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    FE
    Earnings call· Sep 2025(Q3 FY25)

    FIRSTENERGY CORP FE

    Oct 23, 2025 Source

    Executive summary

    FirstEnergy Q3 FY25 — Strong Performance, Raised Guidance, and Significant Investment Opportunities

    FirstEnergy delivered strong Q3 FY25 results, driven by effective capital deployment and favorable rate adjustments. The company raised its 2025 capital plan and reaffirmed its long-term EPS growth outlook, bolstered by significant data center demand and transmission investment opportunities. Management is actively addressing customer affordability concerns, particularly regarding the generation component of bills in deregulated states, while pursuing new regulated generation in West Virginia.

    Highlights

    5

    • Reported Q3 FY25 core earnings of $0.83 per share, a 9% increase year-over-year.

    • Raised 2025 capital investment program by 10% to $5.5 billion.

    • Reaffirmed core earnings CAGR of 6% to 8% through 2029, with confidence in the upper end of the range.

    • Long-term data center demand pipeline nearly doubled, with contracted demand increasing over 30%.

    • Consolidated return on equity (ROE) improved to 10.1% on a TTM basis, exceeding the target range.

    Concerns

    3

    • Electric bills for customers in deregulated states increased 11% over the last year, with 85% of this increase driven by the generation component.

    • PJM capacity auctions are criticized for paying for new generation that is not materializing, leading to customer burden.

    • Supply chain for major gas generation equipment shows strong pricing and 3-4 year lead times.

    Guidance & targets

    12
    CategoryTargetConfidence
    Full-year 2025 Core EPS
    $2.50 to $2.56 per share
    high materiality
    High
    Core Earnings Compounded Annual Growth Rate
    6% to 8%
    high materiality
    High
    Capital Plan
    Higher CapEx plan
    high materiality
    High
    Transmission Investments
    increase by 30%
    high materiality
    High
    Transmission Rate Base Growth
    up to 18% per year
    high materiality
    High
    West Virginia Capacity Need
    capacity need
    medium materiality
    High
    West Virginia Utility Scale Solar Addition
    70 megawatts
    medium materiality
    High
    West Virginia Dispatchable Gas Combined Cycle Generation Addition
    1.2 gigawatts
    high materiality
    High
    West Virginia Coal Plants Operation
    operational through the planning period
    low materiality
    High
    PJM Board Transmission Project Awards
    expected to award
    medium materiality
    High
    Ohio Base Rate Case Order
    expect an order
    medium materiality
    High
    Ohio Multiyear Rate Plan Filing
    plan to file
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Distribution
    Year-to-date earnings improvement due to Pennsylvania base rates, higher customer demand, and lower operating expenses.
    Annual rate adjustment: $225 million
    		———$0.20 per share improvement
    Integrated
    Year-to-date earnings improvement primarily from formula rate investments in transmission in New Jersey, West Virginia, and Maryland, and higher customer demand, partially offset by higher depreciation.
    Transmission rate base growth: 16%
    		—7%—$0.05 per share improvement
    Stand-alone Transmission
    Earnings increased due to strong capital investment program, partially offset by new debt at FET Holding Company and full-year dilution from FET minority interest sale.
    Owned rate base growth: 9%
    		—7%——

    Operational metrics

    25
    GAAP EPS
    $0.76vs. $0.73 in Q3 FY24
    Q3 FY25

    Reported GAAP earnings.

    Core EPS
    $0.83vs. $0.76 in Q3 FY24 (9% increase)
    Q3 FY25

    Non-GAAP financial measure.

    Core EPS
    $2.02vs. $1.76 in YTD FY24 (15% increase)
    YTD FY25

    Non-GAAP financial measure.

    Capital investments
    $4 billion30% increase vs. prior year
    9 months YTD FY25

    Invested in regulated utilities.

    Transmission capital investments
    $1.9 billion35% increase vs. prior year
    9 months YTD FY25

    Includes stand-alone transmission and integrated businesses.

    System peak load increase from data centers
    15 GWnearly 50% increase from 33.5 GW in 2025
    2035

    Based on contracted or pipeline data center customers.

    PJM peak load forecast increase
    48 GW30% of current peak load of 162 GW
    2035

    Forecasted increase across PJM.

