FE - Earnings call transcript Q1 2021

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Operator

Greetings and welcome to the FirstEnergy Corp.

First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. to for host, FirstEnergy pleasure President, Prezelj, my Relations Investor Corp. now introduce Irene your Vice It's Thank you. Ms. Prezelj, you may begin.

Irene Prezelj

forward-looking we Thank welcome you. other expectations make matters. Today on are prospects and to and revenues, various will current our first These indicated performance Good section quarter earnings and found Factors morning, results the strategies, link, statements regarding everyone are to based earnings, statements our call. from those to on under actual differ be can Investor cause risks by that and Earnings statements could and of SEC uncertainties. website in the these filings. materially Information our subject

of detailed We in non-GAAP will Jon the today's Financial in presentation and Vice the website. Strategic Officer, Financial financial Chief measures. on our discuss other John Executive Somerhalder. quarter Officer, non-GAAP Director, supports & call President President Steve financial Executive our about section Strah; Senior be can Reconciliations information Vice between the Highlights Chairperson the Taylor; found measures, include Chief certain GAAP are; document and that Investor and Participants and also and discussion and today's

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

Steve. to Now the call I'll turn over

Steve Strah

the Thank in XXXX upper you, reported share, end earnings operating good our $X.XX Yesterday per and is first everyone. of GAAP range. we Irene and morning, quarter share of per earnings of which guidance $X.XX

employees the I Directors. our to Board continue strong the successful expenses. appreciate the long-term trust CEO of named has in placed of position our was we was month, in stability discipline and higher pride company privilege and reflect to navigate As investment customers results appointed our CEO residential It's in and adjusted and I business FirstEnergy and Since be continued and implementation greatly our financial President October. leading Jon discuss, current the honored Acting success. operating the to named work for FirstEnergy's to and in and communities. do serve my will our Board challenges managing Last have I the load May, I in great our last confidence weather our me. class as strategies, our

move As of the and grid and accountability FirstEnergy and are; by a continued compliance Ensuring integration Forward, flexibility FE to are in results and program. my safety that in work customers. effort to on our our supported Forward, to priorities deliver integrity renewable employees Executing and deeply our corporate capitalize ingrained strong infrastructure transformational we culture modernization our maximize and our benefit customers. financial electrification, from our opportunities potential, continuing investments near-term long-term growth ethics,

us I'll of management's culture before our FE your provide work integrity. and compliance our update and Then upon an join topics the instilling open for Jon Justice developments. Forward review on financial towards Board standards regulatory built ethics John matters for business questions. will and Somerhalder a other of results up of the it Taylor we highest today's an During will initiative on Investigation, update and the other and call, Department

to As ongoing the our cooperate reputation on investigations. decisive we taking to focus government and call, committed quarter the to with and actions rebuild discussed fourth continuing future are we on our

the resolution begun possible of agreement. prosecution of including FirstEnergy the impact the can't the outcome deferred We regarding the We with DOJ. discussions DOJ have possibility, timing, entering a the resolution with predict into this the or matter, currently

of stakeholders engagement approach and consistent take is with review. a political Our with the the range a is This legislative in spectrum under approach matters our changes we're across goal transparent and advocacy. to holistic making of and

process. all contributions we've including political Committee limited Action our in all We and XXX(c)(X)s. to other stopping participation disbursements, paused are the Political political from we example, For our

also have terminated We suspended consulting and/or political relationships. various

our around expanding transparency. be order we'll spending In provide political in addition, to increased disclosures

case example, associations open regulatory our Ohio, Ohio taking on our comprehensive political website Ohio stop with House customers. an our and collected rate the decision the revenues state. proactive under steps utilities The regulatory our Ohio our on decision regulatory have partial we activity. political that well the corporate Bill matter ESP actions X interest. late collections Together customers to the Bill our not to also to reduce activity uncertainty our on customers. we the basis. settlement plus continue General recovery Attorney the corporate House impact are in decoupling seek million. In this requirements includes activity, lost us. on committed This approach of other trade fully Ohio matters, is in in Ohio steps relationship our comprises as to of seek perspective utility updated these XXX law, approved In our A related authorized provide mechanism updates the decoupling individual the under review revenues put and This to through affecting and important revision. For as revenues, These cornerstone in values we behind March distribution policy, post to which our testimony of the our to Quadrennial company with $XX credit in Ohio were from approximately address proactively is

this and matter engaged XXXX in XXXX, on parties cases as SEET as consolidated interested XXXX the well are proceeding. discussions this into We that settlement with were

request, rider our state DCR to payments. customer-focused support transition to we customers proactively our underway are is activity annual initiatives of with that will During of climate. Ohio refund Ohio, affected our cleaner mentioned In that jurisdiction. each of the scope regulatory were of review our Outside concentrated has these in the a call, certain engaging last vendor for we Those conversations payments. on include a to been expanded regulators PUCO's the at audit

approved, throughout For a the development the infrastructure Public rate offer If with to program. four-year New EV the of Utilities, commercial filed the And residential, and benefits our which to would Conservation petition vehicles accelerate seeking Pennsylvania and Jersey Board XX% & PUC's the and rate late Yards Plan, the structures closed approved JCP&L modifications. X,XXX announced by developments, regulatory customers. Waverly, proposed million is in charging Penelec's plans Co-Op. Xst, In $XXX five-year PUC supports In on sell March Creek in million. JCP&L its which to formula customers FERC for consumption March, distribution deal, York program of $XX example, support without an reduction on service to and EV-driven which Jersey March, local approval electric pump-storage $XXX a our incentives sell will of other The approved to last the solely industrial New Efficiency our focusing territory effort simplify hydro adoption Energy million also provide to recent in forward-looking New any the of Penelec's to approval, received week, targets. our we uncontested proceeds JCP&L's assets, subject And customers. plant serves we interest about Pennsylvania transaction business settlement

