FE - Earnings call transcript Q2 2020

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Operator

Greetings! And welcome to the FirstEnergy Corp, Second Quarter 2020 Earning Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Investor President, Vice Prezelj, Relations. Irene Thank you.

begin. may You

Irene Prezelj

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

non-GAAP We President today’s will FirstEnergy also measures. Taylor. call and Executive Officer, include presentation Vice which President, GAAP discuss can John the on with certain and measures non-GAAP our Strah; the Chief be supports along found and Jones; Senior financial financial Chief Chuck today's in between Participants Steve Officer, website, Relations Financial Investor Reconciliations discussion.

available the several for to other us also We executives have join session. Q&A

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

Chuck Jones

you, morning Thank everyone. joining us. Irene, Thanks for good and

indicated, discuss updates Irene and the role the our lineup in Taylor of put were Steve will a we and operational realm FirstEnergy in financial new call, his reflecting May. review that results. changes of will President in as place in his CFO management as Strah, on speakers new to today's role the regulatory today, have John As returning new

with our in we company. a discussed, we've and are result transition a these of As board for of the smooth changes planning are and our succession to prepared proactive extensive thoughtful leadership plan ensure the

recently. been that's Let's the in begin issue addressing news the by

served Ohio involves FirstEnergy X, Tuesday federal others related matter. to Ohio subsidiary our political were the former our criminal action the political the by speaker charges. FirstEnergy subpoenas our Bill the of committee Corp., As related four on case Energy house this on known on recognizes of House were activity to operated value The as which arrested Solutions you FirstEnergy Company, plants power subsidiary, Services Harbor. and Also now Tuesday, nuclear and know,

ensure with is things, comply House with the of of and We all in on standards and this investigation strive in this personally. political lawyers of and financial as possible. with role fully properly the the operate In a This having accurately that highest our business Department cooperate in the which other and to discussions standards matter our family Justice to values are the the we foundational perspective our meantime, We customers, These values subpoenas. and and and to process. preliminary high among believe our apply supporting acted intend and for FirstEnergy I trust entire will the company Bill have upholding the we company. our share and dealings, the understood to the we our wanted conduct is employees, Ethical X situation. our serious these with including issue, as are behavior reinforce disturbing me fostered community. participation standards fully FirstEnergy

believe We development supported we that thousands taxpaying As rely two are FirstEnergy who supporting good in nuclear of to believe These those provide. families Ohio's critical jobs operation. know, jobs the plants we have former Ohio's in families, plants you economic are keeping the on efforts.

of We energy. nation zero our best believe reliable maintain clean, Ohioans the to also is and and that all of affordable, interest in carbon, sources these

support House supporters not because the the the nuclear oppose plants. in get it. competitive even we a no as their we including though and calls, dollar we out energy after has on supply, long-term X million of previous were in We the we are the referendum those would for even Bill House FirstEnergy to operating them. looking serve gave strong the solutions of We earnings supported effort and Bill funding X discussed Ohio, for repeal So stopped X customers legislative plants, single to longer obligation state generation of for business our

in facts we X me passage be a in nuclear our decrease rate our surcharges, Ohio business progresses, that House nuclear facts and properly. investigation clear but resulted no for the let to despite become does as support for addition, the In customers, interfere obligations plants the or clear Ohio time support of Bill at conduct ethical bringing our supersede forward. The will

and our on and come know since our mind. that impact focused manner in remain the remains you've slowdown I business other the economic talk will same team of about executing strategy conscientious expect. that, last the let's running call. leadership on pandemic Our developments to our With the everyone's

well-positioned strategy remains are crisis. we to resilient business managing COVID-XX the and continue through Our

continue early months. the procedures we We supply our made investments our to pandemic, planned several and practices and our any customers adjustments deploying of and last continued system we've or our and To and work protect health across in not experienced in workforce. families the significant our refining employees, we’ve making their our capital the those chain disruptions over safety

those in a and beat. X,XXX, haven't working who March in the to the missed Our employees both transitioned field from home

working for to has the customers Likewise, together office. their strong workforce adopted the while our return from during continuing in provide past we're physical home, in established the rallied workplace I'm face to team they've have months, plan for to employees of rush other We've safe to our Our who performance protocols each extremely our back keep electricity but no challenge. this proud a great job the They of new need. few are them the get done. given

core established precautions value has overall we checks, as continue provide pleased a part a locations, do and extended unwavering crew I'm working temperature adjustments protections safety an this and through this all the work we company to spread schedules, FirstEnergy, and That that measures, note disease. with from first safe on to increased We drive virus sizes. for mask, disinfecting virus. this will and to beyond COVID for includes this safety months cleaning our reporting our of of and to focus continue helped stronger environment performance spread preventing is stop the the the following of At year. employees six

