What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-13 · 837 added, 786 removed, 1521 unchanged (52% of the section changed)

33 unchanged sentences

Accounting for the Effects of Rate Regulation

As described in Note 1 to the consolidated financial statements, the Company’s Regulated Distribution and Regulated Transmission segments are subject to regulation that sets the prices (rates) the Company is permitted to charge customers based on costs that the regulatory agencies determine are permitted to be recovered.

As described in Note 1 to the consolidated financial statements, the Company’s Regulated Distribution, Regulated Transmission and Integrated segments are subject to regulation that sets the prices (rates) the Company is permitted to charge customers based on costs that the regulatory agencies determine are permitted to be recovered.

At times, regulatory agencies permit the future recovery of costs that would be currently charged to expense by an unregulated company.

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As of December 31, 2024, there were $617 million of regulatory assets and $995 million of regulatory liabilities.

The principal considerations for our determination that performing procedures relating to management’s accounting for the effects of rate regulation is a critical audit matter are the significant audit effort in assessing the impact of regulation on accounting for regulatory assets and liabilities and in evaluating the complex audit evidence related to whether the regulatory assets will be recovered and liabilities settled.

The principal considerations for our determination that performing procedures relating to accounting for the effects of rate regulation is a critical audit matter is a high degree of auditor effort in performing procedures and evaluating audit evidence related to the recovery of regulatory assets and the settlement of regulatory liabilities.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the accounting for regulatory matters, including controls over the evaluation of the recoverability and settlement of existing regulatory assets and liabilities.

These procedures also included, among others, (i) obtaining the Company’s correspondence with regulators, (ii) evaluating the reasonableness of management’s assessment regarding regulatory guidance, proceedings, and legislation and the related accounting implications, and (iii) calculating regulatory assets and liabilities based on provisions outlined in rate orders and other correspondence with regulators.

These procedures also included, among others, (i) obtaining the Company’s correspondence with regulators, (ii) evaluating the reasonableness of management’s assessment regarding regulatory guidance, proceedings, and legislation and the related accounting implications, and (iii) testing, on a sample basis, the regulatory assets and liabilities by considering the provisions outlined in rate orders and other correspondence with regulators.

/s/ PricewaterhouseCoopers LLP

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Provision for depreciation 1,581 1,461 1,375

Amortization (deferral) of regulatory assets, net ( 261 ) ( 365 ) 269

Deferral of regulatory assets, net ( 231 ) ( 261 ) ( 365 )

General taxes 1,212 1,164 1,129

DPA penalty (Note 14)

Gain on sale of Yards Creek — — ( 109 )

Total operating expenses 11,097 10,604 10,549

3 unchanged sentences

( 85 ) ( 36 ) ( 171 )

Equity method investment earnings (Note 1) 175 168 31

Equity method investment earnings, net (Note 1) 58 175 168

Miscellaneous income, net 189 164 415

Pension and OPEB mark-to-market adjustment ( 78 ) 72 382

Pension and OPEB mark-to-market adjustments ( 22 ) ( 78 ) 72

Interest expense ( 1,144 ) ( 1,124 ) ( 1,039 )

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(1) Includes excise and gross receipts tax collections of $ 429 million, $ 420 million and $ 406 million in 2024, 2023 and 2022, respectively.

(2) Net of income tax benefit (expense) of ($ 21 million) and $ 48 million in 2023 and 2021, respectively.

(2) Consists of income taxes of $ 21 million in 2023.

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

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Amortized losses on derivative hedges 3 2 9

Other comprehensive loss ( 4 ) — ( 13 )

Income tax benefits on other comprehensive loss

( 1 ) ( 1 ) ( 3 )

Other comprehensive income (loss) 4 ( 4 ) —

Income tax expense (benefits) on other comprehensive loss 1 ( 1 ) ( 1 )

Other comprehensive income (loss), net of tax 3 ( 3 ) 1

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Accumulated other comprehensive loss ( 14 ) ( 17 )

Accumulated deficit ( 97 ) ( 1,199 )

Retained earnings (accumulated deficit) 43 ( 97 )

Total common stockholders' equity 12,455 10,437

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Common Stock Other Paid-In Capital AOCI Accumulated Deficit Total Common Stockholders' Equity

Common Stock OPIC AOCI Retained Earnings (Accumulated Deficit) Total Common Stockholders' Equity

(In millions) Shares Amount NCI Total Equity

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Net income — — — — 406 406 33 439

Other comprehensive loss, net of tax — — — ( 10 ) — ( 10 ) — ( 10 )

Other comprehensive income, net of tax — — — 1 — 1 — 1

Cash dividends declared on common stock (1)

— — ( 892 ) — — ( 892 ) — ( 892 )

Common stock issuance (Note 11)

26 3 971 — — 974 — 974

Stock Investment Plan and share-based benefit plans 2 — 98 — — 98 — 98

19.9 % FET equity interest sale, net of transaction costs (Note 1)

— — 1,887 — — 1,887 451 2,338

Noncontrolling interest distributions declared — — — — — — ( 21 ) ( 21 )

Capital contribution from FET equity interest — — — — — — 9 9

Consolidated tax benefit allocation — — ( 5 ) — — ( 5 ) 5 —

Other — — ( 4 ) — — ( 4 ) — ( 4 )

Balance, December 31, 2022 572 $ 57 $ 11,322 $ ( 14 ) $ ( 1,199 ) $ 10,166 $ 477 $ 10,643

Net income — — — — 1,102 1,102 74 1,176

Other comprehensive income, net of tax — — — 1 — 1 — 1

Other comprehensive loss, net of tax — — — ( 3 ) — ( 3 ) — ( 3 )

Cash dividends declared on common stock (1)

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Stock Investment Plan and share-based benefit plans 2 — 89 — — 89 — 89

FET minority interest sale, net of transaction costs (Note 1) — — 1,887 — — 1,887 451 2,338

Distribution to FET minority interest — — — — — — ( 21 ) ( 21 )

Capital contribution from FET minority interest — — — — — — 9 9

Consolidated tax benefit allocation — — ( 5 ) — — ( 5 ) 5 —

Other — — ( 4 ) — — ( 4 ) — ( 4 )

Noncontrolling interest distributions declared — — — — — — ( 72 ) ( 72 )

Balance, December 31, 2023 574 $ 57 $ 10,494 $ ( 17 ) $ ( 97 ) $ 10,437 $ 479 $ 10,916

Net income — — — — 978 978 149 1,127

Other comprehensive loss, net of tax — — — ( 3 ) — ( 3 ) — ( 3 )

Other comprehensive income, net of tax — — — 3 — 3 — 3

Cash dividends declared on common stock (1)

1 unchanged sentence

Stock Investment Plan and share-based benefit plans 3 1 73 — — 74 — 74

Distribution to FET minority interest — — — — — — ( 72 ) ( 72 )

FET Equity Interest Sale (Note 1) — — 1,934 — — 1,934 731 2,665

Noncontrolling interest distributions declared — — — — — — ( 86 ) ( 86 )

Other 8 8 ( 8 ) —

Balance, December 31, 2024 577 $ 58 $ 12,368 $ ( 14 ) $ 43 $ 12,455 $ 1,265 $ 13,720

(1) Dividends declared for each share of common stock totaled $ 1.56 during 2022 and 2021.

(2) Dividends declared for each share of common stock totaled $ 1.60 during 2023.

(1) Dividends declared for each share of common stock totaled $ 1.70 , $ 1.60 and $ 1.56 during 2024, 2023 and 2022, respectively.

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

7 unchanged sentences

Depreciation, amortization and impairments 1,588 1,280 1,317

Charges associated with change in ARO (Note 10)

Employee benefit costs, net ( 32 ) ( 9 ) ( 279 )

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Transmission revenue collections, net 113 ( 180 ) 79

Gain on sale of Yards Creek — — ( 109 )

Pension trust contribution — ( 750 ) —

14 unchanged sentences

Capital investments ( 4,030 ) ( 3,356 ) ( 2,848 )

Proceeds from sale of Yards Creek — — 155

Sales of investment securities held in trusts 121 38 48

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Short-term borrowings, net — 675 100

Common stock issuance — — 1,000

Redemptions and repayments-

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Short-term borrowings, net ( 225 ) — —

Proceeds from FET minority interest sale, net of transaction costs — 2,348 —

Distributions to FET minority interest ( 72 ) ( 21 ) —

Capital contributions from FET minority interest — 9 —

Proceeds from FET Equity Interest Sale (Note 1) 3,500 — —

Proceeds from 19.9% FET equity interest sale, net of transaction costs

Noncontrolling interest cash distributions ( 86 ) ( 72 ) ( 21 )

Capital contributions from noncontrolling interest — — 9

Common stock dividend payments ( 970 ) ( 906 ) ( 891 )

Other ( 72 ) ( 152 ) ( 61 )

Debt issuance and redemption costs, and other ( 125 ) ( 72 ) ( 152 )

Net cash provided from (used for) financing activities 1,434 2,238 ( 912 )

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SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid (received) during the year-

Cash paid during the year-

Interest (net of amounts capitalized) $ 1,062 $ 1,002 $ 1,021

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Organization and Basis of Presentation

2 Revenue 103

3 Earnings Per Share 107

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9 Variable Interest Entities 118

10 Asset Retirement Obligations 120

11 Fair Value Measurements 121

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16 Segment Information 145

16 Discontinued Operations 133

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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FE’s principal business is the holding, directly or indirectly, of all of the outstanding equity of its principal subsidiaries as of December 31, 2024:

OE, CEI, TE, Penn (a wholly owned subsidiary of OE), JCP&L, ME, PN, FESC, MP, AGC (a wholly owned subsidiary of MP), PE, WP and KATCo.

Additionally, FET is a majority-owned subsidiary of FE, and is the parent company of ATSI, MAIT, PATH and TrAIL.

OE, CEI, TE, FE PA, JCP&L, FESC, MP, AGC (a wholly owned subsidiary of MP), PE and KATCo.

Additionally, FET is a VIE of FE, and is the parent company of ATSI, MAIT, PATH and TrAIL.

In March 2024, PATH completed the process of terminating all of its FERC-jurisdictional rates and facilities, with the result that PATH no longer is a “public utility” and no longer is subject to FERC jurisdiction.

FET and its non-affiliated joint venture partner are completing the process of terminating the PATH corporate entities.

In addition, FE holds all of the outstanding equity of other direct subsidiaries including FEV, which currently holds a 33-1/3% equity ownership in Global Holding, the holding company for a joint venture in the Signal Peak mining and coal transportation operations.

On January 1, 2024, FirstEnergy consolidated the Pennsylvania Companies into FE PA, including OE subsidiary, Penn, making FE PA a new, single operating entity.

In addition to merging each of the Pennsylvania Companies with and into FE PA, with FE PA surviving such mergers as the successor-in-interest to all assets and liabilities of the Pennsylvania Companies, (i) WP transferred certain of its Pennsylvania-based transmission assets to KATCo, and (ii) PN and ME contributed their respective Class B equity interests of MAIT to FE.

FE PA, as of January 1, 2024, is FE’s only regulated distribution utility in Pennsylvania encompassing the operations previously conducted individually by the Pennsylvania Companies and serves an area with a population of approximately 4.5 million.

FE PA operates under the rate districts of the former Pennsylvania Companies.

FirstEnergy is also evaluating the legal, financial, operational and branding benefits of consolidating the Ohio Companies into a single Ohio utility company.

On May 31, 2022, Brookfield and the Brookfield Guarantors acquired 19.9 % of the issued and outstanding membership interests of FET.

FirstEnergy presents the third-party investors’ ownership portion of FirstEnergy's net income, net assets and comprehensive income as NCI.

NCI is included as a component of equity on the Consolidated Balance Sheets.

On January 1, 2024, FirstEnergy consolidated the Pennsylvania Companies into FE PA, rendering FE PA a new, single operating entity and the successor-in-interest to all assets and liabilities of the Pennsylvania Companies.

As of January 1, 2024, FE PA is FE’s only regulated distribution power company in Pennsylvania encompassing the operations previously conducted individually by the Pennsylvania Companies.

FirstEnergy continues to evaluate the legal, financial, operational and branding benefits of consolidating the Ohio Companies into a single Ohio power company.

Also on January 1, 2024, WP transferred certain of its Pennsylvania-based transmission assets to KATCo, and PN and ME contributed their respective Class B equity interests of MAIT to FE, which were ultimately contributed to FET in exchange for a special purpose membership interest in FET.

So long as FE holds the FET special purpose membership interests, it will receive 100% of any Class B distributions made by MAIT.

FESC provides legal, financial and other corporate support services at cost, in accordance with its cost allocation manual, to affiliated FirstEnergy companies.

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FE and its subsidiaries are principally involved in the transmission, distribution, and generation of electricity.

FirstEnergy’s utility operating companies comprise one of the nation’s largest investor-owned electric systems, serving over six million customers in the Midwest and Mid-Atlantic regions.

FirstEnergy’s electric operating companies comprise one of the nation’s largest investor-owned electric systems, serving over six million customers in the Midwest and Mid-Atlantic regions.

FirstEnergy’s transmission operations include more than 24,000 miles of transmission lines and two regional transmission operation centers.

AGC and MP control 3,580 MWs of total capacity.

As of December 31, 2024, MP and AGC control 3,604 MWs of total capacity.

The accompanying consolidated financial statements have been prepared in accordance with GAAP and the rules and regulations of the SEC.

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Under the equity method, the interest in the entity is reported as an investment in the Consolidated Balance Sheets and the percentage of FE's ownership share of the entity’s earnings is reported in the Consolidated Statements of Income and Comprehensive Income.

Certain prior year amounts have been reclassified to conform to the current year presentation, including presenting long-term debt and other long-term obligations within “Noncurrent Liabilities” on the Consolidated Balance Sheets as compared to “Total Capitalization”.

Certain prior year amounts have been reclassified to conform to the current year presentation.

During the first quarter of 2024, FirstEnergy’s segment reporting structure was modified to increase transparency for leadership and investors, simplify the presentation to corresponding legal entities, and align FirstEnergy’s earnings, cash flows and balance sheets at the business unit level.

The modification to the segments resulted in a reallocation of goodwill between the segments based on the relative fair value of the reporting units, as described further below.

Disclosures for FirstEnergy's reportable operating segments for 2023 and

2022 have been reclassified to conform to the current presentation reflecting the new reportable segments.

In addition, on January 1, 2024, WP transferred certain of its Pennsylvania-based transmission assets to KATCo and for comparability, prior year results in the Stand-Alone Transmission segment reflect the earnings and results of those WP transmission assets.

Economic Conditions

Post-pandemic economic conditions have increased supply chain lead times across numerous material categories, with some as much as tripling from pre-pandemic lead times.

Several key suppliers have struggled with labor shortages and raw material availability, which along with inflationary pressure that appears to be moderating, have increased costs and decreased the availability of certain materials, equipment and contractors.

FirstEnergy has taken steps to mitigate these risks and does not currently expect service disruptions or any material impact on its capital spending plan.

However, the situation remains fluid and a prolonged continuation or further increase in supply chain disruptions could have an adverse effect on FirstEnergy’s results of operations, cash flow and financial condition.

Economic conditions have stabilized across numerous material categories, but not all lead times have returned to pre-pandemic levels.

Several key suppliers have seen improvements with capacity, but FirstEnergy continues to monitor the situation as demand increases across the industry, including due to data center usage.

Inflationary pressures have moderated, which has improved the cost of materials, but certain categories have remained elevated.

FirstEnergy continues to implement mitigation strategies to address supply constraints and does not expect any corresponding service disruptions or any material impact on its capital investment plan.

However, the situation remains fluid and a prolonged continuation or further increase in demand, or the continuation of uncertain or adverse macroeconomic conditions, including inflationary pressures and new or increased existing tariffs, could lead to an increase in supply chain disruptions that could, in turn, have an adverse effect on FirstEnergy’s results of operations, cash flow and financial condition.

In February 2025, the new U.S.

presidential administration announced the imposition of widespread and substantial tariffs on imports, with plans for additional tariffs to potentially be adopted in the future.

Although certain of these tariffs were subsequently temporarily stayed, the situation is dynamic and subject to rapid change.

The imposition of these or any other new or increased tariffs or resultant trade wars could have an adverse effect on FirstEnergy's results of operations, cash flow and financial condition.

Facility Optimization

FirstEnergy has begun implementing its facility optimization plans, which focus on both cost savings and alignment with our flexible working arrangements and EESG priorities, which will result in exiting the General Office in Akron, Ohio, and other corporate facilities in Brecksville, Ohio, Greensburg, Pennsylvania and Morristown, New Jersey beginning in 2024.

In December 2023, FirstEnergy purchased the General Office building with the intention to sell in the future.

It is currently expected that the exit of the General Office and sale will occur in 2025.

The corporate headquarters will remain in Akron, Ohio, moving to the West Akron Campus, and FirstEnergy continues to explore real estate options and relocation opportunities for the other corporate facilities.

FirstEnergy continues implementing its facility optimization plans, which will result in exiting the general office in Akron, Ohio, and other corporate facilities in Greensburg, Pennsylvania, and Morristown, New Jersey.

In December 2023, FirstEnergy purchased the general office building with the intention to sell it in the future.

During the third quarter of 2024, the Akron general office building was classified as held-for-sale.

Upon classification as held-for-sale, FirstEnergy recognized a $ 62 million pre-tax impairment charge within “Other operating expenses” on the Consolidated Statements of Income.

Of the $ 62 million, $ 17 million is included with Integrated, $ 31 million is included within Distribution, $ 11 million is included within Stand-Alone Transmission and $ 3 million at Corporate/Other for segment reporting.

The remaining carrying value of the held-for-sale asset is immaterial, and therefore has not been presented separately on the Consolidated Balance Sheets.

The corporate headquarters will remain in Akron, Ohio, moving to FirstEnergy’s campus located in west Akron, Ohio, and FirstEnergy continues to explore real estate options and relocation opportunities for the other corporate facilities.

As FirstEnergy continues to transform the business and implement initiatives to reduce costs, including the facility optimization plan, the impact of such actions may result in future impairments or other charges that may be significant.

The result of these combined efforts will help build a stronger, more sustainable company for the near and long term.

Sale of Equity Interest in FirstEnergy Transmission, LLC

The aim of these combined efforts will be to help build a stronger, more sustainable company for the near and long term.

Sale of Equity Interests in FirstEnergy Transmission, LLC

On May 31, 2022, Brookfield acquired 19.9 % of the issued and outstanding membership interests of FET.

On February 2, 2023, FE, along with FET, entered into the FET P&SA II with Brookfield and the Brookfield Guarantors, pursuant to which FE agreed to sell to Brookfield at the closing, and Brookfield agreed to purchase from FE, an incremental 30 % equity interest in FET for a purchase price of $ 3.5 billion.

The majority of the purchase price is expected to be paid in cash upon closing, and the remainder will be payable by the issuance of a promissory note, which is expected to be repaid by the end of 2024.

As a result of the consummation of the transaction, Brookfield’s interest in FET will increase from 19.9% to 49.9%, while FE will retain the remaining 50.1% ownership interests of FET.

The transaction is subject to customary closing conditions, including approval from the PPUC.

In addition, pursuant to the FET P&SA II, FirstEnergy made the necessary filings with the applicable regulatory authorities for the PA Consolidation.

The FET Minority Equity Interest Sale is expected to close by the end of the first quarter of 2024.

Upon closing, FET will continue to be consolidated in FirstEnergy’s financial statements.

Pursuant to the terms of the FET P&SA II, in connection with the closing, Brookfield, FET and FE will enter into the A&R FET LLC Agreement, which will amend and restate in its entirety the current limited liability company agreement of FET.

The FET Equity Interest Sale closed on March 25, 2024 and FET continues to be consolidated in FirstEnergy’s financial statements.

The purchase price was paid in part by the issuance of two promissory notes at closing having an aggregate principal amount of $ 1.2 billion with:

(i) one promissory note having an aggregate principal amount of $ 750 million, at an interest rate of 5.75 % per annum, with a maturity date of September 25, 2025 and (ii) one promissory note having an aggregate principal amount of $ 450 million, at an interest rate of 7.75 % per annum, with a maturity date of December 31, 2024.

The remaining $ 2.3 billion of the purchase price was paid in cash at closing.

On July 17, 2024, Brookfield paid FE approximately $ 1.2 billion in full satisfaction of the promissory notes.

Interest income associated with the promissory notes was $ 24 million for the year ended December 31, 2024 and is reported within “Miscellaneous income, net” on FirstEnergy’s Consolidated Statements of Income.

As a result of the consummation of the transaction, Brookfield’s interest in FET increased from 19.9 % to 49.9 %, while FE retained the remaining 50.1 % ownership interests of FET.

The difference between the purchase price, net of transaction costs and taxes of approximately $ 32 million and $ 803 million, respectively, and the carrying value of the NCI of $ 731 million, was recorded as an increase to OPIC by $ 1.9 billion.

Pursuant to the terms of the FET P&SA II, in connection with the closing, Brookfield, FET and FE entered into the A&R FET LLC Agreement, which amended and restated in its entirety the Third Amended and Restated Limited Liability Company Agreement of FET.

The A&R FET LLC Agreement, among other things, provides for the governance, exit, capital and distribution, and other arrangements for FET from and following the closing.

Under the A&R FET LLC Agreement, at the closing, the FET Board will consist of five directors, two appointed by Brookfield and three appointed by FE.

Reference Rate Reform

In March of 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

“Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (issued March 2020 and subsequently updated).

This ASU, which introduces Topic ASC 848 to the FASB codification, provides temporary optional expedients and exceptions, that if elected, will ease the financial reporting burdens related to the market transition from London Inter-Bank Offered Rate and other interbank offered rates to alternative reference rates.

On April 27, 2023, FE, FET, the Utilities and the Transmission Companies entered into amendments to the 2021 Credit Facilities to, among other things:

(i) permit the sale from FE to Brookfield of an incremental 30 % equity interest in FET for a purchase price of $ 3.5 billion, (ii) permit the consolidation of the Pennsylvania Companies into a new, single operating entity, FE PA, which will be FE’s only regulated utility in Pennsylvania encompassing the operations previously conducted individually by the Pennsylvania Companies, and (iii) transition the benchmark interest rate for borrowings under the 2021 Credit Facilities from London Inter-Bank Offered Rate to SOFR.

During the second quarter of 2023, FirstEnergy utilized the optional expedient within ASC 848 to account for the amendments to the credit facilities as a continuation of the existing contract without additional analysis.

Under the A&R FET LLC Agreement, as of the closing, the FET Board consists of five directors, two of whom are appointed by Brookfield and three of whom are appointed by FE.

Discontinued operations

On February 27, 2020, the FES Debtors emerged from bankruptcy and were deconsolidated from FirstEnergy’s consolidated federal income tax group.

The bankruptcy, emergence and deconsolidation resulted in FirstEnergy recognizing certain income tax benefits and charges, which were classified as discontinued operations.

During the third quarter of 2023, FirstEnergy recognized a $ 21 million tax-effected charge to income tax expense as a result of identifying an out of period adjustment related to the allocation of certain deferred income tax liabilities associated with the FES Debtors and their tax return deconsolidation in 2020.

This adjustment was immaterial to the 2023 and prior period financial statements.

Discontinued operations are reflected at Corporate/Other for segment reporting and within “Discontinued Operations” on the Consolidated Statements of Income and Comprehensive Income and “Loss on disposal, net of tax” on the Consolidated Statements of Cash Flow.

ACCOUNTING FOR THE EFFECTS OF REGULATION

FirstEnergy’s Regulated Distribution and Regulated Transmission segments are subject to regulation that sets the prices (rates) the Utilities and the Transmission Companies are permitted to charge customers based on costs that the regulatory agencies determine are permitted to be recovered.

FirstEnergy’s operating segments are subject to regulation that sets the prices (rates) the Electric Companies and the Transmission Companies are permitted to charge customers based on costs that the regulatory agencies determine are permitted to be recovered.

At times, regulatory agencies permit the future recovery of costs that would be currently charged to expense by an unregulated company.

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Storm-related costs 694 602 92

Pandemic-related costs 35 45 ( 10 )

Vegetation management 16 21 ( 5 )

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Regulatory Assets Not Earning a Current Return $ 1,243 $ 1,197 $ 46

FirstEnergy is exposed to limited financial risks resulting from fluctuating interest rates and commodity prices, including prices for electricity, coal and energy transmission.

To manage the volatility related to these exposures, FirstEnergy’s Risk Policy Committee, comprised of senior management, provides general management oversight for risk management activities throughout FirstEnergy.

