FE - Earnings call transcript Q4 2019

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Operator

Greetings! And welcome to the FirstEnergy Corp, Fourth Quarter 2019 Earning Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded.

pleasure Relations your for my Vice Irene now Investor President, FirstEnergy is to host, introduce Prezelj, It Corp. Thank you Ms. Prezelj, begin. now you may

Irene Prezelj

Doug. under to are statements be fourth will Thanks statements are strategies our call. current uncertainties. Factors of These risks the statements to we expectations and on those can Today and and found quarter prospects. indicated make to revenues, in filings. regarding the from earnings information forward-looking based earnings, subject our performance, various our that could earnings website differ cause and link by materially actual section on results Investors SEC such Welcome

along We measures. can with Reconciliations which will supports financial financial the measures non-GAAP be non-GAAP discuss also between found GAAP website, FirstEnergy the today’s certain presentation discussion. and on Relations Investor

include in Q&A call Financial and President Jones, the room available Chuck Senior Chief who other in President Chief Strah, Steve Executive executives the today’s are in session. participate Participants Officer; Vice Officer; several and and to

the Now, I’ll call turn Chuck. to over

Chuck Jones

you, forward and Thanks another customers, a that communities and our and joining by company. year great us. XXXX step was benefit Thank morning FirstEnergy, execution for on good shareholders, solid initiatives marked our for everyone. Irene,

share, of the per share us and makes proud last of accomplishments is earnings GAAP $X.XX on range our of This XXXX the which the per we earnings at the financial One guidance call. that morning operating commitments to community. of is delivering our the most top-end made record provided on we we $X.XX of announce earnings

of of we the benefits growth successfully with the Modernization Rider half weather, in from quarter our year. the on focus Distribution customer some executing along Ohio By mitigated the absence second third strategy,

FirstEnergy culture our service on of strong continue consistently at and execution customers mid-point or team of one we we deliver We and The provided. of improve our you for the as reached results communities has to the that established ownership count quarterly is leadership can for guidance that our five exceeding shareholders. and years meeting

our to from long year growth In park. introduced years out X% the first term compounded projection annually we it hit of the rate Two of we ago XXXX to first XXXX. X%

guidance and Our impacts. both XXXX excluding XXXX original weather versus Ohio DMR XX%, the was our growth

clearly culture strong a now $X.XX guidance we gotten reaffirm and earnings to another has of Our growth a of execution plan, $X.XX great XXXX is in off forward solid and evident looking five on operating to we're us year is share. what year start, to our per as

with the for investors November long earnings a through we expectations XXXX. X% rate to In clarity our I into term X% continue growth. extended providing CAGR at of

represent to will of includes XXXX, $XX total and discussed, we we’ve it approximately plans $XXX XXXX. up of in When infusion the period. our equity, growth that in have since during equity of issue will this billion first business this As into our happens, to million modest amount invested projection starting annually initiatives a a early

placing our making XX%, results our EEI period. investors. XX%, and within FirstEnergy top over the the years, two shareholder strategies, By stock we on EEI regulated XXXX Index. driven number growth stock XXXX successfully for return over our of In the that The in have the one was quartile XXXX total TSR strong last was executing Index

regulated as as we the operations the agencies XXXX In acknowledged well lower risk resulting and company FirstEnergy have to the a with rating our numerous past ratings in the transition Distribution level. primarily at years family, parent several fully upgrades Over Transmission received a across profile.

all solid agencies. With goal three BBB ratings the Fitch, are upgrade our November progress from solid we achieve towards at making to

issuance. the our making are our well associated for we positioned to growth, on remain steady including equity we improvements plans sheet, support CAGR believe focused balance to While we and extended

which we XXXX approximately long transmission This to $X distribution executing customer in billion foreseeable included investment infrastructure, future. for capital continued expect our our of and growth term, an focus on we annual plans. continue In the

Transmission Energizing Future investments more billion with during program, we our six period. that the our completed $X.X than of year investment business In in successfully

you As nearly are modernize we reduction doing XXXX, as our there reported related is customers ATSI all work equipment the in to to throughout improvements, reliability Grid. the the including measurable in outages, seeing a we're footprint XX% transmission

benefits. extending As eastern footprint, those experience to we into program our we the continue expect customers similar

formula important change, another in nearly the expansion is X, assets our effective XXXX of forward-looking to forward XX% on rights. of accepted took Energizing application to looking transmission step the formula rates JCP&L’s In our continued refund. FERC We in December Transmission Future business Initiative. January subject move XXXX, our this to With