renewed during said smarter this silver creatively coming country, our call, people the of us of over brought of is are years, first one diversity together work ever crisis our promote team actively address social with positive outcry taking I have linings and to together the and changes faced to events we our already sense a of areas a more and urgency an been we FirstEnergy is help for and communities. across color deeper and steps injustice company number to efficiently issue of within working also our on in As workforce and energy of had focus more Other a is last inclusion. by the This before. the than the equality and namely drive within inequality

second quarter quarter. Yesterday, earnings to the closed, we our both the reported per move upper GAAP $X.XX was Let's end and provided results. basis. market of at operating earnings of on This earnings after the for we the share guidance

and of John we slowdown. out and call, discuss structure in a model pandemic stability the detail measure this during our as expected, of later While in more economic rate period the business that I'll provided point will drivers

base about sector. from and April, commercial customers from in the about discussed come revenues industrial our with from two-thirds of residential we X% As distribution XX% sales

about XX% industrial charges. are addition, of XX% customer and up made rates of of and In rates demand commercial

As in [borne-out] this has a through told what we result, you quarter. April

the stay-at-home load the XXXX, in the in orders adjusted residential to territory than and X% commercial weather the service increase While second dropped sectors. by revenues compared offset more related decreases system-wide industrial to in almost quarter the of our

I believe economy, view bring we distribution think remained few the predictable we to what well-positioned terms we're of very economic position and impact taking to re-closing conservative the to and Nevertheless, and investments While of the provide positive in slowdown, the stable future of the we next continue that continue the anyone in reopening, managing transmission and are might what continued don't our earnings. of or will a pandemic, months is bring. predict might

up and you. also quarter of XXXX. extending of as $X.XX we're $XXX XXXX earnings CAGR our X% XXXX, third XXXX, for per introducing We’re share. to guidance well operating issue We're share. an through to of a affirming of range our X% $X.XX through earnings to X% and expected the guidance total X%, to as XXXX, range in affirming Thank Also plan per our XXXX equity million in $X.XX $X.XX to to of

I’ll Now the Steve Strah. turn call over to

Steve Strah

capacity. It's with a for costs. To deferral good both Chuck. incremental of I’ll walk-through again that since West Virginia And in of talk well are and Pennsylvania matters, PUC for the last authorized deferral some Utility update the our expenses. operations. New new as my authorized brief uncollectible Commission's regulatory related a pleased begin, COVID-XX mechanisms call on mechanism you Thanks we as today Jersey all have our to

April, our existing in first to put and already Maryland the we such Ohio in had As place, mechanism state New expenses. we was told and you for riders in service in uncollectible Jersey a territory

ALJ calendar our in Jersey, few for time. distribution matters we XXXX. is only through rate February. assigned light at touch very an base regulatory open developments. As we New you recent was on the In a I'll filed know, And this have some case

anticipate over with a transmission recover recall, XXXX, forward- costs year. to Jersey, these in system refund. service capital you'll filing recovery a a the the for FERC $XXX application former electric associated X, optimistic approximately million accepted soon, New settlement reliable into reach with along formula in for supports favorable subject focused Also increasing parties effective and with rate our looking in customer rate formula for transmission spending customers, seeking the assets. procedural scheduled few in and storm this to As years. issued JCP&L we can safe JCP&Ls to past discussions – we we we that to costs case. incurred are We the on January remain providing assets This In settlement move are JCP&L with our be plan of our our December,

to it strengthen precautions the indicated now your reliability, plans continue transmission and employees safe, I'll we than the resiliency of and on this to enhancing over Taylor operations to billion to efficiency. execute $X the for Moving improving XXXX. customers Chuck keep review. systems for turn front, investments track in and operational And with make distribution earlier, the our while to customer time. for our goal we John modernize remain with financial Thank Even more our you year, as focused significant security, to and

John Taylor

great posted document other to our information you along our It's reconciliations in strategic with detailed to with with Consistent all and morning. financial highlights you about will Good that's the find today. speak normal quarter website. the practices,

our Now results. let's review

same was distribution our $X.XX class, Pennsylvania, compared load higher offset business, increase we above of revenue basis. July the days compared related a describe same GAAP weather second period the residential XX.X% second Heating to top and class, period we quarter earnings second in X% in This both COVID quarter revenue, a XXXX basis, is residential were the in by territories stay saw XXXX, cooling at and weather above an of year. quarter And XX% of rider to actual orders the compared a or decreased of expenses, total our which XXXX in including both the than on year. normal The guidance. XX.X% the the on year. an the approximately last degree operating Chuck when degree and In decrease basis quarter XX.X% near usage, reported adjusted Total quarter usage. XX% incremental absence in quarter slightly of said, deliveries As benefit in second while and expenses, our normal of an the last XX.X% as and for industrial in weather higher period XX.X% moment. compared sales I'll In Ohio XXXX higher XXXX. sales the ended last increased and actual commercial end Ohio compared the has to and which result higher non-deferred adjusted a a of adjusted on higher same DMR drove decreased to to service X% days of revenue customer distribution second earnings second share, of of than home were weather

