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Hello, and welcome to FirstEnergy Corp.'s First Quarter 2026 Earnings Call. As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to Karen Sagot. Vice President of Investor Relations. Please go ahead, Karen.

Thank you. Good morning, everyone, and welcome to FirstEnergy's First Quarter 2026 Earnings Review. Our earnings release, presentation and related financial information are available on our website at firstenergycorp.com/ir.

Today's discussion will include the use of non-GAAP financial measures and forward-looking statements, which are subject to risks and uncertainties. Factors discussed in our earnings news release during today's conference call, and in our SEC filings, could cause our actual results to differ materially from these forward-looking statements. The appendix of today's presentation includes supplemental information, along with the reconciliation of non-GAAP financial measures. Please read our cautionary statement and discussion of non-GAAP financial measures on Slides 2 and 3 of the presentation.

Our Chairman, President and Chief Executive Officer, Brian Tierney, will lead our call today, and he will be joined by Jon Taylor, our Senior Vice President and Chief Financial Officer. Now it's my pleasure to turn the call over to Brian.

Thank you, Karen. Good morning, everyone. Thank you for joining us today. We are off to a solid start this year with first quarter core earnings 7.5% above last year, reflecting our customer-focused investment plan and strong financial discipline. We are on track for a successful year with expected results in line with our 2026 earnings guidance range of $2.62 to $2.82 per share and our long-term outlook remains strong.

The team executed extremely well in the first quarter despite numerous storms that rolled through our service territory. Our employees demonstrated a strong commitment to our customers by their performance safely restoring power.

What I observed during the first three months of this year further strengthens my commitment to our strategic direction. We are investing in our electric system to improve reliability, resiliency and the customer experience, listening and responding to our communities and investing in our people to be safe, well-trained and productive. By doing these things, we improve the well-being of our customers, our communities and our teammates and provide a strong value proposition to investors.

Over the last three years, we have fundamentally transformed FirstEnergy. We sharpened our strategic focus and strengthened our alignment around our core values. I am pleased to share with you that we have recently completed a couple of key hires, further strengthening our leadership team. I am pleased to announce Chris Beam as our new President of West Virginia and Maryland. Chris replaces Jim Myers, who retired after 40 years of remarkable service. I'm also pleased to announce that Dan Puscas has agreed to serve as our Chief Information Officer after serving on an interim basis for the last six months. Both Chris and Dan bring deep technical, industry and leadership experience to the executive team.

At the core of our strategy is improving the service we provide to customers. Each of our business units are working with customers, elected officials and regulators to prioritize investments for local needs. Collaboration with our key stakeholders drives alignment and better outcomes for customers and better results for our company. You see this in action across our footprint, and is a key reason why we are positioned for long-term success.

Our investment plans focus on fundamentals, addressing aging infrastructure, reducing operational risk and building more capacity to serve growing customer demand. For instance, in Pennsylvania, we are accelerating investments under the long-term infrastructure improvement plan that we expect will significantly improve reliability particularly across the rural portions of our service territory. In West Virginia, we see a compelling opportunity to support economic development with new generation, which is strongly aligned with the state's energy goals. And our transmission investment plan remains a key focus, given the location and critical nature of our system in PJM.

Across the company, our business units are executing against tailored investment plans and regulatory strategies that are focused on improving the customer experience.

Affordability remains central to how we lead the company. On average, our rates are 20% below our in-state peers with the T&D component of our bill being 35% below those peer companies. We are proactively having constructive conversations with elected officials and regulators in each of our states to look for ways to address questions around affordability for our customers. The main driver behind the affordability conversation today is a demand and supply imbalance from a capacity market construct that is not attracting any significant incremental generation.

Our conversations with key stakeholders are about how we get more dispatchable generation at a fair price while still protecting our existing customers. We believe that PJM's proposed Reliability Backstop Procurement auction could be a step in the right direction, although there is a significant amount of detail needed to ensure the right amount of dispatchable generation is procured at affordable rates. Additionally, we still have the capacity auction cap in place for the next two auctions through 2030. These were initially negotiated by Governor Shapiro on behalf of all PJM customers.

We are also discussing what we can control through operational efficiencies, alternative distribution rate designs and innovative solutions on other costs on the customer's bill. Since 2022, we have reduced our base O&M by more than $200 million or 15%, and we are continuing to look for ways to work smarter and more efficiently. We are also exploring other ways to protect our customers. For instance, in Pennsylvania, we recently filed an innovative proposal to reform our default service program protecting customers from higher supply rates on variable price contracts. Had this mechanism been in place in 2025, customers would have saved $80 million. We want to protect them from paying higher prices in the future.

Customer affordability continues to be a significant part of our regulatory strategy, and we are proactively working with stakeholders to balance affordability and the critical investments required to ensure a safe and reliable electric system.

Looking ahead, the rapidly evolving energy landscape will continue to require new transmission and generation investments that are above our current plan. Substantial investments in our transmission system are needed to ensure we proactively address aging equipment before it fails. We believe that new transmission capacity is a critical component to energy dominance and economic development. We continue to see ongoing opportunities with regional transmission planning investments through the PJM Open Window process. Our scale, planning expertise and strategic location position us well for these types of opportunities.

Over the last four years, we have been awarded more than $5 billion in competitive projects, and we expect more opportunity in future solicitations.

Turning to Generation. In West Virginia, in addition to the recently filed CPCN for our 1.2-gigawatt natural gas facility, our data center demand in the state continues to grow with approximately 1.8 gigawatts of highly credible projects, an increase of 50% since February. Beyond that, we are having constructive dialogue with prospective customers representing over 6 gigawatts of load in West Virginia. This data center growth would support incremental generation and economic development which is strongly aligned with Governor Morrisey's 50 gigawatts by 2050 initiative and a significant priority for FirstEnergy.

We are prepared to move forward with incremental generation projects as additional large loads enter our pipeline and become contracted, subject to regulatory approval. Our data center interest continues to grow beyond just West Virginia. Approximately 4 gigawatts of our total pipeline is in final contract negotiations and are expected to become contracted with the construction agreement within this quarter, nearly doubling our contracted demand. This is an exciting time for our industry and our company. We are confident in our customer-focused strategy and our operating model that aligns with key stakeholders and local needs.

Our focus is to drive great outcomes for our customers, communities and teammates which will result in a strong value proposition for investors.

Now I'll turn the call over to Jon to discuss our financial results and regulatory updates.

Thanks, Brian, and good morning, everyone. Yesterday, we reported first quarter GAAP earnings of $0.70 a share against $0.62 a share in the first quarter of 2025. Core earnings were $0.72 a share, increasing 7.5% from $0.67 a share in Q1 of last year, with each of our regulated businesses reporting increases year-over-year. You can find more details on our results, including reconciliations for core earnings and the strategic and financial highlights document we posted to our IR website yesterday afternoon. .

Earnings growth largely reflects execution against our regulated investment strategy, with 75% of our capital program under a formula rate. In the quarter, Transmission Rate Base increased to 13% including a 19% increase at our integrated businesses and an 11% increase from our stand-alone transmission segment. Additionally, continuous improvement and innovation continue to be a focus of the management team, with our base O&M down close to 5% in the quarter. Automation increasing the speed of enhanced data transparency for better and more timely decision-making and technology enhancements are pillars to our cost management program. These innovative solutions are making us more efficient and provide better insight into information so we can make the best cost-effective decision for our customers.

In fact, in each of our base rate filings planned for this year, our comparable base O&M is lower than what was approved in the last rate case, demonstrating our commitment to continuous improvement and innovation, allowing us to minimize rate impacts to customers.

Our overall financial performance resulted in a consolidated return on equity of 9.8% on a trailing 12-month basis and continues to be in line with our targeted returns. Our investment program continues to be on track with $1.4 billion of customer-focused investments in the quarter, representing a 33% increase compared to the first quarter of 2025, with nearly all of the increase in formula rate investment programs that are focused on improving the reliability and resiliency of the electric grid.

Overall, we are very pleased with our performance and confident in the path ahead.

In late March, Moody's raised its outlook on FirstEnergy's senior unsecured rating to positive resulting from our improved credit profile as well as our low risk rate regulated T&D operations. Also in March, we successfully completed an $850 million debt offering for FirstEnergy, Pennsylvania with an average coupon of 4.4%. We were pleased with the strong interest in this deal as it was more than 5x oversubscribed. We also successfully completed planned debt offerings for two of our transmission companies, MAIT and ATSI with issuances of $250 million and $175 million, respectively.

For the rest of the year, our financing plan includes $1.7 billion in subsidiary debt offerings and a modest amount of common equity. As we discussed previously, our current 5-year plan includes up to $2 billion of equity or equity-like securities, including $100 million annually from our long-term employee benefit programs, with expected annual common equity issuances at approximately 1% of current market capitalization.

Turning to regulatory updates. In West Virginia, hearings for our proposed 1.2 gigawatt combined cycle gas generating facility are scheduled for mid-July. We're pleased with the time line for this proceeding and anticipate approval for the project in the second half of the year. We are simultaneously working through contracts for major equipment, EPC and gas supply with all of us work on track. Upon regulatory approval, we expect to be in a position to execute these agreements and we'll update our financial plan, reflecting this investment.

Also in West Virginia, we plan to file our base rate case in May, reflecting a $1 billion increase in rate base since our last case in 2023. Based on our filing schedule, we expect new rates effective in the first quarter of 2027. In Ohio, on April 22, we made the prefiling notices for our 3-year rate plan, which will be formally filed next month. Since our last rate case filing in 2024, we have invested more than $1.3 billion in Ohio's distribution system. As part of our filing, we are proposing to increase our investments by nearly 15% to approximately $800 million annually to focus on improving reliability for our customers. Proposed customer bill impacts are less than 3% each year, and we expect new rates to go into effect mid-2027.

In Pennsylvania, as of April, our approved infrastructure investment program is now being recovered through the distribution system improvement charge, which supports recovery of nearly 50% of FirstEnergy, Pennsylvania's capital investment program. This capital program and related surcharge are important tools to ensure we meet our customer commitments from our last base rate case in 2024.

And finally, PJM recently opened the planning window for 2026. We anticipate the Open Window will address needs in a few areas, including portions of our system. The PJM Board is expected to approve projects in the first quarter of next year.

We are off to a strong start this year. Our capital investments supported by our constructive regulatory frameworks and strong financial discipline are improving the customer experience and will continue to provide solid regulated returns to our investors. We are reaffirming this year's capital investment plan of $6 billion and our core earnings guidance range of $2.62 a share to $2.82 a share, with most of the remaining earnings growth compared to 2025, materializing in the second half of the year.

We are also reaffirming our long-term core earnings CAGR of 6% to 8% through 2030 and targeting near the top end of that range, with growth based off our 2026 guidance midpoint of $2.72 a share. We're confident in our outlook for this year and beyond, and we're looking forward to the incremental opportunities ahead.

Now I'll open the call to your Q&A.

[Operator Instructions] Our first question comes from the line of Shar Pourreza with Wells Fargo.

Obviously, lots of upside there on data centers around your systems. The messaging is getting more and more constructive there. But maybe just focusing on comments centered on West Virginia, you highlight 6 gigawatts of load there, incremental generation that's needed. Could we just get a sense on the timing of the spend, your turbine queue status for the incremental generation? And maybe just how that should affect or impact the profile of the CAGR since you're already growing near the higher end.

Yes. So let me start with the queue of our turbines. We're on track to receive delivery of equipment to be able to be online in 2031, with the power plant. Everything is proceeding according to plan there. West Virginia is a state that is open for business, not just for data centers, but for everything else. And being led by Governor Morrisey, who's saying we want 50 gigawatts by 2050. And so it's a place where we're looking to invest to meet that demand and to attract that demand. So disproportionately, data centers are moving to West Virginia because of its open for business stance, and we're happy to be investing into that. I'll ask Jon to comment on what things -- timing of spend and what that might mean to our growth.

Yes, Shar. So we anticipate we'll get approval of the existing application in the second half of the year. If I had to guess, it's probably going to be early in the fourth quarter. What we've told people is, upon approval, rate base growth would increase from just over 10% to just over 11%. And obviously, we'll be very focused on translating rate base growth into earnings growth. So -- more to come on that. We'll update the plan as soon as practical after approval, but we're really excited about this opportunity as well as the opportunities that are in West Virginia associated with the additional data center demand.

Got it. Perfect. And then just lastly, Brian, I mean just the affordability rhetoric in Pennsylvania, I mean, the governor's tone and one of your peers obviously recently pulled its rate case. Can we just get a sense on how you're thinking about the political backdrop, the rate case timing? I mean can you just invest in Pennsylvania through the LTIP program and the rider, can you stay out further until the affordability concerns are kind of more muted?

Yes. So on these affordability issues, I think it's really important that we stay close to our executives, our regulators and our customers on the issue and talking about what's impacting the affordability. So I was just down in Philadelphia last month and met with Governor Shapiro and talked about these issues. He's extremely knowledgeable on energy issues and plugged into what's driving the cost. I also mentioned in our last rate case and our rates just went in effective there a year ago, first quarter of 2025.

The main issues there were reliability and investment in the state. And John Hawkins is addressing those issues every day, making sure that we're making the required investment in Pennsylvania and driving improvement in reliability. So since 2024 in Pennsylvania, our customer average interruption duration is down 27 minutes. So the things that were important in the most recent rate case, we're addressing and we're doing and making happen. And in terms of affordability, we're staying in touch with people and talking to people like Governor Shapiro, Governor Sherrill in New Jersey and making sure there will be no surprises in any of our states when we come in for a rate case.

Our next question comes from the line of Nick Campanella with Barclays.

I wanted to follow up on the discussion you were having on West Virginia. And I'm just kind of going back to some of the comments in your prepared about exploring ways to kind of protect customers and drive economic growth at the same time. It seems like there's a lot of interest in Virginia with the 6-gigawatt backlog you highlighted. And I know we'll figure out what happens with the CPCN and the first gigawatt, which is really more IRP driven. But just what are kind of the frameworks that we should be thinking about to facilitate the next phase of load growth in the state? Do you need to file a separate tariff? And just since you're vertically integrated, are there other models kind of across the sector that you think are working well that you would be interested in replicating in West Virginia?

Yes. So thanks for that, Nick. I think the most important thing is that when you look at data center developers, hyperscalers, there's been somewhat of a political pushback to data center development and the impact in affordability and cost. And I think in response to that, the hyperscalers, data center developers are taking a stance of, we want to make darn sure we're paying our fair share, our full fair share for everything that we are consuming in the energy landscape. And so when we're talking to these folks and negotiating with them, they are coming from a stance of, we're paying for what we're taking, whether it's transmission, generation, land. And in some states like Michigan, I saw Jeff Blau on CNBC earlier this week, talking about something they're doing in Michigan, even lowering electricity rates for existing customers by some development that they're doing in places like Michigan. I think the models are out there and the smart things for us to do are replicate the places where these things have worked well rather than just stopping development.