Jersey The and for our forward year. million rate plan in transmission structure approximately New the looking capital spending focused system customer on supports $XXX JCP&L this

mechanism our month received Utilities On implement decoupling state. last the the distribution we the Commission for customers in and business, residential to our of side commercial a approval of Ohio from Public

these the be thereafter through That adjustment that removed XXXX recognized rider. rider be in on The quarter of commission no There by to and baseline companies. first and also is will revenue Rates our each and conservation rate XXXX. impact year requirement stability reconciled companies filed adjusted providing XXXX will while XXXX to transparency XXXX. a revenues distribution-rate support certainty a customers, for provides for Ohio the Decoupling Ohio from case the our earnings.

rider forward in period be will Going the reflected results. current

moving was three utilities that $XXX year our Modernization PUCO in Grid Ohio, with in Also program the by million the July. approved forward are

number power usage. more make and we’ve the to allow about and projects includes designed customers our decisions their As discussed, energy of informed reduce modernization plan outages help to duration the

electric XXX,XXX and complete year. restore quickly of reclosers will this to meters lockouts This time the service phase prevent to Distribution deploying approximately System, capacitors Mod varying which isolate million includes customers. smart problems, help work initial Ohio and implementing circuit $XXX installing expect XXX customers, than to Grid We more Electric automatically on and entire rates

LTIP million on the completed projects XXXX. Pennsylvania, in of our $XXX original Last X In spanning in accelerate Pennsylvania includes term a The investment improvement infrastructure month X, plan $XXX approved program the state. our utilities infrastructure XXXX. Commission Public our Utility distribution four we across XXXX work the to phase long initial million through LTIP

improvement on already our to Pennsylvania circuits. million The and installing older our distribution work and for we and the X by each and covers new perform manual Investments the network replacing of include plan network fuses, experienced reconfiguring substation utility number boats reduce polls, lines complements duration outages equipment, customers.

the the with are service the expected four improvement to next charge. investments $XXX in associated completed is be Pennsylvania XXXX, our The distribution expected recovered cost reliability remainder the be with Pennsylvania spent million Approximately the area, over of to service through work across system years.

and case Together, JCP&L Distribution that a Investment we position service electric to technologies Reliability of XXXX Utilities recall future. the earlier Initiative. the customers and vehicle of Commission Jersey us new program, while and pilot surcharge in Plus You five approved Maryland approved Grid our Public enable year Service Board these The improve as are the Electric rate our New initiatives to

in Later we this month, rate Jersey. a case distribution plan – New to file base-rate

last providing associated our of increasing costs electric We over recovery few will the years. along service customers, safe seek reliable and Storm with recover for incurred with costs to

rate, you distribution after want To will to annual making sum more and conversion very assets XX% now of rates Investments, profile remind be our to discussion investment the our Regulated I up than that my forward-looking formula investment transparent. in Transmission to JCP&L our of riders, formula a

with target, fall. more provide in to Finally, and to published the force, the including and Governance corporate our to I year average on an our time stability, a element They engagement our diverse website track inclusive both stakeholders. five and taken plan were transparency hope ESG our reduction work offer our responsibility to a such are strategies, of our also important you've These commitment initiatives enhanced which carbon as review platform and and our strategic our ISS report, progress Score. goals reports

We're excited best Forbes and list were the the Bloomberg to Gender-Equality month consecutive diversity. we named last designation of for the employers Index the for year earn second recently

the we possible in Governance rating in are the Quality four In of addition, best to one score. sector our companies only ISS achieve

We this maintain strategic corporate update and next when will report in to data to outlook. month a refresh our five year later the intend report our responsibility annual we plan year publish the we

I can trust stakeholders are of to mission continuing a our FirstEnergy that we believe that utility will become think toward in. our drive electric and see premier you forward thinking

I affirming $X.XX As are to our of earlier, mentioned we XXXX earnings $X.XX operating per guidance share.

to CAGR extending X% We X% are X% to through affirm through also XXXX our XXXX. pleased and X% to expected of

the are we $X.XX XXXX. share per addition, earnings for first quarter $X.XX to introducing In of guidance of operating

look you and your forward a We had Thank time. progress. to year great we building on our for

a for quarter it Now fourth review of I’ll Steve and the turn XXXX. over to

Steve Strah

and in posted today. All you quarter great morning; that detailed highlights financial to about is document available and Good with strategic the website. our are information speak it's reconciliations other the to

to updated capital load book supporting additional as XXXX, this and such XXXX forecasts. materials our morning, and to posted fact the which also in We website related includes