decrease volumes load for offset benefit in a As the than the in residential increased C&I per Chuck share the $X.XX revenue of a indicated earlier, perspective, from quarter. more

expenses, related share a $X.XX spend by our me quarter. earnings in Let moment COVID the about on which impacted per

currently New as defer as Jersey, As due Maryland, costs utilities well by able increase a with increased pandemic amounts amount earlier, earnings approximately deferred. future of of through Steve be other The to uncollectibles of share. are mentioned being no base was rates, all impact the in This incremental could represents for Virginia. remainder that the our deferred included are Uncollectible and in all as uncollectibles earnings. uncollectible collected $X.XX not base per related result and to rates, the and COVID reduced in expense to expenses our quarter recovery in on West

to formula of transmission we primarily earnings very financing versus managing the estimated and rates. in O&M mechanisms due the business, and place While continue mitigate our to that focus the keep we pandemic still have on deferral net track us true-ups financial fluid, costs, slightly, on meet spin COVID to our the decreased In reconciliation impact our of commitments. costs of XXXX is actual and our will expect higher

growth investment operating earnings ongoing our results reflect segment, the to compared in expenses, associated our XXXX. corporate And of see to future continue program. with energizing higher quarter second transmission the our We

your open the few financial discuss call Before matters, pension our with I'd we other a up to to like performance. starting questions,

As to the outperform a strategy, turbulent we market. last conservative which of described investment plan quarter, result pension our continues our

we XX, Asset returns were of as of our above X.X% are target. X.X% around X% and tracking today, annual at as June

committee asset at the plans allocation investment protect plans goal remains returns plans status, prudent Our to the anticipation with in has and volatility the year further additional the of preserving date taken to of funded which market de-risk steps to XX%. unchanged asset

a the FirstEnergy blended debt of completed million in of Corp. successfully $XXX X%. at we June, rate in Finally refinancing

We $XXX $XXX CEI. Potomac and a million we at financing completed in million completed debt Edison financing also debt at July

the maturities our are strong XXXX debt in place remaining financing the at in Chuck currently credit transactions like four before all credit to our with Our only two very new expiring minimal XXXX, some I'd of under facilities liquidity million make facilities money. and as million. that, totaling $XX through we through In covenants our the our manageable current borrow $XXX I and want remains warranties year, Q&A. call to plan, and $X.X that with light billion, XXXX to only only representations million our for we are in to next you money can XXXX. December investigation, compliant to know requirements with closing back In necessary required $XXX are With comments turn with begin transactions in totaling regard over

Chuck Jones

media report that Thanks, had meeting FirstEnergy John. such erroneous an meeting There investor was No held an yesterday. happened.

to So, know. the tried correction. if earlier I anyone was feeling left and out, of that are I from make candidly address and sense we you a we investigation speaking where wanted In heart what currently giving to comments, by my the

the can to to hope on quarter I we Q&A many reported your like As to the that. your appreciate just able that questions. would we marks really recognize And Please great detail let focus move I understanding stand. any I on my speak really Q&A, be won't on. we great on to prepared I of the

question. take the Now first we'll

Operator

Instructions] today Steve of is from question Fleishman Our Please first Research. Wolfe go Thank you. ahead. coming [Operator

Steve Fleishman

good Yeah. morning. Hi,

Chuck Jones

morning, Good Steve.

Steve Fleishman

FES give payments answer, have you FES Chuck. as are asking Hi, on, about why payments you from but much terms over any added – as color talked help best Can’t can more so, control to of versus could FE did this you was How the well? [XXXCX]. and in that maybe

Chuck Jones

as November and They place Well, a essentially of competitive of made take November half an and from business XX, non-core, FES first, part me financially, the independent of say operationally fiduciary, earnings Department specific put about our from generation this, first, the we've we or I issues let in of between two input the you important shared second separated of FirstEnergy. of board, it and transition we when had decision funds as into we of context FirstEnergy’s a to they've I've I've lot authority the in Obviously, that will so prudent years into relates do share terms discussions details going decisions your but made. to are corporate Justice ended XX, companies to services decisions XX%. make to that that On in X.X mine customers no referenced question, the I'm of not of and shareholders. but that we've November on forth, XXXX. and of every are any every case, And is given in exceeding spend had making said, of being funds commitment meeting of in affidavit, the quarter, get the that the the believe as

Beyond that, Justice the on weeks. to coming the we it what how of we we the to spent, Department spent intend in provide details

Steve Fleishman

talk comment Could reference folks? calls can at you between Okay. you these and leadership sure to you talk these I'm this, Is… on of phone can that all? and the some like other not but about you –

Chuck Jones

every talk going I I’d to of with days, our are we that day conduct more to I you professionally. call, when in, of that see every text obligations text phone not we way worries can I the business to a what tell people, I'm talked people. a transparently, I that. anything participate No, I have let these they're lot carry to talk I than merits operating that wasn't about we probably every I have that to arguments in in the this, no I our of message and about. so did our environment. talk political talking ethically, a text meeting, lot