call, we Forward, quarter to resilient, fourth effort a to you companywide transform returns. more and superior into our our FE effective shareholder FirstEnergy introduced customer delivering During value industry-leader

into more bills. electric a Forward efficiencies expenditures experience can our provide strategically capital our while our cleaner in We reinvested business, operating smarter customers investments affordable in a to for and initiatives that supporting growth and and expect grid, electric with be the also FE modern maintaining

we practices cultural and the improve. phase first norms we of where business our evaluated processes, the can understand project, to During

we using satellite scheduling such our safety opportunities is and planning customers now imagery employees areas XXX processes, our and our opportunities optimize and a and the systems deliver web-based experience. through While and later tools to improving identified and on expenditures many for developing terms. employees. advanced to for of of best more power more in drones self-service allow strong, payment to Leveraging to experiences to prepare predictive ideas, vegetation provide programs, this our to performance include, improve these as into we customers with improve their technologies automate our Examples plans integration options than work as our focus reliability more leverage purchasing their we modernize executable operating take management customers. quarter. We've enhance and strategic found to this diving beginning deeper and implementation are and And analytics detailed

initiate we to to As support cases strategic part our of priorities. intend customer-focused cadence these on basis best rate state-by-state evaluate a to appropriate the efforts,

customers We focused operating on remain energy reduce to will share. needs our of technologies, how we we guidance $X.XX start earnings per through our also a off evolving XXXX year as reaffirmed emerging think footprint. and $X.XX to this smart We're electric and yesterday, vehicle great carbon to infrastructure grid, our

we do. center to and strategies Our core our of leadership our proven on team upholding we executing put behaviors our and committed as at the customers is everything values

better confidence. a to We deliver our you will community, promise is employees. the customers, our company, by that and to FirstEnergy steps our respected appropriate investment your for on one take time and regulators Thank make the

call Somerhalder. turn the Now over John I'll to

John Somerhalder

team, Thanks, significant leadership strength, investors strong transmission potential It's sharing pleasure including our Steve months the with enhancing through our strengthening growth. a to I'd FirstEnergy to this role. and businesses, priorities. including in to and ensure distribution the company with and and joining the a customers resilience a join a start priorities, stakeholders, improve a in senior compliance, governance of the deep-seated impressions hello, privilege customer-focused strong and been is spoke I've and supporting almost governance technology by and in of innovation community. our about its the commitment This everyone. functions you my and to our regulators after and Since foundation, relationships to and two firm help external embracing reliability company's Steve to like advancing compliance a safety today. of by deliver culture to value financial area and a business commitment

actions. today focus work So will including remedial on my remarks compliance our I

material compliance of been efforts, in with you to identified has First, and management, new improvement I'd a we the of Board since no and Audit training focus the update concerns opportunities Compliance our together have the the Through Committee investigation have government has the governance, broad management. these Management our of internal risk investigation, working build categories, from a earnings five continued like ongoing to investigation The and cooperation proactive investigations. assistance Subcommittee to issues call. including revealed third-party best-in-class transitioned management on program. which the internal with last communications,

embracing to to culture a is of best-in-class. commitment FirstEnergy part enhancing these be compliance its efforts, As

Some Hyun in hiring Chief January, Vice as Vice who of include Compliance Senior Fernandez, and myself. Ethics Chief Officer and to-date week joined our and President President Antonio Legal and the actions completed Park Officer, last

On Steve Teno a Annual success by out the Shareholders March, term from Pianalto's commitment Board and Melvin joined going these to Icahn CEO. Board the confidence round strategic of skills, side, in March, our Williams deep In along knowledge Steve will Board executive the believe independent tone Lynn has at new leadership and with support nominated of naming next Andrew us month. and compliance culture the team. stability. the affirmed very needed of at top demonstrated member, for integrity, the the Sandy new and a businesses forward. Jesse has experience long-term I changes the election consistently the acumen Board our competent setting FirstEnergy in and of Capital when committed leaders position management and appropriate Meeting, and Board's reinforcement ends helping These are team's to and a insights him the to for

regarding the event integrity company's we instance, of Chairman everything and do. expectations held top Chair to the the Compliance act addressed where with we in the the For recently leaders Subcommittee XXX an