Now few OPEB comments. share, let's adjustment. in per later driven pension by quarter loss non-cash $X.XX review We mark-to-market our results. pension a a our our of spend performance my fourth GAAP reported and annual minutes I'll discussing

were Adjusting operating on the our of quarter fourth mid-point earnings which call. per we earnings items, above guidance $X.XX the for last share, provided special is

revenues the impact footprint. were earnings quarter In the expenses to O&M the and flat across compared compared and of temperatures quarter were mild offset DMR distribution same business, in of absence higher. more were This the the to fourth the XXXX period XXXX. distribution of this lower Ohio our

incremental an of and XXXX and but to down degree basis. normal on Ohio quarter actual adjusted weather of distribution compared fourth to XXXX. the but increased earnings slightly fourth than below increased decreased Heating usage Total X.X% basis. on Pennsylvania, days of an and writer Residential XXXX, to sales on X% X% compared quarter were in a quarter fourth weather due basis adjusted both the the lower revenue were customer actual

and commercial fourth on sales basis the compared quarter decreased customer XXXX. X.X% in actual period X.X%, same class, to an adjusted when for the whether In

X.X%. industrial our loads class, in quarter fourth Finally decreased

to we sector, including decline chemical. steel, other While and sector automotive, gas shale continues every the our sales grow, saw major coal in

consecutive load in for trends stability at the weather encouraged XXXX, adjusted growth recorded Looking to modest sales. two year see residential the are full of years of we the where sector we've our in

conditions, in initiated X% usage energy include generation beverage the XXXX and to economic Drivers decreases year sales sectors, customers sector efficiency and distributed customers compared and from education measures related food XXXX. down full in construction. and by weaker to real-estate new the to were However, lower commercial

the to in widely industrial plant a it’s customers slump, decrease into X.X% in closings manufacturing with that a resulted recognized While U.S. that of recession, year. deliveries combined the a the impacts entered couple for has large

our to for a energizing continued investments quarter higher earnings at fourth primarily in Transmission the the our fourth primarily in operating segment, formula XXXX results companies to contribution babe business, reflect increased to And lower rate program. back of Foundation. Corporate quarter related absence Energy the to our future First in fourth results Turning the rate the expenses due quarter

our Before exceeding pension low performance we the pension questions, XX.X%, the X.XX% our on of on plan of to XXXX original matters, financial In and the a assumption two funding produced produced our its few other with performance, far your with of future investments open outcomes. plan a superior return requirements. assets discount spend rate call a on starting This coupled let's X.X%. moment impact

in pension non provided is October. the at approximately million, after lower tax and end First, which adjustment our $XXX cash OPEB of range the mark-to-market is we XXXX

XXXX at Second, $XXX our requirement significantly. funding have and requirements year for A XXXX XXXX pension million. stood funding our plan ago decreased

compared result requirement As million million, this year, at $XXX our last is the to has of decreased $XXX to XXXX the funding returns of XXXX. to robust and for million $XXX plan a end decreased

has XX% third to pension XX% XXXX. we during higher quarter, at end to funded indicated environment but a rate our has lower As of the status liability, resulted interest improved in the the compared

to As mark the we only we FES emerges you bankruptcy. it but will know, at normally end, from year remeasure pension need again when

on we the the emerge discount first loss year, pension tax, rate this they of anticipate and million after to non-cash based up performance. $XXX in that of an quarter Assuming

borrowings strong Finally, continues in their the with corporate will to $XXX $X.X of billion upon fund This FES cash. to of facilities our position, be approximately million emergence. revolver $XXX plus payment cash credit and of final a liquidity million undrawn portion

XXXX will transitional a final perspective, metrics. year impact will a credit agency as this keep in payment mind, our FES rating from Please be

will metrics each exclude However, established the XXXX this three with of when you payment, thresholds the credit our rating agencies. be compliant by

in up weather With rating to be we number needs ultimate XXXX equity, respect have including equity and to issue of amount load, as we you customer and performance through trends, by $XXX pension factors, incremental we storm of no XXXX. activity, XXXX annually will the million at agency metrics. plan told determined a EEI, The and

you. Thank

our We our year. strong forward continuing of XXXX are proud look in to and this we results progress

Now, let's take your questions.

Operator

Instructions]. you. [Operator Thank

Our Greg Gordon first question the line ISI. from Please with with your comes proceed of Evercore question.