And I think if we work with stakeholders in West Virginia and other states, if we're transparent about who's bearing what costs and if there's a net positive to customers in the state, those are models that we should adopt and develop and continue to impact energy dominance and economic development.

And then I mean just one follow-up I had is just as we layer in some of the additional capital to the plan, just how you're thinking about the funding and financing mix. And yes, maybe I'll leave that there.

Yes, Nick, this is Jon. So as we talked about before, specifically on the West Virginia generation investment, if we get the AFUDC cash recovery, that will help fund a portion of the investment. So we expect up to about 35% of that investment to be funded with new equity. And as we layer new investments into the plan, I don't anticipate it to exceed that amount.

Our next question comes from the line of Steve Fleishman with Wolfe Research.

Sorry, probably going to hit the same topics that have already been hit to some degree. So just in Pennsylvania, first, the -- so we had Shapiro's comments early in the year, then we see unanimous -- pretty much unanimous settlement with PPL still to be approved. And we have this reaction to go filing a case and pulling it, although I think they did file it kind of earlier than normal. So just maybe you could just take these different pieces and what's the takeaway? Is it just -- I think you're in a stay out. So I assume you're not going to file early out of the stay out. Is that really a lot of the issue here or be curious your thoughts.

Like I don't think we should read something into Pennsylvania from what's recently happened. Like we view it as a place that wants our development, wants increased investment, wants to improve the customer experience, but is also cognizant of the affordability issue, like Governor Shapiro is really thoughtful on these energy issues, and he saved customers and PJM billions of dollars from the caps he negotiated. So he's not some person who wants to shut down investment or stop economic development in the state of Pennsylvania. And so we're proceeding with our investment plans.

We're happy with our ability to invest there and our returns. And we're being cognizant of the affordability issue as the Governor would expect us to be, and our customers would expect us to be. And that's true in the state of Pennsylvania, and it's true in all of our states. And I think the key issue is engagement with the executives in our states, with the regulators, with the legislators. And like I said, I met with Governor Shapiro last month in Philadelphia, and will continue to meet with him and talk about these issues that are important to our customers in Pennsylvania and all of our states. It's about engagement and transparency, and we're going to keep doing that in Pennsylvania, in all of our states. It's part of our job. It's important that we do that on behalf of our customers.

Okay. That makes a lot of sense. So -- and then just back to West Virginia, I know you're finalizing a lot of these contracts for the power plant and I think the initial numbers was kind of -- I don't know, it goes back, I think, about a year. So just any sense of kind of where the final costing kind of ends up on it?

Yes, we're still confident in our estimates of about $2.5 billion for the plant. That's what we filed. We had some contingencies in there, of course, let there be no doubt. It's a seller's market when you're talking about turbines and the like. And I think the sellers need to be thoughtful about how much they're going to squeeze that pricing because that goes to the affordability issue and there are political implications related to that.

And I think people like governors and legislators and others are going to be looking at the equipment suppliers and saying, "Hey, you're impacting the affordability to our customers and your profitability and your squeeze on people looking to have energy dominance in the United States need to be measured rather than running free." And so we're confident in the numbers that we have and confident that our partners will be thoughtful about any price increases they try to pass through in a seller's market.

I guess they might have a lot more business to come afterward to be thinking about in West Virginia. So okay.

Yes, we -- that's a good point, Steve. We'd love to be a repeat customer -- and Steve, we'll do that with people that are long-term partners to us, and we'll be reevaluating that as we go forward. So thank you.

Our next question comes from the line of Jeremy Tonet with JPMorgan.

I'll try not to ask on Pennsylvania here. Just maybe if you could turn towards transmission in the PJM Open Window here. Just wondering any incremental thoughts you might be able to share on what the scope of the opportunity set is for you? Or just any other color in how you feel about that process at this point?

So Jeremy, I think looking at past performance as an indicator for the future. $5 billion that we've been able to secure over the last four years. We've changed how we've done things from doing everything by ourselves to partnering with some others where we think some of our neighbors and us might come up with a better solution than each of us doing it on our own. And we've changed things to be more competitive as we've gone forward. So our business model continues to evolve in this competitive landscape.

We think that benefits our customers in terms of affordability. We think it offers better reliability and resiliency solutions. And so we'll continue to develop our business plan under Mark Mroczynski, who's leading that effort for us, but we've been pleased with the incremental investment we've been able to secure in the competitive process and are confident that we'll be able to have similar success in the future.

Yes, Jeremy, this is Jon. The only thing I would add to that is if you think about our transmission CapEx plan, 80% to 85% of it is not the competitive projects. It's just the existing work and the investments that are needed on our existing system. And that will be a continuing theme for us just given where our system is situated, the age of the system. So as we move into the future, I anticipate additional transmission investments on the core system in addition to the regional transmission projects that you asked about.

Understood. That's helpful. And then just want to turn, I guess, to affordability. And I appreciate the disclosures and how FE appears to be among the lowest bills in all the states that you operate in. And just wondering how that resonates with local stakeholders there and particularly thinking about New Jersey, given the new administration there.

Yes. So let me start with New Jersey. We finished a rate case where rates went into effect the early part of '24. And the main issue there in that rate case was investment in New Jersey and improving reliability there. And so we started down the path of the clean energy corridor and enabling that we've shifted away from that to other type growth. I was in Lakewood, New Jersey earlier this month, the amount of growth is phenomenal. Since 2000 that city in New Jersey has more than doubled in population. And so a big part of the last rate case, investment in New Jersey, enabling growth and enabling reliability. And Doug Mokoid and his team, the President of JCP&L there are making that happen. And so we need to be cognizant of affordability.

As we go in for rate cases, Jon, I think for each of the rate cases that we're going into today, the O&M burden is less than it was in the last rate case. So we're talking the talk, walk in the walk on affordability, but also making the investments that are demanded from us by our customers and regulators and trying to strike that right balance.

Yes. And I would say, obviously, making improvements in reliability are important. We talked about Pennsylvania having a 20% improvement in outage duration. If you look at New Jersey, '24 to '25, it's a 16% improvement, which is about 47 -- or excuse me, 49 minutes of outage duration per customer. So pretty significant. So it's important that we continue with this plan, with this investment strategy because we're not where we need to be, but we're on the path to get there.

Got it. And just a quick follow-up there. Just wondering, in these conversations, do you see distinguishment as far as your bills being lower, lower wallet share than others in state? Is that being appreciated and differentiated in your thinking in conversations with others in the state?

I do, Jeremy. I think those are important facts to point out the idea of what the share of wallet is if our rates are increasing at a rate that's lower than inflation. Those are all important things for us to point out. But at the same time, we recognize that customers are being squeezed not just by our bills, but by things like gas bills, food bills, pharmaceuticals and other things. And so we do need to be cautious, aware, empathetic to those issues, but also point out what the facts are. And if our bills are lower, if we're increasing less than inflation, that means that the value we're delivering to our customers is increasing over the periods that we're talking about. So yes, those facts are really important.

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

Just one for me. You noted the impressive cost-cutting measures as a tool to help with affordability? If I heard you, Brian, I think you said O&M expenses were down 5% year-over-year and came in below the levels approved in the latest rate cases. Can you elaborate on that? Was that across all jurisdictions. Are those savings structural or ongoing? Or were they more onetime in nature, whether related to the weather and maybe lower run plant run times or something like that? Were these related to AI and automation? Or how do those cost savings, were they helpful or potentially harmful in terms of reliability? Any additional details would be helpful.

Yes. Andrew, so there's obviously a little bit of timing in each quarter that you go through in terms of when you incur maintenance work and maintenance activities. But we've been at this continuous improvement, cost management program for quite some time, and you're seeing sustainable benefits from the work that we've done historically really starting in 2022 to now. And so this is a lot of sustainable cost savings that are going to help us move into the future, and it's around moving from a more reactive historical performance decision-making process to a much more integrated analytical risk-based decision-making process using data and analytics to help us inform the decisions that we make to be much more efficient with our resources and where we deploy our resources, whether it be capital or O&M.

And so it's much more predictive, much more proactive decision-making that's really driving a lot of our cost management program. So I kind of view it as a much more sustainable part of the company moving forward.

And I also add to that, as we're -- have we changed our business model to focus on our five business units, we are shrinking our service core and increasing our business unit presence. So we're moving more of our customers' management and focus closer to the customer in each of those business units, and that's having the related operational success that we've talked about earlier in the call.

Okay. Safe to say you see opportunity for more?

Always. Always.

Our next question comes from the line of Ross Fowler with Bank of America.

Maybe we'll turn this to FERC for just a second. Obviously, you've got the NOPR out there, the colocated load order and the backstop procurement, so not a shortage of things going on. You obviously took this up to the D.C. circuit with a petition for review. So maybe can you sort of scope out the decision time line there? What you frame is the range of outcomes? Is this sort of an all or nothing, in your favor or not?

Yes. On a lot of this stuff, Ross, it's more to come, whether it's the NOPR or the other issue that you mentioned. And I think our biggest thing there is we think the large loads should pay their fair share, but we think it should be to the utility company, to the transmission provider who's providing the service and have the opportunity to earn a return on that. So it's not just you pay it, it's out of rate base and the utility operates something that they're not earning on.

We think it should be a model even similar to what you have in natural gas pipelines, where you have an open season and people sign up to contract with the pipeline company. But they are paying the pipeline company and the pipeline companies earning a return on their investment. So we don't think CIAC should be outside of that model for network improvements. We think that the large load should pay for their network improvements, but they should be paying the utility and the utility should be earning on their invested capital for that incremental investment to serve them.

Understood, Brian. And then on the backstop procurement, you kind of said you're evaluating the proposal there from PJM and there might be some things to do there. It's still too early to talk about that? Or are you still fleshing that out?

Still fleshing it out. But Ross, I think a large part of this is who pays and for what. And I'm not sure of PJM's value standing in between the people who are making the investment and the people who are paying for it. I just -- I don't see why PJM is a clearinghouse for any of that adds any value. I think that the people making the investment, the power plant developers and builders should contract directly with the end-use customers rather than having some middleman in between and then another middleman being the electric distribution companies.

The long and the short of deregulation was that customers bear the risk of capacity and energy markets. And customers have gotten the benefit of that for the last 20 years. And now it looks like prices are going to be higher. What I think we need to be careful about, whether it's the backstop or anything else in capacity and energy markets is customers for paying for something they're not getting. And that's exactly what's happening in today's capacity markets. People are paying for new capacity, and they're not getting new capacity. Existing capacity owners should get something that's reasonable, but not as high as new capacity. And so today, customers, residential customers are wasting their money in the PJM capacity markets, and that should stop.

I mean, certainly, Brian, we've contracted before, we can contract again. I don't know what difference it makes that PJM gets in the middle. It's bilateral contracts or bilateral contracts, right? I mean that's how that is, right?

Yes, the wrong people are going to end up paying with PJM in the middle. Like the whole idea of deregulation was that the utility companies are just wires companies and they don't take generation capacity and energy commodity risk. And I'll tell you, going forward, if we get the Phase 2, and I'll tell this to PJM and anyone else who listen, we are not going to sign contracts where our companies take commodity risk on generation and energy. It's not going to happen.

So Phase 2 has got some real hurdles to overcome. And if Phase 2 is going to work, they need to contract with us. And the way it's structured today, we're not signing contracts.

Yes. I mean, that's not your business model, right? Your business model is regulated wires, right?

And it's not what the legislators in four of our five states asked for. They said, "You don't do that. You're out of that business." And believe me, we listen to our legislators. We listen to our regulators and we respond accordingly.

Our next question comes from the line of Anthony Crowdell with Mizuho Securities. .

Just a quick one on Ross's question. Brian, you just talked about your view of the backstop auction, all the stress that it creates. Does the state regulators that you operate -- the states you are operating, does the regulators share that same view? Or any insight you can provide if the governors or the regulators share a similar view to how you're viewing what's going on right now in the capacity markets?

I think they absolutely do, Anthony. Look at the law that was just passed last summer here in Ohio, where the legislature took a very firm view of utilities cannot own generation and the market and the legislature took the view that the market will solve the problem and not the utilities. And so -- we heard that. We listened to that, and we're not going to own generation in Ohio, and we're going to let people contract with each other in whatever market they choose to contract in. But yes, Ohio just completely doubled down on that a year ago. So they're firmly in agreement with us.

And if you look across our deregulated states, everyone, but West Virginia, the markets are -- the legislation is clear that we don't own generation. And that is handled through markets and the utility provides T&D services and is not involved in the commodity. So yes, they're firmly in agreement with us.

Our final question this morning comes from the line of Carly Davenport with Goldman Sachs.

Maybe just to follow up on some of your comments on New Jersey earlier. I know you guys have been considering kind of the right timing to potentially file another rate case there. Any updated thoughts on what that could look like?

No. Look, I think given the Governor's executive orders and where we are in our rate case cycle, we'd be very, very thoughtful about when we move forward, and there would be no surprise to the Governor, the BPU or anyone else in the state of New Jersey when we do come in. But -- no, we just -- no surprises is our biggest mantra. And that won't happen. As a surprise, we'll come in at the right time. But the important thing in the last rate case, and I hope it's the important thing in the next rate case is, are we investing in New Jersey for economic development, for growth, and for reliability and balancing that with affordability. And that's our job, and we'll do that openly and transparently whenever we do come in for a rate case in New Jersey.

You're not a customer of ours there. Are you, Carly? .

I'm not at the moment, but I might be at some point, but that's really helpful. I appreciate that. And then maybe just one question on Maryland. I know you guys have the plans to file there soon as well. Just any impacts that you're looking out for from the Omnibus bill that was recently passed in Maryland just in terms of any risk around changes to the regulatory process on the back of the legislation.

Hey, Carly, this is Jon. It's kind of too early to tell right now. I mean we've historically used a historical test year in Maryland, but other components of the legislation, we're working our way through and we'll update our plan accordingly.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for joining. You may now disconnect your lines.

Hello, and welcome to FirstEnergy Corp.'s Fourth Quarter 2025 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Karen Sagot, Vice President of Investor Relations. Please go ahead, Karen.

Thank you. Good morning, everyone, and welcome to FirstEnergy's year-end 2025 Earnings Review. Our earnings release, presentation slides and related financial information are available on our website at firstenergycorp.com/ir. Today's discussion will include the use of non-GAAP financial measures and forward-looking statements which are subject to risks and uncertainties. Factors discussed in our earnings news release, during today's conference call and in our SEC filings, could cause our actual results to differ materially from these forward-looking statements. The appendix of today's presentation includes supplemental information, along with the reconciliation of non-GAAP financial measures.

Please read our cautionary statement and discussion of non-GAAP financial measures on Slides 2 and 3 of the presentation. Our Chairman, President and Chief Executive Officer, Brian Tierney, will lead our call today. He is joined by John Taylor, our Senior Vice President and Chief Financial Officer.