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many conduct. leadership, controls, which as ongoing centralized of the to metrics enhance and for training to the reporting employees, months, standards. continuing regardless title emphasize be developing and of under will address for include take to and values program, employees Antonio's with thorough incorporating goals contributions, few the of misconduct processes organization performance of will holding continuing and to and respect next and to the political course investigate our and oversight and with increased incident allegations our policies communications ensuring in compliance expectations compliance same communications our Enhancing additional processes, compliance and our new, all channels employees company objective the with standards our code utilizing business process of the compliance of the such and more and our commitment of to build business there and requirements, policies company to suspected Over steps our procedures, violations law our reporting ethical for and conduct integrity more addressing other understanding or of business code into

also and enhanced levels internal reassessment to of Targeted have company. payments, across the We reviews our any a controls additional require entire approval approvals. of disbursements around suspicious

will program the payments X of policies clarify taking of disbursements, conduct corrective our area performed. on we are and in FactBook. and Additionally, first training that Pages detailed audit a list and reviews actions services and we update A regular found of can X the quarter institute procedures, be and

with Over the where will areas several be the compliance months, significant organization, established newly it we make the of by next progress to Antonio's and continue Board by the in overseen Steering Through top expect led quarter to remediated for we tone file our Committee compliance. at these expect weakness management's the the time fourth the to ethics associated and we by efforts, earnings. be material the

communicating our consistently stakeholders importance that the and compliance modeling and elevate just regain ethics like trust working behavior core and our of compliance appropriate the to of to and employees values by safety. continuing are leaders Our

employees of We fear that emphasizing top. the that them to a are reporting expected our are confidence have are future. without committed the are Board of team move taking better, a actions are tone setting continually challenges, a to the well we the bolster right and is company from right bright our comfortable the We compliance stronger decisive what lot of actions the the taking we among recent and with to as as ensuring violations believe to proper strategies learned forward. employees repercussions company emerge the at I management by to importance understand as and demonstrating and future, ethical strive that

Now I'll for results floor first and turn a a of quarter financial to over Taylor Jon review update. the

Jon Taylor

John. Thanks,

you the review new I the website. look a materials quarter, Before have noticed probably to to posted our

three in areas Investor disclosures new FactBook. main our provided have within We

XXXX collected sheet, earnings support XXXX Our we're share achieve disclosures more disclosures. robust forego share, operations granular more steps customer quarter Ohio usage related of partially at results end case business, DCR resources, well and announced and GAAP collection distribution to implementation including continue ESG revenues rate as incremental the including distribution balance the our for grid funds two of operating ROEs, from renewable Also as target including monetization associated that $X.XX regulatory charges adjusted of of actual guidance $X.XX share the items, customers. previously of and note to the on Jersey. sensitivities. decoupling in from green this growth a to decoupling taking our our and range. the earnings with XXXX, per revenues and weather quarter year, more and to revenues provide per which charge basis, of system refunds Ohio, the our our commercial steps upper cleaner, In in we investigation. additional GAAP and the compared lost related decision for Yesterday, and to rate on New expenses enhanced in increases, improvement the our our base distribution drivers smarter our goals absence on higher and our settlement These with residential include for the was were movement Pennsylvania riders residential to first of we from per grid our third, special to and both disclosures by in results to Ohio the as $X.XX associated and reflect offset and first of

sales the distribution more X% in as deliveries customers first weather at home our of of total compared basis worth continue commercial of first forecast, industrial quarter total increase last in of forecast. decreased the to XXXX reflecting Our It's load spend that quarter quarter deliveries an to time in versus for as with year, X% are decreased load a sales noting higher adjusted X% on X%. and internal class in first our first a quarter distribution the the our XXXX, through demand consistent X% decline with residential residential

of growth down business, FE offset is load our which earnings an as While result of adjustment regulated previously our net financing the to at partially industrial included capitalized impact made costs, subsidiaries. higher rate-based and a by X%. decreased interest, transmission In

and earnings offset solid for per reflect a first as in operating higher our per We've We're a to quarter off operating guidance to to also start corporate expenses, $X.XX the $X.XX reaffirming $X.XX are of Energy bankruptcy, our related absence Pension/OPEB to introduced well $X.XX share. interest segment, year as the credit for second by Finally, results XXXX. lower XXXX Harbor's emergence of of quarter share expense. guidance from

million in $XXX cash our the In $XXX internal addition, cash quarter. free for a flow in cash a helped on first and adjusted our drive plan increase increase strong operations from million versus focus

to a remains in In on our financial XXXX in a track. FirstEnergy senior updates, March, supported Transmission couple that As notes bond our transmission business. debt under of investment We revolving well million strong, offering other proceeds financing $XXX the issued plan FET offering. on and short-term credit million to borrowings oversubscribed used par the the facility. strength repay in of with The $XXX grade was an deal showcased

repaid In company. holding million addition, $XXX at FirstEnergy the we

possible in well successfully at our issued earlier was April to reduce mortgage This borrowings, our at supported. and million short-term strong also commitment as utilities. credit first as We to at credit FirstEnergy. goal investment also bonds MonPower very supports our $XXX grade metrics improve maintain Return to in well as that the quickly our as ratings

investigation needed and to milestones working the outline credit at to compliance provide company, the and regular are of with metrics. our DOJ changes We Key of is grade business continue develop updates solid agencies to ratings. a our on governance FirstEnergy to what investment them resolution include clear with rating and credit we return

our and through the Forward, Mainly approximately plan needs, financing execution at FirstEnergy the longer-term $X Transmission holding FirstEnergy by of XXXX. more debt we financing to reduced companies. FE through have As billion

as have raise important XXXX. Additionally, equity plans is with mentioned, of part equity financing XXXX of over our up we to previously overall and an billion to $X.X plan,

previously, to plans we all are Starting XX% funding adjusted expected stakeholders. debt also XXst, exploring at obligation, flex timeframe a the could pension, various with position Plan, to our year, any enhancing XX% rating alternatives not range. at These these rate in million million funding requirements and while incremental means $XXX to value do FFO be manner American through program, modification JCP&L the agencies. each assuming rules, of for which our that our that improves our return to from with status capital will flat on funding The million resulted XX% March last cash in will was said Rescue relatively we we in targeted generate maintaining raise actions debt levels adjusted foreseeable rates and XX% to extended will the As capital plan equity unfunded all XXXX, at assets. end our as $XXX to pension needed which up plus combined a our our new $XXX a debt permitted of year, with X.X% flow together stabilization under rate achieves expect formula XX% investment support more the of interest of the reduction future,

pension with plan this make to plans. into contributions we as and additional our flexibility we to provides voluntary allocation capital assess legislation next make contributions Although discretion us year, the