Steve Fleishman

Okay.

everyone on And spending, the have on to just how XXXCXs seems spend? they this other focus color similar of much HBX? million for do this did because $XX Just side

Chuck Jones

share XX%. speak the to for not I'm our going was Steve, side. other

go have to talk going them. to You're to

Steve Fleishman

sorry. I'm law, the oppose that people meant I

Chuck Jones

legal of you all Ohio. it amount don't passed of I spent and XXXCXs of lot was it spent don't other spent thing But know this spent there gathering because was organizations, aren't used the it signatures, both issue sides in on all issue, that A the lot money were the was particularly interesting both provocative, referendum got into organizations, of a spent of it's where that was X know sides know – state – media we a process through clearly, on the and is was on on donors and sides. money similar who this side. after the House XXXCX both about the Bill ads, difficult was Well, it's process, the

Steve Fleishman

just Chuck, is question, quick review response? last you like all do of do One on you to the kind as Could of independent some of Board that? – going to the are color going give this more part

Chuck Jones

Right now, affidavit, be an for subpoena. necessary we're which of obviously to in do in us respond planning to internal to is everything to review questions going the involved the the

the is get the to and Justice review get needs going think that Department review I of completed. important most

Steve Fleishman

very it. much. you Thank Right. Appreciate

Operator

Thank you.

next is Our go Guggenheim. question Shar Pourreza ahead. coming from of Please

Shar Pourreza

Hey, good morning, guys.

Chuck Jones

Shar. Hi,

Shar Pourreza

just through more how so clear XXXX? processing a maybe similar little some in time, go on things else everything Corp. Just isn't like company, granularity the and of – like a but it process management a IT us bifurcated, company, continue I payment level. some the the FE to give on separation of i.e., sort for service you was can know the topic, understand actually at bit we

did interaction know split? much the with management corporate You have senior filing? When were you functions the after actually how ended non-back know, FES FE,

Chuck Jones

of when do not shared functions were shared agreement million they emerged that can't own. of by to the that when the tell no, running from can't to to FES, And of the or corporate by operating with Harbor that. we is that XXXX, worth of on even of our all of Energy We down have performed reason. at where had on The involved FES transition FES you individual a sides. creditors. business. no done executives on $XXX answer I separation about November ceased whether started and be a way the or were I the bondholders, winding of date we involved. to Harbor specifics point We generation of beyond Energy to services know, could created and There's order get their services the for each of its all we negotiating, process went answer separation both after question corporate November in the were any XXXX. the in its Well, providing the bankruptcy you plan way

involved So, any FES. in We made severed by way decisions we those the in ties. were not

Shar Pourreza

you on that then the can their over on, question, sort time And with sort with long example, of A you charged a know the AX? degree time tell it. both – in both of, of individuals was Got in maybe AX to contact of us period specific lobbyists some of are just know, you know, have A kind elaborate affiliation company any peers enterprises question, what were the who with to For what with company you several interacted and little and individual let's charged? you affiliations a bit know, those the

Chuck Jones

The did Well, expect do arrested us. they X. work let subsequently sure, but Bill them work FirstEnergy we affidavit for When knowledge, for do, never employ know House my have Who I'm they for. worked for? not ourselves I that named not in lobbyists they me to act for did worked on to FirstEnergy. And ethical not the accountable we and we we this, in say the lobbyists. hold manner same

Shar Pourreza

receive then, And like what it. underlining, mean, the the Affairs the whether I Steve's to freely? you aspirations”? approval you vetting just Chuck, were “societal payments? guess, do that making just follow-up I just would like Regulatory question, Got funds used and process for on versus towards them on be how political XXXCX, directed one assess request know, for time last at benefits XXXC those was would and those

Chuck Jones

stay that going I'm away question. Shar, to With all due respect from

Shar Pourreza

you thanks, really is it's visibility I know, subject Chuck, know and addressing of tough a some for important. Well, this. the Okay.

very you much. thank So

Operator

you. Thank

Dumolin-Smith question is of Julien Bank Please America. from ahead. next of go Our coming

Julien Dumolin-Smith

if the just historical here. follow the on arrangement, obvious I team. Hey, want time. good line of to the the I for understand questioning, Shar’s Thanks setup again, At can services morning, risk of into on delving

you you historical making this, articulated, the as this a the piece services were do some I that how about you under know, just affairs running which Affairs Because include right? that can you material to all include arrangement, some more? respect would lasted the these in understand about activities. of presumably and bit, clarify what can their does services you arrangement little for including a for know, running of a obviously, with making articulate if little that decision that what doing bit them, if in of time, side services of How decision External but think You you mean arrangement, on related would do terms things, lot you different a think versus your own, that

Chuck Jones

quickly of one November very the hiring External was We of working place Affairs, after FES began Affairs of and XXXX. law in separated that firms, their their with own were President shortly business and own External Affairs of areas with working their put Vice own very for began lobbyists. External they out virtually the

assumption were to were that bad we for a we it's that So, not. them, assume doing