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

Thank you, Karen. Good morning, everyone. Thank you for joining us today and for your interest in FirstEnergy. 2025 was a transformative year for our company. We executed on our plan, achieved several important milestones and position FirstEnergy for long-term success in one of the most dynamic periods in our industry's history. We delivered strong financial results across all of our key metrics. We advanced key regulatory strategies in Ohio, and we reinforced our foundation for sustainable financial growth resulting in a positive rating [ action ] at S&P. In addition, we are announcing a $36 billion 5-year capital investment program focused on improving customer reliability and grid resiliency. This positions the company to deliver a core earnings per share compounded annual growth rate near the top end of 6% to 8% from 2026 to 2030.

We are also pursuing significant incremental investment opportunities over the planning horizon. These include new generation investments that will provide meaningful benefits to customers in West Virginia and additional regional transmission investments that are critical to maintaining grid stability. Today, we are reporting 2025 GAAP earnings of $1.77 per share compared to $1.70 per share in 2024. Core earnings were $2.55 per share, at the top end of our revised and increased guidance range for the year and an increase of 7.6% compared to 2024.

We deployed $5.6 billion in customer-focused capital investments in 2025, an increase of nearly 25% versus last year and approximately 12% higher than our original plan for the year. Our distribution reliability metrics improved 10% across the system compared to 2024. Notably, this includes significant year-over-year improvement in our New Jersey and Pennsylvania service territories, where we have commission approved investment programs. Finally, we declared quarterly dividends totaling $1.78 per share a 5% increase from 2024. This growth is consistent with our plan of providing a solid dividend yield and an attractive total shareholder return.

We are pleased with our performance in 2025, and we are committed to building on this success as we deliver on our long-term financial plan. Our $36 billion capital program represents a nearly 30% increase from our previous 5-year plan. It requires only modest amounts of equity to fund growth, which John will talk about later. This capital program was designed to a coordinated approach that aligns enterprise strategy with insights from our 5 business units. It addresses state-mandated policies and local needs and it reflects our commitment to affordability while meeting customer expectations for reliable service.

The updated plan includes $19 billion of total transmission investments across our stand-alone transmission and integrated segments, a 35% increase from our previous plan. Company-wide, we expect our updated investment plan to translate into 10% rate base growth over the planning period. Our strategy focused on prioritizing investments for our customers and supported by constructive regulatory jurisdictions positions us well to deliver a core earnings CAGR near the top end of 6% to 8% through 2030.

Turning to Slide 7. We see opportunities for incremental investments that will further support our customers in the region. This includes our planned generation investment in West Virginia. Last week, we filed our request for the 1.2 gigawatt combined cycle natural gas generating facility, which will be located in Maidsville, West Virginia. We ran the build own transfer RFP and considered that option against our self-build engineering, procurement and construction plan. From that analysis, we determined using an EPC approach is the most prudent and cost-effective solution for our West Virginia customers. We anticipate receiving approval in the second half of the year and we expect the new facility to be operational in 2031.

Once approved by the West Virginia Public Service Commission, we will include this $2.5 billion investment in our financial plan. This will increase our consolidated rate base CAGR from 10% to 11%. When we announced this investment last November, Governor Morrissey challenged us to do more. I accept that challenge. And with approval of this project, we will seek to add additional generation in the state to support growing data center activity.

Moving to Slide 8. We also see incremental opportunities in our transmission business. Our transmission operations are among the largest in PJM and encompass critical interconnections with strategic high-voltage corridors and will require ongoing investment to support load growth. We began our transmission investment program in 2014. Over the last 12 years, we've deployed $17 billion to replace aging equipment and upgrade the health of the system. This work has addressed about 1/3 of our transmission lines and major substation assets. Substantial investment will be required as approximately 70% of the lines and 30% of substation assets are expected to reach end of life over the next decade.

Additionally, we have an ongoing opportunity for growth associated with the regulatory required projects such as investments awarded to FirstEnergy as part of the most recent PJM open window process. Since 2022, our stand-alone transmission and integrated segments have been awarded approximately $5 billion in competitive transmission projects. Our ideally situated transmission system and our transmission planning expertise position us to continue our success with the competitive open window process. We expect the upcoming 2026 open window solicitation will be similar in scope and scale to what we have seen in the past years. We expect the PJM board to vote and approve the next round of projects in the first quarter of 2027. At that time, we will update our investment plan to include any awards.

Turning to Slide 9. As we make the necessary investments in a reliable and resilient grid that drives economic growth for our communities, we are actively addressing affordability. On average, we control just 32% of the total customer electric bill in our deregulated states. The generation component represents about 60% of the total bill. Across these states, our customer bills are approximately 20% below the in-state peer average and remain at or below 2.5% of our customers' share of wallet. In fact, with our capital plan by the time we get to 2030, our bills are expected to remain below the current rates of our in-state peers.

We're proud of the value we provide and affordability is top of mind. We're committed to doing what we can to manage customer bill impacts. This includes continued discipline and controllable costs which is reflected in our baseline O&M savings of 15% or over $200 million since 2022. We're also working with state regulators and leaders to identify opportunities to mitigate bill increases. We are advocating for initiatives to ensure generation supply better aligns with customer demand and we're reviewing all programs that can provide relief to customers.

In Ohio, a recent legislative change reduces property tax assessments for our utilities by about $100 million in 2027 which will have a positive impact on customer bills in our upcoming 3-year rate plan. As we make critical investments to provide reliable and resilient service, we are committed to ensuring our rates remain affordable. I am confident in our plan, our management team and our ability to deliver on our commitments. Our execution in 2025 was strong, and we are focused on continuing that momentum.

Now I'll turn the call over to John.

Thanks, Brian, and good morning, everyone. Today, I will review our financial accomplishments and results for 2025 and planned regulatory proceedings for 2026 but spend most of my time reviewing the expectations and key assumptions in our 5-year plan. As Brian mentioned, 2025 was a very important and successful year for FirstEnergy, where we delivered on key financial metrics, including core EPS, base O&M, capital investments and cash from operations. You can review more details about our results, including reconciliations for core earnings and business segment drivers and the strategic and financial highlights presentation that was posted to our IR website yesterday afternoon.

Core earnings for the year came in at $2.55 per share, which is close to 8% above our 2024 results and 2% above our original guidance midpoint of $2.50 per share. This was largely driven by new base rates and formula rate investments, residential customer demand that was 3% above 2024 levels and strong financial discipline in our operating expenses that allowed us to execute on significant additional maintenance work that was originally scheduled for future years. On a consolidated basis, our return on equity in 2025 was 9.8% on rate base of $27.8 billion versus 9.4% on $25.6 billion in 2024. Investments were $5.6 billion for the year, which are 25% above 2024 levels and 12% above plan. These include nearly 75% in formula rate investments with 50% in FERC-regulated transmission investments, where total FE-owned transmission rate base increased 11% year-over-year.

Our financing plan included cash from operations of $3.7 billion which was more than $800 million above 2024 levels, subsidiary debt issuances of $3.4 billion and a $2.5 billion convertible debt transaction in the second quarter. In November, we received constructive regulatory outcomes in Ohio, including in our 2024 base rate case, which paved the way for an upgrade from S&P to BBB flat at FE Corp on a senior unsecured basis. 2025 was a pivotal year for FirstEnergy in terms of delivering on our plan, and we remain focused on meeting our commitments to investors going forward.

Turning to our regulatory strategy. We plan to file traditional base rate cases later this year in both Maryland and West Virginia. In West Virginia, we plan to file in the second quarter to reflect a $1 billion increase in rate base since 2022. Our current rates are based on a rate base of $3.2 billion with an equity layer of 50% and an allowed ROE of 9.8%. In Maryland, we plan to file in the second half of the year to reflect the investments we've made since 2022. Our current rates include rate base of nearly $700 million with an equity layer of 53% and allowed return of 9.5%. In Ohio, we expect to file our 3-year rate plan early in the second quarter, while we appreciate getting to a conclusion in our 2024 base rate case, we are looking forward to filing under the 3-year rate plan with forward test years to ensure timely recovery of critical investments we need to make on behalf of our customers.

In all 3 of these cases, we anticipate requested rate increases at or below annual inflation as compared to the current residential bill, where on average, our monthly bills are approximately 20% below the in-state peer average. Lastly, in West Virginia, our proposed cost recovery for the generation investment consists of 2 phases. First, during the construction phase, we are proposing a generation surcharge based on [ precedent ] and the state designed to recover our total financing cost with a requested equity return at our current authorized return of 9.8%. Then after the power plant is placed in service, we would look to transition the recovery from a surcharge to base rates at a future base rate case.

As part of the financing plan for this investment, we filed an application with the U.S. Department of Energy, seeking a low interest loan under the energy dominance financing program. We expect approval before the end of the year, which would save customers more than $200 million over the 30-year life of the loan versus traditional financing. Based on our forecast, once in service, this investment is expected to have minimal impact to customer bills.

Moving to our 5-year plan, our $36 billion capital investment plan is an increase of $8 billion or nearly 30% from our prior 5-year plan. As Brian discussed, this program results in expected rate base growth of 10% through 2030, led by transmission investments totaling $19 billion and customer-focused distribution investments to strengthen and modernize the grid. 100% of our capital plan is focused on improving customer reliability and resiliency of the system and only consists of awarded, approved and contracted projects. We increased transmission investments by $5 billion or 35% from our previous 5-year plan. This includes transmission investments in both our stand-alone transmission and integrated segments. The plan also includes regional transmission projects from the 2025 and prior PJM open windows totaling $4 billion.

Total distribution investments in our distribution and integrated segments are increasing 25% or $3 billion from the prior plan. This largely reflects increases for reliability investments in core infrastructure upgrades with the largest increase in Pennsylvania, where we are accelerating investments under the LTIP program and are recovered through the existing distribution system improvement surcharge. This investment plan includes targeted customer benefits, both on the transmission and distribution systems and excludes the significant incremental investments we're planning in West Virginia and additional upside in transmission.

Moving to core earnings, we are well positioned to deliver compounded annual earnings growth near the top end of our 6% to 8% growth rate from '26 to 2030. This sustainable long-term growth starts with our $36 billion capital investment plan with 75% in formula rate programs and 10% rate base growth, targeting a consolidated ROE of 9.5% to 10% through the planning period. Our load forecast includes active and contracted customers, resulting in 2% customer demand growth, which is largely driven by a 5% increase from industrials that typically are on a demand-based, not volume-based charge. As our data center pipeline becomes contracted, this will be incremental to this forecast, both from a customer demand and capital investment perspective.

As we've demonstrated in the past, our plan includes financial discipline with our base O&M expenses with modest increases of 1% to 1.5% per year. Operating expenses will continue to be a focus of the management team as we look to deploy technology, artificial intelligence and continuous improvement initiatives to further help offset planned increases. Finally, our financing plan target strong investment-grade credit metrics through cash from operations, long-term debt issuances and modest levels of equity or equity-like securities that we have discussed previously. Our cash from operations funds 65% of our total investment plan and includes a modest impact from expected deductions from tax repairs on the corporate alternative minimum tax.

Because of our tax position, including existing [ AMT ] deductions, the expected impact of tax repairs on cash flow is less than 2% and does not change our overall plan. Our debt financing plan includes $16 billion in new long-term debt issuances with FE Corp debt as a percentage of total debt at 20% versus 25% at the end of last year. And our equity needs are up to $2 billion, which includes our $100 million annual DRIP program, which has historically been in place. We will explore all options to fund our equity needs, including hybrid instruments, and anticipate any annual common equity issuances, including for the DRIP to be approximately 1% of current market cap on average through the forecast period.

In closing, we believe we have a compelling story and value proposition. Our plan is strong, focused on critical investments with significant incremental opportunities. We have a proven track record of executing on regulatory strategies that are focused on the customer and provide solid returns to our investors and we have demonstrated our ability to be disciplined with our cost structure, not only to minimize regulatory lag but to provide benefits to customers. We believe we provide a compelling low-risk value proposition to investors with a total shareholder return opportunity of approximately 12% with upside potential. We are committed to meeting our commitments for our customers, our communities and our investors and are excited about the future.

Thank you for your time. Now let's open the call to Q&A.

[Operator Instructions] And our first question comes from the line of Nick Campanella with Barclays.

So I appreciate the disclosure, 6% to 8% at the high end now. You mentioned West Virginia could be another $1.2 billion incremental to the plan, and that would bring your RaB CAGR to 11%. Just what's the incremental financing that would be associated with that. Given my understanding is there is kind of a proposal for cash [ fee with ] and would this kind of put you comfortably above the 6% to 8% range, say, by '29? Or how should we kind of think about that?

Yes, Nick, this is John. I'll take the financing, piece of that. So obviously, the cash recovery will help pretty significantly. So I expect that to be 15% of the total investment. We'll target 50% of the total investment with the Department of Energy loan with the rest likely being new equity to fund the investment. And then on the growth, Nick, as we get these incremental investment opportunities coming in, whether it's generation or transmission we'll be updating what growth looks like as we put those in the plan.

Okay. So I'll take 15% of that CapEx. And then maybe just -- I guess there's just been a bigger focus on Pennsylvania from investors given the various comments out of Governor Shapiro. And I know the distribution plan across the company is up. Pennsylvania, I think you're doing $6.7 billion. I also understand your rates are below average there, but just how has the increased CapEx impacting your earned returns in the state just relative to that 10% that you show on the slides and when do you think you're going to be going back in for a case there?

So Nick, it's not that long that we've come out of a rate case there. And the big part of that rate case was investment in the distribution system. And so the increases that we got were to fund that investment, and we're actively doing that. We have a very targeted long-term investment program there that's been approved as well. So the focus for us in Pennsylvania has been incremental investment in the distribution system to drive improvements and reliability. And that's what we're seeing in the plan. So that's what our focus has been. We're going to go in when we need to, again, to reflect that increased rate base that we've been adding to since the last rate case.

But the focus in both Pennsylvania and New Jersey has always been -- we want to see the investment coming from the company in those states to drive reliability, and that's what we're doing. And that does leave us in a position where we have to keep going in for rate cases to update the rate base and our cost structure as well. But whether it's in Pennsylvania, New Jersey, all of our states, we're keenly focused on affordability, and that has us focusing on things like our own O&M, and then other bills charges. We mentioned taxes in Ohio coming down that are flowing through the rates, but investment and affordability of the things that are top of mind for us in Pennsylvania and our other states.

Yes. Nick, and I would just add on that roughly 45% of the investment that we're making in Pennsylvania is under the LTIP program. which is recovered through the DISC surcharge. So that provides for interim recovery of our investments and really helps us kind of with base rate case planning and that type of thing.

The next question comes from the line of Shar Pourreza with Wells Fargo.

Brian, I just want to make sure we have the numbers correct here. So the CapEx numbers were obviously healthy. The rate base growth is likely a little bit closer to 10.4%, right? Just as you're adding West Virginia, remind us, does that sort of get you to closer to 11.4% I know we're getting quoted on 11% but I think West Virginia is probably 100 basis points accretive to that. And then how do we sort of think about the delta between 11.4% when you add West Virginia in it and your EPS growth where you're already at the higher end. So I guess another way to ask it is, what is the amount of lag between rate base growth and the newly guided, let's just say, 11.4% rate base growth when you add West Virginia in there?