As discussions Steve Department begun Justice. the of mentioned, have with

resolution it believe our investigation. in is has contingency that connection with We we loss of will financial reflected a consolidated statements. no this a been in incur probable While

we yet the estimate cannot amount. reasonably However,

related electric the a as Finally, could American tax minimum provision potential positive the which the grid. in includes increase its opportunities tax, slightly tax Clearly, cash current infrastructure last Jobs us early President infusion and and very be as proposed it's form. process, implemented energy corporate in but the month, to vehicle into Biden well if for proposed Plan, the introduced corporate

year Our systems. strong enhance to solid the our transmission first fundamentals quarter continued results and and our of and reflect modernize success and operating expectations for our distribution the strategies

customers are opportunities unlocking move time. and your on As Thank shareholders, value employees. our company we laser-focused for for forward, our and we you increasing

to open let's Now Q&A. the call your

Operator

Thank you.

Michael Instructions] first proceed Lapides [Operator conducting be with the with Sachs. comes Our your question-and-answer session. from question Goldman a we'll line Now Please of question.

Michael Lapides

my Thank taking everybody. for probably quickly you Real Hey, for this question. one's John.

Your year the in passed prior of pension guidance and sizable in impacts this pretty and that act assume XXXX pension requirements March beyond. funding disclosure before

lockstep? longer no making requirements those funding If the down equity you're why wouldn't pension requirements, go in funding

Jon Taylor

know, Well, you least the achieving question. I perspective, FFO equity part debt an you is appreciate of, At our know, to XX%. XX% of my from important Michael targeted the to

used obligations, know you pay down to, not be pay debt. other would sheet it's it down to balance if used related know, you So pension

So to XX% sheet, improving it balance that. key to of laser-focused equity getting on up we and are that is the a XX% component

Michael Lapides

to recognize, saying to than requirements, need we're is, higher - like hey, other reduce levered group, words, but not peer make de-lever we having play saving you're the what looking but our In the cash more basically you're pension for let's the risk to you de-lever, you're profile de-lever from ratings

Jon Taylor

That's right, that's right -

Michael Lapides

Okay, - super

Jon Taylor

right. That's

If acceptable we're this at to going a to to want you not XX.X% that's forward. you have the to plan and debt, FFO year, to look XX% XX% We improve be then to around know, us. be going where for at XX% somewhere

Michael Lapides

it, ton of Got a makes sense.

detail EV is, guidance little distribution Or that and New aligning in bit all What segment, in know filed that the meaning, of follow-up. these these I'm projects, not a the know, cetera. on struggling - know, project upside guidance? are say and which Pennsylvania green you - in on are in in that what's guidance? are to CapEx you what's of distribution the great one's one you or Y'all small guidance for actually Okay, things Jersey you kind are or EC the a understand state-by-state, your detail CapEx projects lot et meaning, of gave the with potential

Jon Taylor

are forecast would in So that of we've been currently. CapEx the not made our that approved have not filings tell you some I Michael, that

do Grid in into have that's than to be Mod XXXX in items going So that X program. assume roll we that we programs. What those that 'XX, approved upside have would been a CapEx think forecast our to I we're are and the other now

item there So would be that not only the has been think in our forecast that I that's approved. out

Michael Lapides

Meaning that -

Steve Strah

- in Michael sorry, that's I'm that's Ohio. Ohio, and Mod X Grid Yeah, is that's in

Michael Lapides

okay. Thank Much appreciated. Right, guys. you,

Steve Strah

Thanks, Michael.

Operator

you. Thank

Our from Please question. of Fleishman next with Wolfe question proceed Steve with comes line Research. your

Steve Fleishman

morning. Good Thanks. hi. Yeah,

a comments updates. regulatory your So on Ohio just question on

to So resolve Ohio. issues engaged talked call settlement then goal pursuing on regulatory the issues, last correct? a talks all call in And sounds forward. you comprehensively you looking about backward on Is officially it kind in now of like SEET that this both and are

Eileen Mikkelsen

Mikkelsen, Vice question. good It's Thanks, Steve President Yeah, your morning. Eileen I'm of Rates and for Regulatory Affairs.

know, these taking the actions were an move to taken that, issues appreciation the that well prospective, other also, face. Ohio approach appreciation know both this We parties the we issues have our that currently transparent meeting about XXst many, you SEET of Ohio, expressed represented engaged that the in the range with represent of really of we companies in Quadrennial a pending by many we today broad I very March us are matters. Ohio in in past talking about Review, parties quarter, open, those We groups. in historical in of customer as kind an well think the of first say course And constructive all folks our of discussion, attended, that this, are that the on And past a generally the I discussions cases, for to for in range and the course of whole as matters. resolving generally would broad-based you to Ohio. that discussions, had

Steve Fleishman

Okay.