Greg Gordon

guys. thanks. a year good on Hey, Congrats

Chuck Jones

Greg. Good morning

Greg Gordon

A couple questions. of

the Looking guess major at the changes it the like just changes, the FES the cash when some note rather relative to settlement. with tax cash a pay it, flow creditors I delay prior the out that there's to disclosure looks last than in to like outlook in gave, you decision but looked associated fact unpack in payment book, the I them and the take on cash what

value the as latter I accretive? – the why former through timing, the is see on decision you but just know walk that making and just you can So

Steve Strah

Steve Hey Strah. it’s Greg,

exactly So an at going XXXX, FES We obviously were what which we the point would we the February, explain happen. is as but make in payment fund note, it pay assuming that happened. that in sometime here tax be tax emergence that It's at also cash. planning pay to cash will previously way and payment we to also happen in you’ve will didn't note point, $XXX in issued million what time thinking were we of a will the

just and at an than it of And tax cash-on-hand perspective economics with to point. again makes that it the to have deal note now, sense for from by us it to so that XXXX pay-off end refinance more use rather

Chuck Jones

means be answering five won't the that next so. about point, that we questions emphasize for just I'll FES And years

Greg Gordon

that. beyond the pension equity, to needs, just lot little about happy a it more equity No, pieces know Two you million. to better contributions a ‘XX you've million. its parts set pension potential future are moving one we're questions; by about you performance that of over looks is, all as pertains obviously of think and means up $XXX like the down gotten $XXX But when

does things are mean $XXX equal, all So equity needs your potentially to by up that that down million?

Chuck Jones

we a then. between there be on point. is get zero we say to of including drip put expect that range at things think it that be million to don't we I single for would range, this, within we now flexibility are XXX, change in. every of and stay for range should in it The Well, lots the range to a be it will that that depending $XXX extracted I but where will that when year, allows to

Greg Gordon

government's fair on it Right, I impact will Is with FERC that’s this the it state a enough is, economic What answer. Ohio to, know response direct on has that – rules definitely is the the possible you think throughout MOPR PJM to market? leaving regard has impact My final customers. Ohio do be to of on your decision the question consider capacity the going an no FRR? your

Chuck Jones

the intention at to their policy XX PJM look the of disappointment was energy with last policy next that state. looked the year regulated to would Senate energy they Ohio state. I the time and at about market, use say has the XD ago, the state years Bill kind so in state already XXXX, or the for when of The talked their

there's never that think lot be the achieved some goals I they a thought that, materialized. disappointment through of would of

happen how Ohio to as energy think know from and back consequences the everything, to being generation insure has term Ohio a with shortfall. opposed going for a that supply state think utilities get didn't fully you to that the long customers, commission secure they're look to to surplus to we at an they we a how public so of I that unintended expect utilities were some interact happened there I how

of there's should we going way. helping feel about want that, know at, and a want certain table think where we’ll but is, look guidance I are a intention strongly be is our they lot beyond things views where to things where our the providing guidance, our help, certain you what they expressing go they at

Greg Gordon

way feel other? strongly the FRR you about one Do or

Chuck Jones

to its capacity next three on I'm mean not short with have feel generation, up markets long are my run now. marginal changed. one and I years cost – no failing. for effective views hourly no this A has your not but we ensures I secure, haul these anymore, the out customers come signal that need right is do term And adequate, the strongly don't, a so signaled the not to that fuel business I in cost they they business generation for way just – and long solution

up the to I customers. today my is outcome to decides for And but going think best be them, the something, Ohio whether do as is needs so do up to long something constructed provide and to step done, market term not

Greg Gordon

Thank you.

Operator

Our with Please proceed comes next Mehta question a Praful of line your with question. Citigroup. from

Praful Mehta

guys! Thanks so much. Hi

Chuck Jones

Hi Praful.

Praful Mehta

page something charges for about earnings. the in relate to? so operating that maybe of clarify distribution does get firstly earnings adding Hi, which back more being just XX regulatory on is $X.XX fourth is adding more specifically the specific, – which $X.XX to business, quarter you What to have

Jason Lisowski

to Yeah as in did Jason Chief Officer. Lisowski, the in order time our is Praful, may customers. the is Ohio we pass Accounting that the past not transmission recall, ability expenses at related this some a to reallocates That have to And you utilities. across those FERC on

our So consistently receive up since the operating to excluding from it earnings. that non-GAAP non-GAAP a and earnings, our you a operating also were it companies, ended actually refund being wild we credit, the we past in when back from and exclude credit them

Praful Mehta

that talked growth on based rate walk were years got math dilution, then the slower I I much base you're you obviously of to years. a growth, expect base if forecast for you growth, X.X% two rate last in Can growth term you've you. strong And equity I'm ‘XX assuming is two helpful, of looks and the like what longer the understand assuming ‘XX of kind That’s just a through then group some terms how or use the to the profile in thank about to like versus earnings base rate and just last us you. that help earnings the need. for current the EPS.