Julien Dumolin-Smith

Right.

the that seemingly seems that are them for include presumably it's you facets other terminated Affairs, context a duration, including of to lobbing the in So extent External [indiscernible]? for XXXX, which would to services arrangement if very through in some for quickly, specifically longer running a

Chuck Jones

we we in were Administrative financial of Yes, know, were those services, think I about them, think Affairs of things HR you services, you providing. more types terms some, that providing services, payroll, it should IT

with figure very and but involved took all separated, to that running leading all it are while get the know, things that out separated to a a how early. You company,

Julien Dumolin-Smith

that proximate investigation, with from I before – to the done mean, when just about if not And realities contributed XXXCXs? that for all, can about to question be when to the you think separation you the then to speak case, you've the mean, can here. necessarily of in to activities very the to know, XXXCX, past, of you in done this prior I you is in want if to the you you that the and extent I just XXX you've companies separate the ask, I the think here, clear even funding perceptions which

Chuck Jones

money I House going that this we bracketed the spent of get of Bill it details X, the not call. on into we to on I'm spent how amount

Julien Dumolin-Smith

Last that you management I was Understood. about own question you your the team, [indiscernible] of and articulated think know [Technical that transition about for your plans obviously how super you've quick. Difficulty]. do

Chuck Jones

Julien, you your losing hear I We're can't question.

Julien Dumolin-Smith

the on think pendency the of you Do just [indiscernible]? help Sorry. to investigation you'll to stay

Chuck Jones

to I my never I anything said. I've And the part publicly plans to and absolutely made – be what no of not company to you articulated that it I've my know, certainly help do not year, and to going definitive going knowledge, have not that think – what we've retirement reputation this restore said deserves. Well, I am this won't truly to it

Julien Dumolin-Smith

luck. Absolutely. Alright. Good best. the All

Chuck Jones

Julien. you, Thank

Operator

you. Thank

Our ahead. next Morgan Stephen coming question is from of Byrd Stanley. Please go

Stephen Byrd

Hi, Good morning.

Chuck Jones

Hi, Stephen.

Stephen Byrd

the FirstEnergy Just FES wanted to any executives talk there board about of FES and was post-XXXX? governance there, on

Chuck Jones

again, that Stephen. say Excuse me,

Stephen Byrd

at other the Board folks FES? FirstEnergy executives or of FirstEnergy there any FES, were Post-XXXX on

Chuck Jones

board FirstEnergy FES. No the were on of executives

Stephen Byrd

you. then Okay, thank And … question just another

Chuck Jones

FES that Board, of independent Solutions directors FirstEnergy the President who but think I and was Donnie executives on selected no FE the served The Board. Schneider, on was

Stephen Byrd

on doing wrong. one statement time doing that no subpoenas the time that, the kind was confidence gives that no made delicate] wondering then just at a that guess There's company everyone you the and felt question another that sure was anything to way done issued between the [and fairly anything short confident pretty of no this FirstEnergy one about to the tone amount short believe to that anything entities was I it’s statement you the subpoenas make of between number issued? And short being you. What I'm you and make in Thank don't exactly that assessment statement just the an given of wrong. FirstEnergy a wrong to Understood. a ask

Chuck Jones

looking that believe We The say our in by was I We're first that we we complicated. We provided know X know me to why it. gives financial confidence we anybody to Bill X. what Bill be we House that just support so did statement Justice. all, able with would to forward than say FirstEnergy the on House the properly happened FirstEnergy. that what to properly. acted of Department dealings our to We did. other – speak isn't of can't sharing that That's what we acted

Stephen Byrd

given Okay, what see rating plan that understood. agencies seen action agencies’ statements? statements you see the position of the near-to-medium this we've rating – on any sort in terms in you seen need credit your of from span don't do given question, equity Or and need investigation? And just recently, to do term support last of sort your already some those we've

Chuck Jones

plenty of Well, and S&P Moody's as what both spoke liquidity all, I imagine, we've seen S&P might we've of since Tuesday, to first And now. got did. you right

You put XX-day negative on know us a they watch.

spoke as to question? I the add will be the definitely. and Tuesday. Steve, told going when executive the they company it’s You and got CAGR ratings of earnings that the that's job Justice our told their that existed job on told with to that FFO-to-debt tell you it's We've liquidity strong know, reputation, into that's of want not the ratings to profile process from but work line and hasn't I'll Department, it that, company's company we sheet, that to XX% out specifics care on And underlying financial balance you take when teams them. same should same we a before we through improving anything I XX% that range, we an integrity the them both, the changed. That put the to I them for what of the to do my also the are and we're come our I company them moving FirstEnergy.