the branch it does to know, and - talk way, put the put least parties discussions you are parties, it have another these to you the willing key to olive appear that out So, at

Eileen Mikkelsen

- that's Yeah

Steve Fleishman

in these settlement issues? of various Are you talks

Steve Strah

discussions. to running end, talked of engagement. good us level had want right, is But know, process know, sensitive we that to our a call, you tour, common Steve, can we Yeah, think felt the the as work part we a ongoing the be to I as understand ground. I as listen through of on about prior often at just committed constituencies, the for team to. to to And is find you this listening where And just we various had

Steve Fleishman

Okay. of And going to that I the continue this is different any cases? that's something of the dockets this something kind something those it's on been don't - those cases? for up dockets that's is of going because all is So outside - the in think to come

Eileen Mikkelsen

parties posted are matters to specific I be will think the to that resolution related conversations But continue resolution outside dockets, those conversations would at formal dockets. the if there's of this ultimately that the with point. of proceedings

Steve Fleishman

really if One thanks. on of if things the are you might thing for the reviewing objectives sales? would would be And less for fit equity what asset be strategic is you maybe looking other talk that, you your I the you that about question and asset reviewing that, you that that sales. you're could would only would lower just just just be talk that like - with at like cost, Great, reviewing are about Jon, alternatives other think that can maybe dilution or there be that

Jon Taylor

different Duke this earlier way common our about transaction equity equity have sheet year. than I announced I think it, something instance, in guess Steve. know, many I be more issuing mean you Indiana the priorities. was like that would capital alternatives the Yeah, line to Obviously, are with accretive raise for it much balance would that to there be

a equity You needs. at yes, long-term on range to we're given focus But looking value of customer growth. our options know, our focus maximize

Steve Fleishman

great. you much. Okay, Thank very

Jon Taylor

Thanks, Steve.

Operator

Thank you.

your comes with question question. proceed of with next Dumolin-Smith Please America. from of line Bank Julien Our

Julien Dumolin-Smith

the the questions. can time last couple follow-up morning, if and I opportunity. Perhaps, Hey, for of the on to Thanks everyone. good

engaging in test to what the of SEET I the could here? instance? you're extent additional First, can any success about appreciated. mean, how you on to I would resolution expect with could elaborate more you be provided color this we resolution a Ohio? would be know expect just Any little bit parameters some out more than you stakeholders. But over what for

- As well

Eileen Mikkelsen

Yeah, thanks -

Julien Dumolin-Smith

As whether a just the prerequisite? explicitly. ask I not. deferred prosecution to want But agreement that is I suspect

Eileen Mikkelsen

a the settlement, to to kind and then parties, the cases. of then addressed discussions, of spent with all said, to address regulatory respect to meeting, the the interest the to our respect to the it I'm listening we and on and the exercise, Quadrennial engaged Steve listening them SEET deferred I'll necessarily Exactly a prosecution are as and what first others areas with of we're in really we agreement. beyond But Review range defer issues were just going question broad

to we as are trying we that it's other the going But be the being early to too continue play to and important can committed as open call out, process will what to a So the and to process, parties. we're throughout listening to little outcome react to transparent what's let as be.

Steve Strah

your moment on even. second in later, that's prosecution I resolution Justice, company. way that right Ohio. developments the for from Department their are of now. with I'm today spoke But, point, our we let of a potential anything question you development know, I'll to constructive like deferred for the on discussions just the because a Julien, And that the - just suspect me in That agreement doing viewing I'd get it spend separate Yeah, the we're positive

Justice. encouraged certainly it all. cooperate going Department to process fully encouraged I continue get of that details just that not on with I'm very dialogue I can't really at and and of the fine for And by that just be timing, at say do As want the potential all. want to speculate of of to we though, for I'm are the I or ahead our penalties to And respectful

Julien Dumolin-Smith

understood. Okay,

annually shouldn't address about beyond FFO FFO last you back already $XXX sizably million? talk debt to If that flat, off I $XXX the adjusted get now, think prospectively, where clarify any can the want were the here versus you through relatively delta your thinking $XXX when metrics? I Mike talk you need where alternatives just here to debt in what's being about on metrics the about, million question, that understand starting or equity want know, of equity you're credit plan you already itself in mind, to to position stand the this you you to 'XX incremental to responding then today FFO and you of increase in XXXX of because and million you where don't I

Jon Taylor

Julien, assume of relatively debt say billion Well, to up would levels you that, remaining flat equity. our I $X.X know, adjusted

formula plan CapEx XX% going see to three if it slight years if benefits on part to was XXXX. that's of back. I at your is FFO debt end and industrial adjusted So next the - relatively our load And of over where rates, program commercial come perspective, from you're some keep, you then the to you're know, of mean, two or the flat as an

cash flow at going JCP&L rate the that's to this end year, to next of to implementing rates at that's the have the be and end positive be new year year. We of case this going

if to that going the And you'll keep up be really years. that naturally, $XXX grow into $XXX that's driving our So XX%. a next XX% few million incremental we to for year debt of and to FFO million, levels adjusted

Julien Dumolin-Smith

come business, needs said And otherwise. to Right, back thinking organic specific but already addressing on track be. equity any to with - should out differently, status the that not funding to get need be any might your quo, we incremental requirements PPA you're through or of metrics as rather about incremental

Jon Taylor

Correct. Correct.