    Utility scale solar addition
    70 MW
    2028

    Part of West Virginia IRP.

    Dispatchable gas combined cycle generation addition
    1.2 GW
    around 2031

    Part of West Virginia IRP, represents 35% increase to current regulated generation portfolio.

    PJM open window capital investments awarded
    $4 billion
    last few years

    Awarded through PJM's RTEP open window process.

    Customer bills as % of share of wallet
    2.5%
    current

    On average.

    Customer bills vs. in-state peers
    19% below
    current

    On average.

    Electric bill increase
    11%
    last year

    Average increase for customers.

    Generation component of bill increase
    85%
    last year

    Driving the electric bill increase in deregulated states.

    Consolidated return on equity
    10.1%vs. 9.4% in 2024 (70 bps improvement)
    TTM

    Slightly above targeted ROE of 9.5% to 10%.

    Subsidiary debt transactions
    8
    FY25

    Part of 2025 financing plan.

    FirstEnergy Transmission debt transaction
    $450 million
    FY25

    Included in subsidiary debt transactions.

    JCP&L financing
    $1.35 billion
    Q3 FY25

    Included in subsidiary debt transactions.

    FE Corp. convertible debt offering
    $2.5 billion
    June FY25

    Part of 2025 capital markets program.

    Total debt financing
    $6 billion
    FY25

    Encompassed by 2025 capital markets program.

    Sales growth
    1%higher than last year
    YTD FY25

    Overall sales.

    Industrial load increase
    more meaningful increases
    Q4 FY25 and next year

    Expected from data center customers ramping up. Mid-single digits by Q2 next year, significantly higher by Q4 next year.

    O&M performance
    tracking better than plannedlargely in line with last year
    current

    Despite executing additional maintenance work.

    Total shareholder return opportunity
    10% to 12%
    long-term

    With upside potential.

    Major equipment lead time
    3 to 4 yearsdown from 4 to 5 years
    current

    For gas generation projects.

    Industry KPIs

    5
    MetricValueDetails
    Retail sales growth1%%
    Regulatory rate base growthup to 18%%
    Rto market structure reviewPJM capacity auctions
    New gas generation builds upgrades1.2 GWGW
    Contracted large load capacity esas loasover 30%%

    Orderbook & backlog

    2
    Long-term data center demand pipelinenearly doubledQ3 FY25

    nearly doubled since Q4 FY24

    Includes interconnection requests from serious and reputable customers.

    Contracted data center customer demandincreased by over 30%Q3 FY25

    over 30% increase since Q4 FY24

    Customers are contracted or in pipeline, with criteria like land ownership, building permits, public announcements considered for confidence.

    Deals & partnerships

    1
    Potential partnersRFP for build-to-own transfer of natural gas resourcesup to 1.2 GW

    Company plans to issue an RFP for up to the full 1.2 GW of natural gas resources in West Virginia, while also evaluating building a portion or entirety on its own.

    Capital programs

    3
    2025 Capital Investment Programunderway$5.5 billion
    Period spend: $4 billion
    Spent to date: $4 billion through first 9 months

    Benefit: System reliability and resiliency for customers

    Increased by 10% from original plan. Over half of the increase is in transmission CapEx, remaining in distribution for reliability and storm restoration.

    West Virginia 1.2 GW Natural Gas Generation Projectplanned$2.5 billion

    Benefit: 1.2 GW dispatchable gas combined cycle generation

    Initial estimate, will be included in long-term plan after regulatory approval. Company plans to issue a build-to-own transfer RFP or evaluate self-building.

    2026-2030 Capital Planplanned
    Start: 2026

    Benefit: Higher CapEx, significant increase in transmission investments (30% vs. current 5-year plan)

    Expected to be rolled out early next year. Most growth from high-quality transmission investments.

    Risks & headwinds

    4
    Unsustainable electric bill increases in deregulated stateslast year

    11% increase over last year, 85% driven by generation component

    Mitigation: Advocating with state leadership for meaningful change, attracting new generation, addressing PJM capacity auctions.