Yes. So Nick, as we're looking at this, we're trying to give transparency and insight into what's in the plan today and then what are the things that could be added to the plan and what those additions would look like. Your math is about right on the 10.4% to 11.4%. And we've always said, we'll update the CapEx plan, we'll update earnings as things like and incremental transmission comes in. But what we're not going to do is put things in there that are speculative and not approved yet and then have to take them out of the plan. So our idea is, here's what the plan is today, here's what the incremental could be. And if we need to change what the earnings growth rate is as we add things to the plan, we'll do that at that time.

Got it. Okay. Because I know, Brian, there's a lot of confusion out there with 10% versus 10.4% and there's a big difference between 10% and 10.4%. And then just lastly, on West Virginia, can you just expand incremental opportunities post the current projects. So what's the potential timing there, the turbine supplies? Where are the DC conversations, et cetera.

Thanks for that, Shar. So as we look at our states and we look at states that are wanting us to invest in regulated generation, West Virginia stands at the top of that. I mentioned the governor's challenge to us to do more. He has a 50 gigawatts by 2050 goal that he is searching for. And if we get constructive regulatory approval here, we're going to be going back into West Virginia and looking at ways that we can add another 1,200 megawatts, hopefully dedicate that to data center load talking with hyperscalers, with developers about doing that. And the relationships that we're beginning now with suppliers like Siemens on the turbine side in terms of what we're doing with the first EPC that we're going forward, we'll leverage those relationships going forward for the incremental build. But when we look at our universe of opportunity to invest in generation, West Virginia said to us, we're open for business. We want you to invest here. And as a regulated, fully integrated utility there, looking to drive economic development, we want to be a key part of that for our customers and the state of West Virginia.

Our next question comes from the line of David Arcaro with Morgan Stanley.

Wondering if you could touch on New Jersey and the backdrop there, kind of expectations for timing of your next rate case. And just overall, your perspective following the executive orders and some of the changes we could see ahead in the regulatory backdrop?

Yes. So obviously, affordability is front and center for Governor Sherrill. We've been working with her and our staff to look at ways that we can address affordability in the states, what are items on the bill that we can either reduce or eliminate. But again, when we were in our last rate case there, the real focus of that was the worst-performing circuits that we had. And the big point of that rate case was, are we going to make the incremental investment to drive increased reliability in those circuits. We've been doing that since the last rate case, and we're seeing related improvement in reliability there, which is what New Jersey wanted from that case.

So we're going to continue with that activity. We're going to work constructively with the governor and her staff with the BPU and others to address affordability. But ultimately, we'll have to go back in for another rate case to keep that investment coming. Our rates in New Jersey are significantly below our in-state peers. And even with the investment that we have planned there, we anticipate to still be below our in-state peers but we have to improve reliability. We're singularly focused on that and affordability at the same time. So we're going to work constructively with everyone to time a next rate case and try and maintain that affordability as well.

Got it. Okay. That's helpful. And then could you touch on the outlook that's embedded in your plan for ROEs? I guess, it looks like you're assuming basically flattish kind of holding ROE steady throughout the plan. I wanted to confirm that if you're around 9.8% now and you're planning on just holding that essentially between 9.5% and 10% going forward, I guess, can you touch on kind of the key levers there, key moving pieces as you're sketching out the outlook for earned ROEs.

Yes. So thank you for that, David. We're continuing to be in that -- the target in that 9.5% to 10% range, our goal is to be as close to our authorized returns as possible. Given the amount that we're investing, we're going to be going in regularly for rate cases because of the magnitude and the investment that we're making to drive reliability. But we're confident that we'll be able to stay in that 9.5% to 10% range with the flight of rate cases that we have and the investment that we're making today.

Our next question is from the line of Ryan Levine with Citi.

I was hoping you'd be able to give some color around the execution ability of your $36 billion CapEx plan to sufficient internal engineering and project management capability to deliver on the step-up of CapEx especially in transmission, given labor tightness? And how are you seeing in-house versus contractor labor relations to be able to deliver on this?

Yes. So thank you for the question, Ryan. We're very confident in our ability to deliver against the plan, especially the transmission side of it, we're having considerable growth, we've been investing in that side of the business significantly since 2014. We have the relationships with contractors, labors, suppliers to allow us to do that and we're ramping up those relationships as our investment is ramping up. But project management, discipline, supplier relationships, all those things are key to us executing against our plan and [ Mark Mozenski ] and his team on the transmission side are laser-like focused on our ability to deliver and things are going according to plan there. So it's a heavy lift, no doubt but we have the expertise and relationships to deliver. So we're very confident in our ability to make it happen.

On that front, are there certain aspects that you're most constrained on? And are there any external markers that we could track the progress around the execution?

I don't think so. I mean we're starting to see -- on the distribution side, we're starting to see the tightness and the supplier market is starting to ease. Suppliers are looking for people that they'll view as strategic partners that they can look to be delivering significant volumes of demand to them going forward. And we're obviously going to be one of those players. We've done things like made orders out in time, things that are no regrets on the transmission and distribution side. And then we have [ Chris Beam ], who is working very hard on the generation side, fostering relationships with Siemens as our OEM on the key components of the generation that we have. So it's tied out there. It's not as tight as it was during COVID, but we believe we have the relationships to get us through what we need to do to drive the growth that we have planned.

Okay. And then one last one related question. How are you assessing the potential impacts from the Maryland [ Lower ] Bills Act and [ were ] similar affordability-driven legislation in that state?

Yes. So we're seeing this across our system where people are very, very focused on affordability, and we are engaging all of our jurisdictions and legislatures in that discussion. We're well positioned relative to our peers on that. We talked about on the call that our part of the bill in our deregulated state, it's only about 32% of the bill with generation being about 60%. So there are some obvious places to focus on where the increases in the bill have come on, which is why we're supportive of extending the capacity auction caps.

And I think it would be beneficial to our customers to even lower those caps for existing generation, and we've been supportive of things like a second auction that would bring new generation to the 4, which is what's needed. So we've been focused on affordability on our cost structure and looking for ways to engage with all stakeholders to make sure that electricity is affordable to our customers going forward.

The next question is from the line of Steve Fleishman with Wolfe Research.

So just a follow-up on the West Virginia. Maybe just a little more specifics on what do they actually need to approve in this order, just that the plan is needed? And the cost levels and I guess, the CWIP rate making? Are those the key items that need approval? The exact timing to like any rough sense of when in the second half?

Yes. So what they're going to approve is a certificate of need and public necessity. We're asking for the interim financing in the plan, where we get AFUDC CWIP we've asked for. So what that will be during the plan. And we've also proposed what our financing plan will be for the plan both on an interim basis and a long-term basis. And so that's why we're moving forward with the DOE approval there. I think the commission has up to a year to act on this. We've heard that they are interested in acting much quicker than that to get the plant online even sooner. And so we do anticipate that it will be -- again, I can't be more specific than the second half and we're expecting a procedural schedule on the filing within the next month.

So they are -- I'd say West Virginia is fast-tracking the investment because they know how important it is to the economic development in the state. And I think you're seeing that everywhere from the governor's interest in making sure that the investments made right down to the commission. I think they're going to do things right. I think they're going to make sure it's needed and [ their ] eyes and cross their tees, but I think they're going to be moving with dispatch.

Okay. Great. That's helpful. Then one other question just on the equity plans. Any color on the $2 billion -- up to $2 billion kind of the timing of that? Is it kind of ratable over the period, roughly. Any color on that?

Yes, Steve, it's pretty much ratable over the 5-year period. Beginning in '26 with about 1% of our total market cap and that includes the DRIP program that has been in place historically. But I would plan on pretty ratable issuances over the 5-year planning period. And again, that $2 billion includes potential equity-like securities. So we'll look at hybrids to kind of reduce the common equity issuance need and we'll look at that over this year.

Our next question comes from the line of Carly Davenport with Goldman Sachs.

Maybe just on the transmission CapEx piece of the plan. Can you just talk a little bit about what portion of the near-term spend, so say, '26 to '28 is tied to projects with right-of-way or siting and permitting that are in advanced stages versus still in earlier stages?

Yes. So everything that we have that's in the plan, Carly, is either approved by a commission doesn't need approval or we have clear line of sight to permitting to getting it done. So if it's in the plan, there's very high confidence that all of the approvals necessary are either received or are in flight, and we anticipate getting them in the near term. So if there's a long plot on something or we don't have line of sight to that being in service and the dates that we're talking about it, it's not in the plan. And we have a big enough portfolio of projects. So if something happens on one project in particular, we can advance another and do the like and have that flexibility over the planning period. But we're extremely confident in what's in the near-term part of that plan. And if we are still awaiting approvals or the like, what we talk about with the PJM open windows, then it's not in the plan yet.

Great. Okay. That's clear. And then just a follow-up on the affordability questions. I know in the slides, you had mentioned that you expect this to remain below in-state peers throughout the planning period. Is there anything specific that you can provide on a sort of percent bill inflation target that you'd expect over the plan period?

Yes. We anticipate it to be below inflation. So we anticipate that the share of wallet and the like will stay the same. But our affordability position is really one of our strengths. And it's something we're going to focus on. People are always concerned about, oh my bill is going up x percent. We're focused on making that as small as possible and keeping a very modest share of our customers' wallet as we go forward. And that ranges significantly from places where we have wealthier customers, the places where we have customers closer to or the mean average income but we're very sensitive to that affordability and doing everything we can on our cost structure side. And on the build components that we're working with the various commissions on to make sure that the impact to customers is as low as possible and certainly trying to keep that below inflation.

The next question is from the line of Jeremy Tonet with JPMorgan.

Just want to -- sorry, clarify real quick on the CCGT financing as far as the components there, this 50% DOE loan and then the remaining 50%, what are the components there?

Yes. So you're right, the loan, we would target 50% of the total investment value. And then if we get the approval of cash recovery during the construction phase, that would fund about 15% of the overall investment and then the rest, which would be about 35% would be new equity needs that we would have to put into the plan.

Got it. And then just wanted to pivot towards earned ROEs at this point. I'm just wondering, I guess, where you see the biggest gap versus allowed in, I guess, a key focus going forward, which jurisdictions have earned return to low authorized?

So it's all things you'd expect, Jeremy, the places where you see us going in for rate cases are the places where our investment has driven down the earned ROE, and that's why, clearly, why we're going in. John talked about that in his remarks. And then we've also talked about the timing for when we might go in ultimately for New Jersey. But it's the places where we're making the incremental investments, where we lag a little bit due to the incremental investment that we're making, and we just have to refresh that by going in for new rate cases.

Yes. The other thing I would say, Jeremy, if you look at our overall plan, I mean, we're in jurisdictions that have formula rate recovery mechanisms. So 75% of our total investments are in formula rate programs. So if you think about the impact on growth with respect to that -- those programs, it drives a healthy amount of the growth in the plan with base rate cases being less of a contributor in the overall scheme of things. So really, most of the growth in the plan is driven by the formula rate investment programs with a lesser extent from base rate cases.

Got it. And just a last quick one, if I could. There obviously continues to be a lot of focus on the PJM auction and how this might evolve in the future. Just wondering any thoughts you might share there in FE's potential role if regular generation or otherwise might become something that FE would look at more in the future.

So Jeremy, it's still early days in the stakeholder process. I think it just began yesterday or the day before continuing today. The stakeholder process in PJM is a really, really difficult one. But the key things that we're going to be focusing on is affordability for our customers. And so as you look at the key things that are going to play out in the stakeholder process, it's going to be how much generation are they looking for, what the timing is going to be, how it's going to be paid for and who's going to bear the cost, like all the basic things that you would look for.

So we are involved in the stakeholder process. We're going to continue to be involved. And first and foremost, we're going to be looking out for affordability for our customers as we work our way through that. In terms of FirstEnergy and our interest in regulated generation. Look at our states and you have states where Ohio just passed legislation saying that the utility can't own regulated generation. And then I think it would be difficult for us to in places like New Jersey and Maryland. So that really leaves us then with West Virginia, where we told you what our plans are. We want to get this one approved. And then if West Virginia would like, we're interested in investing incrementally more in that state, and that leaves you with Pennsylvania. And again, we don't have a path to seeing regulated generation in that state yet. But if they'd like us to consider it, we'd be willing to look at it. But our clearest path to helping with that issue is, one, what we're doing in West Virginia and then two, what we're doing in the stakeholder process at PJM.

The next question is from the line of Paul Patterson with Glenrock Associates.

Just on the transmission when I look at Slide 7, how much of this, I guess, is demand driven? I mean, is that part of the 20%? Or is this really pretty much just replacing the aging issue to serve the reliability issue. And also just in -- with respect to New Jersey, is the offshore wind things still going on there? Is that still part of the plan that [ tricollector ] project and stuff? Or how should we think of that?

Let me start with that last part. We're working with New Jersey and PJM to modify what portions of that plan are no regrets and will be beneficial to New Jersey and PJM even without the offshore wind component of that. So we are working to make those modifications that are agreeable to both New Jersey and PJM to make sure that we're investing in what they want us to invest in, and it's no regrets regardless of the offshore wind. So that's in process as we speak.

If you look at the rest of the transmission, a lot of it is demand driven, but a lot of it's aging infrastructure as well. So if you look at the $5 billion that we've gotten from the open window process since 2022, I'd say that's all demand driven. And so that's what our data centers doing, what's happening with just demand across the PJM system and they're responding to that, and that's clearly $5 billion of what's in the plan that we've been awarded.

And then if you look at the rest of what we're doing, we've made significant investments since 2014 but have only addressed about 30% of the system and about 60% to 70% of the system is going to have the end of its useful life in the next 10 years. And so that's a huge amount of what we're spending on the transmission investment. And those are things that we have to do for reliability. We have to do for economic development and don't require a lot of incremental approvals for us to make those investments.

Yes. Paul, the other thing I would add is if you look at our data center pipeline. If you look at the 13 gigawatts that we have in the pipeline through 2035, obviously, that's not in our plan today. But each gigawatt that's added to the contracted or active demand would probably drive $250 million or so of incremental capital investments on the transmission system.

Okay. And just in terms of the cost allocation, when it -- I guess, as determined basically by retail jurisdictions. Should we think of a lot of this CapEx being absorbed by the new demand -- by the new data center demand growth? Or how should we think about the breakdown of roughly speaking, obviously, it's kind of early, but do you follow what I'm saying in terms of how people should sort of think about that?

I do, Paul. So anything that is directly for that specific customer is being borne by the customer. The regional upgrades are being handled the way PJM handle those with generally the region that's benefiting from the investment is paying for the investment. So it's a traditional PJM user pays, the benefit owner pays most of the cost of what's happening on a regional basis.