Julien Dumolin-Smith

guys. great clarifying day. Have you Thank a Excellent. for that,

Steve Strah

Julien. Thanks,

Operator

Thank you.

from of Our comes with question. Jeremy line proceed Tonet with next J.P. question Please your Morgan.

Jeremy Tonet

good Hi, morning.

Steve Strah

Good morning.

Jeremy Tonet

Just fruition you stage, change proposed right were at the know the Biden you opportunities point this this but broadly for wondering do plan and at kind bit what see FE as infrastructure plan I to the know, and want over come early here, the with if of can if now? innings just to a could things still you kind granted to shape gears very at shift time, of

Steve Strah

Well potential there's very I company think our clearly. for

company a the form a in a of course, may five-state energy, diversity transition next certainly the it being of for fully that into area positioned we have be to I and think in benefit administration takes our consideration I well company cleaner transmission through come as in with impacted, assets will the steps. and believe we're well there's other have, whatever that regulated goes will that distribution We factors necessary that.

want United some thoughtful the transition plan. progressing embedded issue we to of. And, all reliability look, States in very You do are climate this for the have to economic to not part. stay know, we going mindful in of have our go impacts planning is There that potential forward impacts, the we to away and and T&D systems a the is have

reduction goal the already XXXX. year levels in And reduction at XX% we overall look neutrality by goals, that. the achieving are you on have XXXX you out at there gas in know, look As have you carbon a in placed a goal from and of goals, - our greenhouse we we ESG a And carbon way XXXX. our to

or it what statement consistent a I our Biden of there's I our to on-the-ground to take think So, proposed. work a the But from strategy is lot improvements. you policy plan administration do goal, with business to know, think

Jeremy Tonet

developments just on that FE that then it, that you to thoughts sense. the side, And happen? seems have what some wondering and like FERC. speaking could there's impacts could makes and that you was that, possibly Got RTO if does any there over provide there on turning to It adder if have broadly the

Eileen Mikkelsen

organizations. technical When FERC that in happy recognize, to the point Yeah, and in transmission occur with NOPR of participation out you. comment I issued, order important this really issue take a then scheduled point that to conference $X.XX basis to all If we for been XX savings maybe making, fact between our the would $X.XX to a respect transmission really, at that meeting impact, and shared of in rest transmission address the this basis incentive organizations at same also which comment, to that us has that, also incent total initiated September Supplemental to we question. a across Proposed action. with look performance that for period Thank through it's this mechanisms incentives puts think time, is related and But Supplemental given of I reply transmission RTO. Rulemaking it's FERC probably have on XXXX. quantify to to And is rate FERC Notice go just in

ROAs stay puts might some course, what we're going expect, as there's you and takes those to all on of of with and think may transmission I happen discussions. So very actively in engaged

Steve Strah

that's is transmission and important would I strategy. to add, I our just Yeah, think very Eileen business our excellent, obviously,

it, As to track but monitor enough is it's certainly. our $X.XX outlined, a throw we'll not the $X.XX concern obviously, off Eileen company to

we transmission the company which have should to, a to very and as more I large opportunities, as have stated we bit also distribution can impactful footprint this assets a multiple little advantage in We in development invest of diverse earlier, us. become a

Jeremy Tonet

helpful. at to treated, of where on could you instead issue reason sales have recent on an there if as at execute plan really would of and how expect any sale should of kind period asset if That's real of there kind is to I one, quick here. you if alternatives $XXX the equity looking assets takes a sooner it touched With Last equity sale? levels these do go given is more for that choose to year, that route? we the And front news regards million next you time

Jon Taylor

Well, I the of Duke we're a a trade share. reasons issuing multiple, like forward at think just common $XX take Jeremy, that. mean, it's I looking at you that's like equity one the Indiana if

those look an to have equity types when like do. of we you have And so at take you a options need

transaction. something you type of think I know, to that at, that's mean the reasons we are of I So similar one looking

Jeremy Tonet

really you. it, makes Got sense. helpful. that Thank That's

Operator

you. Thank

Morgan with Our Please of Stanley. next from line question question. Stephen proceed with Byrd comes your

Stephen Byrd

update. Thanks thorough for the really

entire for understand Just of governance, questions sort couple you're under revision On additional of a I me. approach. on your

could in of under bit I given you're wondered color review a limited unless you involvement add You the process, just more of a now? sort more sort little political mentioned premature if

Steve Strah

under you as revised thinking are activity in integrating our policy. said, we review, a Stephen, political terms Well, of it's formalizing

ceasing, interim, about the the that as example. for an we Committee. thought terms was important our in activity terms in Action talked to it So of actions that's of company revision. take currently XXX(c)(X)s our Political out did under disbursements necessary we that know, In giving I very The the no of, you

in and and I We increased in in talk in thinking we are we're compliance that's are define be could openness out, around that my political now. to more transparency going program to accountability see new customers that. as about sense any company that in deep revision the limited make involved for John help right get sit - employees that's it that of any together our to just And stakeholders. the sense about, And right our come would view our now. makes is, it taking to arena. breath, view current which putting Somerhalder we There'll what of I engage betterment the And way things a you'll will up down scope current a spoke really because that all for my in our stand but or example, of it just for involved

Stephen Byrd

And there's through. then for question significant finding investigation terms the of That's of been back other that Or just review going to color. in investigation? in me needed determining say helpful sort broadly of complete of work of complete everything that additional would just understanding you really, that you that just really internal the terms characterize as going Would one sort fact a kind through and happened? you've

John Somerhalder

John any investigation think know, call, last new I earnings is you is since material - good the has the not Somerhalder, this that, the issues. news, revealed good

now to proactive to, investigations. continue transitioning that government a you investigation cooperate know, that an from, with So investigation ongoing we will are know, you

occurring. transition that or So has occurred is

Stephen Byrd

Thank I very That's very much. you That's helpful. all had.