The Risk Policy Committee is responsible for promoting the effective design and implementation of sound risk management programs and oversees compliance with corporate risk management policies and established risk management practice.

FirstEnergy may use a variety of derivative instruments for risk management purposes including forward contracts, options, futures contracts and swaps.

FirstEnergy uses various market risk sensitive instruments, including derivative contracts, primarily to manage the risk of price and interest rate fluctuations.

FirstEnergy’s Enterprise Risk Management Committee, comprised of members of senior management, provides general oversight for risk management activities throughout FirstEnergy, including market risk.

FirstEnergy accounts for derivative instruments on its Consolidated Balance Sheets at fair value unless they meet the normal purchases and normal sales criteria.

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FEV's ownership interest is subject to the equity method of accounting.

For the years ended December 31, 2023, 2022 and 2021, pre-tax income related to FEV’s ownership in Global Holding was $ 175 million, $ 168 million and $ 29 million, respectively.

For the years ended December 31, 2024, 2023 and 2022, pre-tax equity earnings, excluding impairments, related to FEV’s ownership in Global Holding was $ 72 million, $ 175 million and $ 168 million, respectively.

FEV’s pre-tax equity earnings and investment in Global Holding are included in Corporate/Other for segment reporting.

Due to FirstEnergy's actions to exit from FEV’s equity method investment in Global Holdings, a $ 13 million (pre-tax) impairment charge was recognized in the fourth quarter of 2024 and is included within "Equity method investment earnings, net” on the Consolidated Statements of Income and within Corporate/Other for segment reporting.

As of December 31, 2024 and 2023, the carrying value of the equity method investment was $ 45 million and $ 66 million, respectively.

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FirstEnergy's ownership interest in PATH-WV is subject to the equity method of accounting.

As of December 31, 2023 and 2022, the carrying value of the equity method investment was $ 17 million and $ 18 million, respectively.

FirstEnergy and its non-affiliated joint venture partner are completing the process of terminating the PATH corporate entities.

As of December 31, 2024 and 2023, the carrying

value of the equity method investment was $ 17 million, which is expected to be recovered through a distribution.

FirstEnergy's pre-tax equity earnings in PATH-WV were immaterial for the years ended December 31, 2024, 2023 and 2022.

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However, if FirstEnergy concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value or bypasses the qualitative assessment, then the quantitative goodwill impairment test is performed to identify a potential goodwill impairment and measure the amount of impairment to be recognized, if any.

As of July 31, 2023, FirstEnergy performed a qualitative assessment of the Regulated Distribution and Regulated Transmission reporting units' goodwill, assessing economic, industry and market considerations in addition to the reporting units' overall financial performance.

In accordance with GAAP, the modification to the segments in the first quarter of 2024 resulted in a transfer of goodwill between the segments based on the relative fair value of the reporting units, and as such, the segment goodwill balances do not necessarily represent the goodwill balances of the specific legal entities within the segments.

The external segment reporting is consistent with the internal financial reports used by FirstEnergy's Chief Executive Officer (its CODM) to regularly assess performance of the business and allocate resources.

The fair values of the reporting units were calculated using a discounted cash flow analysis.

Key assumptions incorporated in the discounted cash flow analysis included discount rates, growth rates, projected operating income, changes in working capital, projected capital investments, and terminal multiples.

The discounted cash flow analysis was also utilized to complete an impairment assessment before and after the segment change, with no impairment of goodwill indicated.

As of July 31, 2024, FirstEnergy performed a qualitative assessment of its reporting units' goodwill, assessing economic, industry and market considerations in addition to the reporting units' overall financial performance.

Key factors used in the assessment included:

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It was determined that the fair values of these reporting units were, more likely than not, greater than their carrying values and a quantitative analysis was not necessary.

FirstEnergy's reporting units are consistent with its reportable segments and consist of Regulated Distribution and Regulated Transmission.

FirstEnergy's reporting units are consistent with its reportable segments and consist of Distribution, Integrated and Stand-Alone Transmission.

The following table presents goodwill by reporting unit as of December 31, 2024 and 2023:

(In millions) Regulated Distribution Regulated Transmission Consolidated

(In millions) Distribution Segment Integrated Segment Stand-Alone Transmission Segment FirstEnergy Consolidated

Goodwill $ 3,222 $ 1,953 $ 443 $ 5,618

Materials and supplies inventory primarily includes fuel inventory, emission allowances, and the distribution, transmission and generation plant materials, net of reserve for excess and obsolete inventory.

Materials and supplies inventory primarily includes fuel inventory, the distribution, transmission and generation plant materials, net of reserve for excess and obsolete inventory as well as emission allowances.

Materials charged to inventory are at weighted average cost when purchased and expensed or capitalized, as appropriate, when used or installed.

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On May 31, 2022, Brookfield and the Brookfield Guarantors acquired 19.9 % of the issued and outstanding membership interests of FET.

The difference between the cash consideration received, net of transaction costs of approximately $ 37 million, and the carrying value of the noncontrolling interest of $ 451 million was recorded as an increase to Other Paid-In Capital.

KATCo, which was a subsidiary of FET, became a wholly owned subsidiary of FE prior to the closing of the transaction and remains in the Regulated Transmission segment.

Pursuant to the terms of the FET P&SA I, on May 31, 2022, Brookfield, FET and FE entered into the FET LLC Agreement.

The FET LLC Agreement, among other things, provides for the governance, exit, capital and distribution, and other arrangements for FET from and following the closing.

Under the FET LLC Agreement, Brookfield is entitled to appoint a number of directors to the FET Board, in approximate proportion to Brookfield’s ownership percentage in FET (rounded to the next whole number).

The FET Board now consists of five directors, one appointed by Brookfield and four appointed by FE.

KATCo, which was a subsidiary of FET, became a wholly owned subsidiary of FE prior to the closing of the transaction and remains in the Stand-Alone Transmission segment.

The FET Equity Interest Sale closed on March 25, 2024 and FET continues to be consolidated in FirstEnergy’s financial statements.

The difference between the purchase price, net of transaction costs and deferred taxes of approximately $ 32 million and $ 803 million respectively, and the carrying value of the NCI of $ 731 million, was recorded as an increase to OPIC by $ 1.9 billion during 2024.

PROPERTY, PLANT AND EQUIPMENT

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December 31, 2024

Property, Plant and Equipment In Service (1)

Net Plant CWIP Total

(In millions)

Regulated Distribution $ 33,453 $ ( 10,039 ) $ 23,414 $ 860 $ 24,274

Regulated Transmission 15,538 ( 3,178 ) 12,360 1,208 13,568

Segment In Service (1)

Net Plant CWIP Total Average Service Life

(In millions) ( years )

Distribution $ 21,245 $ ( 7,338 ) $ 13,907 $ 618 $ 14,525 5 - 80

Integrated 17,080 ( 3,943 ) 13,137 1,076 14,213 5 - 100

Stand-Alone Transmission 13,509 ( 2,660 ) 10,849 986 11,835 5 - 85

Corporate/Other 1,062 ( 607 ) 455 74 529 3 - 63

Total $ 50,107 $ ( 13,811 ) $ 36,296 $ 2,116 $ 38,412

Total Property, Plant and Equipment $ 52,896 $ ( 14,548 ) $ 38,348 $ 2,754 $ 41,102

December 31, 2023

Property, Plant and Equipment In Service (1)

Net Plant CWIP Total

(In millions)

Regulated Distribution $ 32,257 $ ( 9,636 ) $ 22,621 $ 828 $ 23,449

Regulated Transmission 14,468 ( 2,978 ) 11,490 818 12,308

Segment In Service (1)

Net Plant CWIP Total Average Service Life

(In millions) (years)

Distribution $ 20,423 $ ( 7,008 ) $ 13,415 $ 417 $ 13,832 5 - 80

Integrated 16,180 ( 3,748 ) 12,432 823 13,255 5 - 100

Stand-Alone Transmission 12,388 ( 2,461 ) 9,927 828 10,755 5 - 85

Corporate/Other 1,116 ( 594 ) 522 48 570 3 - 63

Total $ 47,850 $ ( 13,258 ) $ 34,592 $ 1,693 $ 36,285

Total Property, Plant and Equipment $ 50,107 $ ( 13,811 ) $ 36,296 $ 2,116 $ 38,412

(1) Includes finance leases of $ 46 million and $ 68 million as of December 31, 2024 and 2023, respectively.

(2) Includes finance lease accumulated amortization of $ 14 million and $ 33 million as of December 31, 2024 and 2023, respectively.

Regulated Distribution has approximately $ 2.2 billion of total regulated generation property, plant and equipment as of December 31, 2023.

Integrated has approximately $ 2.3 billion of total regulated generation property, plant and equipment as of December 31, 2024.

FirstEnergy provides for depreciation on a straight-line basis at various rates over the estimated lives of property included in plant in service.

The respective annual composite depreciation rates for FirstEnergy were approximately 2.8 % in 2023 and 2.7 % in each of 2022 and 2021.

The respective annual composite depreciation rates for FirstEnergy were approximately 2.9 %, 2.8 % and 2.7 % in 2024, 2023 and 2022, respectively.

For the years ended December 31, 2024, 2023 and 2022, capitalized financing costs on FirstEnergy's Consolidated Statements of Income include $ 60 million, $ 44 million and $ 56 million, respectively, of allowance for equity funds used during construction and $ 73 million, $ 53 million and $ 28 million, respectively, of capitalized interest.

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If the carrying value is greater than the undiscounted future cash flows, an impairment charge is recognized equal to the amount the carrying value of the assets exceeds its estimated fair value.

Asset Retirement Obligations

FirstEnergy recognizes an ARO for its legal obligation to perform asset retirement activities associated with its long-lived assets.

The ARO liability represents an estimate of the fair value of FirstEnergy's current obligation such that the ARO is accreted monthly to reflect the time value of money.

A fair value measurement inherently involves uncertainty in the amount and timing of settlement of the liability.

FirstEnergy uses an expected cash flow approach to measure the fair value of the remediation AROs, considering the expected timing of settlement of the ARO based on the expected economic useful life of associated asset and/or regulatory requirements.

The fair value of an ARO is recognized in the period in which it is incurred.

The associated asset retirement costs are capitalized as part of the carrying value of the long-lived asset and are depreciated over the life of the related asset.

In certain circumstances, FirstEnergy has recovery of asset retirement costs and, as such, certain accretion and depreciation is offset against regulatory assets.

Conditional retirement obligations associated with tangible long-lived assets are recognized at fair value in the period in which they are incurred if a reasonable estimate can be made, even though there may be uncertainty about timing or method of settlement.

When settlement is conditional on a future event occurring, it is reflected in the measurement of the liability, not the timing of the liability recognition.

FirstEnergy has recognized applicable legal obligations for AROs and their associated cost, including reclamation of sludge disposal ponds, closure of coal ash disposal sites, underground and above-ground storage tanks and wastewater treatment lagoons.

In addition, FirstEnergy has recognized conditional retirement obligations, primarily for asbestos remediation.

The following table summarizes the changes to the ARO balances during 2023 and 2022:

ARO Reconciliation (In millions)

Balance, January 1, 2022 $ 179

Changes in timing and amount of estimated cash flows ( 2 )

Liabilities settled ( 6 )

Balance, December 31, 2022 $ 185

Changes in timing and amount of estimated cash flows 10

Liabilities settled ( 2 )

Balance, December 31, 2023 $ 209

In April 2015, the EPA finalized regulations for the disposal of CCRs (non-hazardous), establishing national standards for landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring and protection procedures and other operational and reporting procedures to assure the safe disposal of CCRs from electric generating plants.

On September 13, 2017, the EPA announced that it would reconsider certain provisions of the final regulations.

On July 29, 2020, the EPA published a final rule again revising the date that certain CCR impoundments must cease accepting waste and initiate closure to April 11, 2021.

The final rule allowed for an extension of the closure deadline based on meeting identified site-specific criteria.

On November 30, 2020, AE Supply submitted a closure deadline extension request to the EPA seeking to extend the cease accepting waste date for the McElroy's Run CCR impoundment facility through the end of the first quarter of 2024, which request is pending technical review by the EPA.

AE Supply continues to operate McElroy’s Run as a disposal facility for Pleasants Power Station, which is owned and operated by a non-affiliate.

Jointly Owned Plants

AGC owns an undivided 16.25 % interest ( 487 MWs) in the 3,003 MW Bath County pumped-storage, hydroelectric station in Virginia, operated by the 60 % owner, VEPCO, a non-affiliated utility.

AGC owns an undivided 16.25 % interest ( 487 MWs) in the 3,003 MW Bath County pumped-storage, hydroelectric station in

Virginia, operated by the 60 % owner, VEPCO, a non-affiliated utility.

Total property, plant and equipment includes $ 142 million representing AGC's share in this facility as of December 31, 2024.

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AGC's share of direct expenses of the joint plant is included in operating expenses on FirstEnergy's Consolidated Statements of Income.

AGC provides the generation capacity from this facility to its owner, MP, which is recovered from the ENEC.

AGC provides the generation capacity from this facility to its owner, MP, which is recovered through the ENEC.

NEW ACCOUNTING PRONOUNCEMENTS

Recently Issued Pronouncements - The following new authoritative accounting guidance issued by the FASB has not yet been adopted.

Unless otherwise indicated, FirstEnergy is currently assessing the impact such guidance may have on its financial statements and disclosures, as well as the potential to early adopt where applicable.

FirstEnergy has assessed other FASB issuances of new standards not described below based upon the current expectation that such new standards will not significantly impact FirstEnergy's financial reporting.

Recently Adopted Pronouncements

ASU 2022-03, " Fair Value Measurements of Equity Securities Subject to Contractual Sale Restrictions " (Issued in June 2022):

ASU 2022-03 clarifies current guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, and introduces new disclosure requirements for those equity securities subject to contractual restrictions.

For FirstEnergy, the guidance will be effective for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years, with early adoption permitted.

The adoption of this ASU did not have a material impact on the financial statements.

ASU 2023-07, " Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures " (Issued in November 2023):

ASU 2023-07 enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements.

Disclosure requirements within ASU 2023-07 include disclosing significant segment expenses by reportable segment if they are regularly provided to the CODM and included in each reported measure of segment profit or loss.

A public entity is also required to disclose the title and position of the individual(s) identified as the CODM as well as an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

Disclosures are required on both an annual and an interim basis.

For FirstEnergy, the guidance will be effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The segment disclosures within have been updated to reflect the requirements of ASU 2023-07.

Recently Issued Pronouncements - The following new authoritative accounting guidance issued by the FASB has not yet been adopted.

Unless otherwise indicated, FirstEnergy is currently assessing the impact such guidance may have on its financial statements and disclosures, as well as the potential to early adopt where applicable.

ASU 2023-09, " Income taxes (Topic 280):

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ASU 2023-09 enhances disclosures primarily related to existing rate reconciliation and income taxes paid information to help investors better assess how a company’s operations and related tax risks and tax planning and operational opportunities affect the tax rate and prospects for future cash flows.

Disclosure requirements include a tabular reconciliation using both percentages and amounts, separated out into specific categories with certain reconciling items at or above 5% of the statutory tax as well as by nature and/or jurisdiction.

In addition, entities will be required to disclose income taxes paid (net of refunds received), broken out between federal, state/local and foreign, and amounts paid to an individual jurisdiction when 5% or more of the total income taxes are paid to such jurisdiction.

For FirstEnergy, the guidance will be effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendments within ASU 2023-09 are to be applied on a prospective basis, with retrospective application permitted.

ASU 2024-03, " Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) " (Issued in November 2024 and subsequently updated within ASU 2025-01):

ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities.

The ASU does not change the expense captions an entity presents on the face of the income statement;

rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements.

ASU 2024-03 is effective for FirstEnergy for the first annual reporting period beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

FirstEnergy accounts for revenues from contracts with customers under ASC 606, “ Revenue from Contracts with Customers.

” Revenue from leases, financial instruments, other contractual rights or obligations and other revenues that are not from contracts with customers are outside the scope of the standard and accounted for under other existing GAAP.

FirstEnergy has elected to exclude sales taxes and other similar taxes collected on behalf of third parties from revenue as prescribed in the standard.

As a result, tax collections and remittances are excluded from recognition in the income statement and instead recorded through the balance sheet.

Excise and gross receipts taxes that are assessed on FirstEnergy are not subject to the election and are included in revenue.

FirstEnergy has elected the optional invoice practical expedient for most of its revenues and utilizes the optional short-term contract exemption for transmission revenues due to the annual establishment of revenue requirements, which eliminates the need to provide certain revenue disclosures regarding unsatisfied performance obligations.

FirstEnergy’s revenues are primarily derived from electric service provided by the Utilities and Transmission Companies.

Regulated Distribution

The Regulated Distribution segment distributes electricity through FirstEnergy’s utility operating companies and also controls 3,580 MWs of regulated electric generation capacity located primarily in West Virginia and Virginia.

Each of the Utilities earns revenue from state-regulated rate tariffs under which it provides distribution services to residential, commercial and industrial customers in its service territory.

The Utilities are obligated under the regulated construct to deliver power to customers reliably, as it is needed, which creates an implied monthly contract with the end-use customer.

FE and its subsidiaries are principally involved in the transmission, distribution and generation of electricity through its reportable segments:

Distribution, Integrated and Stand-Alone Transmission.

• Distribution Segment, which consists of the Ohio Companies and FE PA;

• Integrated Segment, which consists of MP, PE and JCP&L;

• Stand-Alone Transmission Segment, which consists of FE's ownership in FET and KATCo.

The Electric Companies distribute electricity through FirstEnergy’s utility operating companies and also controls 3,604 MWs of regulated electric generation capacity located primarily in West Virginia and Virginia.

Each of the Electric Companies earns

revenue from state-regulated rate tariffs under which it provides distribution services to residential, commercial and industrial customers in its service territory.

The Electric Companies are obligated under the regulated construct to deliver power to customers reliably, as it is needed, which creates an implied monthly contract with the end-use customer.

See Note 14, “Regulatory Matters,” for additional information on rate recovery mechanisms.

Distribution and electric revenues are recognized over time as electricity is distributed and delivered to the customer and the customers consume the electricity immediately as delivery occurs.

Retail generation sales relate to POLR, SOS, SSO and default service requirements in Ohio, Pennsylvania, New Jersey and Maryland, as well as generation sales in West Virginia that are regulated by the WVPSC.

Certain of the Utilities have default service obligations to provide power to non-shopping customers who have elected to continue to receive service under regulated retail tariffs.

The volume of these sales varies depending on the level of shopping that occurs.

Supply plans vary by state and by service territory.

Default service for the Ohio Companies, Pennsylvania Companies, JCP&L and PE’s Maryland jurisdiction are provided through a competitive procurement process approved by each state’s respective commission.

Retail generation revenues are recognized over time as electricity is delivered and consumed immediately by the customer.

Wholesale sales primarily consist of generation and capacity sales into the PJM market from FirstEnergy’s regulated electric generation capacity and NUGs.

Certain of the Utilities may also purchase power in the PJM markets to supply power to their customers.

Generally, these power sales from generation and purchases to serve load are netted hourly and reported as either revenues or purchased power on the Consolidated Statements of Income based on whether the entity was a net seller or buyer each hour.

Capacity revenues are recognized ratably over the PJM planning year at prices cleared in the annual PJM Reliability Pricing Model Base Residual Auction and Incremental Auctions.

Capacity purchases and sales through PJM capacity auctions are reported within revenues on the Consolidated Statements of Income.

Certain capacity income (bonuses) and charges (penalties) related to the availability of units that have cleared in the auctions are unknown and not recorded in revenue until, and unless, they occur.

The Utilities’ distribution customers are metered on a cycle basis.

An estimate of unbilled revenues is calculated to recognize electric service provided from the last meter reading through the end of the month.

This estimate includes many factors, among which are historical customer usage, load profiles, estimated weather impacts, customer shopping activity and prices in effect for each class of customer.

In each accounting period, the Utilities accrue the estimated unbilled amount as revenue and reverse the related prior period estimate.

Customer payments vary by state but are generally due within 30 days.

ASC 606 excludes industry-specific accounting guidance for recognizing revenue from Alternative Revenue Programs as these programs represent contracts between the utility and its regulators, as opposed to customers.

Therefore, revenues from these programs are not within the scope of ASC 606 and regulated utilities are permitted to continue to recognize such revenues in accordance with existing practice but are presented separately from revenue arising from contracts with customers.

Regulated Transmission

The Regulated Transmission segment provides transmission infrastructure owned and operated by the Transmission Companies and certain of FirstEnergy's utilities (JCP&L, MP, PE and WP) to transmit electricity from generation sources to distribution facilities.

The segment's revenues are derived from primarily forward-looking formula rates.

See Note 13, “Regulatory Matters,” for additional information.

Forward-looking formula rates recover costs that the regulatory agencies determine are permitted to be recovered and provide a return on transmission capital investment.

Under forward-looking formula rates, the revenue requirement is updated annually based on a projected rate base and projected costs, which is subject to an annual true-up based on rate base and actual costs.

Revenues and cash receipts for the stand-ready obligation of providing transmission service are recognized ratably over time.

The following represents a disaggregation of revenue from contracts with customers for the years ended December 31, 2024, 2023 and 2022:

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(In millions) 2024 2023 2022

Regulated Distribution

Retail generation and distribution services (1)

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Industrial 588 726 806

Street lighting/Other

Other 73 72 56

Wholesale 6 20 19

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Total revenues from contracts with customers 6,783 6,779 6,353

Alternative Revenue Program (3)

Other revenue unrelated to contracts with customers (3)

Total Regulated Distribution $ 11,038 $ 10,801 $ 9,711

Regulated Transmission

Total Distribution $ 6,863 $ 6,854 $ 6,425

Retail generation and distribution services

Residential $ 2,528 $ 2,137 $ 2,121

Commercial 1,142 1,023 1,016

Industrial 577 545 505

Other 32 30 26

Wholesale 146 208 475

Transmission 380 318 282

Other revenue from contracts with customers (4)

Total revenues from contracts with customers 4,824 4,285 4,442

Other revenue unrelated to contracts with customers (3)

Total Integrated $ 4,876 $ 4,320 $ 4,470

Stand-Alone Transmission

ATSI $ 980 $ 967 $ 911

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MAIT 436 394 340

JCP&L 205 203 164

MP, PE and WP 202 138 124

KATCo 85 89 59

Other ( 2 ) 2 1

Total revenues from contracts with customers 1,768 1,731 1,581

Other revenue unrelated to contracts with customers 19 17 16

Total Regulated Transmission $ 2,054 $ 1,868 $ 1,618

Corporate/Other and Reconciling Adjustments (5)

Total Stand-Alone Transmission $ 1,787 $ 1,748 $ 1,597

Corporate/Other, Eliminations and Reconciling Adjustments (5)

Wholesale $ 9 $ 11 $ 27

Retail generation and distribution services (5)

( 181 ) ( 186 ) ( 154 )

Other revenue unrelated to contracts with customers (5)

( 52 ) ( 51 ) ( 57 )

Total Corporate/Other and Reconciling $ ( 222 ) $ ( 210 ) $ ( 197 )

Eliminations and reconciling adjustments ( 63 ) ( 63 ) ( 60 )

Total Corporate/Other, Eliminations and Reconciling Adjustments $ ( 54 ) $ ( 52 ) $ ( 33 )

FirstEnergy Total Revenues $ 13,472 $ 12,870 $ 12,459

(1) Includes approximately $ 58 million and $ 38 million as of December 31, 2022 and 2021, respectively, of customer refunds associated with the Ohio Stipulation that became effective in December 2021.

See Note 13, “Regulatory Matters,” for further discussion.

(1) Includes approximately $ 58 million as of December 31, 2022 of customer refunds associated with the Ohio Stipulation that became effective in December 2021.

(2) Primarily includes amounts collected from customers to administer and repay securitization bonds and pole attachment revenue.

(3) Reflects amount the Ohio Companies refunded to customers that was previously collected under decoupling mechanisms, with interest.

(4) Primarily includes late payment charges and revenue from derivatives.

(3) Primarily includes late payment charges and revenue from FTRs.

(4) Related to lost distribution revenues associated with energy efficiency in New Jersey.

(5) Includes eliminations and reconciling adjustments of inter-segment revenues.

Receivables from contracts with customers include retail electric sales and distribution deliveries to residential, commercial and industrial customers of the Utilities.

Certain of the Electric Companies have default service obligations to provide power to non-shopping customers who have elected to continue to receive service under regulated retail tariffs.

The volume of these sales varies depending on the level of shopping that occurs.

Supply plans vary by state and by service territory.