Okay. And then just in terms of the generation proposals that you guys have been making for a couple of years now, how would you characterize the overall reception because it's changing how things are currently, this auction and what have you. I mean, have you -- do you get a feeling that there's some momentum here in terms of your discussions with regulators in the service territories about just opening this thing up and just not relying completely on the capacity auction. And when do you think we might see some tangible action in terms of maybe making some moves on this, which would lower rates potentially not your rate -- not what you technically control, but would lower the wholesale price of power potentially?

Yes. So let me talk about that in regards to West Virginia in particular. I've been doing this a long time, and I've never had in my career a meeting or an announcement like what we had in November in West Virginia. The overall reception was overwhelmingly positive from the governor, to legislators, to employees, to unions, to executive members of the executive branch in West Virginia, just overwhelmingly positive.

And so I would just say that in the 5 states that we're in, in terms of addressing resource adequacy and the generation issues West Virginia is given their integrated nature is very, very well positioned to address it from an economic standpoint and very welcoming to the investment and that's why when we look at how we can help with economic development and resource adequacy, West Virginia is the place where, first and foremost, we have an opportunity to do that, and that's why we've filed for the first unit that we're talking about putting in there. And that's why we would strongly consider and look forward to applying for a second unit and maybe a third and maybe a fourth, if things continue the way they are in West Virginia.

Okay. But the other areas, it's still open here?

I mean, you know the issues, Paul. I mean states are deregulated. They thought the market would provide for it. The market isn't providing for it. It's really -- it's tough, and that's why we find ourselves in this difficult PJM stakeholder process, but the issues are going to come down to how much do you want, when do you want it and who's going to pay for it? And our main interest there is making sure there's enough generation so the lights stay on and making sure it's affordable to our customers.

Our next question is from the line of Anthony Crowdell with Mizuho Securities.

Just 2 quick housecleaning items. One is to Shar's question earlier on the spread or the difference between rate base growth and earnings growth, your CAGRs. Just what would cause that to maybe contract or expand as we move out to the forecast or it's very unlikely, whether it's 240 bps or more, what would cause that to change throughout the forecast period?

I think the things that we talked about, and it's kind of the basic things that you would think of. How much incremental investment can we have? And then how quickly can we get that recovered in rates. And it's just that simple, Anthony. And so that's why we're showing you what's in the plan. We're showing you what we think could be incremental, how big it is when we think we might get approvals for that. And on the recovery side, you're seeing us regularly go in for rate recovery when it's not already in the 75% that's covered in the formula rates the way John talked about.

Great. And then just a follow-up to David's question. I just missed it. Did you guys state when you plan on filing your next New Jersey case?

We've not said and we're not being cagey about that. We just haven't decided and obviously, we'll be in discussions with the Governor's office and the BPU about when is the right time for us to go in.

Our last question comes from the line of Andrew Weisel with Scotiabank.

I can't believe it's the last question, but I want to ask about 2 topics that receive very little airtime today. Data centers in Ohio regulation. First, on the data centers, I see more additions to the contracted demand and pipeline disclosure. I appreciate the table with the detail by state. I could be wrong. I think that's maybe disclosure, very helpful. My question is relative to the latest updates and the recent trend, where are you seeing the most activity in which state? And are the latest additions going to be within this 5-year plan? Or are those mostly going to be more like the early 2030s by the time they ramp up?

Yes. So we're seeing a lot of activity currently in our Maryland service territory associated with the data center outside of Frederick, Maryland. And then after that, we're seeing significant activity in both Pennsylvania and Ohio. And you're seeing that sort of significant amount of activity between now in 2030, 2031 but then a huge amount of activity in terms of load and contracted load by that 2035 time frame, so between 2031 and 2035. So that's -- those are the locations. Those are the places where we're seeing most of that data center activity.

Great. In Ohio, obviously, 2025 was a super busy year for you and the company got to a lot of important proceedings and dockets. Looking forward, what are the priorities for 2026 in the next few years, whether that's on the regulatory side or execution and should we expect conference calls to go almost nearly the whole time with barely any talk about Ohio for a while. Should it be quiet in that state?

So thank you for that question. The one thing that we were monitoring in Ohio was the commission told us since I started here that the business as usual cases, we're going to go business as usual. And the legacy issues cases would be separate and not mingled with the business as usual case. The commission held very much true to that. And so we were thrilled to be able to get what we think was a constructive order in the base rate case. In the punishment phases, there was a significant penalty that was paid there, and we're happy to settle that and get all forms of appeal of that behind us and just move on from that.

So what we see is business as usual going forward in Ohio with the legacy issues behind us, we'll be going in, in the near term for a 3-year rate case to get that moving forward and get us firmly footed in that new regulatory regime that the new legislation has. And Ohio has always been very supportive of wires investment in the state that drive economic development and improve reliability. And we anticipate that, that will continue going forward.

So it was a pivotal year for us, 2025, and we'll be right back in for the 3-year rate case and anticipate constructive dialogue with the commission and interveners and hope to be able to settle some issues going forward. But it's nice to have Ohio firmly focused on the future and the new regulatory regime and being at constructive standpoint that's been demonstrated with the company, and we hope [ Terrence ] and his team will keep that moving forward with the commission staff and all interveners. Thank you for the question, Andrew.

Okay. That was the last question. I'd like to thank everyone for joining us today. We strengthened FirstEnergy in 2025 operationally financially and strategically. We enter 2026 with momentum, a clear business model and a disciplined plan to work safely, improve reliability, maintain affordability and deliver sustainable growth. We look forward to updating you on our progress as we go forward throughout the year. Thank you, everyone, and have a good day.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may now disconnect your lines at this time, and have a wonderful day.

Hello, and welcome to the FirstEnergy Third Quarter 2025 Earnings Conference Call. As a reminder, this conference is being recorded.

It is now my pleasure to turn the call over to Karen Sagot, Vice President of Investor Relations. Please go ahead, Karen.

Thank you. Good morning, everyone, and welcome to FirstEnergy's Third Quarter 2025 Earnings Review. Our earnings release, presentation slides and related financial information are available on our website at firstenergycorp.com/ir. Today's discussion will include the use of non-GAAP financial measures and forward-looking statements, which are subject to risks and uncertainties.

Factors discussed in our earnings news release, during today's conference call and in our SEC filings, could cause our actual results to differ materially from these forward-looking statements. The appendix of today's presentation includes supplemental information, along with the reconciliation of non-GAAP financial measures.

Please read our cautionary statement and discussion of non-GAAP financial measures on Slides 2 and 3 of the presentation.

Our Chair, President and Chief Executive Officer, Brian Tierney, will lead our call today. He will be joined by Jon Taylor, our Senior Vice President and Chief Financial Officer. They will discuss the team's continued strong execution and performance on key financial metrics as well as our bright outlook and positive momentum as we close the year.

Topics include raising our full year 2025 guidance midpoint and narrowing the range, increasing our 2025 capital plan, our expectations for incremental investment opportunities and our progress and time frame on regulatory activities.

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

Thank you, Karen. Good morning, everyone. Thank you for joining us today and for your interest in FirstEnergy. We are having a great year with strong results across all of our key financial metrics. Yesterday, we reported third quarter GAAP earnings of $0.76 per share compared to $0.73 in the third quarter last year. Core earnings were $0.83 per share for the quarter compared to $0.76 in the third quarter of 2024. For the year-to-date period, our core earnings were $2.02 per share compared to $1.76 in 2024, an increase of 15%.

Our results benefited from strong execution of our customer-focused investment plan, Pennsylvania base rates that went into effect in January and strong financial discipline. Through the first 9 months of 2025, we invested $4 billion of capital in our regulated utilities. This is a 30% increase compared to last year. We are pleased to be in a position to put even more resources into system reliability and resiliency for our customers.

Today, we are announcing a 10% increase to our 2025 capital investment program to $5.5 billion. With our strong year-to-date results, we are raising our 2025 guidance midpoint and narrowing our range to $2.50 to $2.56 per share. We remain positive about the opportunities ahead.

We are reaffirming our core earnings compounded annual growth rate of 6% to 8%. And early next year, we expect to roll out a higher CapEx plan for the 2026 through 2030 planning period.

Turning to Slide 6. Load growth from data centers continues to transform our industry. FirstEnergy service territory, expertise and assets are ideally positioned to support the remarkable demand growth and economic opportunity within and adjacent to our footprint. Within our operational area, data center interest remains high. Our long-term pipeline of demand, which includes interconnection requests from serious and reputable customers, has nearly doubled since our fourth quarter earnings call in February.

Our contracted customer demand increased by over 30% during the same period. The impact of this demand will be tremendous. Based on data center customers who are contracted or in our pipeline, we expect FirstEnergy system peak load to increase 15 gigawatts or nearly 50% from 33.5 gigawatts this year to 48.5 gigawatts in 2035.

Across PJM, peak load projections are forecasted to increase by nearly 48 gigawatts by 2035 or 30% of the current peak load of 162 gigawatts.

FirstEnergy is uniquely situated to support this growing demand through customer-focused investments, specifically in our transmission system. This system is located in the heart of PJM and interconnecting with a broad number of neighboring utilities and encompassing strategic high-voltage corridors that are a vital part of the transmission grid.

Turning to Slide 7. Earlier this month, we submitted our integrated resource plan in West Virginia that lays out our recommendations to keep power affordable, accessible and reliable over the next decade. The IRP indicates a capacity need in West Virginia beginning in 2027. Our preferred plan provides the flexibility to adapt to the rapidly changing energy landscape while delivering reliable and cost-effective energy to West Virginia homes and businesses.

Key aspects of the plan include adding 70 megawatts of utility scale solar in 2028, and adding 1.2 gigawatts of dispatchable gas combined cycle generation around 2031, keeping our Fort Martin and Harrison coal plants operational through the planning period and using short-term power purchases to bridge the gap until new resources are online.

The proposed gas and solar investments are aligned with Governor Morrisey's 50-50 initiative which aims to boost West Virginia's energy capacity to 50 gigawatts by 2050. We are pleased to pursue generation projects in a state with strong executive, legislative and regulatory support.

To provide the best outcomes for West Virginia, we plan to issue a build-own-transfer RFP for up to the full 1.2 gigawatts of natural gas resources. We are also evaluating building a portion for the entirety of this generation on our own.

In the first quarter of 2026, we plan to file with the Public Service Commission seeking approval of the new gas generation. The proposed assets represent a 35% increase to our current regulated generation portfolio. This is an exciting opportunity for FirstEnergy, and we are pleased to support customer needs and economic growth in West Virginia.

Turning to Slide 8. As I mentioned earlier, our transmission system will require significant incremental investments to ensure reliable electric service. At our stand-alone transmission and integrated segments, we need to ensure our critical infrastructure is resilient and reliable, especially as demand is projected to increase in the region. This includes investments to replace aging infrastructure, improve system performance and increase operational flexibility.

We are also participating in regional network upgrades, which are the investments awarded through PJM's RTEP open window process. This includes required system upgrades and improvements to address reliability, security and load demands of the bulk electric system.

Over the last few years, we have been awarded $4 billion of capital investments through the PJM open window process. We recently submitted proposals of capital investments through the 2025 open window to support increasing demand in Ohio, Pennsylvania and Virginia. These proposed investments include several new and upgraded substations and high-voltage lines needed to support the increase in customer demand.

The PJM Board is expected to award transmission projects in this open window by the first quarter of 2026. Any projects awarded to FirstEnergy in this open window will be included in our new 5-year plan. We now expect transmission investments included in the 2026 to 2030 capital plan to increase by 30% versus our current 5-year plan. This includes increases from reliability enhancements and regulatory required investments to improve the overall health and performance of our most critical assets on the system and to address growing demand and changes in generation in the region.

Our company-wide transmission assets are a terrific growth engine. Our investments are expected to result in a compound transmission rate base growth of up to 18% per year through 2030. This means total transmission rate base would more than double through the planning period.

On the generation side, we have a significant incremental investment opportunity associated with adding the 1.2 gigawatts of natural gas generation in West Virginia by 2031. This project had an initial estimate of $2.5 billion, will be included in our long-term plan after we receive regulatory approval.

Moving to Slide 9. We're in a strong position to make all of these investments that benefit our customers while keeping affordability a top priority. Today, our bills are on average 2.5% of our customer share of wallet and on average, are 19% below our in-state peers. Even with an increasing investment plan, we will be below our in-state peers for the foreseeable future. However, we recognize that affordability is top of mind for our customers, and that, on average, electric bills have increased 11% for our customers in our 4B regulated states over the last year.

As we drill into this, the generation component of the bill is driving 85% of this increase. This type of increase is not sustainable and needs to be addressed with new dispatchable generation. In that regard, we are advocating on behalf of our customers and working with state leadership in our deregulated states on how they can take the lead to drive meaningful change and attract new generation. It's a different story in West Virginia, our one traditionally integrated state.

Total customer bills remained flat from 2024 to 2025, and the state is taking proactive steps through its IRP process and 550 program to maintain and expand its generating capacity. We are also working to protect current customers as demand increases from data center developers. This includes utilizing volumetric commitments and customer credit support as needed. Our approach leverages the balance sheet of the data center developers to protect existing customers.

Turning to Slide 10. We are on track to have a successful year and look forward to a strong finish. Our updated earnings guidance of $2.50 to $2.56 per share is in the upper half of our original range. We are reaffirming our 6% to 8% core earnings CAGR through 2029. We are on pace to execute our 2025 to 2029 capital investment plan. And looking ahead, we see significant increase in our next 5-year investment plan.

Most of this growth will come from high-quality transmission investments, backed by forward-looking rates with constructive ROEs. We're also excited about new opportunities to invest in generation in a state that is supportive of these efforts. Our value proposition remains strong, encompassing robust growth, consistent financial discipline an attractive risk profile and a 10% to 12% total shareholder return opportunity with upside potential. We are on course, and we are committed to achieving our goals and realizing our bright future as a premier electric company.

Now I'll turn the call over to Jon. Jon?

Thanks, Brian, and good morning, everyone. We had another strong quarter and continue to make excellent progress this year. We delivered on each of our key financial metrics, including core earnings, capital investments, base O&M and cash from operations. You can review more details about our results, including reconciliations for core earnings and business segment drivers and the strategic and financial highlights presentation posted to our IR website yesterday afternoon.

We delivered third quarter core earnings of $0.83 per share, a 9% increase versus 2024. This improvement was largely a result of new distribution base rates in Pennsylvania that went into effect earlier this year and total transmission rate base growth of 11% including 9% for our ownership in stand-alone transmission rate base and 16% in transmission rate base within our integrated business.

Additionally, as a result of our strong performance this year, especially with our controllable operating expenses, we were able to move a modest amount of maintenance work into the third quarter from future years, which gives us flexibility within our plan. Through the first 9 months of the year, core earnings improved to $2.02 per share, a 15% increase from the first 9 months of 2024. Again, our strong year-to-date results largely reflect the execution of our regulated strategies, stronger customer demand and transmission rate base growth.