Chuck Jones

first to that. That is you five Well, the I'll is given hit, X% we then answer for the and X% that the years next X% we’ve to to X% after CAGR have CAGR that this. expect for which three

through rate but to with accounting told to the be. base try no it's at I've gets let to company because but on, to line-up It’s you times, outside goes simple walk many longer the I’ll what at you the that you our you have Jason same from in, trying that, that as accounting look try. just Jason the difficult, math regulatory used look that it when we'll

Jason Lisowski

morning, Yeah, growth, expected actually the that a if transmission, XXXX at we we rate there book state. each is distribution this show look you XXXX both that by you in base XXXX bit. released separately does And for but will down the through little down do no that growth, and slow fact regular regulate see our broken and growth

Praful Mehta

equity so through and that enough. that reduce fair help I understand little discuss equity bit. then dig the on finally the pensioners that. And more the that needs helped, clearly I'll a needs just should Okay, bit point, little

thinking terms pension, few the holdco have you to helpful. guide are lead from around just debt in the think be down up, could should we kindly to I it leverage, up posts to right about apart balancing what of understand guide could that what other bring key XXX, it pushing would as what be about of equity goals wanted to those post

Chuck Jones

could help Well, reasonable it see bring obviously eventually some low our we if X that growth down throughout is footprint. thing

continue bit a impact. needed what – what's can range little We for the a a have to plan Just there. low reason. can huge performance give of a affect a growth the mean I pension

to we're can can't to Greg's today It's equity and confidently going ‘XX. here XXXX, not I be recommend – say sit You to question, I dodge trying $XXX issue tell how going than you that. know it's in more we you know I much million, ‘XX, wasn't

Praful Mehta

Thank appreciate really I it it. Got guys. you.

Operator

of America Our your Merrill line comes next Dumoulin-Smith question. from question Bank a Julien of proceed Lynch. with with Please

Julien Dumoulin-Smith

Hey, good morning team.

Chuck Jones

Julian. morning Good

Julien Dumoulin-Smith

Hey.

know New a masterplan of you I'm pick and/or to state here a and their on emerging otherwise. little just opportunities AMI filings see about in more some perhaps can up slightly and different talk So energy peers respective that and do parallel. your Jersey bit from you specifically, or the you and clean angle, energy how thinking

touch pretty implications and the to can do obviously then reduction gas about on you And the meaningful be think that a or how respect gas, in in as as in commentary but guys the to the reduction aren’t some EMP of seem with well, you electrification well. conversely EMP you clear

the business New Jersey everything So you perhaps if touch holistically mind. don't given going on on

Chuck Jones

with there’s a of that was and team, policy BPU with after the of I the the with to our him three particular in New team how met about successful in he Governor afternoon Jersey Okay, had well, over it. talk I rolled his question. week. a him with just can last lot his opportunity company help met energy in think I I I commissioners. be out and the so masterplan, lot

state investing help the and robust vehicle opportunities you area decides know if network to utilities electric think are charging in the the there embrace I out state. for a to particularly us throughout building

metering experience nearly rolling I know, X.XX is on, You Ohio. X their but we're lot million state Pennsylvania has there got going what million with out to in decide now we've the is to be in advanced something of and meters policy think a a

them make So the are what and the see, them that. to on informed help is, offered table pros an decision come that because to understand cons, I and the we both help there we'll

those transmission, I going point about on That's question. transmission know well I not here, honest about wind. him to the with I see get because talked I might I'm this a to some in and at so no get that know as intention made I address I him I time. very just President investing comments BPU taking us with something into have in was offshore

way. to the for and saw comments were company by comments his transmission with yesterday after in the auction service network his know company public. became that charges the You specific our market I happened us not the one BGS what in stock was

else. market smart figure should should investment you than the to also New that also our figure billion what I be of going out to the of be all transmission and transmission they do told everywhere It he involved is think FERC states should be New our set enough other the of rates as said other out smart It they different that to in to enough for we've not Jersey BPU, is investment New ones XX% Jersey. states figure smart in company. Jersey, along that end, capital XX% that is sets of not than $X one out than are all at and

and we actually wants masterplan together I continue work he were they energy make complementary what out can his plan, the receptive that, fact that trying and how what figure we be and enabling Governor talked of team to he's energy to that with happen. to what with But to know his and work our if masterplan, agreed to to very to together transmission about to you his to do is do the

doing, help it's of. the the terms in way, in Jersey relationships, that office masterplan me be pieces There but us place our of to ever FirstEnergy that don't you energy nothing masterplan. trusted is energy there's can that you part and was know parts his best that that been we advisors in of there Governor's in that know more the So parts of I we terms on New on I think think are we're to and scares in pieces want and being things in at all-in-all, any terms

Julien Dumoulin-Smith

helping plan But a capital? New but financing be committed clarify Jersey guys just know know just of capital you incremental here could specific about very I city too. the about you through talked equity your I period, on plan hear comments and that, also forecast to the this and