Default service for the Ohio Companies, FE PA, JCP&L and PE’s Maryland jurisdiction are provided through a competitive procurement process approved by each state’s respective commission.

Retail generation revenues are recognized over time as electricity is delivered and consumed immediately by the customer.

Wholesale sales primarily consist of generation and capacity sales into the PJM market from FirstEnergy’s regulated electric generation capacity and NUGs.

Certain of the Electric Companies may also purchase power in the PJM markets to supply power to their customers.

Capacity revenues are recognized ratably over the PJM planning year at prices cleared in the annual PJM Reliability Pricing Model Base Residual Auction and Incremental Auctions.

Capacity purchases and sales through PJM capacity auctions are reported within revenues on the Consolidated Statements of Income.

Certain capacity income (bonuses) and charges (penalties) related to the availability of units that have cleared in the auctions are unknown and not recorded in revenue until, and unless, they occur.

The Electric Companies’ distribution customers are metered on a cycle basis.

An estimate of unbilled revenues is calculated to recognize electric service provided from the last meter reading through the end of the month.

This estimate includes many factors, among which are historical customer usage, load profiles, estimated weather impacts, customer shopping activity and prices in effect for each class of customer.

In each accounting period, the Electric Companies accrue the estimated unbilled amount as revenue and reverse the related prior period estimate.

Customer payments vary by state but are generally due within 30 days.

Transmission infrastructure owned and operated by the Transmission Companies and certain of FirstEnergy's Electric Companies (JCP&L, MP and PE) transmits electricity from generation sources to distribution facilities.

Transmission revenues are derived primarily from forward-looking formula rates.

See Note 14, “Regulatory Matters,” for additional information.

Forward-looking formula rates recover costs that the regulatory agencies determine are permitted to be recovered and provide a return on transmission capital investment.

Revenues and cash receipts for the stand-ready obligation of providing transmission service are recognized ratably over time.

FirstEnergy has elected to exclude sales taxes and other similar taxes collected on behalf of third parties from revenue as prescribed in the standard.

As a result, tax collections and remittances are excluded from recognition in the income statement and instead recorded through the balance sheet.

Excise and gross receipts taxes that are assessed on FirstEnergy are not subject to the election and are included in revenue.

Receivables from contracts with customers include retail electric sales and distribution deliveries to residential, commercial and industrial customers of the Electric Companies.

Billed and unbilled customer receivables as of December 31, 2024 and 2023, are included below.

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FirstEnergy reviews its allowance for uncollectible customer receivables utilizing a quantitative and qualitative assessment.

Management contemplates available current information such as changes in economic factors, regulatory matters, industry trends, customer credit factors, amount of receivable balances that are past-due, payment options and programs available to customers, and the methods that the Utilities are able to utilize to ensure payment.

This analysis includes consideration of the outbreak of the pandemic and the impact on customer receivable balances outstanding and write-offs since the pandemic began and subsequent economic slowdown.

FirstEnergy’s uncollectible risk on PJM receivables, resulting from transmission and wholesale sales, is minimal due to the nature of PJM’s settlement process and as a result there is no current allowance for doubtful accounts.

During 2023, various regulatory actions, including extended installment plans, continue to impact the level of past due balances in certain states, resulting in the allowances for uncollectible customer receivables to remain elevated above 2019 pre-pandemic levels.

However, normal collection activity has resumed, and arrears levels continue to decline towards pre-pandemic levels.

As a result, FirstEnergy recognized a $ 77 million decrease to its allowance during 2023, of which $ 41 million was applied to existing deferred regulatory assets.

Activity in the allowance for uncollectible accounts on receivables for the years ended December 31, 2024, 2023 and 2022 are as follows:

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Charged to other accounts (2)

( 5 ) ( 1 ) 4

Write-offs ( 5 ) ( 2 ) ( 7 )

End of year balance $ 6 $ 15 $ 11

(1) Customer receivable amounts charged to income for the years ended December 31, 2023, 2022, and 2021, include approximately $( 15 ) million, $ 11 million, and $ 12 million, respectively, deferred for future recovery (refund).

(1) Customer receivable amounts charged (credited) to income for the years ended December 31, 2024, 2023, and 2022, include approximately $ 17 million, $( 15 ) million, and $ 11 million, respectively, deferred for future recovery (refund).

(2) Represents recoveries and reinstatements of accounts previously written off for uncollectible accounts.

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Diluted EPS reflects the dilutive effect of potential common shares from share-based awards and convertible securities.

The dilutive effect of outstanding share-based awards was computed using the treasury stock method, which assumes any proceeds that could be obtained upon the exercise of the award would be used to purchase common stock at the average market price for the period.

The dilutive effect of the 2026 Convertible Notes, as further discussed in Note 12, "Capitalization" under Long-term debt and other long-term obligations, is computed using the if-converted method.

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The plans provide defined benefits based on years of service and compensation levels.

Under the cash-balance portion of the pension plan (for employees hired on or after January 1, 2014), FirstEnergy makes contributions to eligible employee retirement accounts based on a pay credit and an interest credit.

In addition, FirstEnergy provides a minimum amount of noncontributory life insurance to retired employees in addition to optional contributory insurance.

Under the cash-balance portion of the pension plan (for employees hired on or after January 1, 2014), FirstEnergy credits amounts to eligible employee notional cash-balance accounts based on a pay credit and an interest credit.

In addition, FirstEnergy provides a minimum amount of noncontributory life insurance to retired employees in addition to optional contributory insurance to a closed group of retired employees.

Health care benefits, which include certain employee contributions, deductibles and co-payments, are also available upon retirement to certain employees, their dependents and, under certain circumstances, their survivors.

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FirstEnergy also has obligations to former or inactive employees after employment, but before retirement, for disability-related benefits.

On May 9, 2023, FirstEnergy announced a voluntary retirement program for eligible non-bargaining employees, known as the PEER.

More than 65 % of eligible employees, totaling approximately 450 employees, accepted the PEER, which included lump sum compensation equivalent to severance benefits, healthcare continuation costs and a temporary pension enhancement.

Most PEER participating employees departed in 2023.

The temporary pension enhancement and healthcare continuation costs are classified as special termination costs within net periodic benefit costs (credits).

In addition to the PEER, FirstEnergy notified and involuntarily separated approximately 90 employees on May 9, 2023.

Management expects the cost savings resulting from these initiatives to support FirstEnergy’s growth plans.

FirstEnergy’s pension funding policy is based on actuarial computations using the projected unit credit method.

On May 12, 2023, FirstEnergy made a $ 750 million voluntary cash contribution to the qualified pension plan.

FirstEnergy does not currently expect to have a required contribution to the pension plan until 2028, which based on various assumptions, including an expected rate of return on assets of 8.0 %, is expected to be approximately $260 million.

FirstEnergy does not currently expect to have a required contribution to the pension plan until 2027, which based on various assumptions, including an expected rate of return on assets of 8.5 % for 2025, is expected to be approximately $300 million.

However, FirstEnergy may elect to contribute to the pension plan voluntarily.

Pension and OPEB costs are affected by employee demographics (including age, compensation levels and employment periods), the level of contributions made to the plans and earnings on plan assets.

Pension and OPEB costs may also be affected by changes in key assumptions, including anticipated rates of return on plan assets, the discount rates and health care

trend rates used in determining the projected benefit obligations for pension and OPEB costs.

Pension and OPEB costs may also be affected by changes in key assumptions, including anticipated rates of return on plan assets, the discount rates and health care trend rates used in determining the projected benefit obligations for pension and OPEB costs.

FirstEnergy uses a December 31 measurement date for its pension and OPEB plans or whenever a plan is determined to qualify for a remeasurement.

The fair value of the plan assets represents the actual market value as of the measurement date.

In December 2023, FirstEnergy, executed a lift-out transaction with Banner Life Insurance Company and Reinsurance Group of America that transferred approximately $ 683 million of plan assets and $ 719 million of plan obligations, associated with approximately 1,900 former competitive generation employees, who will assume future and full responsibility to fund and

administer their benefit payments.

There was no change to the pension benefits for any participants as a result of the transfer.

The transaction was funded by pension plan assets and resulted in a pre-tax gain of approximately $ 36 million, which was included in the fourth quarter 2023 pension and OPEB mark-to-market adjustment charge.

Additionally, in January 2025, FirstEnergy executed a lift-out transaction with MetLife, that transferred approximately $ 640 million of plan assets and $ 652 million of plan obligations, associated with approximately 2,000 former competitive generation employees, who will assume future and full responsibility to fund and administer their benefit payments.

Similar to the lift-out in 2023, there was no change to the pension benefits for any participant as a result of the transfer and the transaction was funded by pension plan assets.

FirstEnergy believes that this lift-out transaction, in addition to the lift-out in 2023, further de-risked potential volatility with the pension plan assets and liabilities, and will continue to evaluate other lift-outs in the future based on market and other conditions.

Actuarial Assumptions Pension OPEB

2024 2023 (2)

2022 2024 2023 (2)

Assumptions Related to Benefit Obligations:

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(1) Excludes impact of pension and OPEB mark-to-market adjustments.

(2) As a result of the interim plan remeasurement during 2023, there were different rates in effect from January 1, 2023, through April 30, 2023 compared to May 1, 2023 through December 31, 2023.

Discount Rate - In selecting an assumed discount rate, FirstEnergy considers currently available rates of return on high-quality fixed income investments expected to be available during the period to maturity of the pension and OPEB obligations.

The assumed rates of return on plan assets consider historical market returns and economic forecasts for the types of investments held by FirstEnergy’s pension trusts.

The long-term rate of return is developed considering the portfolio’s asset allocation strategy.

(2) As a result of the interim plan remeasurement during 2023, different rates were in effect from January 1, 2023, through April 30, 2023 compared to May 1, 2023 through December 31, 2023.

Discount Rate - The discount rate is determined using currently available rates of return on high-quality fixed income investments expected to be available during the period to maturity of the pension and OPEB obligations.

FirstEnergy utilizes a spot rate approach in the estimation of the components of benefit cost by applying specific spot rates along the full yield curve to the relevant projected cash flows.

FirstEnergy utilizes an analytical tool developed by its actuary to determine the discount rates.

Expected Return on Plan Assets - The expected return on pension and OPEB assets is based on input from investment consultants, including the trusts’ asset allocation targets, the historical performance of risk-based and fixed income securities and other factors.

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7.00 % for OPEB

7.50 % 7.50 %

Mortality Rates - During 2023, the Society of Actuaries elected not to release a new mortality improvement scale due to data available being severely impacted by COVID-19.

It was determined that the Pri-2012 mortality table with projection scale MP-2021, actuarially adjusted to reflect increased mortality due to the ongoing impact of COVID-19 was most appropriate and such was utilized to determine the obligation as of December 31, 2023, for the FirstEnergy pension and OPEB plans.

8.00 % for pension

7.00 % for OPEB

Mortality Rates - During 2024, the Society of Actuaries elected not to release a new mortality improvement scale.

It was determined that the Pri-2012 mortality table with projection scale MP-2021, actuarially adjusted to reflect increased mortality due

to the ongoing impact of COVID-19 was most appropriate and such was utilized to determine the obligation as of December 31, 2024, for the FirstEnergy pension and OPEB plans.

This adjustment acknowledges COVID-19 cannot be eradicated and assumes reductions in other causes will not offset future COVID-19 deaths enough to produce a normal level of improvements.

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(2) Related to benefits provided in connection with the PEER.

For the years ended December 31, 2023, 2022 and 2021, approximately $ 36 million, $ 15 million and $( 31 ) million, respectively, of the annual pension and OPEB mark-to-market charges (credits) were allocated to the Regulated Transmission companies under forward-looking formula rates, and expected to be refunded or recovered through formula transmission rates.

For the years ended December 31, 2024, 2023 and 2022, approximately $( 8 ) million, $ 36 million and $ 15 million, respectively, of the annual pension and OPEB mark-to-market charges (credits) were allocated to companies under forward-looking formula rates, and expected to be refunded or recovered through formula transmission rates.

FirstEnergy recognizes a pension and OPEB mark-to-market adjustment for the change in fair value of plan assets and net actuarial gains and losses annually in the fourth quarter of each fiscal year and whenever a plan is determined to qualify for remeasurement.

The size of the voluntary contribution made on May 12, 2023, in relation to total pension assets triggered a remeasurement of the pension plan, and as a result, FirstEnergy recognized a non-cash, pre-tax pension mark-to-market adjustment gain of approximately $ 59 million in the second quarter of 2023.

In 2024, FirstEnergy recognized a $ 22 million pension and OPEB mark-to-market adjustment loss, primarily reflecting lower than expected return on assets and demographic changes partially offset by a 67 basis points increase in the discount rate used to measure pension benefit obligations.

The size of the $ 750 million voluntary contribution made on May 12, 2023, in relation to total pension assets triggered a remeasurement of the pension plan, and as a result, FirstEnergy recognized a non-cash, pre-tax pension and OPEB mark-to-market adjustment gain of approximately $ 59 million in the second quarter of 2023.

FirstEnergy elected the practical expedient to remeasure pension plan assets and obligations as of April 30, 2023, which is the month-end closest to the date of the voluntary contribution.

The pension mark-to-market adjustment primarily reflects higher than expected return on assets, partially offset by a 29 basis points decrease in the discount rate used to measure benefit obligations.

In the fourth quarter of 2023, FirstEnergy recognized a $ 137 million pension and OPEB mark-to-market adjustment loss, primarily reflecting lower than expected return on assets, partially offset by an 11 basis points increase in the discount rate used to measure pension benefit obligations from May 1, 2023, and the gain associated with the pension lift-out, as described below.

In December 2023, FirstEnergy, executed a lift-out transaction with Banner Life Insurance Company and Reinsurance Group of America that transferred approximately $683 million of plan assets and $719 million of plan obligations, associated with approximately 1,900 former FES and FENOC employees, who will assume future and full responsibility to fund and administer their benefit payments.

There was no change to the pension benefits for any participants as a result of the transfer.

The transaction was funded by pension plan assets and resulted in a pre-tax gain of approximately $36 million, which was included in the fourth quarter 2023 pension mark-to-market charge.

FirstEnergy expects that the transaction further de-risked potential volatility with the pension plan assets and liabilities, and FirstEnergy will continue to evaluate other lift-outs in the future based on market and other conditions.

Obligations/Funded Status - Qualified and Non-Qualified Plans 2024 2023 2024 2023

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Non-qualified plans ( 363 ) ( 394 ) — —

Funded Status (Net liability as of December 31) $ ( 1,484 ) $ ( 2,135 ) $ 75 $ 21

Funded Status - Net asset (liability) as of December 31 (1)

$ ( 1,528 ) $ ( 1,484 ) $ 160 $ 75

Accumulated benefit obligation $ 7,572 $ 7,324 $ — $ —

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Prior service cost (credit) $ 2 $ 4 $ 1 $ ( 1 )

(1) The pension net liability is included in “Retirement benefits,” on the Consolidated Balance Sheets.

The OPEB net asset is included in “Other” non-current assets on the Consolidated Balance Sheets.

The following tables set forth pension financial assets that are accounted for at fair value by level within the fair value hierarchy.

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Fixed income — 146 — 146 25 %

Total $ 258 $ 258 $ — $ 516 100 %

$ 314 $ 258 $ — $ 572 100 %

(1) Excludes $( 5 ) million as of December 31, 2023, of receivables, payables, taxes and accrued income associated with financial instruments reflected within the fair value table.

December 31, 2023 Asset Allocation

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$ 258 $ 258 $ — $ 516 100 %

(1) Excludes $( 1 ) million as of December 31, 2022, of receivables, payables, taxes and accrued income associated with financial instruments reflected within the fair value table.

FirstEnergy’s target asset allocations for its pension and OPEB trust portfolios for 2024 were as follows :

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Taking into account estimated employee future service, FirstEnergy expects to make the following benefit payments from plan assets and other payments, net of participant contribution.

Pension Benefit Payments Subsidy Receipts

Pension Benefit Payments Benefit Payments (1)

Subsidy Receipts

(In millions)

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Years 2030-2034 2,652 163 ( 3 )

(1) Net of participant contributions.

STOCK-BASED COMPENSATION PLANS

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During 2024, approximately $ 17 million was paid in relation to the cash portion of restricted stock unit obligations that vested in 2024.

The vesting period for the performance-based restricted stock unit awards granted in 2023, 2022 and 2021, were each three years .

The vesting period for the performance-based restricted stock unit awards granted in 2024, 2023 and 2022, were each approximately three years .

Dividend equivalents are received on the restricted stock units and are reinvested in additional restricted stock units and subject to the same performance conditions as the underlying award.

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Forfeited in 2024

( 0.2 ) 38.08

Vested in 2024 (1)

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The weighted-average fair value per share of awards granted in 2024, 2023 and 2022 was $ 36.79 , $ 38.36 and $ 41.49 per share, respectively.

For the years ended December 31, 2023, 2022, and 2021, the fair value of restricted stock units vested was $ 24 million, $ 26 million, and $ 34 million, respectively.

During the years ended 2024, 2023, and 2022, the fair value of restricted stock units vested was $ 55 million, $ 24 million, and $ 26 million, respectively.

As of December 31, 2024, there was approximately $ 30 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted for restricted stock units, which is expected to be recognized over a period of approximately three years .

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Forfeited in 2024

( 0.01 ) 42.24

Vested in 2024

( 0.21 ) 41.02

Nonvested as of December 31,2024

The weighted average vesting period for restricted stock granted in 2024 was 2.6 years.

As of December 31, 2023, there was $ 11 million of total unrecognized compensation cost related to non-vested restricted stock, which is expected to be recognized over a period of approximately four years .

As of December 31, 2024, there was $ 5 million of total unrecognized compensation cost related to non-vested restricted stock, which is expected to be recognized over a period of approximately 3 years.

401(k) Savings Plan

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Under the DCPD, members of the FE Board can elect to defer all or a portion of their equity retainers to a deferred stock account and their cash retainers to deferred stock or deferred cash accounts.

The net liability recognized for DCPD of approximately $ 4 million and $ 8 million as of December 31, 2023 and 2022, respectively, is included in “Retirement benefits,” on the Consolidated Balance Sheets.

The net liability recognized for DCPD of approximately $ 4 million as of December 31, 2024 and 2023, is included in “Retirement benefits,” on the Consolidated Balance Sheets.

FirstEnergy records income taxes in accordance with the liability method of accounting.

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Deferred tax assets are recognized based on income tax rates expected to be in effect when they are settled.

FE and its subsidiaries are party to an intercompany income tax allocation agreement that provides for the allocation of consolidated tax liabilities.

On August 16, 2022, President Biden signed into law the IRA of 2022, which, among other things, imposes a new 15% corporate AMT based on AFSI applicable to corporations with a three-year average AFSI over $ 1 billion.

FE and its subsidiaries, other than FET and its subsidiaries, are parties to an intercompany income tax allocation agreement that provides for the allocation of consolidated tax liabilities.

For periods subsequent to the closing of the FET Equity Interest Sale, FET and its subsidiaries are no longer members of the FirstEnergy consolidated group for federal income tax purposes and, instead, will file their own consolidated federal income tax return and have their own income tax allocation agreement.

The IRA of 2022, among other things, imposes a new 15% corporate AMT based on AFSI applicable to corporations with a three-year average AFSI over $ 1 billion.

The AMT is effective for the 2023 tax year and, if applicable, corporations must pay the greater of the regular corporate income tax or the AMT.

Although NOL carryforwards created through the regular corporate income tax system cannot be used to reduce the AMT, financial statement net operating losses can be used to reduce AFSI and the amount of AMT owed.

The IRA of 2022 as enacted requires the U.S.

The IRA of 2022 requires the U.S.

Treasury to provide regulations and other guidance necessary to administer the AMT, including further defining allowable adjustments to determine AFSI, which directly impacts the amount of AMT to be paid.

Based on interim guidance issued by the U.S.

Treasury during 2022 and 2023, FirstEnergy continues to believe that it is more likely than not it will be subject to the AMT beginning in 2023.

Accordingly, FirstEnergy made a first quarter estimated payment of AMT of approximately $ 49 million in April 2023.

In June 2023, the U.S.

Treasury issued additional guidance that eliminated the requirement of corporations to include AMT in quarterly estimated tax payments, pending further guidance on the application and administration of AMT.

Therefore, as a result of guidance issued to date, the current forecast of AMT obligation, and the amount of AMT already paid in April 2023, FirstEnergy did not make any additional AMT payments for the 2023 tax year.

Until final U.S.

Treasury regulations are issued, the amount of AMT FirstEnergy pays could be significantly different than current estimates or it may not be a payer at all.

The regulatory treatment of the impacts of this legislation may also be subject to regulation by FERC and/or applicable state regulatory authorities.

Any adverse development in this legislation, including guidance from the U.S.

On September 12, 2024, the U.S.

Treasury issued proposed regulations for the AMT for comments.

FirstEnergy is assessing the proposed regulations but continues to believe that it is more likely than not it will be subject to AMT, however, the completion of the U.S.

Treasury’s rulemaking process and the future issuance of final regulations, as well as potential future federal tax legislation or presidential executive orders, could significantly change FirstEnergy’s AMT estimates or its conclusion as to whether it is an AMT payer at all.

As further discussed below, FirstEnergy expects to pay regular federal corporate income tax for the 2024 tax year, due in large part to the gain realized from closing the FET Equity Interest Sale.

The regulatory treatment of the IRA of 2022 may also be subject to regulation by FERC and/or applicable state regulatory authorities.

Any adverse development in the IRA of 2022, including guidance from the U.S.

Treasury and/or the IRS or unfavorable regulatory treatment, could negatively impact FirstEnergy’s cash flows, results of operations and financial condition.

As discussed above, FirstEnergy expects to close on the sale of an additional 30 % interest in FET in 2024, at which time FirstEnergy expects to realize an approximate $ 7.5 billion tax gain from the combined sale of 49.9 % of the membership interests of FET for consideration received and recapture of negative tax basis in FET.

As of December 31, 2023, FirstEnergy had approximately $ 8.1 billion of gross federal NOL carryforwards, as further discussed below, which will be used to offset a majority of the tax gain from the FET sale and expected taxable income in 2024, however due to certain limitations on utilization enacted in the Tax Act, a portion of the NOL will carry into 2025 and possibly beyond.

As a result of the expected additional 30% sale in FET, FirstEnergy recognized a charge to income tax expense in the fourth quarter of 2022 of approximately $ 752 million, representing the deferred tax liability associated with the deferred tax gain on the initial 19.9 % sale of FET that closed in May 2022, such deferred gain consisting of consideration received on the sale and the recapture of estimated negative tax basis in FET impacted by taxable income and loss among other factors.

In the fourth quarter of 2023, FirstEnergy recognized a charge to income tax expense of approximately $ 58 million as a true-up of the deferred tax liability associated with the deferred tax gain.

During the third quarter of 2023, FirstEnergy recognized a tax benefit of approximately $ 65 million, net of a reserve for uncertain tax positions, from the reduction of state income taxes and partial release of a valuation allowance for the expected utilization of state NOL based on an assessment of regulated business operations and a change in the composition of a state tax return filing group.

In the fourth quarter of 2023, FirstEnergy recognized a tax benefit of approximately $ 37 million from the remeasurement of valuation allowance previously recorded on business interest expense carryforwards, net of carryforward adjustments, based on the expectation that FirstEnergy will be able to utilize these tax benefits on realized and future earnings and distributions from FirstEnergy’s interests in FET and FEV.

The business interest expense could not be deducted previously due to certain limitations imposed on interest expense from non-utility operations under section 163(j) of the Tax Act, however, the Tax Act provides that the nondeductible interest can be carried forward indefinitely and deducted against income from non-utility operations.

During 2022, FirstEnergy recognized an approximate $ 38 million tax benefit from remeasurement of the prior valuation allowance on interest expense carryforwards.

On March 29, 2023, the West Virginia Governor signed into law House Bill 3286, which provides corporate taxpayers a reduction to pre-apportionment federal taxable income with the amount necessary to offset the increase in the net deferred tax liability (or decrease in the net deferred tax asset) caused by West Virginia’s apportionment law change enacted in 2021.

Beginning with the 2033 tax year, qualifying taxpayers can subtract one-tenth of the amount each year for ten years.

Taxpayers intending to claim this subtraction will have to file a statement with the West Virginia tax commissioner by July 1, 2024, specifying the total amount of subtraction to be claimed.

Accordingly, FirstEnergy recorded a state deferred tax asset of approximately $ 9 million in the first quarter of 2023, which was fully reserved.