I want to take just a second to highlight the financial performance and growth in each of our regulated businesses. In our distribution business, the $0.20 improvement in year-to-date earnings is a result of the $225 million annual rate adjustment in Pennsylvania that supports the capital investments and operating expenses we are deploying back into that business, as well as higher customer demand and lower operating expenses as we execute on continuous improvement initiatives.

In our Integrated segment, earnings improved $0.05 per share or 7% for the year-to-date period resulting primarily from formula rate investments in the transmission system in New Jersey, West Virginia and Maryland and higher customer demand, partially offset by higher depreciation.

And finally, in our stand-alone transmission business, earnings increased approximately 7%, resulting from our strong capital investment program, delivering on rate base growth of 9% and which was partially offset by the impact of new debt at FET Holding Company and the full year dilution impact of the FET minority interest sale.

As you can see, our performance year-to-date at our regulated businesses is a testament to the execution on our regulated strategies, the constructive rate designs we have in each of our businesses, our strong customer-focused investment programs and a focus on financial discipline.

Through the first 9 months of 2025, sales were 1% higher than last year and essentially flat on a weather-adjusted basis. For our industrial class, based on ramp-up schedules of some of our data center customers, we expect to see more meaningful increases in industrial load beginning in Q4 and into next year.

As Brian mentioned through September, we deployed $4 billion of customer-focused investments, which is a 30% increase as compared to the same period of 2024. The majority of this increase was associated with transmission capital both at our stand-alone transmission and integrated businesses, which in total was $1.9 billion of CapEx through the first 9 months of the year, representing a 35% increase as compared to 2024.

For 2025, we are increasing our planned investments from $5 billion to $5.5 billion, over half of the increase is in transmission CapEx with the remaining on the distribution system largely reflecting reliability and storm restoration investments. The team continues to do a nice job ensuring that our capital investments are targeted at improving reliability and the customer experience.

Additionally, even though our CapEx programs have increased significantly over the past few years, we have strong confidence in our ability to deliver, if not exceed these plans given our capital planning process, which is based on known and specific projects with resiliency built into the portfolio and our broad and deep relationships with our vendors and suppliers.

For O&M, we continue to track better than planned and largely in line with last year despite executing additional maintenance work this year that will enhance reliability and give us flexibility as we finish this year and look to 2026.

Our financial performance resulted in a consolidated return on equity of 10.1% on a trailing 12-month basis, which is slightly above our targeted ROE of 9.5% to 10% and represents a 70-basis point improvement from our 2024 consolidated return of 9.4%. Through September 30, to support our capital investments of $4 billion, cash from operations was $2.6 billion, which is better than our internal plan and an increase of more than $700 million as compared to 2024. And we successfully completed our 2025 financing plan with 8 subsidiary debt transactions totaling nearly $3.5 billion at an average coupon of 4.8% and including a $450 million transaction at FirstEnergy Transmission and a $1.35 billion financing at JCP&L in the third quarter.

Including the successful $2.5 billion eCorp convertible debt operating in June, our 2025 capital markets program encompassed close to $6 billion of debt financing all significantly oversubscribed at a weighted average rate of 4.4%, demonstrating the attractive credit profile of our utilities and business mix.

And finally, to close out my updates, we do expect an order in the Ohio base rate case in November. As soon as practical after that, we plan to file a multiyear rate plan to ensure timely recovery of the important investments needed in the state. We are very pleased with our progress as we closed out 2025.

As I mentioned earlier, we are ahead of plan on all of our key financial metrics and look to carry this momentum in the final months of this year and as we begin 2026.

In closing, the team is extremely focused on the value proposition that we offer to shareholders. We are focused on delivering enhanced customer experience through strong customer-focused investments, which in turn will allow us to provide solid risk-adjusted returns to our investors. The future is bright for FirstEnergy, whether it be industry-leading transmission investment opportunities, significant reliability investments in the distribution system, or the build-out of regulated generation in a supportive state like West Virginia, we have a strong business plan and the right team to execute.

We are committed to continuing our positive momentum and delivering value for our shareholders.

Thank you for your time. Now let's open the call to Q&A.

[Operator Instructions]. And our first question comes from the line of Nick Campanella with Barclays.

I was just wondering, just on the West Virginia generation, if you kind of talked about building transfer versus self-build -- can you maybe kind of talk about how you've recovered the capital in either scenario and how we should kind of think about the impact to earnings through 2031.

And I guess if you're just kind of thinking about a building transfer for 2031, is there really no earnings attribution until then? Or could there be milestone payments? Maybe you can kind of expand on that.

Yes. So the build own transfer I think, is fairly straightforward on -- on the -- we build it side, we, of course, would file for CWIP during construction. And so we'd expect at least the recovery of that, if not the earnings component during the pendency of construction. But the real significant earnings component for that will come after the assets online.

Yes. Okay. And then just maybe how you're thinking about rate case strategy for '26, mostly asking on Maryland, West Virginia, New Jersey, where the ROEs are trending a little lower than authorized?

Nick, it's Jon. Yes. So I think as we look to 2016 and beyond, if you look back to the cadence that we went through when we first started filing cases a few years ago, we started with Maryland New Jersey, West Virginia, we'll start to look at that kind of cadence as we move into 2026.

Obviously, it's going to be important for our utilities to earn close to their allowed returns. And so as they're deploying capital, we need to make sure that we get timely recovery through increases in base rates.

The next question comes from the line of David Arcaro with Morgan Stanley.

I was wondering just any thoughts you could give on -- as you're talking about these increased CapEx opportunities from both transmission and potentially on West Virginia generation. How does that impact the earnings growth outlook and the range that you've got as you consider out closer to the end of the decade?

David, we think of it as firming up the ability for us to be in that 6% to 8% earnings per share range over the planning period. People don't traditionally think of utilities as growth investments. But as we look at the opportunity to invest in our system, increase in CapEx over the period, it gives us real confidence that we'll solidly be in that 6% to 8% earnings per share growth range.

Okay. Got it. And then, I guess, looking at the data center pipeline, I was wondering if you could refresh us on just the activity seems to continue to be very strong. And as you see more gigawatts maybe come in and firm up, I guess, is there a way to give any rule of thumb for how much increased transmission CapEx you could see going forward, like on a per gigawatt basis, I think you've given that rule of thumb in the past.

But the CapEx that you're adding to the plan here seems to be quite a bit stronger. So just wondering your current thoughts on as more and more data center activity continues to come to your service territory, what that could mean going forward?

David, it's Jon. So in total, right now, as we look at what's contracted and just our transmission CapEx program in total, I think you could say there's probably easily $1 billion of CapEx associated with transmission interconnection requests, whether that be direct connection projects or network upgrades to support large loads. So that's what we see now based on the contracted and active large load customers that we have.

But I think that will vary as we move into the future. And we've seen a wide range of capital deployment based on interconnection request depending on the location and the size.

The next question comes from the line of Carly Davenport with Goldman Sachs.

Maybe just a quick follow-up on the transmission CapEx point. Just as you continue to raise sort of the upside opportunity there, now at 30% this quarter. I guess, can you talk a little bit about kind of what's giving you the confidence to do that? And ultimately, if we should be thinking about that as a floor looking into the 4Q update or if there's potential for further upside there?

Yes. I think the upside that we mentioned, that 30% for the next 5-year plan is what we feel comfortable with at this point. And again, we're going to come out with that full CapEx plan early in '26. But I think that's what we would guide to be the number right now. As we think about that and where we're spending the transmission CapEx -- about 60% of it is associated with reliability enhancements, upgrade health of system, replacing aging reliability type investments. And the 40% of it is what we call regulatory required. That's transmission interconnection requests and things like the PJM open windows.

So we have some pretty good insight into where we're spending those dollars and what the increase will look like for the next 5-year plan. So I'd expect it to be very, very close to that number.

Great. Okay. That's really helpful. And then maybe just on the data center pipeline. I appreciate all the updates on that front. I guess just as we think about that contracted bucket, are you able to share how much of what is contracted is under an ESA versus another type of contractual agreement?

Yes. So that's a great question. Thank you, Carly. The ESA is usually the last thing that happens before power starts flowing. So that happens very late in the process traditionally. But making sure that they're contracted to either build the facilities that are needed to happen that we put in place the credit support that they're going to need to make sure that they show up and take what we're spending. Those type of things happen earlier in the process.

So we feel really confident once we have put them in that contracted category that they're going to show up even if we don't yet have an ESA sign.

The next question comes from the line of Jeremy Tonet with JPMorgan.

You touched on in your comments, I guess, the bill increases and the impact generation has had on that. And I was just wondering if you could expand a bit more there, I guess, on appetite to build new generation elsewhere across PJM if there's the proper underpinnings to it. And how do conversations look on that and anything new to report there?

Yes. So nothing new to report there, Jeremy. I mean, the place where we have a clear window, a supportive governor commission and legislature is in West Virginia. And so that's how we're able to move forward so quickly with those plans. The idea that we'd be building in any of the other states on a long-term basis would really just be speculative at this point.

Got it. Understood. And turning to Ohio. I was just wondering if you could expand any more there on the backdrop and talking about filing as soon as practical there, what that could look like?

Yes. So we expect the order on the base rate case during the fourth quarter, and we need to get that to see what the treatment of various aspects are in that base rate case. But given that we've been making investments in the state and want to continue making investments in that state, since that test year, which ended in May of 24, we're going to have to go in right away given that we don't have trackers and riders in the state anymore.

And so given the forward-looking nature of the multiyear rate plan, we think that's the perfect avenue to do it. And as soon as we know what our situation is coming out of that base rate case, we'll know what we need to file for and we'll be going in right away.

The next question comes from the line of Ryan Levine with Citi.

Regarding the 30% CapEx upside in the prepared comments, what regions in PJM are you seeing the majority of the investment opportunity? And is there any cost inflation associated with the labor equipment is a component of that 30%.

Yes. I'd say most of that 30% is really associated with incremental work rather than inflationary impacts. And it's across the system in terms of where we're investing. It's in all 5 of our states, and I'd say fairly evenly distributed in those 5 as well. So it's broad-based. It's that reliability type investment. It's the regulatory required. It's the new customer hookups, it's the open windows. It's really broad-based, but it's incremental work that's driving that 30% increase.

Okay. And then in terms of the load forecast embedded in your planning, do you have a lot of confidence in the visibility of those forecasts in light of some of the FERC and other PC recent commentary on that front?

We do, Ryan. So as we're looking at the planning period, the next 5-year period, a lot of that is associated with what is contracted, not necessarily in the pipeline. So we have pretty good visibility into what the load forecast is going to be in that time frame.

When you get out a little bit farther is when you're starting to look at the significant increases that we talked about with data center load and up to the 15 gigawatts. As we're looking at those load increases, we're looking at things, various criteria, like does the developer own and control the land, they have building permits. Do they have development plans that they publicly announced what the project is going to be, who the customer is, all those things. We look at those factors to get a comfort level? And is the customer actually going to show up and does it make sense to put them in the pipeline. And it's that level of confidence that we have in that 15 gigawatts that we're talking about in the next 10 years.

The next question comes from the line of Ross Fowler with Bank of America.

Just maybe circling back to West Virginia. This is going to be a self-build. I think that's what you said on the call, if I caught it correctly. So as you file for CW you go through that, how are you thinking about the supply chain connected to that 1.2 gigawatts. Do you have a turbine in the queue? Do you have a cute position? And kind of what are you seeing for pricing there? Because you know the [ turbine ] prices have increased over time.

Yes. So that's all factored into what we forecasted in the IRP assuming it's going to be about $2.5 billion. And we haven't made a determination yet as to whether or not it's going to be build on transfer or self-build. We're going out with an RFP for the build own transfer and we'll see what that brings in. But we're also seeing things come in a little bit. So we're not seeing that 4 to 5 years that people have been talking about.

We're seeing more of the 3- to 4-year lead time on major equipment. But the pricing remains pretty strong on that. We've not secured a space yet. But we think that we'll be able to do that given the regulatory framework that we have for getting approvals and getting the facility up and running in the 2031 time frame.

And then -- and Jon, as you kind of talked about rate case cadence, you talked about sort of New Jersey. I mean, obviously, Ohio is coming very soon as soon as practicable. But New Jersey might be next in that cadence as you wind through it. How are you thinking about sort of the affordability pressures in that state? Obviously, it's been an issue in the governor's race, is it well understood from your perspective in that state that most of that is coming from the generation portion of the bill or kind of contextualize that for us a little bit?

We think that's well understood that generation is really what's driving so much of that increase. At the end of the day, is a political issue though, that doesn't much matter. People see their bills going up and are concerned about that. And we're trying to do everything we can in our power to keep those bills as low as possible for the portions that we control. And so we're being very thoughtful about how we're spending our O&M.

We're advocating on behalf of our customers to stop the madness that is these PJM capacity auctions right now, which are paying for new generation that's just not showing up. And we don't think it's appropriate that our customers bear that kind of burden. So we're doing everything we can to try and mitigate the impact of the higher generation cost, but we think it's well understood that that's where the increases in those rates are coming from.

The next question comes from the line of Steve Fleishman with Wolfe Research.

Just a quick follow-up on the transmission upside the 18% rate base growth. When we were going to get these open window outcomes and such over the next few months or start seeing them, should we assume those are embedded in there already? Or -- would those be upside to that? Or how should we think about as we see these announcements?

Steve, we put a very modest amount in there, but it's our practice to not put things in the plan until we have the approvals that are needed from PJM, but in this case, we put a very modest amount in there.

Yes. And I would say, as I mentioned in my prepared remarks, the portfolio is what we call resilient. So we have hundreds and hundreds of projects that we can fill in as needed, all needed for reliability purposes. So depending on how things shake out with the open window, which quite frankly, we feel really good about the solutions that we submitted in the open window process, our track record, where the congestion constraints are, and we feel really good about our prospects there. But to the extent that anything varies from our plan, we have a resilient portfolio.

Okay. And then just to clarify the answer because there's the plan right now, then there's the upside plan or the next plan we're going to get. So when you made your comments, Brian, is that relative to the next plan or the current plan, I guess -- that makes sense.

The 30% increase that we talked about, there is a very modest amount from the pending PJ open window that's in there. So if we get significant incremental awards from that, we'll be refreshing that plan.

The next question comes from the line of Andrew Weisel with Scotiabank.

First, a question on the CapEx update, and this is sort of a high-level question, but you're talking about very meaningful upside to the transmission CapEx. The West Virginia IRP is calling for a lot of spending there, plus you have the Ohio rate case.

My question is when we look at the update coming in a few months, are you expecting to reallocate some spending away from the other segments and businesses -- or do you think the balance sheet and the labor force could handle what might be a pretty sizable increase to the plan overall? I don't know if the whole $28 billion plan is going to go up by 30%, maybe it will. But how do you think about limiting factors for the upcoming increase?