Chuck Jones

we to going capital ability couple The that around reason that we've we're not it to so flexibility sit given that CapEx that tell going the we range we've communicated we're move transmission-to-distribution. you range control in a that and and add I'm the state-to-state, to have incremental you, is this is it. the rods got in here have a giving plan you have beyond of to range

constant rod is the to sheet these load our to and all we going ultimately BBB get amount and our the a are to customer's to that agencies. of that are One control growth to managing equity balance be fact careful for rate have awareness pay and ability customers we that, going be other without and with of where goal the of do being the with maintain to begin want credit that we three it and rated increases

a change states. that work have planning to going we're from five all I'm to plan to So in the near we're term. that range in satisfy going to use execute we what range this not

Julien Dumoulin-Smith

Thank Alright, great. Well, best you. of luck.

Chuck Jones

Julian. Thanks

Operator

with Please Our from Goldman with proceed next of comes the Lapides your Sachs. question Michael line question.

Michael Lapides

Virginia. my one taking really generation owned West Hey guys, you for question. thanks kind state, in of regulated only Chuck,

generation of you're about add customer mix into a the the of the for company of maybe especially potential makes little how composition to for thinking curious the the economics bit generation gas shale generation kind sitting sense changes the whether fleet, since there. fleet, and regulated the Marcellus the Just kind fired the on of state to the kind more

in kind smart either there And distribution [ph] Virginia. of or the in uptick for an need is then even CapEx obviously, side grid kind on renewable of West a

Chuck Jones

profile don't owning forth. disposal very risk states particularly in so we point and have we the there along that coal so that's low one are distribution don't the large. many company from our Well, by think are things you make There a transmission re-emphasize four I a generation risks can a of others We of coal sites that that good with go are me straight you that waste help plants, creates man, that differentiates us risk. because and deregulated, and sector fleets is and the own and massive generating

simple. conjunction year. In are the with is needs resource integrated ideas of to forth. their industrial where of they We're on we so think going in this those an see state Virginia being, compressing that going on development West West decisions are West by Virginia it opportunities of real with in growth that, Virginia made the our the a that to are file capitalizing I and collection meet to what's capacity with lot going and and state in plan shale West to Virginia and share about end you with process there some the thoughts but how embrace of on be We'll in know terms

Whether they speak generation it to you but to been I welcoming sources, up of now haven't state want terms that there, in remains the from know least, until West be at capitalize Virginia, want and for they to to that about seen that a as don't but us, real be get fashion. we whole of is in behind to from any in FirstEnergy adding separations issue I perspective, a put FES to thinking and portfolio, this context regulated need deregulated generation our in something investment we think not renewable renewables

that's plants risk, earning invest that Virginia markets, company stay. want just return T&D might West company’s of be just two rate we worked going We Any no those to to I this to where to is said. low in we do. like hard so a generation It’s regulated get to in a exposure

Michael Lapides

other it. totally question, unrelated. Got One

in embedded also what's distribution in and – of level? rates the of you at across O&M can business the guidance corporate curious, kind terms growth Just

Chuck Jones

O&M to What’s at that so customers. flat service embedded how efficient the what deliver in guidance get to do challenged keeping team is over to I've period, more we our is and

an of FirstEnergy. out the rolling process center in of innovation We’re

you got more offset average one it to which the give group. put We're X.X% increase you We've – us help drive in who O&M. about of into to efficient of a this that going half number wage throughout going a earned and have company belts use ends the this year, make employees, up we them innovation a to in X on black know annual know our employees way all engineering. group We're a to innovation as to

to way throughout period. in a know You the what's guidance that offset, is to find but period we've flat got O&M

Michael Lapides

base, of it. base in XXXX XXXX starting anything unusual off or there XXXX? off Got was Starting

Chuck Jones

the off with costs dealing as the finished in bottom O&M and bottom by we cases. decile which our T&D costs our as when costs, of tomorrow corporate our terms corporate low being way good finished far FE quartile Starting are of are both – and in

So way throughout we've that this got this to expect it company and period. very lean keep we

Michael Lapides

Got appreciated. Chuck. it. Thank you, Much

Chuck Jones

Thank you.