Operator

Thank you.

Our proceed comes question line Please question. from next Angie your with Storozynski Seaport of with Global Securities.

Angie Storozynski

Thank you.

that agreement seems of and again, negotiations. to like agreement, it's everybody issuing Steve, mentioned fair anticipation settlements. with are the what's So outcome DOJ Ohio. assessment Toledo. happening? seems a least of if Again, DOJ General guys you the Ohio then you is Attorney of of between wondering separation and DOJ JCP&L least And more at in waiting that just at well, a happening the It I'm potential in the with there a the as negotiations the standstill But like me, was it awaits what's

Steve Strah

more look lot with coordinate you going Angie, a that here that's the to in would of deal moving have to the find, way encouraging, a we cooperate activity view, at that we're work do is, lot to pieces have we extent, we're workstream I that's a the separate appropriately. know, have but I the it we And Well, we one fully to on. with DOJ, and in my certainly workstream. which Ohio, working that there, All have

of extent that way or pieces that others that way multiple for at that into And have, we again, integrate look the may may us. in the with are a through. it - And the I Taylor the to that. plan, influence all just the that have regard working not moving stable is, we're are Jon environment to we're pieces with would financing we've I We all success we once the markets. outlined all moving think The our had in we

best your question. that's I So my perhaps way approach to guess

Angie Storozynski

you are the thank FactBook disclosures additional And separately, the greatly greatly these appreciated. - - Okay. in for

I mentioned One is the distribution of includes, you things rate guys of there that, the that jurisdictions, your which in considering take, cases Ohio. you are all

So with mentioned intervenors issue state? discussed the a Ohio, filing different far, you've that how being the about case is in in distribution SEET as early rate

Eileen Mikkelsen

implemented case that distribution think Xst mentioned January of I this I starting that accretive to later year. our from rate we settlement, based actually cash want be folks Well, Jon this remind perspective - a JCP&L will year, yeah, how

beginning JCP&L formula procedures. year, rate to settlement, Xst transmission our transmission moved formula rates forward-looking of this assets uncontested last a we and subject remaining January hearing think week I to forward-looking our FERC approved settlement

Maryland ESP, in the three schedule on by for we're We companies Ohio end of our XXXX. by for the are XXXX. of Potomac our filed case scheduled to first of May rate to And which a have quarter file our Edison is

we are stack base be make up to when And judgments rate evaluating it that, about if would costs and cases. to so of kind how continually our seek appropriate beyond against revenues our

Angie Storozynski

you. thank Okay,

Steve Strah

Thanks, Angie.

Operator

you. Thank

with from question. comes line with question Chopra next Evercore your Please proceed ISI. Durgesh Our of

Durgesh Chopra

guys. my taking question for Hey, here. good Thanks morning,

weakness, a requirement? that sort working in something audit-driven Jon, clarify credit material wanted that you're agencies? driven something, sort of taking commentary, governance of front. that the Or with actions is your in of Just removal know, mentioned you tandem the on with by to you you're Is

Jon Taylor

Well, I would tell Taylor. you that, is Jon this

[Johns] call. the two have We [ph] on

you think, first that know, and if wants John the and important know I But be follow-up, is do the So compliance. we then it. tone top, weakness the the our, as steps piece that governance some around And can of to add, as I'll of to at around Somerhalder culture you remediated do around there's take the well. part material

I them around rating program. to do you a weaknesses, about think know, to what's agencies bit so broadly, do also, is So that with to the plans compliance the the make important little want we important But we more to the think, just you that's them. spoke material think the I I know, enhancements

John Somerhalder

the fourth and the that that that work quarter announce Yeah, you the indicate this a or auditor the Committee. plan the that us the know, in implement the to is John our on a yeah and those just very Q why Somerhalder, that will that, type folks We're with K That's we on deal the of recommendations as issues then high look and subcommittee on quarter the FactBook we as to - allow Audit we're we having best-in-class have issues are - to and that both the Those the priority if compliance recommendations those by related are to related number then earnings. in our ethics material putting compliance internal external things program. weakness. That's of but fourth of Pages with the pursuing of you material to follow-up of that, us. and our with important internal material time X to to deal set weakness subcommittee combination Jason compliance recommendations and allow we weakness - through a well anticipate remediate X, address will the file our our

Durgesh Chopra

Understood, thank you.

sort follow-up any Have of quick get rating standpoint constructive? quantitative remarks, but a touched boxes there of is that, roadmap sort and you in sort they a there you of terms take a to in sort your for to to information think this sort agencies to of need - effect? you from prepared of shared or of I you on qualitative need credit Just is or that the to with more check governance actions a

Jon Taylor

Durgesh now to institute that, right in to I working we're we've mean, know, going of want FactBook through that these you out compliance. governance I them. enhancements see, think the they're us laid and some around Yeah, with

some prepared disbursements spoke that controls detailed You we've know, we our in as as of maybe the of well remarks. around implemented that

those be we You we to of not again, know, prohibit to that issues. that would type the ensure issue control again or of of happen they happen the will type this that and type this culture of built have want types controls sure will that not that - the that structure, the culture issue

think those they'll of types So focused be issues. I on

Durgesh Chopra

Thanks time. Understood. Appreciate for the the guys. color,

Operator

you. Thank

proceed line Glenrock Our next question. your from comes with Please Paul question of with Patterson Associates.