In conjunction with the assessment of regulated business operations discussed above, FirstEnergy removed the $ 9 million reserve and reduced the state deferred tax asset to approximately $ 4 million, and recorded a corresponding $ 4 million regulatory liability associated with the amount expected to be refunded to customers in future rates.

As discussed above, on March 25, 2024, FirstEnergy closed on the FET Equity Interest Sale realizing an approximate $7 billion tax gain from the combined sale of 49.9% of the equity interests of FET for consideration received and recapture of negative tax basis in FET.

As of December 31, 2023, FirstEnergy had approximately $8.1 billion of gross federal NOL carryforwards available to offset a majority of the tax gain and expected taxable income in 2024.

Due to certain limitations on NOL utilization enacted in the Tax Act, approximately $1.6 billion NOL will carry forward into 2025 and possibly beyond.

In the first quarter of 2024, FirstEnergy recognized a net tax charge of approximately $46 million, comprised of updates to estimated deferred tax liability for the deferred gain from the 19.9% FET equity interest sale in May 2022, deferred tax liability related to its ongoing investment in FET, and valuation allowance associated with the expected utilization of certain state NOL carryforwards impacted by the sale and the PA consolidation, and recognized a reduction to OPIC of approximately $803 million for federal and state income tax associated with the tax gain from closing on the FET Equity Interest Sale.

Previously, in the fourth quarter of 2023, FirstEnergy recognized a charge to income tax expense of approximately $58 million as a true-up of the deferred tax liability associated with the deferred tax gain.

FirstEnergy is continuing to evaluate the potential requirement to transition certain of its Electric Companies and Transmission Companies to standalone treatment for computing NOL carryforward deferred tax assets for rate making purposes and expects that if and where transitioning is required, those impacted Electric Companies and Transmission Companies will make the appropriate regulatory filing(s) in their applicable jurisdiction to include the NOL carryforward deferred tax asset in rate base and revenue requirement, which could have a material, favorable impact on future net income.

The following table provides the composite of income taxes on income from continuing operations for the years ended 2024, 2023 and 2022:

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Currently payable -

Federal $ 32 $ 14 $ —

State 29 1 11

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Total income taxes on income from continuing operations $ 377 $ 267 $ 1,000

(1) Excludes $ 2 million of federal tax benefit associated with discontinued operations for the year ended December 31, 2021.

(2) Excludes $ 21 million of federal tax expense and $ 46 million of federal tax benefits associated with discontinued operations for the years ended December 31, 2023 and 2021, respectively.

(1) Excludes $ 21 million of federal tax expense associated with discontinued operations for the year ended December 31, 2023.

FirstEnergy tax rates are affected by permanent items, such as AFUDC equity and other flow-through items, as well as discrete items that may occur in any given period but are not consistent from period to period.

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Amortization of investment tax credits ( 4 ) ( 3 ) ( 4 )

Deferred gain on 19.9 % FET minority interest sale

Deductions associated with certain equity method investments ( 19 ) — —

Taxes related to the combined sale of 49.9% of the equity interests of FET 6 58 752

Federal tax credits claimed ( 2 ) ( 3 ) ( 3 )

Nondeductible DPA monetary penalty

Tax on distributions from FET 16 — —

Excess deferred tax amortization due to the Tax Act ( 52 ) ( 46 ) ( 51 )

Nondeductible SEC and OAG settlements 27 — —

Remeasurement of excess deferred income taxes ( 43 ) — —

Uncertain tax positions — 41 2

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Effective income tax rate (continuing operations) 25.1 % 18.2 % 69.5 %

Accumulated deferred income taxes as of December 31, 2023 and 2022, are as follows:

Net accumulated deferred income tax liabilities (assets) as of December 31, 2024 and 2023, are as follows:

As of December 31,

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Deferred compensation ( 127 ) ( 153 )

Deferred gain on 19.9 % FET minority interest sale

Deferred gain on 19.9 % FET equity interest sale

Loss carryforwards and tax credits ( 762 ) ( 2,192 )

Valuation reserve 226 440

Valuation allowances 240 226

Other ( 239 ) ( 264 )

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FirstEnergy has recorded as deferred income tax assets the effect of federal NOLs and tax credits that will more likely than not be realized through future operations and through the reversal of existing temporary differences.

As of December 31, 2023, FirstEnergy's loss carryforwards primarily consisted of $ 8.1 billion ($ 1.7 billion, net of tax) of federal NOL carryforwards, $ 5.9 billion ($ 1.2 billion, net of tax) of which have no expiration and the remainder that will begin to expire in 2031.

As discussed above, FirstEnergy expects to utilize the majority of its federal NOL carryforwards by the end of 2024.

However, due to certain limitations on utilization enacted in the Tax Act, a portion of the NOL will carry into 2025 and possibly beyond.

In addition, FirstEnergy's tax credit carryforwards primarily consisted of AMT credits of $ 57 million, which have no expiration, and federal general business tax credits of $ 12 million that begin to expire in 2039.

The table below summarizes pre-tax NOL carryforwards and their respective anticipated expirations for state and local income tax purposes of approximately $ 13.5 billion ($ 436 million, net of tax) for FirstEnergy, of which approximately $ 6.1 billion ($ 233 million, net of tax) is expected to be utilized based on current estimates and assumptions.

As of December 31, 2024, FirstEnergy's loss carryforwards primarily consisted of $ 1.6 billion ($ 343 million, net of tax) of federal NOL carryforwards, all of which have no expiration.

The table below summarizes pre-tax NOL carryforwards and their respective anticipated expirations for state and local income tax purposes of approximately $ 12.9 billion ($ 403 million, million net of tax) for FirstEnergy, of which approximately $ 4.7 billion ($ 185 million, million net of tax) is expected to be utilized based on current estimates and assumptions.

The ultimate utilization of these NOLs may be impacted by statutory limitations on the use of NOLs imposed by state and local tax jurisdictions, changes in statutory tax rates, and changes in business which, among other things, impact both future profitability and the manner in which future taxable income is apportioned to various state and local tax jurisdictions.

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Balance, January 1, 2022 $ 47

Current year increases 15

Prior year decreases ( 8 )

Effectively settled with taxing authorities

Prior year increases 2

Decrease for lapse in statute ( 7 )

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Prior year increases 88

Effectively settled with taxing authorities ( 24 )

Decrease for lapse in statute ( 1 )

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Balance, December 31, 2024 $ 105

As of December 31, 2023, none of the unrecognized tax benefits are expected to be resolved during 2024 as a result of settlements with taxing authorities or the statute of limitations expiring.

As of December 31, 2024, none of the unrecognized tax benefits are expected to be resolved during 2025.

FirstEnergy recognizes interest expense or income and penalties related to uncertain tax positions in income taxes by applying the applicable statutory interest rate to the difference between the tax position recognized and the amount previously taken, or expected to be taken, on the tax return.

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Due to uncertain tax positions that were effectively settled with tax authorities during 2023, approximately $ 9 million in net interest was reversed.

There was no material interest expense or income, or penalties, related to uncertain tax positions in 2022 and 2021.

There was no material interest expense or income, or penalties, related to uncertain tax positions in 2024, nor does FirstEnergy have a cumulative net interest payable as of December 31, 2024.

IRS review of FirstEnergy's federal income tax return is complete through the 2020 tax year with no pending adjustments.

FirstEnergy's tax returns for some state jurisdictions are open from tax years 2015-2023.

General Taxes

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Most leases include one or more options to renew, with renewal terms that can extend the lease term from 1 to 40 years, and certain leases include options to terminate.

In December 2023, FirstEnergy purchased the General Office building in Akron, Ohio with the intention to sell in the future.

It is currently expected that the exit of the General Office and sale will occur in 2025.

The exercise of lease renewal options is at FirstEnergy’s sole discretion.

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FirstEnergy does not believe it is probable that it will be required to pay anything pertaining to the residual value guarantee, and the lease liabilities and right-of-use assets are measured accordingly.

In December 2023, FirstEnergy exercised a purchase option within their lease to purchase the General Office building in Akron, Ohio, with the intention to sell it in the future.

Finance leases for assets used in regulated operations are recognized in FirstEnergy’s Consolidated Statements of Income such that amortization of the right-of-use asset and interest on lease liabilities equals the expense recorded for ratemaking purposes.

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(1) Operating lease payments for certain leases are offset by sublease receipts of $ 7 million over 8 years.

As of December 31, 2023, additional operating leases agreements, primarily for vehicles, that have not yet commenced are $ 42 million.

These leases are expected to commence within the next 18 months with lease terms of 5 to 10 years.

As of December 31, 2024, lease agreements for vehicles and fiber lines that have not yet commenced are $ 40 million, which are expected to commence from 2025-2029 with lease terms of 5 to 30 years.

Additionally, a building lease agreement is expected to commence in 2025 with a lease term of 22 years with annual rents of approximately $ 2 million.

VARIABLE INTEREST ENTITIES

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Consolidated VIEs

Total assets on the FirstEnergy consolidated balance sheets include approximately $ 11,024 million and $ 10,104 million of consolidated VIE assets, as of December 31, 2023 and 2022, respectively, that can only be used to settle the liabilities of the applicable VIE.

Total liabilities include approximately $ 7,835 million and $ 7,573 million as of December 31, 2023 and 2022, respectively, of consolidated VIE liabilities for which the VIE's creditors do not have recourse to FirstEnergy.

VIEs in which FirstEnergy is the primary beneficiary consist of the following (included in FirstEnergy’s consolidated financial statements):

Total assets on FirstEnergy's Consolidated Balance Sheets include approximately $ 12 billion and $ 11 billion of consolidated VIE assets, as of December 31, 2024 and 2023, respectively, that can only be used to settle the liabilities of the applicable VIE.

Total liabilities include approximately $ 9.1 billion and $ 7.8 billion as of December 31, 2024 and 2023, respectively, of consolidated VIE liabilities for which the VIE's creditors do not have recourse to FirstEnergy.

VIEs in which FirstEnergy is the primary beneficiary consist of the following and are included in FirstEnergy’s consolidated financial statements:

Securitization Companies

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As of December 31, 2024 and 2023, $ 188 million and $ 218 million of environmental control bonds were outstanding, respectively.

Restricted cash included on the FE Consolidated Balance Sheets of $ 40 million and $ 41 million as of December 31, 2023 and 2022 respectively, relates to cash collected from MP, PE and the Ohio Companies' customers that is specifically used to service debt of their respective funding companies.

FirstEnergy's Consolidated Balance Sheets includes restricted cash of $ 40 million as of December 31, 2024 and 2023 which is related to cash collected from MP, PE and the Ohio Companies' customers that is specifically used to service debt of their respective funding companies.

FET is a holding company that owns equity interests in ATSI, MAIT, TrAIL and PATH.

As of December 31, 2023, FE has ownership in FET of 80.1 % with Brookfield having 19.9 %.

As further discussed above, on February 2, 2023, FE entered into an agreement with Brookfield to sell an incremental 30 % equity interest in FET, which will bring FE’s equity ownership in FET to 50.1 % and Brookfield to 49.9 %.

The FET Minority Equity Interest Sale is expected to close by the end of first quarter of 2024.

FirstEnergy has concluded that FET is a VIE and that FE is the primarily beneficiary because FE has exposure to the economics of FET and the power to direct significant activities of FET through the FESC services agreement, which represents a separate variable interest.

Although Brookfield will be granted incremental consent rights upon closing of the incremental 30 % sale, Brookfield will not have unilateral control over any activities that most significantly impact FET’s economic performance.

As further discussed above, on February 2, 2023, FE entered into an agreement with Brookfield to sell an incremental 30 % equity interest in FET, which closed on March 25, 2024.

As of December 31, 2024 FE’s equity ownership in FET is 50.1 % and Brookfield’s is 49.9 %.

FirstEnergy has concluded that FET is a VIE and that FE is the primary beneficiary because FE has exposure to the economics of FET and the power to direct significant activities of FET through the FESC services agreement, which represents a separate variable interest.

Although Brookfield was granted incremental consent rights upon the closing of the FET Equity Interest Sale, Brookfield will not have unilateral control over any activities that most significantly impact FET’s economic performance.

However, FE will continue to retain power over the activities that most significantly impact FET’s economic performance through its incremental decision making rights under the existing FESC services agreement, through which executive management and workforce services are provided to FET.

As a result, FE is the primary beneficiary of FET and FET will continue to be consolidated in FirstEnergy’s financial statements.

As a result, FE is the primary beneficiary of FET, which will continue to be consolidated in FirstEnergy’s financial statements.

The following shows the carrying amounts and classification of the FET assets and liabilities included in the consolidated financial statements as of December 31, 2024 and 2023.

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2024 December 31,

Currently payable long-term debt $ 625 $ —

Short-term borrowings 300 —

Accounts payable — 2

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FirstEnergy is not the primary beneficiary of its equity method investments in Global Holding and PATH WV, as further discussed above, or its PPAs.

FirstEnergy evaluated its PPAs and determined that certain NUG entities at its Regulated Distribution segment may be VIEs to the extent that they own a plant that sells substantially all of its output to the applicable utilities and the contract price for power is correlated with the plant’s variable costs of production.

FirstEnergy evaluated its PPAs and determined that certain Non-Utility Generation entities may be VIEs to the extent that they own a plant that sells substantially all of its output to the applicable utilities and the contract price for power is correlated with the plant’s variable costs of production.

As of December 31, 2024, FirstEnergy maintains four long-term PPAs with NUG entities that were entered into pursuant to the Public Utility Regulatory Policies Act of 1978.

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FirstEnergy has determined that, it does not have a variable interest, or the entities do not meet the criteria to be considered a VIE.

During 2023, FirstEnergy terminated the PPA with the NUG entity in which it had previously applied the scope exception that exempts enterprises unable to obtain the necessary information to evaluate entities.

Because FirstEnergy has no equity or debt interests in the NUG entities, its maximum exposure to loss relates primarily to the above-market costs incurred for power.

FirstEnergy expects any above-market costs incurred at its Regulated Distribution segment to be recovered from customers.

FirstEnergy expects any above-market costs incurred at its Distribution and Integrated segments to be recovered from customers.

ASSET RETIREMENT OBLIGATIONS

FirstEnergy recognizes an ARO for its legal obligation to perform asset retirement activities associated with its long-lived assets.

The ARO liability represents an estimate of the fair value of FirstEnergy's current obligation such that the ARO is accreted monthly to reflect the time value of money.

A fair value measurement inherently involves uncertainty in the amount and timing of settlement of the liability.

FirstEnergy uses an expected cash flow approach to measure the fair value of the remediation AROs, taking into account the expected timing of settlement of the ARO based on the expected economic useful life of associated asset and/or regulatory requirements.

The fair value of an ARO is recognized in the period in which it is incurred.

The associated asset retirement costs are capitalized as part of the carrying value of the long-lived asset and are depreciated over the life of the related asset.

For instances where asset retirement costs relate to assets that have no future cash flows, the costs are recorded as an operating expense.

In certain circumstances, FirstEnergy has recovery of asset retirement costs and, as such, certain accretion and depreciation is offset against regulatory assets.

When settlement is conditional on a future event occurring, it is reflected in the measurement of the liability, not the timing of the liability recognition.

FirstEnergy has recognized applicable legal obligations for AROs and their associated costs, including reclamation of sludge disposal ponds, closure of CCR sites, underground and above-ground storage tanks and wastewater treatment lagoons.

In addition, FirstEnergy has recognized conditional retirement obligations, primarily for asbestos remediation.

The following table summarizes the changes to the ARO balances during 2024 and 2023:

ARO Reconciliation (In millions)

Balance, January 1, 2023 $ 185

Changes in timing and amount of estimated cash flows 10

Liabilities settled ( 2 )

Balance, December 31, 2023 $ 209

Changes in timing and amount of estimated cash flows 131

Liabilities incurred 95

Liabilities settled ( 4 )

Balance, December 31, 2024 $ 455

On November 30, 2020, AE Supply submitted a closure deadline extension request to the EPA seeking to extend the cease accepting waste date for the McElroy's Run CCR impoundment facility to October 2024, which request was withdrawn by AE Supply on July 9, 2024, prior to the completion of the technical review by the EPA.

As of May 31, 2024, AE Supply ceased accepting waste at the McElroy’s Run CCR impoundment facility from Pleasants Power Station.

As of December 31, 2024, AE Supply continues to operate the dry landfill adjacent to McElroy’s Run as a disposal facility for Pleasants Power Station.

During the second quarter of 2024, as a result of the evaluation of closure options for McElroy’s Run and the adjacent landfill, AE Supply reviewed its ARO and future expected costs to remediate, resulting in an increase to the ARO liability and corresponding increase to “Other operating expense” of $ 87 million at Corporate/Other for segment reporting.

On February 3, 2025, AE Supply executed an environmental liability transfer agreement with a subsidiary of IDA Power, LLC, whereby AE Supply will transfer the McElroy’s Run CCR impoundment facility and adjacent dry landfill and related remediation obligations.

The agreement requires

AE Supply to establish a $160 million escrow account that AE Supply will fund over five years.

The escrow funding obligation will be secured by a surety bond, which will be guaranteed by FE.

The transaction is expected to close before the end of the first quarter of 2025 and the derecognition of the ARO is not expected to have a material impact to FirstEnergy’s financial statements, however, no assurances of the closing of the transfer will be satisfied, including transfer of all required environmental permits.

As further discussed below, on May 8, 2024, the EPA finalized changes to the CCR rule addressing certain legacy CCR disposal sites which were not included in previous CCR rules.

As a result, during 2024, FirstEnergy performed a preliminary assessment of former CCR disposal sites and calculated an initial estimate applying historical experience in remediating comparable sites.

As a result, FirstEnergy recorded a $ 139 million increase to its ARO in 2024, of which $ 113 million is included in “Other operating expenses” on the Consolidated Statements of Income and was not capitalized as an asset retirement cost since the associated plants are closed.

Of the $ 113 million expensed in 2024, $ 16 million is included with Integrated, $ 46 million is included within Distribution and $ 51 million at Corporate/Other for segment reporting.

The ARO increase related to certain legacy CCR disposal sites represents the discounted cash flows for estimated closure costs based upon the potential closure requirements as evaluated on a site-by-site basis.

Actual costs to be incurred will be dependent upon factors that vary from site to site.

The most significant factors include the method and time frame of closure at the individual sites, which will be determined based on the groundwater monitoring and, if applicable, EPA approval of closure plans.

In determining the estimated closure costs for each site, FirstEnergy has assumed the anticipated applicable closure method, however, alternative closure methods may be required, resulting in greater or lesser cost.

As a result, the ARO liability may be adjusted as additional information is gained through the evaluation and closure process, including further inspection of the sites, results of groundwater monitoring and changes in interpretation of the CCR regulations which may change management assumptions, and could result in a material change to the ARO liability balance and FirstEnergy’s results of operations.

FAIR VALUE MEASUREMENTS

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Investments that use NAV as a practical expedient are excluded from the requirement to be categorized within the fair value hierarchy tables.

Instead, these investments are reported outside of the fair value hierarchy tables to assist in the reconciliation of investment balances reported in the tables to the balance sheet.

Instead, these investments are reported outside of the fair value hierarchy

tables to assist in the reconciliation of investment balances reported in the tables to the balance sheet.

FirstEnergy has elected the NAV practical expedient for investments in private equity funds, insurance-linked securities, hedge funds (absolute return) and real estate funds held within the pension plan.

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CAPITALIZATION

Retained Earnings and Dividends

As of December 31, 2023, FirstEnergy had an accumulated deficit of $ 97 million.

Dividends declared in 2023 totaled $ 1.60 per share and dividends declared in 2022 totaled $ 1.56 per share.

Dividends of $ 0.39 per share were declared in the first, second, third and fourth quarters in 2022 and the first and second quarters in 2023.

In September 2023, the FE Board declared a $ 0.02 per share increase to the quarterly common dividend payable December 1, 2023, to $ 0.41 per share, which represents a 5 % increase compared to the quarterly payments of $ 0.39 per share paid by FE since March 2020.

The dividend declared in the fourth quarter of 2023, payable on March 1, 2024, was also $ 0.41 per share.

The amount and timing of all dividend declarations are subject to the discretion of the FE Board and its consideration of business conditions, results of operations, financial condition, risks and uncertainties of the government investigations, and other factors.

Dividends declared and paid per share of common stock during 2024 and 2023 were as follows:

Dividends Declared Dividends Paid

2024 2023 2024 2023

Q1 $ 0.425 $ 0.390 $ 0.410 $ 0.390

Q2 — 0.390 0.425 0.390

Q3 0.850 0.410 0.425 0.390

Q4 0.425 0.410 0.425 0.410

Total $ 1.700 $ 1.600 $ 1.685 $ 1.580

In addition to declaring dividends from retained earnings, FE can declare dividends from paid-in capital accounts.

When FE makes distributions to shareholders, it is required to subsequently determine and report the tax characterization of those distributions for purposes of shareholders’ income taxes.

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Generally, a non-taxable return of capital will reduce an investor’s basis in FirstEnergy's stock for federal tax purposes, which will impact the calculation of gain or loss when the stock is sold.

Provided the FET Minority Equity Interest Sale closes as anticipated, FE expects to realize an over $ 7 billion tax gain in 2024.

This tax gain is estimated to create sufficient earnings and profits to cause distributions made during 2024 to be characterized as ordinary dividends for federal income tax purposes.

Based on the closing of the FET Equity Interest Sale on March 25, 2024, FE realized an approximate $ 7 billion tax gain in 2024.

FE expects that this tax gain created sufficient earnings and profits to cause distributions made during 2024 and the next several years, to be characterized as dividends for federal income tax purposes.

Upon such characterization, shareholders are urged to consult their own tax advisors regarding the income tax treatment of FE's distributions to them.

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In addition, AGC has authorization from FERC to pay cash dividends to its parent, MP, from paid-in capital accounts, as long as its FERC-defined equity-to-total-capitalization ratio remains above 45 %.

The articles of incorporation, indentures, regulatory limitations, FET P&SA I and FET P&SA II, and various other agreements, including those relating to the long-term debt of certain FirstEnergy subsidiaries contain provisions that could further restrict the payment of dividends on their common stock.

The governance documents, indentures, regulatory limitations, and FET P&SA II, and various other agreements, including those relating to the long-term debt of certain FirstEnergy subsidiaries contain provisions that could further restrict the payment of dividends on their common stock.

None of these provisions materially restricted FirstEnergy subsidiaries’ abilities to pay cash dividends to FE as of December 31, 2024.

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FE issued approximately 3 million shares of common stock in 2024, 2 million shares of common stock in 2023 and 2 million shares of common stock in 2022 to registered shareholders and its directors and the employees of its subsidiaries under its Stock Investment Plan and certain share-based benefit plans.

On November 6, 2021, FE entered into a Common Stock Purchase Agreement with BIP Securities II-B L.P., an affiliate of Blackstone Infrastructure Partners L.P., for the private placement of 25,588,535 shares of FE common stock, par value $ 0.10 per share, at a price of $ 39.08 per share, representing an investment of $ 1.0 billion.

The transaction settled on December 13, 2021.

Issuance costs associated with the transaction were approximately $ 26 million as of December 31, 2021.

PREFERRED AND PREFERENCE STOCK

FirstEnergy and the Utilities were authorized to issue preferred stock and preference stock as of December 31, 2023, as follows:

FirstEnergy and certain of its subsidiaries are authorized to issue preferred stock and preference stock as of December 31, 2024, as follows:

Preferred Stock Preference Stock

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OE 8,000,000 $ 25

1,200,000 $ 100

CEI 4,000,000 no par 3,000,000 no par

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JCP&L 15,600,000 no par

10,000,000 no par

11,435,000 no par

MP 940,000 $ 100

PE 10,000,000 $ 0.01

32,000,000 no par

(1) On January 1, 2024, FirstEnergy consolidated the Pennsylvania Companies into FE PA, making it a new, single operating entity.

FE PA has not been authorized to issue preferred stock or preference stock.

As of December 31, 2024 and 2023, there were no preferred stock or preference stock outstanding.

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Redemptions (1)

ME Unsecured Notes March, 2023 3.50 % 2023 $ 300 ME redeemed unsecured notes that became due.

FE Unsecured Notes May, 2023 7.38 % 2031 $ 194 FE repurchased approximately $ 194 million of the principal amount of its 2031 Notes through the open market for $ 228 million including a premium of approximately $ 34 million ($ 27 million after-tax).

In addition, FE recognized approximately $ 2 million ($ 1 million after-tax) of deferred cash flow hedge losses associated with the FE debt redemptions.

WP FMBs January, 2023 5.29 % 2033 $ 50 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.