Operator

line next your Charles Morningstar with Please question of the comes Our with Research. Fishman question. from proceed

Charles Fishman

you And your Chuck, you in that what what showed New to XX%? it the process Jersey Yeah on XX% one to saw gets forward formula was based, do now, last what's we a timing slide think? that that looking. Is of transmission you and in similar

Chuck Jones

a its a not do be we’ll or Right now and Allegheny all returns, is will you the the there process merge in one of more investment stated terms – in system, know than does forward rate to that Transco, formula returns but that such where the left, sense into rate another that in what best the timing better formula is yes, is right. existing is what’s the stated shareholders crossover would for Transcos is you. former point makes be that looking Well looking form forward a it of of rates eventually the to it when our either

Charles Fishman

And hadn’t off wanted you and Okay. November, you finished process guidance on in when the we second talked to ‘XX. planning question, till then hold last

too you but up thought As strong a of know, there that maybe in different anything process? – probably a wrapped I surprise than that a was that wrapped your you word, don’t as up little you process, mind was is

Chuck Jones

think happen to all. you what's not those the know what's what's we get in look the process I No, out, like, that going etcetera, had at to comfortable world today, bracket look etcetera what's with in XXXX; types inflation, to to with it's growth, things. going but predict with I happen like a going planning to though and of of not what to lot years is the difficult future very going five mean, world

plan One billion to can company that formula to confident cases, to where have easy by am on we billion, more very and $X.X said. is It’s that deliver, rate as is or thing it's the $X.X we I that to execute this if out you than deliver the we we're all and and it's rates. the point results have put tell billion or in I going going $X.X of XX% I need it and we're of in to going where them, calculate, intend to transparent to getting just to

up comfortable then, that some We’re demonstrated know we with range costs a we and with and you equity our we've that could to assumptions, month that case the was that between cases, deferred but CAGR execute happen until get getting really New and get now, ability rate get comfortable storm this do probably it now Jersey can so more with going the to file trued to both. rate outcomes a on recover of just too, to in comfortable up

Charles Fishman

Okay, all that’s Thank I had. you.

Chuck Jones

know other is got not plan this tell added in why I have going a still every engineer said on at that's I little thing which and I've I'm the probably straight CAGR, We until or it, what to now, to but guidance. quarter results have we the something can you we got And in I meeting five also work is in and years a we've to repeatedly know. exceeding me you to getting only that EEI, was and I five the single there. year numbers The given slow execute in

Operator

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

Andrew Weisel

everybody. Hey, good morning

Chuck Jones

Good morning.

Andrew Weisel

energy in the were outlook, My to believe by covered New I on related CapEx would masterplan JCP&L of things those separate and or the the do or follow some something filing spending to energy like be first that? case later upcoming those they just will AMI buckets come EV’s, part compliance like efficiency, level questions rate forecasts that Jersey earlier. want in one, a I include the filings up of

Chuck Jones

anything Right about that. million it's $XXX include in now transmission. don't they for No,

first time at to IIP see some You when Pennsylvania. so a hopefully the in IIP have in round of have TXD. And to from ability we that know just why We're to IIP that's again, and the range comes you'll CapEx, going is. and state the X what that state flexibility round II of point out we have like you LTIIP saw

Andrew Weisel

Okay.

to upside spending be would that? current numbers, the if they be that on were So to

Chuck Jones

probably be to you from Might that we're come it pieces New can I've we're CAGR it move going what get, the somewhere is, from and to parts going I you of plan may the state upside would in count Jersey, being I've mean else. on but capital to state. around and get told away the but told it you

Andrew Weisel

Does it is Got that your DSIC a it, this but And just to any is you of points reduced one, so question so, benchmark on LTIP subsidiaries? the sensitivity? getting yesterday was time, if just the believe then can Rider, I lot that's I this on know helpful. last, full. X basis by And in kind to ROE My whole out just a came X.XX. thoughts you earnings give small the give on sort any apply of in didn't congratulations yesterday, but that? of Pennsylvania, XX approved

Chuck Jones

it. on top Eileen's of

Eileen Mikkelsen

Regulatory Eileen Affairs. Mikkelsen, I'm of Chuck. Vice It's Thank Good Rates morning. President and you,

is X.XX. DSIC to case yesterday had the calculation is DSIC the PaPUC we Pennsylvania that they substitute to calculate benchmark not really four for They base into benchmark that reduced years. have Yes, the their aware when revenues. ROE two the calculation relates used and are number rate that in their utilities ROE Where our that last a in benchmark

across utilities riders. return So we've XX we’ll our in use calculations, past, we’ll immaterial return to DSIC going been revenues is the the using X.XX% rather which on Pennsylvania, those under than in really change that of for a the points in collect our equity the forward basis distribution those X.XX%, that calculations four

for used of a have then below time to they fall the quarterly their that benchmark, their second that until customer their say have as earnings utilities that the earnings such really to The extent to they in that protection report excess they DSIC is thing reports. If in that benchmarks ROE recovery benchmark turn earnings exceed that. is will off

settlement the at a cap So confident we do Penn planning for caveat have the it a numbers Public horizon. pending it change Pennsylvania our increase would the outlook doesn't during to in we I We're we've Utilities before overnight. collections say, on DISC put to that have Power. looked those Commission

be So expect approved, DSIC period. planning assuming all that's the of throughout our to able to collect utilities continue to across we