Paul Patterson

Hey, good morning.

Steve Strah

morning. Good

Paul Patterson

$X.XX I Just us But again this. if and was through the looked I apologize sort the be it - a on decoupling, impact quarter. supposed just for was I what correctly was and on walk wondering the And it to the reading sort the of of? can years that like for you impact

Jon Taylor

up about Yeah, adjustment just quarter, there to an so the year, level. was so you decoupling in the true XXXX to if think Paul, decoupling first revenues last in first quarter implemented was the

a of piece So it. that was

of significant fairly the the piece were was that other very, mild. that it very fact in The was temperatures XXXX,

a on. lost the that not adjusted smaller that And collection pursuing the decoupling impact distribution and for the so the mild revenues the load. - input then and piece And temperatures we're - we on was

of up those that $X.XX, So - kind thing. made the it's that - $X.XX, that are $X.XX, like $X.XX components the kind of

in $X.XX a headwind into know, the the fourth we it'll took associated a you that. get charge forward think, when probably quarter, you'll all second obviously, of when headwind. reversing be then going we see And third $X.XX in that's and the I quarter, quarter then the

so And for that'll flip us.

Paul Patterson

Okay.

there then then how that on seems or statement be a of just this I of And - much less clear, And just part stuff, is in are wasn't not in great. I or permanent if terms Okay, clear that not - of pause financially the wasn't - of, of so, terms permanent kind to that distributing the guys policy that be just whether stuff. speaking you impact is the a more from And is was to a XXX(c)(X)s or the to back is the benefit - a And XXX(c)(X) not? than? implementing, perceived PAC

Steve Strah

I Paul, I'm put it, would the way sorry.

Paul Patterson

no No, I ahead, go please you that. for apologize

Steve Strah

is, company, community-based our there's a which under is you it to would you at decision organizations. you look review The when in way put can know, that with it, benefit component XXX(c)(X)s, it currently I help societal

component other that end political And look that's I the that it, The not participate of going of it spectrum. way is, certainly the at area period. are in, an to we

to not through, going will So as we contribute work to measure this forward our be XXX(c)(X)s.

Paul Patterson

And we when have economic what stuff sometimes, of any under this on there is impact - is all account, significant as we mentioning you, there is of Okay. could it a is depending number companies I've significant different that's seen that this into is take any - there result potential financial or benefit see a a still worth

Steve Strah

is, like in the which I'm would you we with forward helping look at it work I our The to would going I an live it. them. communities we're look, it part know, a large going of way Paul, at No, not our that look excellent in viewing continue be corporate way. the and in customers areas in the citizen and way giving levels that's And to

savings, be financial impact So, there a would or I large won't embedded say.

Paul Patterson

you. Awesome. Thanks Thank for clarification. the

Steve Strah

Paul. Thank Okay. you,

Operator

Thank you.

line the from your with Morningstar. Please of Fishman comes proceed morning with this question Charles final question. Our

Charles Fishman

occasionally the the maybe create the of some sheet investment? it balance enhancement for that the cleanup. it Thank all million fourth what difficulty] transmission $XXX third to one I Or investment do My that project that's you to Biden impact is cases? is reduction one the transmission? $XXX what it Or slowing is the for Hey, a above, choice? bottom or plan little just in have guess regulated difficulty]. and - Or found be, you some your see want bearing on range is opportunities forecasted would [technical on [technical or just you the million of lowered transmission, what do specific? of Is with more down clarity question the could question of

Jon Taylor

this Charles, is Jon. Yeah.

So impact transmission that the that we transform the the we was to you're program more lower FE out, programs structure and look adjust transmission that company. overall Forward with of efficient as that as will some in our we're mainly associated some right, did cost CapEx become rolling of we

the you know, CapEx, and consider, we once Department you ramping investigation clarity will We around outcomes. know, of up Justice get

of the we with ramp bottom those future of give the So done know, little bit more could to why we capital, get up that's if a money. kind of end us range we took you it flexibility wanted in off years less work to

Charles Fishman

it, the X.X the year, Got lowering this so I range million to project okay. stuff? understand is X.X, specific $XXX that

Jon Taylor

not projects So little with a vendor it decided health project had. - but modeling. new and it We we've at looked around a from run we our associated it to bit through necessarily it's asset is process specific, contracts some some of the is restructuring health back pull until perspective that

Charles Fishman

you. real That's helpful. Excellent, great. Okay, all I Thank have.

Operator

to Thank the turn final you. question-and-answer I'll comments. session. concludes Strah for gentlemen, Mr. Ladies our any back and that floor

Steve Strah

us thank to and Thank I'd your support. you. today being like for with everyone continued

to shareholders. can to and talk is an we'll FirstEnergy soon - And hope again. and all Our committed healthy everyone our that industry-leader leadership stays I transforming team into exceptional And Thanks. customers deliver to transform you value safe.

Operator

you. concludes Thank This conference. today's

this may your Thank your disconnect you lines participation. You at for time.

FirstEnergy (FE) 23 Apr 212021 Q1 Earnings call transcript