MAIT Unsecured Notes February, 2023 5.39 % 2033 $ 175 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.

ME Unsecured Notes March, 2023 5.20 % 2028 $ 425 Proceeds were used to repay short-term borrowings, including borrowings incurred to repay, at maturity, the $ 300 million aggregate principal amount of ME's 3.50 % unsecured notes due March 15, 2023, to finance capital expenditures and for other general corporate purposes.

PN Unsecured Notes March, 2023 5.15 % 2026 $ 300 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.

ATSI Unsecured Notes May, 2023 5.13 % 2033 $ 150 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.

FE Unsecured Convertible Notes May, 2023 4.00 % 2026 $ 1,500 Proceeds were used to repay short-term borrowings, to repurchase a portion of its 2031 Notes, to fund the qualified pension plan and for other general corporate purposes.

PE FMBs September, 2023 5.64 % 2028 $ 100 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.

PE FMBs September, 2023 5.73 % 2030 $ 50 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.

MP FMBs September, 2023 5.85 % 2034 $ 400 Proceeds are to be used for repaying short-term and long-term debt, including MP’s $ 400 million 4.10 % FMBs due April 15, 2024, to finance capital expenditures and for other general corporate purposes.

FE Unsecured Notes April, 2024 7.375 % 2031 $ 463 FE redeemed all of its remaining $ 463 million of 2031 Notes including a premium of approximately $ 80 million ($ 63 million after-tax).

In addition, FE recognized approximately $ 4 million ($ 3 million after-tax) of deferred cash flow hedge losses and $ 1 million in other unamortized debt costs and fees associated with the FE debt redemptions.

JCP&L Unsecured Notes April, 2024 4.70 % 2024 $ 500 JCP&L redeemed unsecured notes that became due.

MP FMBs April, 2024 4.10 % 2024 $ 400 MP redeemed FMBs that became due.

CEI FMBs August, 2024 5.50 % 2024 $ 300 CEI redeemed FMBs that became due.

FE PA Unsecured Notes December, 2024 4.00 % 2025 $ 250 On December 30, 2024, FE PA caused to be redeemed $ 250 million of 4.00 % senior notes due 2025.

FE PA Unsecured Notes December, 2024 4.15 % 2025 $ 200 On December 30, 2024, FE PA caused to be redeemed $ 200 million of 4.15 % senior notes due 2025.

FET Unsecured Notes December, 2024 4.35 % 2025 $ 600 On December 30, 2024, FET caused to be redeemed $ 600 million of 4.35 % senior notes due 2025.

ATSI Unsecured Notes March, 2024 5.63 % 2034 $ 150 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.

MAIT Unsecured Notes May, 2024 5.94 % 2034 $ 250 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.

FET Unsecured Notes with registration rights September, 2024 4.55 % 2030 $ 400 Proceeds were used to repay short-term borrowings, to redeem FET's $ 600 million 4.35 % notes due 2025, to finance capital expenditures and for other general corporate purposes.

FET Unsecured Notes with registration rights September, 2024 5.00 % 2035 $ 400 Proceeds were used to repay short-term borrowings, to redeem FET's $ 600 million 4.35 % notes due 2025, to finance capital expenditures and for other general corporate purposes.

KATCo Unsecured Notes November, 2024 5.17 % 2035 $ 200 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.

JCP&L Unsecured Notes with registration rights December, 2024 5.10 % 2035 $ 700 Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.

(1) Excludes principal payments on securitized bonds.

As noted above, on September 5, 2024, FET issued $ 400 million of unsecured senior notes due in 2030 and $ 400 million of unsecured senior notes due in 2035 in a private offering that included a registration rights agreement in which FET agreed to conduct an exchange offer of these senior notes for like principal amounts registered under the Securities Act.

On October 8, 2024, FET filed a registration statement on Form S-4 for the exchange offer with the SEC, which was declared effective on December 20, 2024.

On January 24, 2025, FET completed an exchange offer of these senior notes for like principal amounts registered under the Securities Act.

As noted above, on December 5, 2024, JCP&L issued $ 700 million of unsecured senior notes due in 2035 in a private offering that included a registration rights agreement in which JCP&L agreed to conduct an exchange offer of these senior notes for like principal amounts registered under the Securities Act.

JCP&L also agreed to file a shelf registration statement with the SEC to cover resales of the senior notes under certain circumstances.

In the event that JCP&L's exchange offer is not completed or the shelf registration statement, if required, is not effective by the 366th day after December 5, 2024, or the effective shelf registration stops being effective for 60 days during any 12-month period, then additional interest will accrue on the coupon.

Interest will accrue at a rate of 25 basis points for the first 90 days and an additional 25 basis points in the subsequent 90-day period, but not to exceed 50 basis points per year.

However, if the additional interest is triggered, the interest rate will reset to the original notes rate once the registration statement is effective, or the shelf registration, if required, becomes effective.

JCP&L plans to file a registration statement for the exchange offer before the end of the first quarter of 2025.

The following table presents scheduled debt repayments or debt that has been noticed for redemption for outstanding long-term debt, excluding finance leases, fair value purchase accounting adjustments and unamortized debt discounts and premiums, for the next five years as of December 31, 2024.

(In millions) 2025 2026 2027 2028 2029

Scheduled debt repayments $ 973 $ 2,876 $ 2,003 $ 2,453 $ 1,064

Convertible Notes

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FE will settle conversions of the 2026 Convertible Notes, if any, by paying cash up to the aggregate principal amount of the 2026 Convertible Notes being converted and by paying cash or delivering shares of FE’s common stock (or a combination of each), at its election, of its conversion obligation in excess of the aggregate principal amount of the 2026 Convertible Notes being converted.

The conversion rate for the 2026 Convertible Notes will initially be 21.3620 shares of FE’s common stock per $1,000 principal amount of the 2026 Convertible Notes (equivalent to an initial conversion price of approximately $ 46.81 per share of FE’s

common stock).

The initial conversion price of the 2026 Convertible Notes represents a premium of approximately 20 % over the last reported sale price of FE’s common stock on the New York Stock Exchange on May 1, 2023.

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In addition, if certain fundamental changes occur, FE may be required, in certain circumstances, to increase the conversion rate for any 2026 Convertible Notes converted in connection with such fundamental changes by a specified number of shares of its common stock.

(In millions) 2024 2025 2026 2027 2028

Scheduled debt repayments $ 1,246 $ 2,023 $ 2,876 $ 2,003 $ 2,453

Securitized Bonds

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As of December 31, 2024 and 2023, $ 175 million and $ 191 million of the phase-in recovery bonds were outstanding, respectively.

The Ohio Companies, Penn, MP, PE, and WP each have a first mortgage indenture under which they can issue FMBs secured by a direct first mortgage lien on substantially all of their property and franchises, other than specifically excepted property.

The Ohio Companies, FE PA, MP and PE each have a first mortgage indenture under which they can issue FMBs secured by a direct first mortgage lien on substantially all of their property and franchises, other than specifically excepted property.

The outstanding debt under the FMBs of specific FE PA predecessors (WP and Penn) were assumed by FE PA.

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These provisions generally trigger a default in the applicable financing arrangement of an entity if it, or any of its significant subsidiaries, default under another financing arrangement in excess of a certain principal amount, typically $ 100 million.

Such defaults by any of the Utilities or Transmission Companies would cross-default certain FE financing arrangements containing these provisions, and a certain FET Financing arrangement, with respect to the Transmission Companies only.

Such defaults by any of the Electric Companies or Transmission Companies would cross-default certain FE financing arrangements containing these provisions, and a certain FET Financing arrangement, with respect to the Transmission Companies only.

Such defaults by AE Supply would not cross-default to applicable financing arrangements of FE.

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FirstEnergy had $550 million and $775 million of outstanding short-term borrowings as of December 31, 2024 and 2023, respectively.

On October 18, 2021, FE, FET, the Utilities, and the Transmission Companies entered into the 2021 Credit Facilities, which were six separate senior unsecured five-year syndicated revolving credit facilities with JPMorgan Chase Bank, N.A., Mizuho Bank, Ltd.

and PNC Bank, National Association that replaced the FE Revolving Facility and the FET Revolving Facility, and provide for aggregate commitments of $4.5 billion.

Under the 2021 Credit Facilities, an aggregate amount of $4.5 billion is available to be borrowed, repaid and reborrowed, subject to each borrower’s respective sublimit under the respective facilities.

These credit facilities provide substantial liquidity to support the Regulated businesses, and each of the operating companies within the businesses.

On October 20, 2023, FE and certain of its subsidiaries entered into the amendments to each of the 2021 Credit Facilities to, among other things;

(i) amend the FE Revolving Facility to release FET as a borrower and (ii) extend the maturity date of the 2021 Credit Facilities for an additional one-year period, from October 18, 2026 to October 18, 2027.

Also, on October 20, 2023, each of FET and KATCo entered into the 2023 Credit Facilities.

In connection with PA Consolidation, the Pennsylvania Companies' rights and obligations under their revolving credit facility were assumed by FE PA on January 1, 2024.

Under the FET Revolving Facility, $1.0 billion is available to be borrowed, repaid and reborrowed until October 20, 2028.

Under the KATCo Revolving Facility, (i) $150 million is available to be borrowed, repaid and reborrowed until October 20, 2027, (ii) borrowings will mature on the earlier of 364 days from the date of borrowing or the commitment termination date, as the same may be extended;

upon KATCo demonstrating to the administrative agent authorization to borrow amounts maturing more than 364 days from the date of borrowing, its borrowings will mature on the latest commitment termination date.

KATCo may not draw on the KATCo Credit Facility until the satisfaction of certain conditions, including the availability of first quarter financial statements, which are expected to be completed during the second quarter of 2024.

The 2021 Credit Facilities and 2023 Credit Facilities are as follows:

On October 24, 2024, FE and certain of its subsidiaries entered into the following amendments to each of the 2021 Credit Facilities to, among other things:

(i) extend the maturity date of the 2021 Credit Facilities for an additional one-year period, from October 18, 2027 to October 18, 2028, and (ii) increase the borrowing limit of the JCP&L credit facility from $500 million to $750 million.

Also on October 24, 2024, each of FET and KATCo entered into amendments of the 2023 Credit Facilities, to, among other things, extend the maturity date of the 2023 Credit Facilities for an additional one-year period, from October 20, 2028 to October 20, 2029 and from October 20, 2027 to October 20, 2028, for the FET credit facility and KATCo credit facility, respectively.

The 2021 Credit Facilities and 2023 Credit Facilities, as amended on October 24, 2024, are as follows:

• FE, $1.0 billion revolving credit facility;

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• MP and PE, $400 million revolving credit facility;

• Transmission Companies, $850 million revolving credit facility;

• ATSI, MAIT and TrAIL, $850 million revolving credit facility;

• KATCo, $150 million revolving credit facility.

As of December 31, 2023, available liquidity under the 2021 and 2023 Credit Facilities was approximately $ 5.0 billion.

As of December 31, 2024, available liquidity under the 2021 and 2023 Credit Facilities totaled approximately $ 5.3 billion.

Borrowings under the 2021 Credit Facilities and 2023 Credit Facilities may be used for working capital and other general corporate purposes.

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Each of the 2021 Credit Facilities and 2023 Credit Facilities contain financial covenants requiring each borrower, with the exception of FE, to maintain a consolidated debt-to-total-capitalization ratio (as defined under each of the 2021 Credit Facilities and 2023 Credit Facilities) of no more than 65%, and 75% for FET, measured at the end of each fiscal quarter.

FE is required under its 2021 Credit Facility to maintain a consolidated interest coverage ratio of not less than 2.50 times, measured at the end of each fiscal quarter for the last four fiscal quarters beginning with the quarter ending December 31, 2021.

FE is required

under its credit facility to maintain a consolidated interest coverage ratio of not less than 2.50 times, measured at the end of each fiscal quarter for the last four fiscal quarters.

Subject to each borrower’s sublimit, certain amounts are available for the issuance of LOCs (subject to borrowings drawn under the 2021 Credit Facilities and 2023 Credit Facilities) expiring up to one year from the date of issuance.

The stated amount of outstanding LOCs will count against total commitments available under each of the 2021 Credit Facilities and 2023 Credit Facilities and against the applicable borrower’s borrowing sublimit.

As of December 31, 2023, FirstEnergy had $4 million in outstanding LOCs.

As of December 31, 2024, FirstEnergy had $170 million in outstanding LOCs, $139 million of which are issued under the revolving credit facilities.

The 2021 Credit Facilities and 2023 Credit Facilities do not contain provisions that restrict the ability to borrow or accelerate payment of outstanding advances in the event of any change in credit ratings of the borrowers.

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Additionally, borrowings under each of the 2021 Credit Facilities and 2023 Credit Facilities are subject to the usual and customary provisions for acceleration upon the occurrence of events of default, including a cross-default for other indebtedness in excess of $ 100 million.

As of December 31, 2023, the borrowers were in compliance with the applicable interest coverage and debt-to-total-capitalization ratio covenants in each case as defined under the 2021 Credit Facilities and 2023 Credit Facilities.

As of December 31, 2024, FE was in compliance with its applicable consolidated interest coverage ratio and the borrowers in each case as defined under the 2021 Credit Facilities and 2023 Credit Facilities, were in compliance with their debt-to-total-capitalization ratio covenants.

FirstEnergy Money Pools

FirstEnergy’s utility operating subsidiary companies also have the ability to borrow from each other and FE to meet their short-term working capital requirements.

FirstEnergy’s regulated operating subsidiary companies also have the ability to borrow from each other and FE to meet their short-term working capital requirements.

Effective September 23, 2024, AGC and KATCo became participants in the regulated companies’ money pool.

Similar but separate arrangements exist among FirstEnergy’s unregulated companies with AE Supply, FE, FET, FEV and certain other unregulated subsidiaries.

As of June 1, 2024, FET no longer participated in the unregulated money pool.

FESC administers these money pools and tracks surplus funds of FE and the respective regulated and unregulated subsidiaries, as the case may be, as well as proceeds available from bank borrowings.

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The rate of interest is the same for each company receiving a loan from their respective pool and is based on the average cost of funds available through the pool.

The high interest rate environment has caused the rate and interest expense on borrowings under the various FirstEnergy credit facilities to be significantly higher.

Average Interest Rates Regulated Companies’ Money Pool Unregulated Companies’ Money Pool

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Weighted Average Interest Rates

The annual weighted average interest rates on short-term borrowings outstanding as of December 31, 2023 and 2022, were 6.96 % and 3.93 %, respectively.

The annual weighted average interest rates on short-term borrowings through the years ended December 31, 2024 and 2023 were 7.10 % and 6.96 %, respectively.

REGULATORY MATTERS

STATE REGULATION

Each of the Utilities' retail rates, conditions of service, issuance of securities and other matters are subject to regulation in the states in which it operates - in Maryland by the MDPSC, in New Jersey by the NJBPU, in Ohio by the PUCO, in Pennsylvania by the PPUC, in West Virginia by the WVPSC and in New York by the NYPSC.

Each of the Electric Companies retail rates, conditions of service, issuance of securities and other matters are subject to regulation in the states in which it operates - in Maryland by the MDPSC, in New Jersey by the NJBPU, in Ohio by the PUCO, in Pennsylvania by the PPUC, in West Virginia by the WVPSC and in New York by the NYPSC.

The transmission operations of PE and TrAIL in Virginia, ATSI in Ohio, the Transmission Companies in Pennsylvania, PE and MP in West Virginia, and PE in Maryland are subject to certain regulations of the VSCC, PUCO, PPUC, WVPSC, and MDPSC, respectively.

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Further, if any of the FirstEnergy affiliates were to engage in the construction of significant new transmission facilities, depending on the state, they may be required to obtain state regulatory authorization to site, construct and operate the new transmission facility.

The following table summarizes the key terms of base distribution rate orders in effect for the Utilities as of December 31, 2023:

The following table summarizes the key terms of state base rate orders in effect for the Electric Companies as of December 31, 2024:

Company Rates Effective For Customers Allowed Debt/Equity Allowed ROE

CEI May 2009 51 %/ 49 %

January 2017 48.8 % / 51.2 %

MP February 2015 54 % / 46 %

JCP&L November 2021 48.6 % / 51.4 %

January 2017 Settled (2)

MP March 2024 Settled (2)

JCP&L June 2024 48.1 % / 51.9 %

OE January 2009 51 % / 49 %

PE (West Virginia) February 2015 51 % / 49 %

PE (West Virginia) March 2024 Settled (2)

PE (Maryland) October 2023 47 % / 53 %

January 2017 47.4 % / 52.6 %

January 2017 49.9 % / 50.1 %

TE January 2009 51 % / 49 %

January 2017 49.7 % / 50.3 %

(1) Reflects filed debt/equity as final settlement/orders do not specifically include capital structure.

Additionally, on January 1, 2024, FirstEnergy consolidated the Pennsylvania Companies into FE PA, making it a new, single operating entity, and will operate under the rate districts of the former Pennsylvania Companies.

(2) Commission-approved settlement agreements did not disclose ROE rates.

PE operates under MDPSC approved base rates that were effective as of October 19, 2023.

(1) As further discussed below, new rates became effective for customers on January 1, 2025, and did not disclose allowed debt/equity and ROE rates.

(2) Commission-approved settlement agreements did not disclose allowed debt/equity and/or ROE rates.

PE operates under MDPSC approved distribution base rates that were effective as of October 19, 2023, and that were subsequently modified by an MDPSC order dated January 3, 2024, which became effective as of March 1, 2024.

PE also provides SOS pursuant to a combination of settlement agreements, MDPSC orders and regulations, and statutory provisions.

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PE recovers its costs plus a return for providing SOS.

On March 22, 2023, PE filed a base rate case with the MDPSC, utilizing a test year based on twelve months of actual 2022 data.

The base rate case request included an annual increase in base distribution rates of $50.4 million, plus a request to establish a regulatory asset (or liability) to recover (or refund) in a subsequent base rate case the net differences between the amount of pension and OPEB expense requested in the proceeding (based on average expense from 2018 to 2022) and the actual annual amount each year using the delayed recognition method.

The rate case additionally requested approval to continue an EDIS to fund three service reliability and resiliency programs, two new proposed programs to assist low-income customers and cost recovery of certain expenses associated with PE’s pilot electric vehicle charger program and its COVID-19 pandemic response.

On October 18, 2023, the MDPSC approved an annual increase in base distribution rates of $28 million, effective October 19, 2023.

The order denied PE’s request to establish a pension/OPEB regulatory asset (or liability), allowed recovery of most COVID-19 deferred costs;

and rejected the continuation of PE’s EDIS, as PE's reliability has improved such that the surcharge recovery mechanism is no longer merited at this time.

The MDPSC also ordered an independent audit of certain allocations from FESC to PE and denied recovery of approximately $12 million in rate base associated with certain corporate support costs recorded to capital accounts resulting from the FERC Audit.

On January 3, 2024, the MDPSC issued an order granting PE’s request for reconsideration and increased PE’s allowed distribution rates by another $0.7 million.

The EmPOWER Maryland program requires each electric utility to file a plan to reduce electric consumption and demand 0.2% per year, up to the ultimate goal of 2% annual savings.

PE recovers program investments with a return through an annually reconciled surcharge, with most costs subject to recovery over a five-year period with a return on the unamortized balance.

Maryland law only allows for the utility to recover lost distribution revenue attributable to energy efficiency or demand reduction programs through a base rate case proceeding.

The EmPOWER Maryland program previously required each electric utility to file a plan to reduce electric consumption and demand 0.2% per year, up to the ultimate goal of 2% annual savings.

The passage of the Climate Solutions Now Act of 2022 modified the annual incremental energy efficiency targets to 2% per year from 2022 through 2024, 2.25% per year in 2025 and 2026, and 2.5% per year in 2027 and thereafter.

On August 1, 2023, PE filed its proposed plan for the 2024-2026 cycle as required by the MDPSC.

Consistent with a December 29, 2022, order by the MDPSC phasing out the ability of Maryland utilities to earn a return on EmPOWER investments, PE will be required to expense 33% of its EmPOWER program costs in 2024, 67% in 2025 and 100% in 2026.

Notwithstanding the order to phase out PE’s ability to earn a return on its EmPOWER investments, all previously unamortized costs for prior cycles will continue to earn a return and be collected by the end of 2029, consistent with the plan PE submitted on January 11, 2023.

In the 2024-2026 order issued on December 29, 2023, the period to pay down the amortized balances was extended through the end of 2031.

Additionally at the direction of the MDPSC, PE together with other Maryland utilities are required to address GHG reductions in addition to energy efficiency.

Additionally, at the direction of the MDPSC, PE together with other Maryland utilities were required to address GHG reductions in addition to energy efficiency.

In compliance with the MDPSC directive, PE submitted three scenarios with projected costs over a three-year cycle of $311 million, $354 million, and $510 million, respectively.

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On December 29, 2023, the MDPSC issued an order approving the $311 million scenario for most programs, with some modifications.

On April 17, 2023, PE submitted a proposal to the MDPSC seeking approval to end its PPA with the Warrior Run generating station.

The PPA for Warrior Run was a requirement of the Public Utility Regulatory Policies Act of 1978.

PE’s Maryland customers currently pay a surcharge on their electric bill in connection with the Warrior Run PPA, which fluctuates from year to year based on the difference between what PE pays for the output of the plant and what PE is able to recover by reselling that output into PJM.

PE negotiated a termination of the PPA, which the MDPSC approved on June 21, 2023, and became effective June 28, 2023, requiring it to pay Warrior Run a fixed amount of $51 million annually through 2029, for a total of $357 million.

During the second quarter of 2023, a liability was established for the $357 million termination fee, of which $55 million was included in “Other current liabilities” and $302 million in “Other non-current liabilities”, and as the cost of the termination fee will be recovered through the current surcharge, an offsetting regulatory asset was established on FirstEnergy’s Consolidated Balance Sheets, and results in no impact to FirstEnergy’s or PE’s current or future earnings and is expected to result in savings for PE’s Maryland customers.

On July 26, 2023, the MDPSC approved the change in surcharge, effective August 1, 2023, after previously approving the termination of the agreement.

JCP&L operates under NJBPU approved rates that took effect as of January 1, 2021, and were effective for customers as of November 1, 2021.

On August 15, 2024, in accordance with the MDPSC directive, PE filed a revised plan for the remainder of the 2024-2026 cycle to comply with refined GHG reduction targets with a total budget of $314 million.

On December 27, 2024, the MDPSC issued an order approving PE’s revised plan.

PE recovers EmPOWER program costs with a return on unamortized balances through an annually reconciled surcharge, with certain costs subject to recovery over a five-year amortization period.

Maryland law only allows for the utility to recover lost distribution revenue attributable to energy efficiency or demand reduction programs through a base rate case proceeding.

Consistent with a December 29, 2022, order by the MDPSC phasing out the unamortized balances of EmPOWER investments, PE is required to expense 33% of its EmPOWER program costs in 2024, 67% in 2025, and 100% in 2026 and beyond.

Notwithstanding the order to phase out the unamortized balances of EmPOWER investments, all previously unamortized costs for prior cycles were to be collected by the end of 2029, consistent with the plan PE submitted on January 11, 2023.

In the 2024-2026 order issued on December 29, 2023, the period to pay down the unamortized balances was extended through the end of 2030.

On February 21, 2024, the MDPSC approved PE’s tariff to recover costs in 2024 but directed PE to analyze alternative amortization methods for possible use in later years.

On November 27, 2024, PE filed for approval of revised tariff pages reflecting an update of the PE tariff becoming effective in 2025, which included the requested analysis of alternative amortization methods.

On December 18, 2024, the MDPSC approved the revised tariff pages permitting PE to continue to use its preferred amortization method.

New legislation signed into law on May 9, 2024, and effective July 1, 2024, is expected to reduce the return on the EmPOWER unamortized balances for PE by a total of $25 to $30 million over the period of 2024-2030.

On July 31, 2024, the MDPSC issued an order implementing revised EmPOWER surcharge rates for PE in accordance with the new law and denying PE’s request for a hearing that sought to challenge certain portions of the law.

On August 30, 2024, PE filed a petition seeking judicial review of its challenge to the law.

The MDPSC and Maryland Office of People’s Counsel filed intents to participate.

On November 15, 2024, the parties filed a joint motion to postpone the February 7, 2025 hearing date scheduled by the court and proposed a briefing schedule.

The motion was granted on December 28, 2024.

PE filed a Petitioner Memorandum on December 17, 2024.

The MDPSC and Maryland Office of People’s Counsel filed a Response Memorandum on January 28, 2025.

PE filed a Reply Memorandum on February 20, 2025.