Steve Strah

mean No, strong at our billion. Chuck. $X.X is I liquidity

all do We it. forward. the expect reps under facilities to the able to make be to that and access have moving and We can warranties

Stephen Byrd

Understood.

for question dialogue me, last had Just PUCO that this to and announced since have report investigation you of things? with was just on side anything

Chuck Jones

I dialogue the PUCO. with no have had

Stephen Byrd

Understood. Thank much. you very

Operator

you. Thank

Please question Paul of next Our from is Glenrock Patterson go Associates. ahead. coming

Paul Patterson

morning. good Hey,

Chuck Jones

Hi, Paul.

Paul Patterson

or in would sort decoupling X. is And area, should FES that guys repealing significant contingencies just has other bankruptcy, So, the it's since – or follow if from removed if know, potential as Energy emerged same FirstEnergy, now impact to provision, out mean repealed – thinking anything there that I Harbor likewise about replaced? since also of whatever there's or bankruptcy, I'm you think – the you it's about and to not we you there discussion are since HB significant other it obligations was since me? happen that of any any than

Chuck Jones

what Alright, related went happens? so the repealed, I actually it for law, it’s question result resulted if the you how rate the energy was of prepared were of when that some the, surcharges know, with Bill energy previous the it's have repealed, how Bill depend into decoupling surcharges a know, can on in would that made all. for you happens what renewable House is customers House else replaced, our first customers House and X to those many as renewable remarks being decoupling It the payments in benefits. charges. in reduction for Bill nuclear if X that On piece, X, a at provisions despite mentioned plants my is

it both rate and case. our certainty customers know base You provides rate shareholders for next until

on workers this it a due decoupling now, hot depending said, the month result case home at providing in being month, could shareholders, is provide as benefit to of a downturn, loads with normal a I've of You combined but benefit during pandemic customers. know, weather the actually with whether up right to economic a last the as and

those So, going that go away. away, you the decoupling know, benefits if types goes are of to are

Paul Patterson

I of again, potentially, than think outside that financial with? is the that financial Okay, should just should any absent about going think decoupling other we thinking there is we but other than I'm away, there, any about thing anything – impact that there guys is impact you mean, decoupling like to decoupling?

Chuck Jones

No, accommodate anything significant nor that's could that our we within not plan.

Paul Patterson

Okay.

Chuck Jones

It's a if customers it's summer not also risk paying benefit share, because this it shared is few probably paying. pennies higher of whole the maximum, that than I said, real us. there, they'd And bills lot they're a electric be by as would

Paul Patterson

is – or there your them? post-bankruptcy, contingency that you FES with any obligations to just have then And great. Okay,

Chuck Jones

than creditors any other true-ups, by No, The agreement any of its change was was was House with what X our Bill obligations other for and FES our approved contingent all on court. from and of plants. nuclear no other other the There's the parties. or FE the in financial settlement support there's bondholders, no FES plan to not agreement reorganization in that

Paul Patterson

I'm that should bankruptcy saying? I it's we is be from – emerged to that any what But should FES, follow having if it do – what you okay, I'm was since we guys, agreed, so potential Okay. guess happens that, et something now on saying concerned about cetera, you impact

Chuck Jones

was be don't public used were $XXX they the back March. made don't know for sitting part all on I'm on of million part to what's of about cash. I can't last worried of they out I I at plus – sitting company. our That there. here know, a that not Well, what announcement in going you I – speak

Paul Patterson

Okay. of with actually general, some not of about Appreciate there in I we the are mean, the individuals have I what course, I if clear issue just is nothing of that put manner but me. information illegally subpoena we obviously I can allegations of lots about some arrested, that. … see legal been to and actual, any being how if the then, that pages in out think are it And that? you, It's associated sort done guess, have what is have, [XX] me when being look made FirstEnergy of or at follow you should to a with.

Chuck Jones

that let I'm going remarks prepared on my stand question. to

Paul Patterson

there. Okay. in hang Again, so much thanks

Chuck Jones

care. Take right. All

Operator

you. Thank

coming of is Our ahead. go Fremont Please next question from Mizuho. Paul

Paul Fremont

following on – want Thank Byrd's question. Steve just you. start up Basically, I to want I by

or If Poor's financing your the would allow for go rating you equity rating, with & rating by were down? to the plans alter faced you descend a to downgrade would of prospect the potential Standard you

Chuck Jones

the do wouldn't in rating. think to And short-term, anything to comfortable get them change our the point drastic. our would we I We work wouldn't we restoring plan. where they're

Paul Fremont

Okay.

John Taylor

As I haven't changed. said, company of this the underlying financials

Our is We're sheet XX% stronger. range. to into the getting XX% moving balance

If news, and XX% as us threshold to know, to I behind result a of downgrade there. S&P that rating us appropriate. this to to when this our going were job below not they expect We're go that. that's a You restore would get has them as the happens, I've news it's said,

Paul Fremont

you investigation of FBI’s the prior conference the of became announcement press Were time this or without first to the week aware investigation? aware Got that the it. and you

Chuck Jones

that on I'm not one. going comment to

Paul Fremont

Okay.