Andrew Weisel

that's very helpful. great, Okay,

soon? Power. there potential sometime Is case a You mentioned for Penn rate Penn Power

Eileen Mikkelsen

because to were we're Pennsylvania our in that's pending for up to allow parties distribution over in think we other X%. Power before to the the the collect able don't of where Penn a DSIC horizon expecting settlement to Power, utilities planning a case commission at rates I rate reach that's X.X% largely the and other us revenue Penn base all capped it's with

us and allowed really a need the that for the to that Rider So additional case. cover investment through base eliminated DSIC rate

Andrew Weisel

great. That's

is the might only then Chuck, fair be So say XXXX? that through it JCP&L to case rate

Chuck Jones

today, we're say fair to where I'd that's look at a yeah. at way

Eileen Mikkelsen

file again, Maryland. of state I on in Put a case obligation an XXXX agree the it have I to that do an Eileen. it's we in would caveat Chuck. additional with just – base rate

Andrew Weisel

good Right, reminder.

so much. thank you Okay,

Operator

KeyBanc Sophie question. question of Markets. Karp your line Capital next with the Our Please with from proceed comes

Sophie Karp

morning. good Hi,

Chuck Jones

morning. Good

Sophie Karp

growth. have question load I a on

be seen what sense load see you. or may bit Ohio offset give territories. needs of you one factors clearly and what you're ground some elsewhere, new of guys So and that you or Could little that economy, positive change despite some impact in that and way, we’ve a like maybe have that on in mentioned doesn't can that in lot of the to the it strong overall Thank a equity seem discuss actually a sort it's us seen you planning help growth? can a of

Steve Strah

in growth and seen that XXXX I was of conservative of our growth. Steve right plan. we're X.X%. I into is is we've XXXX But this we just see load know Strah. down now in that were Sophie, guidance, what And believe looking more basically we which also put declining to do flat the terms will – we load moment, lower growth at load slightly you was that than and slightly X.X% our a And for

sensitivities, of in where terms versus the miss in really didn't that's that it And the about XXXX significantly. sector. going really pretty we we So and when residential X% the estimating we we're earnings by decline to good estimate only at guidance land, impacts saw driven it, X%, we're

which Our impactful. not fixed are commercial are really as rates having rates, and demand industrial and loads are – or

see start hopeful manufacturing little recovery. see We're in we start to right in see recovery we So that XXXX mid-year a now the to do continuing or recession later. to on before bit

really So say right within growth to load We I see would now that look territory. forward don't changing flat significantly. our just

Chuck Jones

world, half be this only would this significant as Pennsylvania, there in at end But economists talking It's Western add year due thing to over of look shell half the drove period last to about by I a just I and back planning for it's empirically a cracker is could think that that we're meeting the in week. XXXX, plant online away. and the So, in. that that a I factor difficult of it's so that come

that's but a It this load can going to pop-up, see waste of Western the cracking I see economy won't opportunity West in already we are starting Ohio, the Eastern on other Pennsylvania, be in an to product a too. the think because they lot are the Northern of cranes progress up, sites, air load cracker itself, construction process, to to you're now that's on and have and with plant methane, self-generate jump-start popping going in Virginia, industrial Ohio starting the is to

can factor of be both of I good something combination surprise that a could it's to and the those into be So numbers. difficult think the

Steve Strah

I by Albeit positive the mentioned we of Sophie add earlier. are also know reasons load we being growth. would very the modest, years I some as consecutive look at lastly, that of for seeing encouraged you two residential

all. So I downer much don't a of want at be too to

Sophie Karp

you. Thank

Chuck Jones

Lordstown northeastern repurposed into northeastern electric in over mean announced in And facility. got an mean plants the state-of-the-art being we've two just GM truck medium-duty former facility plant had $X billion I investing of you're vehicle, Ohio. Ohio. manufacturing in is forward I Ohio. light-duty, look, The battery in

get those when to that. job market done, all the is going of from the all economy benefit things So and

optimistic of some I'm back can end in the that growth. period, planning see So this we

Sophie Karp

thank it, you. Got

Chuck Jones

questions in Okay, see no the I other queue.

on another over know really this job, So for support, five you in year Expect years the move of we in be we've like your the in last again you. just there. month you FES with intend been think just I us the fully regulated thank last here Thank had this to company from and five end XXXX have years. then by a since I've and to behind

Operator

and gentlemen, does Thank Ladies you participation. this your conclude today’s for teleconference.

this at lines time and day! have your disconnect wonderful may a You

FirstEnergy (FE) 7 Feb 202019 Q4 Earnings call transcript