A hearing is scheduled for March 7, 2025.

JCP&L operates under NJBPU approved rates that took effect as of February 15, 2024, and became effective for customers as of June 1, 2024.

JCP&L provides BGS for retail customers who do not choose a third-party EGS and for customers of third- party EGSs that fail to provide the contracted service.

All New Jersey EDCs participate in this competitive BGS procurement process and recover BGS costs directly from customers as a charge separate from base rates.

On March 16, 2023, JCP&L filed a base rate case with the NJBPU, utilizing a test year based on six months of actual data for the second half of calendar year 2022, and six months of forecasted data for the first half of calendar year 2023.

The rate case requested an annual net increase in base distribution revenues of approximately $185 million, plus a request to establish a regulatory asset (or liability) to recover (or refund) in a subsequent base rate case the net differences between the amount of pension and OPEB expense requested in the proceeding (based on 2023 expense) and the actual annual amount each year using the delayed recognition method.

JCP&L updated its base rate case in filings made on June 2, 2023 and August 7, 2023 to provide actual test-year data for the twelve months ended June 30, 2023, and update its proposed annual net increase in base rate distribution revenues to approximately $192 million.

In addition to the above, JCP&L’s request includes, among other things, approval of two new proposed programs to assist low-income customers, cost recovery of certain investments and expenses associated with its electric vehicle and AMI programs, an update of its depreciation rates, modifications to its storm cost recovery, and tariff modifications to update standard construction costs.

A procedural schedule was adopted with evidentiary hearings to be held the week of January 8, 2024.

On October 17, 2023, JCP&L requested a suspension of the procedural schedule to enter into

formal settlement discussions, which all parties agreed, and the administrative law judge granted the same day.

On February 2, 2024, JCP&L, joined by various parties, filed a stipulated settlement with the NJBPU resolving JCP&L’s request for a distribution base rate increase.

The settlement provides for an $85 million annual base distribution revenues increase for JCP&L, which, if approved by the NJBPU, is expected to take effect February 15, 2024, and be effective for customers on June 1, 2024.

Until those new rates become effective for customers, JCP&L would begin to amortize an existing regulatory liability totaling approximately $18 million to offset the base rate increase that otherwise would have occurred in this period.

Under the base rate case settlement agreement, JCP&L also agreed to a two-phase reliability improvement plan to enhance the reliability related to 18 high-priority circuits, the first phase of which will begin no later than March 1, 2024 and represents an approximate investment of $95 million.

JCP&L expects to amend its pending EnergizeNJ petition upon receipt of NJBPU approval of the base rate case settlement, to include the second phase of its reliability improvement plan that is expected to address any remaining high-priority circuits not addressed in the first phase.

The settlement did not include the request to establish a regulatory asset (or liability) to recover (or refund) net differences between the amount of pension and OPEB expense requested in the proceeding and the actual annual amount each year using the delayed recognition method, however, JCP&L has the ability to pursue in a future separate proceeding.

The base rate increase approved by the NJBPU on February 14, 2024, took effect on February 15, 2024, and became effective for customers on June 1, 2024.

Until those new rates became effective for customers, JCP&L was amortizing an existing regulatory liability totaling approximately $18 million to offset the base rate increase that otherwise would have occurred in this period.

Under the base rate case settlement agreement, JCP&L also agreed to a two-phase reliability improvement plan to enhance the reliability related to 18 high-priority circuits, the first phase of which began on February 14, 2024, and represents an approximate investment of $95 million.

Additionally, JCP&L recognized a $53 million pre-tax charge in the first quarter 2024 at the Integrated segment within “Other operating expenses” on the FirstEnergy Consolidated Statements of Income, associated with certain corporate support costs recorded to capital accounts from the FERC Audit that were determined, as a result of the settlement agreement, to be disallowed from future recovery.

JCP&L has implemented energy efficiency and peak demand reduction programs in accordance with the New Jersey Clean Energy Act as approved by the NJBPU in April 2021.

The NJBPU approved plans include recovery of lost revenues resulting from the programs and a three-year plan (July 2021-June 2024) including total program costs of $203 million, of which $160 million of investment is recovered over a ten-year amortization period with a return as well as $43 million in operations and maintenance expenses and financing costs recovered on an annual basis.

On December 5, 2023, JCP&L filed a petition with the NJBPU for a six-month extension of EE&C Plan I, which was originally scheduled to end on June 30, 2024, but would end on December 31, 2024, with the extension.

The proposed budget for the extension period would add approximately $69 million to the original program cost.

Under the proposal, JCP&L would recover the costs of the extension period and the revenue impact of sales losses resulting therefrom through two separate tariff riders.

On December 1, 2023, JCP&L filed a related petition with the NJBPU requesting approval of its EE&C Plan II, which covers the January 1, 2025 through June 30, 2027 period and has a proposed budget of approximately $964 million.

EE&C Plan II consists of a portfolio of ten energy efficiency programs, one peak demand reduction program and one building decarbonization program.

On May 22, 2024, the NJBPU approved JCP&L’s request for a six-month extension of the EE&C Plan I, to December 31, 2024.

The budget for the extension period adds approximately $69 million to the original program cost and JCP&L will recover the costs of the extension period and the revenue impact of sales losses resulting therefrom through two separate tariff riders.

On December 1, 2023, JCP&L filed a related petition with the NJBPU requesting approval of its EE&C Plan II, which covers the January 1, 2025 through June 30, 2027 period and had a proposed budget of approximately $964 million.

EE&C Plan II, as filed, consisted of a portfolio of ten energy efficiency programs, one peak demand reduction program and one building decarbonization program.

Under the proposal, JCP&L would recover its EE&C Plan II revenue requirements and lost revenues from reduced electricity sales associated with EE&C Plan II.

On March 6, 2023, the NJBPU issued final rules modifying its regulations to reflect its CTA policy in base rate cases to:

(i) calculate savings using a five-year look back from the beginning of the test year;

(ii) allocate 100% of CTA savings to customers;

and (iii) exclude transmission assets of EDCs in the savings calculation.

The final rules of practice were applied by JCP&L in its most recent base rate case filing described above.

On October 28, 2020, the NJBPU approved a stipulated settlement between JCP&L and various parties, resolving JCP&L’s request for distribution base rate increase.

The settlement provided for a $94 million annual base distribution revenues increase for JCP&L based on an ROE of 9.6%, which became effective for customers on November 1, 2021.

The settlement additionally provided that JCP&L would be subject to a management audit, which began in May 2021.

On October 30, 2024, the NJBPU approved the parties’ stipulation of settlement, wherein the parties agreed to a budget of approximately $817 million for EE&C Plan II, including $784 million of investments that will earn a return on equity of 9.6%, with an equity ratio of 52%, and be recovered over 10 years.

The settlement of the distribution rate case in 2020, provided among other things, that JCP&L would be subject to a management audit, which began in May 2021.

On April 12, 2023, the NJBPU accepted the final management audit report for filing purposes and ordered that interested stakeholders file comments on the report by May 22, 2023, which deadline was extended until July 31, 2023.

JCP&L filed its comments on July 31, 2023.

The parties have filed responses.

On July 2, 2020, the NJBPU issued an order allowing New Jersey utilities to track and create a regulatory asset for future recovery of all prudently incurred incremental costs arising from the COVID-19 pandemic beginning March 9, 2020 and continuing until the New Jersey Governor issues an order stating that the COVID-19 pandemic is no longer in effect.

New Jersey utilities can request recovery of such regulatory asset in a stand-alone COVID-19 regulatory asset filing or future base rate case.

On October 28, 2020, the NJBPU issued an order expanding the scope of the proceeding to examine all pandemic issues, including recovery of the COVID-19 regulatory assets, by way of a generic proceeding.

No moratorium on residential disconnections remains in effect for investor-owned electric utilities such as JCP&L.

Legislation was enacted on March 25, 2022, prohibiting utilities from disconnecting electric service to customers that have applied for utility bill assistance before June 15, 2022 until such time as the state agency administering the assistance program makes a decision on the application and further requiring that all utilities offer a deferred payment arrangement meeting certain minimum criteria after the state agency’s decision on the application has been made.

On July 17, 2023, JCP&L submitted a stand-alone filing to recover approximately $31 million, through October 1, 2023, in incremental costs and interest incurred during the COVID-19 pandemic.

JCP&L and one other party filed comments on July 31, 2023.

On September 17, 2021, in connection with Mid-Atlantic Offshore Development, LLC, a transmission company jointly owned by Shell New Energies US and EDF Renewables North America, JCP&L submitted a proposal to the NJBPU and PJM to build transmission infrastructure connecting offshore wind-generated electricity to the New Jersey power grid.

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The resulting rates associated with the project are expected to be shared among the ratepayers of all New Jersey electric utilities.

On April 17, 2023, JCP&L applied for the FERC “abandonment” transmission rates incentive, which would provide for recovery of 100% of the cancelled prudent project costs that are incurred after the incentive is approved, and 50% of the costs incurred prior to that date, in the event that some or all of the project is cancelled for reasons beyond

JCP&L’s control.

FERC staff subsequently requested additional information on JCP&L’s application, which JCP&L provided.

On August 21, 2023, FERC approved JCP&L’s application, effective August 22, 2023.

On October 31, 2023, offshore wind developer, Orsted, announced plans to cease development of two offshore wind projects in New Jersey—Ocean Wind 1 and 2—having a combined planned capacity of 2,248 MW.

At this time, Orsted’s announcement does not affect JCP&L’s awarded projects and JCP&L is moving forward with preconstruction activities for the planned transmission infrastructure.

Orsted’s cancellation does not affect JCP&L’s awarded projects and JCP&L is moving forward with preconstruction activities for the planned transmission infrastructure.

Construction is expected to begin in 2025.

Consistent with the commitments made in its proposal to the NJBPU, JCP&L formally submitted in November 2023 the first part of its application to the United States Department of Energy to finance a portion of the project using low-interest rate loans available under the United States Department of Energy’s Energy Infrastructure Reinvestment Program of the IRA of 2022.

JCP&L anticipates submitting the second part of its two-part application in the first quarter of 2024.

On November 9, 2023, JCP&L filed a petition for approval of its second EnergizeNJ with the NJBPU that would, among other things, support grid modernization, system resiliency and substation modernization in technologies designed to provide enhanced customer benefits.

Consistent with the commitments made in its proposal to the NJBPU, JCP&L formally submitted in November 2023 the first part of its application to the DOE to finance a substantial portion of the project using low-interest rate loans available under the DOE’s Energy Infrastructure Reinvestment Program of the IRA of 2022.

JCP&L submitted the second part of its two-part application on March 13, 2024, which was approved on May 17, 2024.

The DOE Loan Program Office has initiated a due diligence review of the application.

On November 9, 2023, JCP&L filed a petition for approval of its EnergizeNJ with the NJBPU that would, among other things, support grid modernization, system resiliency and substation modernization in technologies designed to provide enhanced customer benefits.

JCP&L proposes EnergizeNJ will be implemented over a five-year budget period with estimated costs of approximately $935 million over the deployment period, of which, $906 million is capital investments and $29 million is operating and maintenance expenses.

Under the proposal, the costs of EnergizeNJ would be recovered through JCP&L's base rates via annual and semi-annual base rate adjustment filings.

Public hearings have been requested but are not yet scheduled.

JCP&L has requested that the NJBPU issue a final decision and order no later than May 22, 2024, based on a June 1, 2024, commencement date for EnergizeNJ.

JCP&L anticipates filing amendments to the EnergizeNJ program after receipt of approval from the NJBPU of the base rate case stipulation that was filed on February 2, 2024.

Under the proposal, the capital costs of EnergizeNJ would be recovered through JCP&L’s base

rates via annual and semi-annual base rate adjustment filings.

The 2023 base rate case stipulation that was filed on February 2, 2024, necessitated amendments to the EnergizeNJ program.

On February 14, 2024, the NJBPU approved the stipulated settlement between JCP&L and various parties, resolving JCP&L’s request for a distribution base rate increase.

On February 27, 2024, as part of the stipulated settlement, JCP&L amended its pending EnergizeNJ petition following receipt of NJBPU approval of the base rate case settlement, to remove the high-priority circuits that are to be addressed in the first phase of its reliability improvement plan and to include the second phase of its reliability improvement plan that is expected to further address certain high-priority circuits that require additional upgrades.

EnergizeNJ, if approved as amended, will result in the investment of approximately $930.5 million of total estimated costs over five years.

JCP&L and various parties are engaged in settlement discussions with respect to the pending EnergizeNJ petition.

The Ohio Companies operate under PUCO-approved base distribution rates that became effective in 2009.

The Ohio Companies currently operate under ESP IV, effective June 1, 2016 and continuing through May 31, 2024, that continues the supply of power to non-shopping customers at a market-based price set through an auction process.

ESP IV also continues the Rider DCR, which supports continued investment related to the distribution system for the benefit of customers, with increased revenue caps of $20 million per year from June 1, 2019 through May 31, 2022;

and $15 million per year from June 1, 2022 through May 31, 2024.

In addition, ESP IV includes:

(1) continuation of a base distribution rate freeze through May 31, 2024;

The Ohio Companies operated under ESP IV through May 31, 2024, which provided for the supply of power to non-shopping customers at a market-based price set through an auction process.

From June 1, 2024 until January 31, 2025, the Ohio Companies operated under ESP V, as modified by the PUCO, and as further described below.

On December 18, 2024, the PUCO approved the Ohio Companies’ notice to withdraw ESP V and approved the Ohio Companies’ proposal for returning to ESP IV, with modifications.

ESP IV, as modified, continues the DCR rider, which supports continued investment related to the distribution system for the benefit of customers, with an annual revenue cap of $390 million.

In addition, ESP IV, as modified, includes:

(1) continuation of a base distribution rate freeze until ESP VI becomes effective or the Ohio Companies’ obtain the PUCO’s staff agreement;

(2) a goal across FirstEnergy to reduce CO2 emissions by 90% below 2005 levels by 2045;

and (3) contributions, totaling $51 million to:

(a) fund energy conservation programs, economic development and job retention in the Ohio Companies’ service territories;

(b) establish a fuel-fund in each of the Ohio Companies’ service territories to assist low-income customers;

and (c) establish a Customer Advisory Council to ensure preservation and growth of the competitive market in Ohio.

and (3) contributions, totaling $6.39 million per year to:

(a) fund energy conservation, economic development and job retention programs in the Ohio Companies’ service territories;

and (b) establish fuel-funds in each of the Ohio Companies’ service territories to assist low-income customers.

On April 5, 2023, the Ohio Companies filed an application with the PUCO for approval of ESP V, for an eight-year term beginning June 1, 2024, and continuing through May 31, 2032.

ESP V proposes to continue providing power to non-shopping customers at market-based prices set through an auction process, with process enhancements designed to reduce costs to customers.

ESP V also proposes to continue riders supporting investment in the Ohio Companies’ distribution system, including Rider DCR with annual revenue cap increases of $15 to $21 million per year, based on reliability performance, and Rider AMI for recovery of approved grid modernization investments.

ESP V proposes new riders to support continued maintenance of the distribution system, including vegetation management and storm restoration operating expense.

In addition, ESP V proposes four-year energy efficiency and peak demand reduction programs for residential and commercial customers, with cost recovery spread over eight years.

ESP V further includes a commitment to spend $52 million in total over the eight-year term, without recovery from customers, on initiatives to assist low-income customers, education and incentives to help ensure customers have good experiences with electric vehicles.

Hearings commenced on November 7, 2023 and concluded on December 6, 2023.

On December 6, 2023, certain intervenors filed a motion requesting a limited stay of the Ohio Companies’ proposal to continue Rider DCR.

The Ohio Companies contested the motion, which is pending.

On May 16, 2022, the Ohio Companies filed their application for determination of the existence of SEET under ESP IV for calendar year 2021, which demonstrated that each of the individual Ohio Companies did not have significantly excessive earnings.

This matter remains pending before the PUCO.

On May 15, 2024, the PUCO issued an order approving ESP V with modifications, which became effective June 1, 2024 and would have continued through May 31, 2029.

ESP V, as modified by the PUCO, provided for, among other things, the continuation of existing riders related to purchased power, transmission and uncollectibles, the continuation of the DCR rider with proposed annual revenue cap increases until new base rates are established, the continuation of the AMI rider, and the addition of new riders for recovery of storm and vegetation management expenses.

Many of the terms and conditions were to be reconsidered in the base rate case.

The ESP V order additionally directed the Ohio Companies to file another base distribution rate case not later than May 31, 2028, and contribute $32.5 million during the term of ESP V to fund low-income customer bill assistance programs and bill assistance for income-eligible senior citizens, and to develop an electric vehicle education program to assist customers in transitioning to electric vehicles which was recognized in the second quarter of 2024 within “Other operating expenses” at the Regulated Distribution segment and on FirstEnergy’s Consolidated Statements of Income.

Due to the risks and uncertainty resulting from the Ohio Companies’ application for rehearing being denied by operation of law, on October 29, 2024, the Ohio Companies filed a notice of their intent to withdraw ESP V and proposed the terms under which they would resume operating under ESP IV.

On December 18, 2024, the PUCO approved the Ohio Companies’ notice of withdrawal.

Also on December 18, 2024, the PUCO approved the Ohio Companies’ proposal for returning to ESP IV, with modifications.

Consistent with ESP IV, the PUCO authorized the Ohio Companies’ reinstatement of the DCR rider, with an annual revenue cap of $390 million, and denied the Ohio Companies’ request to continue ESP IV’s DCR rider revenue cap increases of $15 million per year.

Additionally, the PUCO ordered that storm costs deferred under ESP V since June 1, 2024 remain on the Ohio Companies’ books and subject to review in a future case.

The PUCO also denied the Ohio Companies’ request to lift the base rate freeze in ESP IV, permitting the Ohio Companies’ pending base rate case to continue, but prohibiting new rates from going into effect until either the effective date of ESP VI, or the staff agrees that the freeze be lifted and new rates be implemented.

On January 22, 2025, the PUCO approved the Ohio Companies’ revised ESP IV tariffs, effective February 1, 2025, at which time the Ohio Companies resumed operating under ESP IV.

On January 31, 2025, the Ohio Companies filed an application with the PUCO for ESP VI, for a term beginning on the date new base distribution rates from the pending base rate case go into effect, in an effort to align with the ongoing base distribution rate case, and continuing through May 31, 2028.

ESP VI proposes to continue providing power to non-shopping customers at market-based prices set through an auction process, and proposes to continue riders supporting investment in the Ohio Companies’ distribution system, including Rider DCR with annual reliability performance-based revenue cap increases of $37 to $43 million, and an AMI rider for recovery of approved grid modernization investments.

ESP VI additionally proposes riders to support continued maintenance of the distribution system, including recovery of vegetation management and storm restoration operations and maintenance expenses.

In addition, ESP VI proposes energy efficiency programs for low-income customers, and includes a commitment to spend $6.5 million annually over the ESP VI term, without recovery from customers, on initiatives to assist low-income customers, as well as education and incentives to help ensure customers have good experiences with electric vehicles.

The PUCO has scheduled a technical conference for March 12, 2025.

On May 31, 2024, the Ohio Companies filed their application for an increase in base distribution rates based on a 2024 calendar year test period.

The Ohio Companies requested a net increase in base distribution revenues of approximately $94 million compared to test period revenues, with a return on equity of 10.8% and capital structures of 44% debt and 56% equity for CEI, 46% debt and 54% equity for OE, and 45% debt and 55% equity for TE, which reflects a roll-in of current riders such as DCR and

Key components of the base rate case filing include a proposal to change pension and OPEB recovery to the delayed recognition method and to implement a mechanism to establish a regulatory asset (or liability) to recover (or refund) net differences between the amount of pension and OPEB expense requested in the proceeding and the actual amount each year using this method.

Additionally, the Ohio Companies request recovery of certain incurred costs, including the impact of major storms, a program to convert streetlights to LEDs, and others.

On June 14, 2024, the Ohio Companies filed supporting testimony.

On July 31, 2024, the Ohio Companies filed an update that adjusted the net increase in base distribution revenues to approximately $190 million compared to test period revenues and incorporated matters in the rate case as directed by the PUCO’s ESP V order.

On January 27, 2025, the Ohio Companies filed a notice in the base rate case notifying parties that they will update their application for an increase in base distribution rates to reflect the withdrawal of ESP V and the reversion to ESP IV.

The PUCO Staff hired a third party to assist in the review of the Ohio Companies' base rate case filing, and on February 21, 2025, PUCO staff and the third party auditor each filed their reports.

The auditor’s report recommended adjustments which would result in a net increase of the Ohio Companies’ base distribution revenues of approximately $8 million with a return on equity of 9.63% and capital structures of 48.8% debt and 51.2% equity for each of the Ohio Companies.

PUCO staff’s report takes limited positions on the auditor’s finding and recommendations and makes additional findings.

The Ohio Companies plan to respond and file supplemental testimony by March 24, 2025.

On May 16, 2022, May 15, 2023, and May 15, 2024, the Ohio Companies filed their SEET applications for determination of the existence of significantly excessive earnings under ESP IV for calendar years 2021, 2022, and 2023, respectively.

Each application demonstrated that each of the individual Ohio Companies did not have significantly excessive earnings.

These matters remain pending before the PUCO.

On July 15, 2022, the Ohio Companies filed an application with the PUCO for approval of phase two of their distribution grid modernization plan that would, among other things, provide for the installation of an additional 700 thousand smart meters, distribution automation equipment on approximately 240 distribution circuits, voltage regulating equipment on approximately 220 distribution circuits, and other investments and pilot programs in related technologies designed to provide enhanced customer benefits.

The Ohio Companies propose that phase two will be implemented over a four-year budget period with estimated capital investments of approximately $626 million and operations and maintenance expenses of approximately $144 million over the deployment period.

The Ohio Companies proposed that phase two would be implemented over a four-year budget period with estimated capital investments of approximately $626 million and operations and maintenance expenses of approximately $144 million over the deployment period.

Under the proposal, costs of phase two of the grid modernization plan would be recovered through the Ohio Companies’ AMI rider, pursuant to the terms and conditions approved in ESP IV.

Hearings are scheduled to commence on April 16, 2024.

On January 22, 2024, OCC filed a motion requesting a stay of phase two.

The Ohio Companies contested the motion, which is pending.

On April 12, 2024, the Ohio Companies and certain of the parties filed a stipulation that modified the Ohio Companies’ application for phase two of its grid modernization plan, which was approved by the PUCO on December 18, 2024 and implementation has since begun.

The stipulation provides for the deployment of smart meters to the balance of the Ohio Companies’ customers or approximately 1.4 million meters.

Phase two of the distribution grid modernization plan, as modified by the stipulation, would be completed over a four-year budget period with estimated capital investments of approximately $421 million.

On September 8, 2020, the OCC filed motions in the Ohio Companies’ corporate separation audit and DMR audit dockets, requesting the PUCO to open an investigation and management audit, hire an independent auditor, and require FirstEnergy to show it did not improperly use money collected from consumers or violate any utility regulatory laws, rules or orders in its activities regarding HB 6.

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Final comments and responses were filed by parties during the second quarter of 2022.

On September 15, 2020, the PUCO opened a new proceeding to review the political and charitable spending by the Ohio Companies in support of HB 6 and the subsequent referendum effort, and directing the Ohio Companies to show cause, demonstrating that the costs of any political or charitable spending in support of HB 6, or the subsequent referendum effort, were not included, directly or indirectly, in any rates or charges paid by customers.

The Ohio Companies initially filed a response stating that the costs of any political or charitable spending in support of HB 6, or the subsequent referendum effort, were not included, directly or indirectly, in any rates or charges paid by customers, but on August 6, 2021, filed a supplemental response explaining that, in light of the facts set forth in the DPA and the findings of the Rider DCR audit report further discussed below, political or charitable spending in support of HB 6, or the subsequent referendum effort, affected pole attachment rates paid by approximately $15 thousand.

On October 26, 2021, the OCC filed a motion requesting the PUCO to order an independent external audit to investigate FE’s political and charitable spending related to HB 6, and to appoint an independent review panel to retain and oversee the auditor.

The proceeding was stayed in its entirety, including discovery and motions, continuously at the request of the U.S.

Attorney for the Southern District of Ohio beginning in August 2022 and was lifted on February 26, 2024.

On February 26, 2024, the Attorney Examiner consolidated this proceeding with the expanded DCR rider audit proceeding described below and on November 22, 2024, the administrative law judge ordered that the bifurcated portion of the corporate separation audit, discussed further below, be consolidated with the already-consolidated DMR audit and expanded DCR rider audit proceeding.