Chuck Jones

if It'd be could got about that we actually point nice. great left, XX minutes really we quarter We the talk about had some here. at

Paul Fremont

alleges And correct lobbyist? one is of to affidavit that have one I that that guess a a to question. of payment you just payment in made lobbyists, part more by you was that there the I the

Chuck Jones

I've I a of think would some lobbyists wasn't this, that affidavit any my and anyone a was, else to payment to directly who say in lobbyist of it life. CEO to payment just know my the not I asked but life me. company reference a our me in never made in that was on don't I nor it make behalf

Paul Fremont

Great. you. That's it for Thank me.

Operator

Thank you.

question Lapides is Sachs. Our next from Please of go coming Michael ahead. Goldman

Michael Lapides

and Thank you you but Hey, to is guys, actually something for something want taking is question. regulatory I Ohio want year. thank you, related related, dive that into deal every a my I dive with in. it's to Chuck. bit

ruled there. XXXX got test on. have XXXX your earnings You significantly I one, And don't application think ever the out excessive

about income little of base. one distribution in own data or year, $XXX not net X million over of the quite next rate utilities XXXX Ohio shows a Your billion

potential a result rate any a, of Would Ohio the test, how reduction a rates? in refund seat for be about be a two thinking that last tests; and lowering and ongoing of kind process if is that of one-time an to curious Just happened? you're would of seat resolving that the or a customers rate the risk b, the reduction, as

John Taylor

is Michael, John. this Hey,

on XXXX drivers at as XXXX dividend there the versus expenses some were that, lower because XX.X% you impact some a in Corp. typically a interest in past they they cost paid some a XXXX, test, time. but dividend more had then than seat filed a lower incurred, in that paid Ohio the bigger and that know, return probably we biggest FE equity. back look little in we quite the You May know, we you costs to hadn't the that was The one-off in done have two utilities in just up bit

on XX.X%. the in increase key the driver foresee don't was in return equity. the that issues I at So the any

the the I that want talk process will on over below timeframe, if some how thresholds. can't through the seat. when period approved for time. – or regulatory you that well be the And We’re gets remember Eileen, resolve maybe will of I to regulatory think timeframe the itself works

Eileen Mikkelsen

we are excessive or not we significantly in to May Eileen before our as of Rates with or prior The John. move whether filing, each utilities. not you Ohio John, Affairs. morning. President thanks. earnings. statutory for Utilities you Good at make reporting to with seat not Vice the judgment a then But that have wait excessive of processes in Commission year a time, on we earnings not to said, our Thanks, we on schedule to as filing It's year's Yeah, comments XX.X% make the Regulatory provide hearings Mikkelsen, the to of language they Ohio the make filing establish to significantly move earnings, excessive really whether concerned a and earnings need about that said, with have procedural and consistent respect that for significantly hearings or folks we determination Public At a test. we

Michael Lapides

Okay.

wrong, mean, on are It be the got one with XXXX does the one the the there didn't unusual So, bought. seems outstanding any a test, for order because that or had issues an I other the actually think I but way be when one seat just commission little may still XXXX XXXX that. issued to

Eileen Mikkelsen

the schedule resolving as proceeding. XXXX no procedural seat for yet is There established

was again, a act then but XXXX we consolidated procedural we X.X% await so on that the So, basis. of will filing and establishment accordingly, and a schedule

we again, So, that earnings in XXXX. excessive have significantly in no concerns Ohio

Michael Lapides

Got Much appreciate it. Thank it. guys. you,

Chuck Jones

Michael. care Take of

Operator

you. Thank

of Sophie is Karp question KeyBanc ahead. from next coming Please Our Markets. go Capital

Sophie Karp

taking for my you questions. thank and morning good Hi,

were remain curious communicated afraid they just out, the to you business, business that you strong, pointed you. of? Thank if to on fundamentally is are, exactly guys agencies underlying trajectory what the rating a it is little because little like they with and conversations better could on maybe you concerns your the just Just what understand their color and try a provide right as bit more

Chuck Jones

think have what don't I call they didn't color if more them read provide. I he to any wrote you shared with everything I discussed much I more pretty to mean them that questions. have and and

Sophie Karp

I follow if may the secondly, you decoupling to up, a went then through mechanism. And right. quickly regulatory president All establish

have you. is, if you was full would in to And to way question Thank go would similar that reversed, rate review trigger again. your that any a in presumably, opinion? my proceeding So that

Chuck Jones

decoupling. one rate implement hardly to review full a would be there I wasn't think coupling, There that the to would

Sophie Karp

Alright. Thank you.

Chuck Jones

you, Sophie. Thank Okay.

Operator

Thank you.

Our ahead. next go question is Evercore Please of coming from Chopra Durgesh ISI.