Yes, we don't see taking from 1 jurisdiction at this point and giving to another. We see increases across the jurisdictions. But Andrew, we've already factored in the needs of the various jurisdictions, the opportunities in the various jurisdictions. And to be honest with you, they're all different. And that's why we put in place the management structure that we have with the presidents, 5 presidents overseeing those 5 properties that we own so that they're very thoughtful about what's going in. Do we need energy efficiency in one jurisdiction that we don't need in another.

Just things like that so that our CapEx plan is very, very tightly tailored to each of the jurisdictions that we serve. And that's what goes into how we put our plan together. We're not -- we don't view the plans that we're talking about, the West Virginia and the incremental transmission is taking away from another jurisdiction, but we view that as all expansive across our 5 jurisdictions.

Okay. Great. And then I think on the industrial load, John, you made a comment about that accelerating in the fourth quarter and into next year. I think you said that was specifically some data center customers ramping up. Can you speak more broadly? I think I may have asked you this on prior calls as well, but it sounds like generally flattish for the industrial customers. Maybe you can talk about trends in the outlook outside of the specific data center ramping.

Yes. I think yes, we are starting to see a little bit of rebound in fabricated metals and steel manufacturing. So that has been kind of a headwind for us over the past few quarters, we're starting to see that come back a little bit. But I think as we move into the fourth quarter, especially into next year, you'll start to see meaningful increases in industrial load mainly from data centers. And I'm talking like mid-single digits by the time we get to maybe Q2 to maybe even higher than that, significantly higher than that by the time we get to the fourth quarter of next year.

The next question comes from the line of Sophie Karp with KeyBanc Capital Markets.

How do you envision a response on the state level from policymakers to these rising consumer energy costs?

I think people are concerned about it as are we. And that's why we're engaging with regulators, legislators and others to both, a, point out what is causing the increase and b, trying to work with them on mitigating those increases and what are things that we think makes sense for our customers. And so again, we are not advocates of continuing this madness of the PJM capacity auctions that are paying people for new capacity that they're not getting and look for other mechanisms like a 2-tiered structure, one that would pay existing capacity on price and have another structure that would attract incremental capacity and any other ways that we can attract new capacity and have customers actually get what it is they're paying for.

But we're concerned about increases in customer bills, and again, making sure that customers get what it is they're paying for and with the capacity auctions, that's not happening.

And do you think there's enough, I guess, momentum behind these efforts now for them to come up in the next legislative session.

Yes. I think there's certainly a lot of attention being paid to it across all of our unregulated jurisdictions. And so yes, I think we'll see people starting to take notice, have plans for mitigation and start enacting those in the near term.

The next question comes from the line of Anthony Crowdell with Mizuho Securities.

I just wanted to -- and I apologize, I just may have not understood it. In response to Carly's question then in response to Steve's question. On Carly's question, and I when I think you were talking about CapEx, it seemed that you were more looking at these additional projects are going to strengthen and lengthen the current 6% to 8% plan.

And again, I don't want to front run your fourth quarter call. But then on Steve's question, I think you talked about your current plan is very modest with very little of this additional CapEx in there leading that there's actually potential for a big change in that growth rate. I wonder if you could help me connect the 2 dots there.

Yes. So thank you for the question, Anthony. So has any confusion around this. This increase in CapEx that we're talking about gives us extreme confidence in the 6% to 8% earnings per share growth range. So we would like to be in the upper end of that, but we're not at a point today where we are going to change that growth rate. But it gives us considerably more confidence to be in the upper part of that range.

So in response to Steve's question, the increase that we're talking about is in the 6% to 8% growth. The specific part that I was talking about with Steve was the PJM transmission open window component that's pending. We have a very modest amount for that, that we think that we will be awarded. If it's higher than that, that will be incremental to the plan. But in any event, we don't see us changing the earnings per share growth rate that we've guided to.

But the CapEx plan that we talked about and the increase in it gives us confidence to be in that range and targeting the upper end of that range. Does that answer the question?

Yes. So if you're better than your plan in the PJM open window, there's more of a bias towards the upper end of the range of the. Is that fair?

No, no, no, no. Let me again -- I don't want you to put words in my mouth. The existing plan and the increase that we're talking about is in the plan and gives us the confidence to be in the upper end of that range. If we get something more than what we talked about in the open window, we'll factor that into the plan, and we don't expect this to take it out of the plan, but we're already expecting to be confidently in the 6% to 8% range, and we're targeting the upper half of it, regardless of what happens with the PJM open window.

Great. Got it. And then just 1 housekeeping item. On large load tariffs, are you guys -- I just apologize I'm not forming with every state you're operate in. But are you guys applying for large old tariffs? Or are they all in place as this growth is hitting the PJM service territory?

Yes. So we don't see the need for them the way our tariffs work. We think that we can enter into terms and conditions that make the data center developers responsible for the incremental investment that we're making and protect our existing customers. So we see others doing that, and they may not have the flexibility that we do in our existing tariffs and contract structures. And it's not something that we see the need for it today. If that changes going forward, we'll evaluate that and make changes at the time.

Thank you. This concludes the Q&A session. I'd like to turn the call back over to Brian Tierney for closing remarks.

Great. Thank you all for joining us today, and thank you for your interest in FirstEnergy. We look forward to seeing many of you at the EEI conference in a few weeks, and we hope you have a safe and enjoyable rest of your week. Take care.

This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.

Hello, and welcome to the FirstEnergy Corp. Second Quarter 2025 Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Karen Sagot, Vice President of Investor Relations. Please go ahead, Karen.

Thank you. Good morning, everyone, and welcome to FirstEnergy's Second Quarter 2025 Earnings Review. Our earnings release, presentation slides and related financial information are available on our website at firstenergycorp.com/ir.

Today's discussion will include the use of non-GAAP financial measures and forward-looking statements, which are subject to risks and uncertainties. Factors discussed in our earnings news release, during today's conference call and in our SEC filings could cause our actual results to differ materially from these forward-looking statements. The appendix of today's presentation includes supplemental information, along with the reconciliation of non-GAAP financial measures. Please read our cautionary statement and discussion of non-GAAP financial measures on Slides 2 and 3 of the presentation. Our Chair, President and Chief Executive Officer, Brian Tierney, will lead our call today. He will be joined by Jon Taylor, our Senior Vice President and Chief Financial Officer.

They will discuss our strong performance on each of our key financial metrics. our progress delivering on our target of 2025 core earnings in the upper half of our guidance range, FirstEnergy's excellent position to enable the economic growth and investment highlighted at the recent Pennsylvania Energy and Innovation Summit, the significant long-term investment opportunities within our well-situated transmission operations and our progress on strategic, regulatory and legislative activities.

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

Thank you, Karen. Before we get started, I would like to express my condolences to those who are impacted by the tragic events earlier this week in New York City. On behalf of the FirstEnergy family, please accept our thoughts, prayers and love as you breathe the loss and celebrate the lives of your loved ones.

This morning, I'll provide an update on our second quarter and year-to-date performance and key developments that we believe are transforming FirstEnergy into a premier electric company. GAAP earnings for the second quarter were $0.46 per share compared to $0.08 in the second quarter of 2024. Core earnings were $0.52 per share for the quarter compared to $0.51 in the second quarter of last year. We are on track to deliver results in the upper half of our full year 2025 guidance range of $2.40 to $2.60 per share.

Second quarter core earnings benefited from the strong execution of our investment strategy, reflecting new base rates in Pennsylvania that went into effect in January. Quarterly results also reflect increased investments in our transmission system, which benefit from formula-based rates. Our team continues to demonstrate strong financial discipline on operating expenses. Jon will speak more about this in a moment.

Through the first 6 months of 2025, we invested $2.5 billion in our infrastructure through Energize 365. We are on pace to deploy $5 billion in capital this year, and we have confidence in our $28 billion capital investment plan through 2029 to improve system resiliency and reliability and to support the level of service customers expect. Providing reliable service is at the heart of our mission. This summer, severe weather strained the system in several of our locations. We are committed to resolving these issues quickly and to making the long-term investments to prevent outages before they happen. Our investment plan supports the customers and communities we are privileged to serve and drives long-term value for our shareholders.

Turning to Slide 6. At the recent Energy and Innovation Summit in Pittsburgh hosted by Senator McCormick, I had the opportunity to address a distinguished group of government and business leaders about our significant investments in and commitment to Pennsylvania. A larger, resilient and reliable electric grid is essential to all of the energy and technology investments announced at the summit. We are proud to be the largest electric utility in the state, which has a constructive regulatory environment to support investment and economic growth. Between our distribution operations and the Pennsylvania portion of our stand-alone transmission business, the Commonwealth represents approximately 35% of our total rate base and earnings. And FirstEnergy Pennsylvania is our largest utility subsidiary.

Through our 2029 planning period, we expect to invest $15 billion in the Commonwealth, consisting of $4.3 billion in distribution capital investments to deliver safe and reliable power, $5.5 billion in transmission capital investments for a modern energy system that can support the growing demand and over $5 billion in operating expenses that support good paying electric industry jobs. Our Pennsylvania capital investment plans are designed to improve reliability and resiliency and drive economic development. These investments are recovered through constructive rate mechanisms such as forward-looking base rates, distribution investment surcharges and forward-looking transmission formula rates.

Governor Shapiro's economic development strategy is fueling innovation and growth in sectors like AI and energy. As Pennsylvania's economic development strategy materializes, it will require incremental electric infrastructure investments well beyond our current plan.

Slide 7 illustrates the remarkable growth we are experiencing in our data center pipeline and contracted data center load. Since February of this year, our long-term pipeline for data center load has increased over 80% to 11.1 gigawatts from 6.1 gigawatts. Our contracted data center load through 2029 has increased approximately 25% since February of this year to 2.7 gigawatts from 2.2 gigawatts. So far this year, we have received requests for 40 new large load studies greater than 500 megawatts each. And since the beginning of 2024, we have received requests for over 95 gigawatts of large load studies.

For reference, the FirstEnergy system coincident peak load for this summer was approximately 33,475 megawatts. Much of the increase in large load studies this year are coming from the states of Pennsylvania and Ohio. Data center growth, both in our system and from those adjacent to our footprint is likely to require additional transmission investments.

Turning to Slide 8. Our transmission system represents a significant growth opportunity for FirstEnergy. The combination of our stand-alone transmission and integrated transmission systems spans 6 states and about 24,000 line miles. FirstEnergy is one of the largest transmission asset owners in PJM. Organic investments in our transmission system are expected to drive rate base growth at a 15% compound annual growth rate between now and 2029. During this period, our annual transmission CapEx is expected to grow from $2.4 billion to $3.4 billion.

In addition, our transmission system is ideally located geographically in the middle of PJM to garner incremental investment associated with data center load growth, both on our own wires and on systems adjacent to ours. Over the last 3 years, FirstEnergy has secured approximately $3.1 billion of investments through competitive open windows through Valley Link and in our stand-alone transmission and integrated segments. We see the incremental transmission expansion associated with load growth as a recurring opportunity for our company. PJM recently initiated the 2025 open window for reliability investment opportunities that we believe are comparable to those in the 2024 RTEP. Our proposals will seek to build on our record of success in the RTEP process.

With the need for a more resilient and reliable electric grid to support economic development and data center growth, we expect transmission investment to increase up to 20% in our next 5-year plan. Moving on to Slide 9 on regulatory and legislative updates. In Ohio, our state President, Torrance Hinton, and his team have done an excellent job moving our base rate case forward. We believe a decision from the PUCO is likely by the end of the year. We are also preparing for the upcoming transition to Ohio's new regulatory framework, which includes multiyear rate cases and forward test years. The new framework supports important capital investments to benefit customers and greater transparency and predictability for our business and investors. In West Virginia, we are preparing to file our 10-year integrated resource plan by October 1.

In that plan, we will provide an updated load forecast and our recommendations to address generation requirements. We expect the IRP will highlight the need for new dispatchable generation in the state. Last week, PJM announced the results from its capacity auction for the 2026 to 2027 delivery year. Prices cleared at the administratively set cap, which is 22% higher than the 2025 to 2026 delivery year with no new dispatchable coal, gas or nuclear generation. It is clear that the capacity auction construct does not provide the incentives necessary to finance and build the much-needed dispatchable generation in deregulated states. We will continue to advocate on our customers' behalf for cost-effective solutions that actually add needed generating capacity to meet growing demand and drive economic development in our states.

Moving to Slide 10. Our progress so far this year reflects our work to optimize FirstEnergy for performance, growth and financial strength. Our leadership team is charged with energizing our culture, delivering improved service to the 6 million customers who depend on us and creating significant value for our investors. Greater accountability means faster results. We are seeing this in the financial discipline that is helping us drive more efficiencies in our cost structure and in a workforce that is more agile and responsive to customers' needs. We are on track for a successful year. We are reaffirming our 2025 core earnings guidance range of $2.40 to $2.60 per share and are on track to deliver results in the upper half of the range.

We are also reiterating our 5-year $28 billion base capital investment program with no incremental equity needs in the plan. These customer-focused investments drive our targeted compound annual growth rate of 6% to 8% through 2029. It is our goal to be recognized as a premier electric company that operates at a high level and consistently delivers growth at or above the midpoint of our guidance range. We offer shareholders a compelling value proposition with a strong growth outlook, demonstrated financial discipline, attractive risk profile and a targeted shareholder return opportunity of 10% to 12% with upside potential. We are committed to operating at a high level, delivering stable growth and realizing our bright future for our customers, communities and investors. With that, I will turn the call over to Jon.

Thanks, Brian, and good morning, everyone. We are very pleased with our progress so far this year. Through the first half, we have delivered on each of our key financial metrics, including core earnings, capital investments, base O&M, which reflects discipline with our operating expenses, and cash from operations, our low-cost funding source for capital allocation. You can view more details about our results, including reconciliations for core earnings and drivers for individual business segments in the strategic and financial highlights document posted to our IR website yesterday afternoon.

Looking at our second quarter, core earnings were $0.50 per share versus $0.51 per share in the second quarter of 2024. Our results, which are ahead of plan, reflect the new base rates in Pennsylvania that went into effect at the start of the year, formula rate transmission rate base growth of 10% when combining our transmission investments at our stand-alone transmission and integrated businesses as well as financial discipline with operating expenses in our distribution and integrated segments. Full details for each of our business segments are available in our highlights document.

Through the first half of the year, core earnings of $1.19 per share reflects strong growth of 19% versus the first half of 2024, with meaningful increases in our distribution and integrated businesses that reflect execution of our regulated strategies, strong financial discipline and higher customer demand, reflecting more normal weather versus the same period of last year. Our financial performance resulted in a consolidated return on equity of 9.7% on a trailing 12-month basis, which is in line with our targeted ROE of 9.5% to 10% and at a 30 basis point improvement since the end of last year. We are very pleased with our results through the first 6 months and remain focused on execution to achieve core earnings per share at the upper half of our guidance range.