Evidentiary hearings are scheduled to begin May 13, 2025.

On September 15, 2020, the PUCO opened a new proceeding to review the political and charitable spending by the Ohio Companies in support of HB 6 and the subsequent referendum effort, and directed the Ohio Companies to show cause, demonstrating that the costs of any political or charitable spending in support of HB 6, or the subsequent referendum effort, were not included, directly or indirectly, in any rates or charges paid by customers.

The Ohio Companies initially filed a response stating that the costs of any political or charitable spending in support of HB 6, or the subsequent referendum effort, were not included, directly or indirectly, in any rates or charges paid by customers, but on August 6, 2021, filed a supplemental response explaining that, in light of the facts set forth in the DPA and the findings of the DCR rider audit report further discussed below, political or charitable spending in support of HB 6, or the subsequent referendum effort, affected pole attachment rates paid by approximately $15 thousand.

retain and oversee the auditor.

In November and December 2021, parties filed comments and reply comments regarding the Ohio Companies’ original and supplemental responses to the PUCO’s September 15, 2020, show cause directive.

On May 4, 2022, the PUCO selected a third-party auditor to determine whether the show cause demonstration submitted by the Ohio Companies is sufficient to ensure that the cost of any political or charitable spending in support of HB 6 or the subsequent referendum effort was not included, directly or indirectly, in any rates or charges paid by ratepayers.

The proceeding was stayed in its entirety, including discovery and motions, continuously at the request of the U.S.

Attorney for the Southern District of Ohio beginning in August 2022 and the stay was lifted on February 26, 2024.

On September 30, 2024, the third-party auditor’s report was filed.

The audit examined 53 payments totaling approximately $75 million made in support of the passage of HB 6 and subsequent referendum efforts, and concluded that less than $5 million was allocated to the Ohio Companies.

The audit report affirmed the Ohio Companies’ conclusion in its August 6, 2021 filing that a rate impact of less than $15 thousand was charged to the Ohio Companies’ pole attachment customers associated with political and charitable spending in support of HB 6.

On October 22, 2024, parties filed comments on the audit report, and on November 5, 2024, parties filed reply comments.

The parties' comments remain pending with the PUCO.

In connection with an ongoing audit of the Ohio Companies’ policies and procedures relating to the code of conduct rules between affiliates, on November 4, 2020, the PUCO initiated an additional corporate separation audit as a result of the FirstEnergy leadership transition announcement made on October 29, 2020, as further discussed below.

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Parties filed comments and reply comments on the audit report.

In connection with an ongoing annual audit of the Ohio Companies’ Rider DCR for 2020, and as a result of disclosures in FirstEnergy’s Form 10-K for the year ended December 31, 2020 (filed on February 18, 2021), the PUCO expanded the scope of the audit on March 10, 2021, to include a review of certain transactions that were either improperly classified, misallocated, or lacked supporting documentation, and to determine whether funds collected from customers were used to pay the vendors, and if so, whether or not the funds associated with those payments should be returned to customers through Rider DCR or through an alternative proceeding.

The proceeding was stayed in its entirety, including discovery and motions, continuously at the request of the U.S.

Attorney for the Southern District of Ohio beginning in August 2022 and the stay was lifted on February 26, 2024.

On September 10, 2024, the Ohio Companies filed testimony describing their compliance with Ohio corporate separation laws and the implementation of the recommendations made in the audit reports.

On September 20, 2024, intervenors filed testimony recommending fines for alleged violations of the Ohio corporate separation requirements.

Evidentiary hearings were held on October 9 and 10, 2024;

the scope of the hearings excluded allegations involving activities related to the passage of HB 6 and the former PUCO chairman, which will be addressed at a later time.

Initial and reply briefs have been filed by the Ohio Companies, PUCO staff and the intervening parties.

To the extent the PUCO ultimately accepts the intervenors’ recommendations and issues a fine to the Ohio Companies, such amount is not expected to be material.

On September 3, 2024, the Ohio Companies filed an application to amend their corporate separation plan to incorporate certain recommendations from prior audit reports, which include, but are not limited to, improving controls for non-regulated competitive employees’ physical space and access to data, updating and implementing a process to annually review the cost allocation manual, developing state specific codes of conduct practices, and implementing additional training related to the cost allocation manual and the state codes of conduct.

On October 23, 2024, the administrative law judge issued an entry suspending automatic approval of the amended corporate separation plan and establishing a procedural schedule.

In connection with an ongoing annual audit of the Ohio Companies’ DCR rider for 2020, and as a result of disclosures in FirstEnergy’s Form 10-K for the year ended December 31, 2020 (filed on February 18, 2021), the PUCO expanded the scope of the audit on March 10, 2021, to include a review of certain transactions that were either improperly classified, misallocated, or lacked supporting documentation, and to determine whether funds collected from customers were used to pay the vendors, and if so, whether or not the funds associated with those payments should be returned to customers through the DCR rider or through an alternative proceeding.

On August 3, 2021, the auditor filed its final report on this phase of the audit, and the parties submitted comments and reply comments on this audit report in October 2021.

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On December 15, 2021, the PUCO further expanded the scope of the audit to include an investigation into an apparent nondisclosure of a side agreement in the Ohio Companies’ ESP IV settlement proceedings, but stayed its expansion of the audit until otherwise ordered by the PUCO.

On August 16, 2022, the U.S.

Attorney for the Southern District of Ohio requested that the PUCO stay the above pending HB 6- related matters for a period of six months, which request was granted by the PUCO on August 24, 2022.

On February 22, 2023, the U.S.

Attorney for the Southern District of Ohio again requested that the PUCO stay the above pending HB-6 related matters for a period of six months, which request was granted by the PUCO on March 8, 2023.

On August 10, 2023, the U.S.

Attorney for the Southern District of Ohio requested that the PUCO stay the above pending HB 6-related matters for a period of six additional months, which was approved by the PUCO on August 23, 2023.

On September 22, 2023, OCC filed an application for rehearing challenging the PUCO’s August 23, 2023, order, which the PUCO denied on October 18, 2023.

On November 17, 2023, OCC filed an application for rehearing challenging the October 18, 2023 entry to the extent the PUCO decided not to stay ESP V as well as Grid Mod I and Grid Mod II along with the investigations.

The proceeding was stayed in its entirety, including discovery and motions, continuously at the request of the U.S.

Attorney for the Southern District of Ohio beginning in August 2022 and the stay was lifted on February 26, 2024.

On February 26, 2024, the Attorney Examiner consolidated this proceeding with the Rider DMR audit proceeding described above, and further lifted the stay of the portion of the investigation relating to an apparent nondisclosure of a side agreement.

On November 22, 2024, the administrative law judge ordered that the bifurcated portion of the corporate separation audit be consolidated with the already-consolidated DMR audit and the expanded DCR rider audit proceeding.

Evidentiary hearings are scheduled to begin May 13, 2025.

On September 22, 2023, OCC filed an application for rehearing challenging the PUCO’s August 23, 2023, order to stay the pending HB 6 related matters above, which the PUCO denied on October 18, 2023.

On November 17, 2023, OCC filed an application for rehearing challenging the October 18, 2023 entry to the extent the PUCO decided not to stay pending proceedings regarding ESP V as well as phases one and two of the Ohio Companies’ distribution grid modernization plans.

On November 27, 2023, the Ohio Companies filed a memorandum contra OCC’s application for rehearing.

The four cases remain stayed in their entirety, including discovery and motions, and all related procedural schedules are vacated.

As the PUCO did not rule on OCC’s November 17, 2023 application for rehearing within 30 days of filing, the application for rehearing was denied by operation of law.

In the fourth quarter of 2020, motions were filed with the PUCO requesting that the PUCO amend the Ohio Companies’ riders for collecting the OVEC-related charges required by HB 6 to provide for refunds in the event such provisions of HB 6 are repealed.

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The Ohio Companies contested the motions, which are pending before the PUCO.

On May 15, 2023, the Ohio Companies filed their application for determination of the existence of SEET under ESP IV for calendar year 2022, which demonstrated that each of the individual Ohio Companies did not have significantly excessive earnings.

This matter remains pending before the PUCO.

See Note 15, "Commitments, Guarantees and Contingencies" below for additional details on the government investigations and subsequent litigation surrounding the investigation of HB 6.

The Pennsylvania Companies operated under rates approved by the PPUC, effective as of January 27, 2017.

On January 1, 2024, each of the Pennsylvania Companies merged with and into FE PA.

As a result of the PA Consolidation, FE PA will have five rate districts in Pennsylvania – four that correspond to the territories previously serviced by ME, PN, Penn, and WP and one rate district that corresponds to WP’s service provided to The Pennsylvania State University.

The rate districts created by the PA Consolidation will continue the current rate structure of ME, PN, Penn, and WP until the earlier of 2033 or in the fourth base rate case filed after January 1, 2025.

Pursuant to Pennsylvania Act 129 of 2008 and PPUC orders, the Pennsylvania Companies implemented energy efficiency and peak demand reduction programs with demand reduction targets, relative to 2007 to 2008 peak demands, at 2.9% MW for ME, 3.3% MW for PN, 2.0% MW for Penn, and 2.5% MW for WP;

As a result of the PA Consolidation, FE PA has five rate districts in Pennsylvania – four that correspond to the territories previously serviced by ME, PN, Penn, and WP and one rate district that corresponds to WP’s service provided to The Pennsylvania State University.

The rate districts created by the PA Consolidation will not reach full rate unity until the earlier of 2033 or the conclusion of three base rate cases filed after January 1, 2025.

FE PA operates under rates approved by the PPUC, effective as of January 1, 2025, as further discussed below.

Pursuant to Pennsylvania Act 129 of 2008 and PPUC orders, the Pennsylvania Companies implemented energy efficiency and peak demand reduction programs with demand reduction targets, relative to 2007-2008 peak demands, at 2.9% MW for ME, 3.3% MW for PN, 2.0% MW for Penn, and 2.5% MW for WP;

and energy consumption reduction targets, as a percentage of the Pennsylvania Companies’ historic 2009 to 2010 reference load at 3.1% MWh for ME, 3.0% MWh for PN, 2.7% MWh for Penn, and 2.4% MWh for WP.

The fourth phase of FE PA’s energy efficiency and peak demand reduction program, which runs for the five-year period beginning June 1, 2021 through May 31, 2026, was approved by the PPUC on June 18, 2020, providing through cost recovery of approximately $390 million to be recovered through Energy Efficiency and Conservation Phase IV Riders for each FE PA rate district.

Pennsylvania EDCs are permitted to seek PPUC approval of an LTIIP for infrastructure improvements and costs related to highway relocation projects, after which a DSIC may be approved to recover LTIIP costs.

Pennsylvania EDCs are permitted to seek PPUC approval of an LTIIP for accelerated infrastructure improvements and costs related to highway relocation projects, after which a DSIC may be approved to recover LTIIP costs.

On January 16, 2020, the PPUC approved the Pennsylvania Companies’ LTIIPs for the five-year period beginning January 1, 2020 and ending December 31, 2024 for a total capital investment of approximately $572 million for certain infrastructure improvement initiatives.

On June 25, 2021, the Pennsylvania Office of Consumer Advocate filed a complaint against Penn’s quarterly DSIC rate, disputing the recoverability of the Companies’ automated distribution management system investment under the DSIC mechanism.

On January 26, 2022, the parties filed a joint petition for settlement that resolves all issues in this matter, which was approved by the PPUC without modification on April 14, 2022.

Following the Pennsylvania Companies’ 2016 base rate proceedings, the PPUC ruled in a separate proceeding related to the DSIC mechanisms that the Pennsylvania Companies were not required to reflect federal and state income tax deductions related to DSIC-eligible property in DSIC rates.

The decision was appealed to the Pennsylvania Supreme Court and in July 2021 the court upheld the Pennsylvania Commonwealth Court’s reversal of the PPUC’s decision and remanded the matter back to the PPUC for determination as to how DSIC calculations shall account for accumulated deferred income taxes and state taxes.

The PPUC issued the order as directed.

On March 6, 2023, FirstEnergy filed applications with the PPUC, NYPSC and FERC seeking approval to consolidate the Pennsylvania Companies into a new, single operating entity.

The PA Consolidation includes, among other steps:

(a) the transfer of certain Pennsylvania-based transmission assets owned by WP to KATCo, (b) the contribution of Class B equity interests of MAIT then held by PN and ME to FE (and ultimately transferred to FET as part of the FET Minority Equity Interest Sale as further described above), (c) the formation of FE PA and (d) the merger of each of the Pennsylvania Companies with and into FE PA, with FE PA surviving such mergers as the successor-in-interest to all assets and liabilities of the Pennsylvania Companies.

On August 30, 2023, the parties filed a settlement agreement recommending that the PPUC approve the PA Consolidation subject to the terms of the settlement, which include among other things, $650 thousand over five years in bill assistance for income-eligible customers and the Pennsylvania Companies’ commitment to (i) not seek full distribution rate unification until the earlier of 10 years or in the fourth base rate case filed after January 1, 2025 and (ii) track and share with customers certain operational and administrative efficiency costs associated with the PA Consolidation.

The PPUC, NYPSC and FERC approved FirstEnergy’s applications on December 7, 2023, November 16, 2023, and August 14, 2023, respectively.

The transaction closed on January 1, 2024 making FE PA FirstEnergy's only regulated utility in Pennsylvania.

On May 5, 2023, FirstEnergy and Brookfield submitted applications to FERC and to the PPUC to facilitate the FET Minority Equity Interest Sale.

On July 22, 2024, FE PA filed its application with the PPUC seeking approval for the next phase of its LTIIP program, which is expected to result in approximately $1.6 billion in investments, with approximately $1.4 billion of such investments going in service during the five-year period beginning January 1, 2025 and ending December 31, 2029.

The PPUC approved FE PA’s application on December 19, 2024, and implementation began in January 2025.

On May 5, 2023, FirstEnergy and Brookfield submitted applications to FERC and to the PPUC to facilitate the FET Equity Interest Sale.

On May 12, 2023, the parties also filed an application with the VSCC, which was approved on June 20, 2023.

On August 14, 2023, FERC issued an order approving the FET Minority Equity Interest Sale.

On November 24, 2023,

CFIUS notified FET, Brookfield and the Abu Dhabi Investment Authority that it has determined that there were no unresolved national security issues and its review of the transaction was concluded.

On November 29, 2023, the parties filed a settlement agreement recommending that the PPUC approve the transaction subject to the terms of the settlement, which include among other things, a number of ring-fencing provisions and a commitment to improve transmission reliability over the next five years.

The settlement is currently pending PPUC approval.

On August 14, 2023, FERC issued an order approving the FET Equity Interest Sale.

On November 24, 2023, CFIUS notified FET, Brookfield and the Abu Dhabi Investment Authority, as an indirect investor in FET through Brookfield, that it had determined that there were no unresolved national security issues and its review of the transaction was concluded.

On November 29, 2023, the parties filed a settlement agreement recommending that the PPUC approve the transaction subject to the terms of the settlement, which includes among other things, a number of ring-fencing provisions and a commitment to improve transmission reliability over the next five years.

The settlement was approved by the PPUC on March 14, 2024.

The transaction closed on March 25, 2024.

On April 2, 2024, FE PA filed a base rate case with the PPUC, based on a projected 2025 annual test year.

The rate case requested a net increase in base distribution revenues of approximately $502 million with a return on equity of 11.3% and capital structure of 46.2% debt and 53.8% equity, and reflected a roll-in of several current riders such as DSIC, Tax Act and smart meter.

The increase represented an overall net average rate increase in FE PA rates by approximately 7.7%, and a 10.5% average residential rate increase.

Key components of the base rate case filing included a proposal to change pension recovery from average cash contributions to the delayed recognition method and to implement a mechanism to establish a regulatory asset (or liability) to recover (or refund) net differences between the amount of pension expense requested in the proceeding and the actual annual amount each year using this method.

Additionally, FE PA requested an enhanced ten-year vegetation management program and recovery of certain incurred costs, including major storms, COVID-19, a program to convert streetlights to LEDs, and others.

On September 13, 2024, FE PA and the active parties to the proceeding filed a joint settlement agreement requesting that the administrative law judges to approve FE PA’s requested distribution base rate case increase subject to the terms and conditions of the settlement, which included, among other things, an annual net revenue increase of $225 million.

Other key components of the settlement agreement included recovery of costs incurred for storms and COVID-19, additional cost recovery of ongoing storm costs, inspection and maintenance of overhead lines and transformers, and rate case expenses, as well as an enhanced vegetation management program.

On October 15, 2024, the administrative law judges issued a decision recommending that the PPUC approve, without modification, the September 13, 2024 settlement agreement.

On November 21, 2024, the PPUC unanimously approved the settlement agreement without modification.

New rates became effective on January 1, 2025.

WEST VIRGINIA

MP and PE provide electric service to all customers through traditional cost-based, regulated utility ratemaking and operate under WVPSC-approved rates that became effective in February 2015.

MP and PE provide electric service to all customers through traditional cost-based, regulated utility ratemaking and operate under WVPSC-approved rates.

MP and PE recover net power supply costs, including fuel costs, purchased power costs and related expenses, net of related market sales revenue through the ENEC.

MP’s and PE’s ENEC rate is updated annually.

On August 25, 2022, MP and PE filed with the WVPSC their annual ENEC case requesting an increase in ENEC rates of $183.8 million beginning January 1, 2023, which represents a 12.2% increase to the rates then in effect.

The increase was driven by an under recovery during the review period (July 1, 2021, to June 30, 2022) of approximately $145 million due to higher coal, reagent, and emission allowance expenses.

This filing additionally addresses, among other things, the WVPSC’s May 2022 request for a prudence review of current rates.

At a hearing on December 8, 2022, the parties in the case presented a unanimous settlement to increase rates by approximately $92 million, effective January 1, 2023, and carry over to MP and PE’s 2023 ENEC case, approximately $92 million at a carrying charge of 4%.

In an order dated December 30, 2022, the WVPSC approved the settlement with respect to the proposed rate increase, but MP and PE rates remain subject to a prudence review in their 2023 ENEC case.

The order also instructed MP to evaluate the feasibility of purchasing the 1,300 MW Pleasants Power Station and file a summary of the evaluation, which MP and PE filed on March 31, 2023.

MP and PE provided the WVPSC with regular status reports throughout the second quarter of 2023 regarding the process of their evaluation.

Subsequently, the owner of Pleasants entered into an agreement to sell Pleasants to an indirect wholly owned subsidiary of Omnis Global Technologies, LLC, which transaction closed on August 1, 2023.

As a result, MP and PE ceased consideration of the possible purchase of Pleasants and on August 30, 2023, the WVPSC closed the proceeding.

On August 31, 2023, MP and PE filed with the WVPSC their annual ENEC case requesting an increase in ENEC rates of $167.5 million beginning January 1, 2024, which represents a 9.9% increase in overall rates.

This increase, which was driven primarily by higher fuel expenses, includes the approximate $92 million carried over from the 2022 ENEC proceeding and a portion of the approximately $267 million under recovery balance at the end of the review period (July 1, 2022 to June 30, 2023).

The remaining $75.6 million of the under recovery balance not recovered in 2024 will be deferred for collection during 2025, with an annual carrying charge of 4%.

MP’s and PE’s ENEC rate is typically updated annually.

On August 31, 2023, MP and PE filed with the WVPSC their annual ENEC case requesting an increase in ENEC rates of $167.5 million beginning January 1, 2024, which represented a 9.9% increase in overall rates.

This increase, which was driven primarily by higher fuel expenses, included the approximate $92 million carried over from the 2022 ENEC proceeding and a portion of the approximately $267 million under recovery balance at the end of the review period (July 1, 2022 to June 30, 2023).

The remaining $75.6 million of the under recovery balance not recovered in 2024 was to be deferred for collection during 2025, with an annual carrying charge of 4%.

A hearing was held on November 30, 2023, at which time a joint stipulation for settlement that was agreed to by all but one party was presented to the WVPSC.

The settlement provides for a net $55.4 million increase in ENEC rates beginning March 27, 2024 with the net deferred ENEC balance of approximately $255 million to be recovered through 2026.

There will be no 2024 ENEC case unless MP and PE over or under recover more than $50 million than the 2024 ENEC balance and a party elects to invoke a case filing.

An order is expected by March 2024.

On November 22, 2021, MP and PE filed with the WVPSC their plan to construct 50 MWs of solar generation at five sites in West Virginia.

The plan includes a tariff to offer solar power to West Virginia customers and cost recovery for MP and PE through a surcharge for any solar investment not fully subscribed by their customers.

A hearing was held in mid-March 2022 and on April 21, 2022, the WVPSC issued an order approving, effective May 1, 2022, the requested tariff and requiring MP and PE to subscribe at least 85% of the planned 50 MWs before seeking final tariff approval.

MP and PE must seek separate approval from the WVPSC to recover any solar generation costs in excess of the approved tariff.

On April 24, 2023, MP and PE sought final tariff approval from the WVPSC for three of the five solar sites, representing 30 MWs of generation, and requested approval of a surcharge to recover any costs above the final approved tariff.

The first solar generation site went into service in January 2024 and construction of the remaining four sites are expected to be completed no later than the end of 2025 at a total investment cost of approximately $110 million.

The settlement provided for a net $55.4 million increase in ENEC rates beginning March 27, 2024 with the net deferred ENEC balance of approximately $184 million to be recovered from 2025 through 2026.

There will be no 2024 ENEC case unless MP and PE over or under recover by more than $50 million from January through June 2024 and a party elects to invoke a case filing, neither of which occurred.

An order was issued on March 26, 2024 approving the settlement without modification and rates became effective on March 27, 2024.

MP and PE will file their next ENEC filing on or before September 1, 2025.

On April 21, 2022, the WVPSC issued an order approving, effective May 1, 2022, a tariff to offer solar power on a voluntary basis to West Virginia customers and requiring MP and PE to subscribe at least 85% of the planned 50 MWs of solar generation before seeking approval for surcharge cost recovery.

MP and PE must seek separate approval from the WVPSC to recover any solar generation costs in excess of the approved solar power tariff.

On April 24, 2023, MP and PE sought approval for surcharge cost recovery from the WVPSC for three of the five solar sites, representing 30 MWs of generation.

On August 23, 2023, the WVPSC approved the customer surcharge and granted approval to construct three of the five solar sites.

The surcharge went into effect January 1, 2024.

The first solar generation site went into service in January 2024 and the second solar generation site went into service in September 2024.

On December 4, 2024, MP and PE submitted for approval a settlement agreement to increase its solar surcharge rate.

The WVPSC approved the settlement without modification on December 27, 2024 and new rates went into effect on January 1, 2025.

On January 13, 2023, MP and PE filed a request with the WVPSC seeking approval of new depreciation rates for existing and future capital assets.

Specifically, MP and PE are seeking to increase depreciation expense by approximately $76 million per year, primarily for regulated generation-related assets.

Specifically, MP and PE were seeking to increase depreciation expense by approximately $76 million per year, primarily for regulated generation-related assets.

Any depreciation rates approved by the WVPSC would not become effective until new base rates were established.

On August 22, 2023, a unanimous settlement of the case was filed recommending a $33 million per year increase in depreciation expense, effective April 1, 2024.

An order from the WVPSC is expected in the first quarter 2024.

On March 2, 2023, the WVPSC ordered an audit of MP and PE focused on:

(i) the lobbying and promotional/image building expenses, including those related to HB 6, incurred by MP and PE from 2018 to 2022 (ii) intra-corporate charges, (iii) the accounting for charges included in the ENEC cost recovery accounts of MP and PE during the same time period, and (iv) review and report on the findings, including those specific to MP and PE, set forth in the FERC Audit described below as well as a review and report of the responses by MP and PE thereto.

The audit began in September 2023 and concluded with a filing of the report on December 28, 2023.

The audit found no evidence that HB 6 related costs were included in the 2022 test year, and no errors or omission were identified that would materially affect lobbying and image building costs or expenses charged to the

ENEC for the period 2018 to 2022.

Additionally, there were several recommended adjustments and recommendations, however, none are expected to have a material effect on FirstEnergy, MP or PE.

The report was evaluated as part of the ongoing base rate case.

An order from the WVPSC was issued on March 26, 2024 approving the settlement without modification and new depreciation rates became effective on April 1, 2024.

On May 31, 2023, MP and PE filed a base rate case with the WVPSC requesting a total revenue increase of approximately $207 million utilizing a test year of 2022 with adjustments plus a request to establish a regulatory asset (or liability) to recover (or refund) in a subsequent base rate case the net differences between the amount of pension and OPEB expense requested in the proceeding (based on average expense from 2018 to 2022) and the actual annual amount each year using the delayed recognition method.

