dispatch from megawatts.

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: What we’re seeing on the current construct is a massive wealth transfer from customers in PJM retail customers in PJM to large independent power producers mostly located in Houston, Texas. I don’t think that’s a good public policy answer. God bless those companies for their recent windfalls. That’s great for them. It’s not solving the problem that we need solved in PJM, and that is new dispatchable generation.

So if the states finally decide that they’ve had enough of their customers paying for something that they’re not getting, I think we’ll get the solutions that help address the problem.

Anthony Crowdo, Analyst, Mizuho Securities: Got it. And then just lastly, you guys talk about the potential I think of I think it’s $14,000,000,000 of more transmission spending. Just a significant raise in CapEx. Yesterday, we had other utilities announcing again significant raises I think another company today along with you guys big raise. I mean do you when you see all these numbers, do you worry that maybe you don’t have the equipment to deliver that?

Do you quickly call your supply team to make sure we have it? Are there any concerns when you’re seeing the whole industry really raise CapEx to a level we haven’t seen? And could you procure the equipment or the could you build that much in this short of a time?

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Yes. Thank you for the question, Anthony. We’re confident that we have the relationships with vendors and suppliers and that they’re included in our short, medium and long term planning that we will be able to deliver against our commitments.

Anthony Crowdo, Analyst, Mizuho Securities: Great. Thanks for taking my question guys. Congrats on the quarter.

Brian Tierney, Chair, President and Chief Executive Officer, FirstEnergy: Thank you, Anthony.

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

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