Durgesh Chopra

good morning. question. you guys, my for taking Thank Hey,

of comment QX are assuming in QX quickly, better trending really, than be Just you to clearly least in you're on at what call? on terms things tend guidance, impacts COVID where any QX first the

John Taylor

Durgesh. Hi This John. is

on the I improved weather probably think, XX, X%, mix year prior consistent, starting and We're be XX, sense a quarter commercial know, slightly up but you improve assume starting see the X% will industrial look industrials be slightly. residential load a reduction different. residential down XX, to is to adjusted you were see load know, commercials off We're if my this will slightly. second come basis, you you could was down down down I at you total, think

we So, on the with what saw second be, the to what of all up that's related rates. and costs, load deferral different, uncollectible but mechanisms we you just expenses, terms in we mix the I know, recorded the quarter. versus load base be respect you COVID in With last have have consistent will total will know, to think year in been fairly

they're So, there. costs not COVID in significant. the I that don't anticipate other main, we're any incurring the that And issues

quarter. impact third So, the COVID I any don't in anticipate from

Durgesh Chopra

And just wanted I to then going that understood clearly. Understood, I quickly, make sure liabilities, back thanks. Chuck, to FES just

specifically stress through understand saying that are okay does just you with where FES no? will if on any nuclear proceeding, financial into trouble comfortable situation? financial were situation recall decommissioning trouble, obligations to FirstEnergy be any you're ash, balances of are to kind obligations that trying FirstEnergy those get I'm obligations in that coal the that you're if kind or whole some have those bankruptcy I as in get and So, you of

Chuck Jones

Durgesh, you have – you do not understand correctly.

We have decommissioning. obligations nuclear for no

obligations. bond, of as agreement court, any have the ash properly, ensure financial no coal ongoing negotiated that but of coal part place it to ash. direct bankruptcy the FES was Separation obligations our and we mitigation We Agreement bond part we by other happened was put for We our place in a in that with that and have is approved surety no

Durgesh Chopra

Understood. Thank clarification. Thank it. that for Appreciate you. you

Operator

you. Thank

question next ahead. Our Please Weisel is Andrew coming Scotia from Bank. of go

Andrew Weisel

good a and taking Thanks question say on quarter. I my for congratulation will

Chuck Jones

Thanks.

Andrew Weisel

XXXX, to I in If you’ve significantly out on and can income and just pretty elaborate the disclosed the look ROE of Ohio of the between subsidiaries points from when it but like subsidiaries income something simple the why it XX.X% those you higher net the those for algebra, numbers of like earned me a do net seems I disparity like? north DMR reconcile subtract XX%, specifically, seat more what and [XX.X] look the and just big the can at help just the

John Taylor

Yeah.

this So, John. is

and that I what's we need So, order adjustments make financial in see, utilities, our exclusions and seat. are what's you in financials, the calculate per to the regulations with start and there but what see obviously to statements Ohio you think in the included

balance adjustment single call, probably go also the And the XX.X% is income time there so, a year. the head you to used not list equity X.X% of average every here to wouldn't or know, adjustments but certain but reported I we in previous of of the rolling and equity the the in don't only calculate the that's by be that reported the my adjustments a make, the the that's on in have top utilities, utilities. are good XX-month use through on by that's It

that are some that could do that through, makes and need walk just there would So, adjustments if we to we offline, sense.

Andrew Weisel

talking about Could you two the or the just versus of biggest still? a dumb would doubling net you're income of guide math what I give like maybe imply? one mean,

Eileen Mikkelsen

this relevant ratemaking but adjustments to to adjust Power formula. for subsidiary, Penn a the It's like example, has not because of that have Penn as Ohio offline, John, Ohio coming out take is can mind we Edison to Thinking Power Eileen. the so we

included that that So, to are like in necessary statutory meet adjustments test. that there's the things are order

Andrew Weisel

thank you. Okay,

Operator

Thank you.

question Our Fishman this morning of Please is Morningstar. Charles coming from last ahead. go

Charles Fishman

Yeah. I Chuck, skeptical. was

Your they revenues resilient as would were. be as

COVID-XX were quarter. certainly with know, you the this after respect quarter, but to they last So,

on] So, you [add the give I'll quarter. And that then… able

Chuck Jones

Charles, the saw vote also Hey the quoted I this of media confidence. you earlier of you. Thank you week. Thank and for in some

Charles Fishman

welcome. well, Okay, you're

question just did on quick Ohio. one I so that, since Okay, I forget

pretty ROE Connect ESP autopilot in the Okay, up, the XXXX? opened much we until the as are expires on far DCR. the as

Chuck Jones

Eileen will take that.

Eileen Mikkelsen

are May in through in DCR autopilot agree which end to Ohio, respect ESP, our XXXX. With currently the would is effect I Chuck. Thanks on of we of through

Charles Fishman

Thanks I Okay. lot. That’s have. all a

Chuck Jones

on you Charles. support. your it's Take We'll least you all you, a Alright. questions Thank for the talk for few appropriate. again Thank quarter. when to at Thanks care. getting

Operator

Ladies and concludes participation. today's events. your gentlemen, thank for This you

You may this disconnect have lines a the webcast at time your or log off and wonderful day.

FirstEnergy (FE) 24 Jul 202020 Q2 Earnings call transcript