As Brian mentioned, we continue to focus on financial discipline and continuous improvement, including reducing maintenance costs through more strategic capital investments, focusing on efficiency in our maintenance plans and enhancing customer processes that will drive better service at a reduced cost. Our year-to-date O&M expenses are lower than planned by nearly 4%, and we expect to continue this trend through the balance of the year. The team is fully committed to identifying sustainable solutions in our cost structure that offset inflation as well as building in flexibility to our financial plans as needed.

Our $5 billion investment plan for 2025 is on track with capital deployment of more than $1.4 billion in the quarter and slightly more than $2.5 billion through the first half of the year. This is 29% ahead of the first 6 months of 2024 with more than 2/3 of the increase in transmission investments in our stand-alone transmission and integrated segments. As Brian mentioned, we continue to see significant needs to invest in our system to improve reliability and resiliency and to support expected increases in customer demand and economic development. Our investment program is funded with internally generated cash flow and utility debt issuances.

Through June 30, our cash from operations was $1.7 billion, an increase of 60% as compared to 2024. This reflects recovery of our capital investments and financial discipline, not only with our operating expenses, but also with discipline around working capital, including managing customer collections, vendor payables and inventory levels. Through the first 6 months of the year, we completed 6 subsidiary debt transactions totaling $1.6 billion, with an average coupon of 5%. This includes $1 billion in new money to fund our capital programs. We expect to complete the remaining 2 transactions in our 2025 financing plan later this year. In addition, in June, FE Corp opportunistically executed a $2.5 billion convertible debt offering in 2 tranches and at a 3- and 5-year tenure at an average coupon of 3.75% with a 20% conversion premium.

This transaction priced 125 basis points lower as compared to the unsecured debt at FE Corp. Proceeds from this transaction will refinance FE Corp.'s $1.5 billion convertible bonds expiring May 2026, $300 million in short-term borrowings that fully redeemed FE Corp's March 2025 bond maturity and a $300 million January 2026 bond maturity. The remaining $400 million will be used to support our capital investment programs or for general corporate purposes. This transaction provides a natural hedge to our overall financing plan as it reduces the company's 2026 financing risk by more than 40% and as with all holding company financing requirements for the next years. Investor demand for our debt remains strong, highlighting the appeal of our core regulated businesses and a solid balance sheet.

Our last 3 utility bond issuances, we received significant interest with transactions oversubscribed by an average of over 9x. We remain committed to a strong balance sheet and investment-grade metrics targeting FFO to debt of 14% plus through 2029. Finally, consistent with our commitment and focus on our core regulated businesses, I am pleased to report that we successfully sold our minority ownership position in the Signal Peak coal mine earlier this month for $47.5 million. This is a full exit, and we have no remaining financial or operational liability. Through the first half of the year, we're executing well on our regulated strategies and investment plan and I am pleased with the financial discipline demonstrated across the organization.

Our key metrics for financial performance through the first 6 months are better than planned and last year, reflecting our commitment to delivering shareholder value. We look forward to continuing this momentum through the balance of the year and as we execute against our long-term plan. We are focused on fulfilling our commitments to all of our stakeholders and delivering on our shareholder value proposition.

Thank you for your time. Now let's open the call to Q&A.

[Operator Instructions]And the first question comes from the line of Nicholas Campanella with Barclays.

Good morning, everyone. Thanks for all the updates. So I just wanted to kind of clarify on the transmission CapEx upside. Certainly, a lot coming here. Just the 20% increase that you have visibility to in the plan -- is that the growth of the minority interest ownership? And maybe you could just clarify just from an FE shareholder perspective, just how much CapEx is going to identify kind of upside to your 5-year plan today? Is it roughly $2 billion? Or is it more than that? And I'll leave it there.

Nick, this is Jon. So to answer your first question, we show our CapEx gross. So in the $28 billion, that $14 billion is our consolidated CapEx. So we -- that 20% would be on that same basis. And then what was your second question? I didn't catch that.

Just if you were to kind of add up all the visibility that you have across the portfolio across RTEP processes and various other things, just on a dollar figure, how much CapEx has now been identified to FE shareholders in the coming 5-year plan?

Yes. So that could be -- incrementally, it could be $2.3 billion to almost $4 billion.

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

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

That's great. And then maybe just a lot of focus on Pennsylvania here, especially with the data points this past quarter. What are your views on pursuing a [ Genco ] similar to some of what your peers in PJM announced? And how are you kind of viewing the auction clearing at the cap now in PJM informing legislation in Pennsylvania for rate base generation.

Yes. So let me start by saying God bless Governor Shapiro for saving the customers in PJM billions of dollars by negotiating the collar that he did. Again, the $16 billion that customers are going to spend during that capacity delivery year, add no new dispatchable generation to the system. You could build an awful lot of 1-gigawatt power plants for $16 billion. We're going to be constructive in terms of how we engage with the states that are fully deregulated. We would be willing to build on a regulated like basis or a fully contracted basis with creditworthy counterparties. In the meantime, we're going to focus on West Virginia, where we do have the opportunity to invest on an integrated basis. We're anticipating our IR call for new dispatchable generation. And we are ready, willing and able to make those investments for the benefits of our customers in West Virginia and for incremental economic development in that state.

The next question comes from the line of Jeremy Tonet with JPMorgan.

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

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

Got it. That makes sense there. Maybe pivoting to West Virginia ahead of the IRP filing. Could you speak to the scope for incremental generation needs there? And what level of low growth do you see in the state? Just wondering any color you might be able to provide there, particularly as it relates to coal plant retirements and how you think about that at this point?

Yes. So we'll be updating those load projections in the IRP that we're going to follow. I don't want to front run that filing today. But we have about 3,500 megawatts of generation, 3,000 of it is coal-fired generation in the state of West Virginia that currently, according to our current forecast, would have those retiring in the 2035 and the 2040 time frame. Again, we'll update that as we get into the IRP. But I could see us incrementally adding over a period of time 1,000 megawatts of dispatch gas combined cycle over the next 10 years. And that would support both giving flexibility to those plans that we have with the coal-fired power plants and attracting new data center load and other load that's looking to relocate in West Virginia. West Virginia has a real competitive advantage given that it's an integrated resource plan state. And we've talked to the governor about that. We've talked to the chair of the commission about that. And we think there would be support for adding generation in the state.

The next question comes from the line of Carly Davenport with Goldman Sachs.

Maybe just to start on results, you're tracking ahead of the plan on a number of key items here. Just curious if you can flesh out what is driving that upside versus the plan? And then curious if you'd revisit the guidance range as we get through 3Q or ship that target within the range given the strong results thus far?

Carly, this is Jon. So most of the favorability of the plan year-to-date is just discipline around operating expenses. As I said in my prepared remarks, our operating expenses are about 4% below plan, and we see that continuing for the balance of the year. So it's really just around financial discipline and continuing to deploy capital on time and on plan. So that's what's really driving that. I think as we get out to the third quarter call, obviously, we'll look at where we are for the year. And then if it makes sense, we'll adjust the guidance range at that time.

Great. And then just wanted to follow up on Nick's question earlier on the transmission upside. Could you just talk a little bit about what's embedded in that 20% opportunity that you've highlighted? Is that just the PJM open window? Or are there any other drivers that we should be thinking about?

It's both the open windows that we have, and then it's incremental to actually add the data centers that are on our system are a component of that. And then there's some additional incremental that we found that's not related to either 1 of those going forward. So it's all 3 of those parts that add up to the upside that we're seeing.

The next question comes from the line of David Arcaro with Morgan Stanley.

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

Yes, I think so, David. We we're not putting in our plan things that we don't feel fairly certain about. So for it to be in the plan, it has to be contracted with the customer or we have to have had the award or feel fairly certain of the award from a competitive process or we have to have line of sight that the investment is at the period that we're talking about. But against that backdrop, I think there will be additional customers will come forward and sign contracts with us. I do think there will be awards coming out of the current open window. I think there will be additional open windows that happened. So I see upside to the plan. But we're not going to be frivolous in putting upside that we don't see line of sight to in our plan. But yes, I do think there will be upside as we go forward in time.

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

Not a ton of clarity on that, David, in deregulated states. I am encouraged by the PJM state-led technical conference that's going to happen on September 23, where all 5 of our states governors are going to be participating in that. I think the capacity auction situation is one that can only be solved by the states themselves. Clearly, the capacity auction construct can't solve it and hasn't solved it. The states can solve it, whether they decide to do so individually or through something like the outcome of the September 23 Technical Conference, I'm not sure, but I'm very pleased to see the governors engaged taking a leadership role in this, and I think that's how we're going to get to the right solution.

The next question comes from the line of Ross Bowler with Bank of America.

A lot of my questions have been asked, but maybe we could just cycle back to or circle back to Ohio regulation for a minute. So you're in this process with the PUCO for a forward test year. We're thinking about affordability pressures with PJM also coming through the system. As you move from the ESP and as you go in the forecast year, maybe 1 piece is what intervenors seem most concerned about through that process? And how would that shift your ability to have an opportunity to earn your allowed ROE and think about regulatory lag?

We're in the midst of our current base rate case, which we've had the testimony briefs have been filed reply briefs and we're waiting for an answer in the current rate case and all the things that you would anticipate being covered by interveners are being covered there. Cap structure, ROE, the rates themselves, like all of the normal things being considered in our base rate case. I anticipate, Ross, that's going to be the case in these forward-looking test years that we have. When we go in for the next rate case under the new regime, whenever that is, we're going to have a fairly limited period that needs to be reviewed historically. And since we have true-ups on the forward-looking portion of the test year, I don't anticipate those being particularly contentious.

So I think we'll be able to move through the next rate case relatively easily in a fairly short period of time without many issues that haven't recently been discussed being raised. So I think the new regime will be constructive and look forward to transitioning to that as quickly as possible.

And then 1 follow up to that, just in Ohio. We still have sort of the remaining or the last, hopefully, remaining HB [indiscernible] processes how do you see those progressing from here? And when can we finally think about wrapping and closing that, so I don't have to ask the questions anymore?

Yes, so similar answer. We've been through most of the rate case in that. There have been no new issues raised during that period. We anticipate getting an outcome later this year and finally, be able to put that chapter behind us. But nothing new was raised in the hearings that wasn't disclosed or and accounted for previously. And we look forward to getting through that proceeding and putting a final period on that by the end of this year as well.

The next question comes from the line of Michael Sullivan with Wolfe Research.

Had another one on the West Virginia generation plans. Are you mainly looking at building new dispatchable generation yourself? Or would you consider buying something that someone else may be developing. I think 1 of your peers is doing that?

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

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

Yes. If the risk profile were to look like regulated, I'd be comfortable with it. Meaning I wouldn't want us to be taking a position in the capacity or energy markets for the benefit of a customer. I wouldn't want us to be long generation that we're looking for a home for. But if we were able to make an investment in generation that had a regulated type risk profile. That's something we consider. I wouldn't say that's an evolution for us. We talked about that type of situation in our deregulated states as being something that we could consider if it could help solve the problem but we're certainly not looking to be a merchant generator with new generation to sell into today's marketplace.

The next question comes from the line of Andrew Weisel with Scotia Bank.

First question on data centers, a lot of new disclosures. I appreciate all the details. On Slide 7, can you tell us what's the current level of data center demand you're seeing today? And then it looks like a pretty substantial step-up in the blue bar from 2025 to 2026. Is that a specific customer ramping up? And can you give us a little more detail even around who the customer is or where in terms of which service territory?

So Andrew, this is Jon. So active customers today are probably 400 megawatts, but then you see the pipeline continue to increase. I mean most of this is happening in Ohio, Maryland and West Virginia. We are starting to see a lot more interest in Pennsylvania. In fact, if you look at our large load studies that are greater than 500 megawatts I would say that probably 1/3 of what we're seeing just this year alone is in Pennsylvania, which is consistent with what some of the announcements have been over the course of the last few months.

Okay. Great. And then when would the next CapEx refresh be coming? I think you're alluding to it, would that be something we'd be seeing with the third quarter in EEI or more like a year-end update in February?

Well, I think we want to get clarity on some of the transmission CapEx with respect to this open window. So we'll likely provide the long-term CapEx plan on the fourth quarter call.

The next question comes from the line of Sophie Karp with KeyBanc Capital Markets.

I have a follow-up on Ohio. Could you talk a little bit about how -- what your strategy is going to be in a higher regulatory strategy following the conclusion of the current rate case? Kind of like when do you plan to file under the new framework? Will that depend on the certain outcomes in the existing rate case and et cetera?

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

In the side of -- to outstanding, so you won't have prior again until you actually have the final decision on it?

Yes. I think we'll look to have a final decision on the existing base rate case before we file the new rate case, if that's what you're asking. And I anticipate that we'll get an outcome sometime in the fourth quarter based on where we are today with [ Reply Breeze ] filed early in July. So my sense is we'll have an outcome in the fourth quarter, and then we'll take some time to understand that and then we'll make some decisions as to what the next steps are.

The next question comes from the line of Anthony Crowdell with Mizuho Securities.

I want to follow up on 1 of David or Carlo's questions. Brian, I think you're very clear you had said and I hope I heard it correctly, that if you think the solution for the capacity issues or the higher prices are likely to be solved at the state level. If that's correct, and if my understanding is correct, which state that's in the FE footprint do you think is maybe in the leader or going to be 1 of the first to solve that problem?

I don't want to pick one, Anthony. I'd say that Pennsylvania has been very active in demonstrating leadership on that. Ohio clearly just doubled down on the markets solving that problem for them. So I think they're going to rely on the PJM capacity construct. And then I think the other states are somewhere in between what I'd call those extremes. West Virginia has an IRP. And I think Maryland and New Jersey, are very concerned about the issue and their governors are engaged. So we're encouraging that engagement. We're participating in that engagement and encouraging states to take the leadership role that we think is the only solution to this issue.

And I'm just turning out, do you think the states or the PJM looks to change maybe compensation different for new generation versus existing generation because you highlighted in your opening remarks that I think it was $19 billion brought no new megawatts or no new dispatch megawatts?

What we're seeing on the current construct is a massive wealth transfer from customers and PJM, retail customers and PJM to large independent power producers, mostly located in Houston, Texas. I don't think that's a good public policy answer. God bless those companies for their recent windfalls. That's great for them. It's not solving the problem that we need to solve in PJM. And that is new dispatchable generation. So if the states finally decide that they've had enough of their customers paying for something that they're not getting, I think we'll get the solutions that help address the problem.

Got it. And then just lastly, you guys talk about the potential, I think, of I think it's $14 billion of more transmission spending. Just a significant raise in CapEx. Yesterday, we had other utilities announcing again, significant raises, I think, another company today along with you guys, big raise. I mean, do you -- when you see all these numbers, do you worry that maybe you don't have the equipment to deliver that? Do you quickly call your supply team to make sure we have -- are there any concerns when you're seeing the whole industry really raise CapEx to a level we haven't seen? And could you procure the equipment or the -- could you build that much in this short of a time?

Yes. Thank you for the question, Anthony. We're confident that we have the relationships with vendors and suppliers and that they're included in our short-, medium- and long-term planning that we will be able to deliver against our commitments.

Congrats on the quarter.

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