    PJM capacity auctions paying for new generation that is not materializingongoing

    Customers bearing burden without receiving new capacity

    Mitigation: Advocating for a 2-tiered structure (existing vs. incremental capacity) and other mechanisms to attract new capacity.

    Strong pricing and long lead times for major gas generation equipmentcurrent

    3-4 year lead time on major equipment, pricing remains strong

    Mitigation: Factored into IRP forecast, regulatory framework supports 2031 in-service date.

    Customer concerns about rising billscurrent

    People see their bills going up

    Mitigation: Being thoughtful about O&M spending, advocating to mitigate impact of higher generation costs, utilizing volumetric commitments and customer credit support for data centers.

    What to watch in Q4 FY25

    5

    Ohio Base Rate Case Order

    Next quarter
    CurrentExpected in November
    TargetOrder issued

    Why it matters

    The order will determine treatment of various aspects and inform the company's subsequent multiyear rate plan filing, impacting future recovery of investments in Ohio.

    we do expect an order in the Ohio base rate case in November.

    Q&A highlights

    6

    How will capital be recovered for the WV gas generation project (build/transfer vs. self-build), and what's the earnings attribution timeline, especially for build/transfer?

    For self-build, CWIP recovery and earnings during construction are expected, with significant earnings post-online. For build-own transfer, it's straightforward.

    “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.”

    asked by Nicholas Campanella · answered by Brian Tierney

    2 min read6 chapters

    Detailed Narrative

    01

    Data Center Demand & Load Growth

    FirstEnergy is experiencing significant demand growth from data centers, with its long-term pipeline nearly doubling and contracted demand increasing over 30% since February. This is projected to increase FirstEnergy's system peak load by 15 GW (nearly 50%) to 48.5 GW by 2035, and PJM's peak load by 48 GW (30%). The company is strategically positioned to support this through transmission investments and is implementing measures like volumetric commitments and credit support to protect existing customers.

    02

    West Virginia Integrated Resource Plan (IRP)

    The company submitted an IRP in West Virginia outlining recommendations for affordable, accessible, and reliable power. The plan addresses a capacity need starting in 2027, proposing 70 MW of solar in 2028 and 1.2 GW of dispatchable gas generation around 2031. It also includes keeping existing coal plants operational and using short-term power purchases. The gas project, estimated at $2.5 billion, aligns with Governor Morrisey's 50 by 50 initiative and will be pursued via a build-to-own transfer RFP or self-build, with regulatory approval sought in Q1 2026.

    03

    Transmission System Investments

    Significant incremental investments are planned for the transmission system to ensure reliability and resilience, especially with increasing demand. This includes replacing aging infrastructure and participating in PJM's RTEP open window process, through which FirstEnergy has already been awarded $4 billion in capital investments. The company submitted new proposals for the 2025 open window, expecting transmission investments in the 2026-2030 capital plan to increase by 30%, driving an 18% compound transmission rate base growth through 2030.

    04

    Customer Affordability & Generation Costs

    FirstEnergy emphasizes customer affordability, noting that average bills are 2.5% of customer share of wallet and 19% below in-state peers. However, electric bills in deregulated states increased 11% over the last year, with 85% of this driven by the generation component. The company is advocating for policy changes, including addressing PJM capacity auctions, to attract new dispatchable generation and mitigate unsustainable cost increases for customers.

    05

    Strong Financial Performance & Capital Deployment

    The company reported strong Q3 FY25 core earnings of $0.83 per share, a 9% increase year-over-year, and year-to-date core earnings of $2.02 per share, up 15%. This performance is attributed to effective execution of investment plans, Pennsylvania base rates, and financial discipline. Capital investments through the first nine months of 2025 totaled $4 billion, a 30% increase, leading to a 10% increase in the full-year 2025 capital plan to $5.5 billion.

    06

    Regulatory Strategy & Rate Cases

    FirstEnergy is actively managing its regulatory strategy, with Pennsylvania base rates already in effect. The company expects an order in the Ohio base rate case in November, after which it plans to file a multiyear rate plan for timely recovery of investments. Management also indicated a review of rate case cadences for Maryland, West Virginia, and New Jersey in 2026 to ensure utilities earn close to their allowed returns.

    AI-generated summary of the company’s earnings call. Not investment advice.