Among other things, the increase includes the approximate $76 million requested in a depreciation case filed on January 13, 2023 and described more fully above, and amounts to support a new low-income customer advocacy program, storm restoration work and service reliability investments.

New rates are expected to be effective by the end of March 2024.

On January 23, 2024, MP, PE and various parties filed with a joint settlement agreement with the WVPSC, which recommends a base rate increase of $105 million, inclusive of the $33 million increase in depreciation expense.

Additionally, the settlement includes a new low-income customer advocacy program, a pilot program for service reliability investments and recovery of costs related to storm restoration, retired generation assets and COVID-19.

The settlement did not include the request to establish a regulatory asset (or liability) for recover (or refund) associated with pension and OPEB expense, however, it did not preclude MP and PE from pursuing that in a future separate proceeding.

An order is expected by the end of the first quarter of 2024 with new rates to be effective March 27, 2024.

On August 31, 2023, MP and PE filed its biennial review of their vegetation management program and surcharge.

MP and PE have proposed an approximate $17 million increase in the surcharge rates, due to an under recovery in the prior two-year period and increased forecast costs.

The case was unanimously settled by the parties on November 29, 2023, approved by the WVPSC on January 8, 2024, and the $17 million increase proposed by MP and PE went into effect on January 1, 2024.

See Note 14, “Commitments, Guarantees and Contingencies - Environmental Matters - Clean Water Act" below, for additional details on the EPA's ELG.

Among other things, the increase included the approximate $75 million requested in a depreciation case filed on January 13, 2023 and described above, and amounts to support a new low-income customer advocacy program, storm restoration work and service reliability investments.

On January 23, 2024, MP, PE and various parties filed a joint settlement agreement with the WVPSC, which recommended a base rate increase of $105 million, inclusive of the $33 million increase in depreciation expense, but deferred issues related to a change in the net energy metering credit.

Additionally, the settlement included a new low-income customer advocacy program, a pilot program for service reliability investments and recovery of costs related to storm restoration, retired generation assets and COVID-19.

The settlement did not include the request to establish a regulatory asset (or liability) for recovery (or refund) associated with pension and OPEB expense, however, it did not preclude MP and PE from pursuing that in a future separate proceeding.

On February 16, 2024, interested parties filed a settlement on the net energy metering credit for consideration by the WVPSC.

An order was issued on March 26, 2024 approving the $105 million increase and accepting the settlements with slight non-material modifications with new rates going into effect on March 27, 2024.

Additionally, due to the order including approval by the WVPSC to recover certain costs associated with retired generation assets, MP recognized a $60 million pre-tax benefit in the first quarter of 2024 to establish a regulatory asset.

FERC REGULATORY MATTERS

Under the Federal Power Act, FERC regulates rates for interstate wholesale sales and transmission of electric power, regulatory accounting and reporting under the Uniform System of Accounts, and other matters, including construction and operation of hydroelectric projects.

With respect to their wholesale services and rates, the Utilities, AE Supply and the Transmission Companies are subject to regulation by FERC.

FERC regulations require JCP&L, MP, PE, WP and the Transmission Companies to provide open access transmission service at FERC-approved rates, terms and conditions.

Transmission facilities of JCP&L, MP, PE, WP and the Transmission Companies are subject to functional control by PJM and transmission service using their transmission facilities is provided by PJM under the PJM Tariff.

With respect to their wholesale services and rates, the Electric Companies, AE Supply and the Transmission Companies are subject to regulation by FERC.

FERC regulations require JCP&L, MP, PE and the Transmission Companies to provide open access transmission service at FERC-approved rates, terms and conditions.

Transmission facilities of JCP&L, MP, PE and the Transmission Companies are subject to functional control by PJM and transmission service using their transmission facilities is provided by PJM under the PJM Tariff.

On January 1, 2024, WP transferred certain of its Pennsylvania-based transmission assets to KATCo.

The following table summarizes the key terms of rate orders in effect for transmission customer billings for FirstEnergy's transmission owner entities as of December 31, 2023:

The following table summarizes the key terms of FERC rate orders in effect for transmission customer billings for FirstEnergy's transmission owner entities as of December 31, 2024:

Company Rates Effective Capital Structure Allowed ROE

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January 2020 Actual (13-month average) 10.20 %

MP January 2021 Lower of Actual (13-month average) or 56 %

PE January 2021 Lower of Actual (13-month average) or 56 %

January 2021 Lower of Actual (13-month average) or 56 %

MAIT July 2017 Lower of Actual (13-month average) or 60 %

MP January 2021 Lower of Actual (13-month average) or 56 % equity

PE January 2021 Lower of Actual (13-month average) or 56 % equity

January 2021 Hypothetical 49.3% equity (3)

MAIT July 2017 Lower of Actual (13-month average) or 60 % equity

TrAIL July 2008 Actual (year-end) 12.7 % (4) / 11.7 % (5)

(1) Reflects a 0.5% reduction to the 10.38% approved ROE due to the January 2025 Sixth Circuit ruling eliminating the 50 basis point adder associated with RTO membership (see Transmission ROE Incentive:

(2) On January 1, 2024, WP transferred certain of its Pennsylvania-based transmission assets to KATCo

(3) Hypothetical capital structure will convert to an actual (13-month average) in January 2027

(4) TrAIL the Line and Black Oak Static Var Compensator

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FERC regulates the sale of power for resale in interstate commerce in part by granting authority to public utilities to sell wholesale power at market-based rates upon showing that the seller cannot exert market power in generation or transmission or erect barriers to entry into markets.

The Utilities and AE Supply each have the necessary authorization from FERC to sell their wholesale power, if any, in interstate commerce at market-based rates, although in the case of the Utilities major wholesale purchases remain subject to review and regulation by the relevant state commissions.

Federally enforceable mandatory reliability standards apply to the bulk electric system and impose certain operating, record-keeping and reporting requirements on the Utilities, AE Supply, and the Transmission Companies.

The Electric Companies and AE Supply each have the necessary authorization from FERC to sell their wholesale power, if any, in interstate commerce at market-based rates, although in the case of the Electric Companies major wholesale purchases remain subject to review and regulation by the relevant state commissions.

Federally enforceable mandatory reliability standards apply to the bulk electric system and impose certain operating, record-keeping and reporting requirements on the Electric Companies, AE Supply, and the Transmission Companies.

NERC is the Electric Reliability Organization designated by FERC to establish and enforce these reliability standards, although NERC has delegated day-to-day implementation and enforcement of these reliability standards to six regional entities, including RFC.

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The audit report included a finding and related recommendation on FirstEnergy’s methodology for allocation of certain corporate support costs to regulatory capital accounts under certain FERC regulations and reporting.

Effective in the first quarter of 2022 and in response to the finding, FirstEnergy had implemented a new methodology for the allocation of these corporate support costs to regulatory capital accounts for its regulated distribution and transmission companies on a prospective basis.

Effective in the first quarter of 2022 and in response to the finding, FirstEnergy

had implemented a new methodology for the allocation of these corporate support costs to regulatory capital accounts for its regulated distribution and transmission companies on a prospective basis.

With the assistance of an independent outside firm, FirstEnergy completed an analysis during the third quarter of 2022 of these costs and how it impacted certain FERC-jurisdictional wholesale transmission customer rates for the audit period of 2015 through 2021.

As a result of this analysis, FirstEnergy recorded in the third quarter of 2022 approximately $45 million ($34 million after-tax) in expected customer refunds, plus interest, due to its wholesale transmission customers and reclassified approximately $195 million of certain transmission capital assets to operating expenses for the audit period, of which $90 million ($67 million after-tax) are not expected to be recoverable and impacted FirstEnergy’s earnings since they relate to costs capitalized during stated transmission rate time periods.

FirstEnergy is currently recovering approximately $105 million of costs reclassified to operating expenses in its transmission formula rate revenue requirements, of which $13 million of costs have been recovered as of December 31, 2023.

FirstEnergy has recovered approximately $105 million of costs reclassified to operating expenses in its transmission formula rate revenue requirements as of December 31, 2024.

These reclassifications also resulted in a reduction to the Stand-Alone Transmission segment’s rate base by approximately $160 million, which is not expected to materially impact FirstEnergy or the segment’s future earnings.

The expected wholesale transmission customer refunds were recognized as a reduction to revenue, and the amount of reclassified transmission capital assets that are not expected to be recoverable were recognized within “Other operating expenses” at the Stand-Alone Transmission segment and on FirstEnergy’s Consolidated Statements of Income.

Furthermore, the Ohio Companies are in the process of addressing the outcomes of the FERC Audit with the PUCO, which includes seeking continued rate base treatment of approximately $100 million of certain corporate support costs allocated to distribution capital assets in Ohio.

On December 8, 2023, FERC audit staff issued a letter advising that two unresolved audit matters, primarily related to FirstEnergy’s plan to recover the reclassified operating expenses in formula transmission rates, were being referred to other offices within FERC for further review.

These reclassifications also resulted in a reduction to the Regulated Transmission segment’s rate base by approximately $160 million, which is not expected to materially impact FirstEnergy or the segment’s future earnings.

The expected wholesale transmission customer refunds were recognized as a reduction to revenue, and the amount of reclassified transmission capital assets that are not expected to be recoverable were recognized within “Other operating expenses” at the Regulated Transmission segment and on FirstEnergy’s Consolidated Statements of Income.

Furthermore, FirstEnergy’s distribution utilities are in the process of addressing the outcomes of the FERC Audit with the applicable state commissions and proceedings, which includes seeking continued rate base treatment of approximately $310 million of certain corporate support costs allocated to distribution capital assets.

If FirstEnergy is unable to recover these transmission or distribution costs, it could result in future charges and/or adjustments and have an adverse impact on FirstEnergy’s financial condition.

ATSI ROE – Ohio Consumers Counsel v.

On July 5, 2024 and September 26, 2024, the FERC Office of Enforcement issued additional data requests related to the 2022 reclassification of operating expenses, to which FirstEnergy replied.

On September 10, 2024, the FERC Office of Enforcement issued a set of data requests related to the classification and recovery of a since terminated fuel consulting contract, to which FirstEnergy responded.

The FERC Office of Enforcement issued another set of data requests related to the same fuel consulting contract on January 13, 2025.

Responses are due March 5, 2025.

If the FERC Office of Energy Market Regulation and the FERC Office of Enforcement were to successfully challenge the recovery of the 2022 reclassified operating expenses and formula transmission rates it could have material adverse effect on FirstEnergy financial conditions, result of operations, and cash flows.

Transmission ROE Incentive:

On February 24, 2022, the OCC filed a complaint with FERC against ATSI, AEP’s Ohio affiliates and American Electric Power Service Corporation, and Duke Energy Ohio, LLC asserting that FERC should reduce the ROE utilized in the utilities’ transmission formula rates by eliminating the 50 basis point adder associated with RTO membership, effective February 24, 2022.

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AEP and OCC appealed FERC’s orders to the Sixth Circuit.

FirstEnergy is actively participating in the appeal and the case remains pending.

FirstEnergy is unable to predict the outcome of this proceeding, but it is not expected to have a material impact.

On January 17, 2025, the Sixth Circuit ruled that the 50 basis point adder is available only where RTO membership is voluntary, that Ohio law requires Ohio’s transmission utilities to be members of an RTO, and that it was unlawful for FERC to excise the adder from AEP rates, but not from the Duke and ATSI rates.

FirstEnergy expects to pursue further appeal.

During the fourth quarter of 2024, ATSI recognized a $46 million pre-tax charge, with interest, of which $42 million is reported in “Transmission Revenues” and $4 million is reported in “Miscellaneous income, net” on the Consolidated Statements of Income at the Stand-Alone Transmission segment to reflect the expected refund owed to transmission customers back to February 24, 2022.

Transmission ROE Methodology

On March 20, 2020, FERC initiated a rulemaking proceeding on the transmission rate incentives provisions of Section 219 of the 2005 Energy Policy Act.

FirstEnergy submitted comments through the Edison Electric Institute and as part of a consortium of PJM Transmission Owners.

In a supplemental rulemaking proceeding that was initiated on April 15, 2021, FERC requested comments on, among other things, whether to require utilities that have been members of an RTO for three years or more and

that have been collecting an “RTO membership” ROE incentive adder to file tariff updates that would terminate collection of the incentive adder.

Initial comments on the proposed rule were filed on June 25, 2021, and reply comments were filed on July 26, 2021.

The rulemaking remains pending before FERC.

FirstEnergy is a member of PJM and its transmission subsidiaries could be affected by the supplemental proposed rule.

A proposed rulemaking proceeding concerning transmission rate incentives provisions of Section 219 of the 2005 Energy Policy Act was initiated in March of 2020 and remains pending before FERC.

Among other things, the rulemaking explored whether utilities should collect an “RTO membership” ROE incentive adder for more than three years.

FirstEnergy is a member of PJM, and its transmission subsidiaries could be affected by the proposed rulemaking.

FirstEnergy participated in comments on the supplemental rulemaking that were submitted by a group of PJM transmission owners and by various industry trade groups.

If there were to be any changes to FirstEnergy's transmission incentive ROE, such changes will be applied on a prospective basis.

Allegheny Power Zone Transmission Formula Rate Filings

On October 29, 2020, MP, PE and WP filed tariff amendments with FERC to implement a forward-looking formula transmission rate, to be effective January 1, 2021.

In addition, on October 30, 2020, KATCo filed a proposed new tariff to establish a forward-looking formula rate and requested that the new rate become effective January 1, 2021.

In its filing, KATCo explained that while it currently owns no transmission assets, it may build new transmission facilities in the Allegheny zone, and that it may seek required state and federal authorizations to acquire transmission assets from PE and WP by January 1, 2022.

These transmission rate filings were accepted for filing by FERC on December 31, 2020, effective January 1, 2021, subject to refund, pending further hearing and settlement procedures and were consolidated into a single proceeding.

MP, PE and WP, and KATCo filed uncontested settlement agreements with FERC on January 18, 2023.

Also on January 18, 2023, MP, PE and WP filed a motion for interim rates to implement certain aspects of the settled rate.

The interim rates were approved by the FERC Chief Administrative Law Judge and took effect on January 1, 2023.

As a result of the filed settlement, FirstEnergy recognized a $25 million pre-tax charge during the fourth quarter of 2022, which reflects the difference between amounts originally recorded as assets and amounts which will ultimately be recovered from customers as a result.

On May 4, 2023, FERC issued an order approving the settlement agreement without condition or modification.

Pursuant to the order, a compliance filing was filed on May 19, 2023, that implemented the terms of the settlement.

On June 26, 2023, FERC issued a letter order approving the compliance filing.

Transmission Planning Supplemental Projects:

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ATSI and the other transmission utilities in Ohio and PJM filed comments and the complaint is pending before FERC.

Local Transmission Planning Complaint:

Industrial Energy Consumers of America, et al.

Avista Corporation, et al.

On December 19, 2024, the Industrial Energy Consumers of America, a group representing large industrial customers, and state consumer advocates filed a complaint at FERC that asserts that transmission owners are overbuilding “local transmission facilities” with corresponding unjustified increases in transmission rates.

The complaint demands that FERC:

(i) prohibit transmission owners from planning “local transmission facilities” that are rated at 100kV or higher, (ii) appoint “independent transmission monitors” to conduct such planning, and (iii) condition construction of local transmission facilities on the facility having been planned by the “independent transmission monitor.” FirstEnergy expects to participate in this matter through a consortium of PJM transmission owners and through certain trade groups, including EEI.

FirstEnergy is unable to predict the outcome or estimate the impact that this complaint may have on its Transmission Companies, however, whether this lawsuit moves forward could have a material impact on FirstEnergy’s transmission capital investment strategy.

COMMITMENTS, GUARANTEES AND CONTINGENCIES

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FirstEnergy enters into these arrangements to facilitate commercial transactions with third parties by enhancing the value of the transaction to the third party.

As of December 31, 2023, outstanding guarantees and other assurances aggregated approximately $ 815 million, consisting of parental guarantees on behalf of its consolidated subsidiaries ($ 515 million) and other assurances ($ 300 million).

The maximum potential amount of future payments FirstEnergy and its subsidiaries could be required to make under these guarantees as of December 31, 2024, was approximately $ 923 million, as summarized below:

Guarantees and Other Assurances Maximum Exposure

(In millions)

FE's Guarantees on Behalf of its Consolidated Subsidiaries (1)

Deferred compensation arrangements $ 406

Vehicle leases 75

FE's Guarantees on Other Assurances

Surety Bonds 161

Deferred compensation arrangements 97

Total Guarantees and Other Assurances $ 923

(1) During the third quarter of 2023, FE was required by PJM to issue a guarantee to cover non-performance until FE PA is able to provide audited financial statements to PJM, which is expected to occur in early 2025.

The guarantee is expected to be immaterial to FE.

COLLATERAL AND CONTINGENT-RELATED FEATURES

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The collateral and credit support requirements vary by contract and by counterparty.

As of December 31, 2023, $ 89 million of net cash collateral has been posted by FE or its subsidiaries and is included in "Prepaid taxes and other current assets" on FirstEnergy's Consolidated Balance Sheets.

As of December 31, 2024, $ 170 million of collateral, in the form of LOCs, has been posted by FE or its subsidiaries.

FE or its subsidiaries are holding $ 29 million of net cash collateral as of December 31, 2024, from certain generation suppliers, and such amount is included in "Other current liabilities" on FirstEnergy's Consolidated Balance Sheets.

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The following table discloses the potential additional credit rating contingent contractual collateral obligations as of December 31, 2024:

Potential Collateral Obligations Utilities and Transmission Companies FE Total

Potential Collateral Obligations Electric Companies and Transmission Companies FE Total

(In millions)

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On August 10, 2023, the 4th Circuit granted West Virginia an interim stay of the disapproval of its SIP and on January 10, 2024, after a hearing held on October 27, 2023, granted a full stay which precludes the Good Neighbor Plan from going into effect in West Virginia.

In addition to West Virginia, certain other states, and certain trade organizations, including the Midwest Ozone Group of which FE is a member, have separately appealed and filed motions to stay the Good Neighbor Plan itself at the D.C.

In addition to West Virginia, certain other states, and certain trade organizations, including the Midwest Ozone Group of which FE is a member, separately filed petitions for review and motions to stay the Good Neighbor Plan itself at the D.C.

On September 25, 2023, the D.C.

Circuit denied the motions to stay the Good Neighbor Plan.

On October 13, 2023, the aggrieved parties filed an Emergency Application for an Immediate Stay of the Good Neighbor Plan with the U.S.

Supreme Court, which remains pending.

Oral argument is scheduled for February 21, 2024.

On October 13, 2023, the aggrieved parties filed an Emergency Application for an Immediate Stay of the

Good Neighbor Plan with the U.S.

Supreme Court.

Oral argument was heard on February 21, 2024.

On June 27, 2024, the U.S.

Supreme Court granted a stay of the Good Neighbor Plan pending disposition of the petition for review in the D.C.

On February 6, 2025, the EPA filed a motion at the D.C.

Circuit to hold the proceedings in abeyance for 60 days to allow the EPA time to familiarize itself with the Good Neighbor Plan and in particular, time to brief the new administration about these consolidated petitions and the underlying Rule to allow them to decide what action, if any, is necessary.

Climate Change

In September 2016, the U.S.

joined in adopting the agreement reached on December 12, 2015, at the United Nations Framework Convention on Climate Change meetings in Paris to reduce GHGs.

The Paris Agreement’s non-binding obligations to limit global warming to below two degrees Celsius became effective on November 4, 2016.

On June 1, 2017, the Trump Administration announced that the U.S.

would cease all participation in the Paris Agreement.

On January 20, 2021, President Biden signed an executive order re-adopting the agreement on behalf of the U.S.

There are several initiatives to reduce GHG emissions at the state, federal and international level.

Certain northeastern states are participating in the Regional Greenhouse Gas Initiative and western states led by California, have implemented programs, primarily cap and trade mechanisms, to control emissions of certain GHGs.

In recent years, regulators in the U.S.

have focused efforts on increasing disclosures by companies related to climate change and mitigation efforts.

There are several initiatives to reduce GHG emissions at the state and international level.

Certain northeastern states are participating in the Regional Greenhouse Gas Initiative and western states, including California, have implemented programs to control emissions of certain GHGs and enhance public disclosures relating to the same.

Additional policies reducing GHG emissions, such as demand reduction programs, renewable portfolio standards and renewable subsidies have been implemented across the nation.

FirstEnergy has pledged to achieve carbon neutrality by 2050 in GHGs within FirstEnergy’s direct operational control (Scope 1).

With respect to our coal-fired plants in West Virginia, we have identified that the end of the useful life date is 2035 for Fort Martin and 2040 for Harrison.

FirstEnergy has pledged to achieve carbon neutrality by 2050 with respect to GHGs within FirstEnergy’s direct operational control (known as Scope 1 emissions).

Our ability to achieve our GHG reduction goal is subject to our ability to make operational changes and is conditioned upon numerous risks, many of which are outside of our control.

With respect to our coal-fired plants in West Virginia, which serve as the primary source of our Scope 1 emissions, we have identified that the end of the useful life date is 2035 for Fort Martin and 2040 for Harrison.

Determination of the useful life of the regulated coal-fired generation could result in changes in depreciation, and/or continued collection of net plant in rates after retirement, securitization, sale, impairment, or regulatory disallowances.

If MP is unable to recover these costs, it could have a material adverse effect on FirstEnergy’s and/or MP’s financial condition, results of operations, and cash flow.

Furthermore, FirstEnergy cannot currently estimate the financial impact of climate change policies, although potential legislative or regulatory programs restricting CO2 emissions, or litigation alleging damages from GHG emissions, could require material capital and other expenditures or result in changes to its operations.

FirstEnergy cannot currently estimate the financial impact of climate change policies, including the final SEC climate disclosure rules, which are currently stayed, although potential legislative or regulatory programs restricting CO 2 emissions, or litigation alleging damages from GHG emissions, could require material capital and other expenditures or result in changes to its operations.

In December 2009, the EPA released its final “Endangerment and Cause or Contribute Findings for GHGs under the Clean Air Act,” concluding that concentrations of several key GHGs constitute an “endangerment” and may be regulated as “air pollutants” under the CAA and mandated measurement and reporting of GHG emissions from certain sources, including electric generating plants.

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Environmental Protection Agency intended to reduce power sector GHG emissions (primarily CO 2 emissions) from fossil fuel based EGUs.

The rule proposes stringent emissions limitations based on fuel type and unit retirement date.

Comments on the proposed rule were submitted to the EPA on August 8, 2023.

Depending on how final rules are ultimately implemented and the outcome of any appeals, compliance with these standards could require additional capital expenditures or changes in operation at the Ft.

The rule, which proposed stringent GHG emissions limitations based on fuel type and unit retirement date, was issued as final by the EPA on April 25, 2024.

In May 2024, a group of 25 states, including West Virginia, filed a challenge to the rule in the D.C.

Also in May 2024, other utility groups, including the Midwest Ozone Group and Electric Generators for a Sensible Transition, both of which MP is a member, filed petitions for review of the GHG rule as well as motions to stay the rule in the D.C.

On July 19, 2024, the D.C.

Circuit denied the stay motions and on July 23 and 26, 2024 the aggrieved petitioners filed emergency stay applications to the U.S.

Supreme Court.

On October 16, 2024, the U.S.

Supreme Court denied the stay applications.

On December 6, 2024, oral arguments on the merits of the challenge were heard by the D.C.

On February 5, 2025, the Department of Justice filed an unopposed motion on behalf of EPA in the D.C.

Circuit, seeking to hold the litigation in abeyance, and forego issuing its opinion, for a period of 60 days while the new leadership at EPA evaluates the rule and determines how it wishes to proceed On February 19, 2025, the D.C.

Circuit granted EPA’s motion.

Depending on the outcome of any appeals, compliance with these standards could require additional capital expenditures or changes in operation at the Ft.

Martin and Harrison power stations.

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On March 29, 2023, the EPA published proposed revised ELGs applicable to coal-fired power plants that include more stringent effluent limitations for wet scrubber systems and ash transport water, and new limits on landfill leachate.

Public hearings on the proposed rules were held in April 2023 and comments were accepted through May 30, 2023.

the interim, the rule issued on August 31, 2020, remains in effect.

Depending on the outcome of appeals and how final revised rules are ultimately implemented, compliance with these standards could require additional capital expenditures or changes in operation at the Ft.

The rule was issued as final by the EPA on April 25, 2024.

On May 30, 2024, the Utility Water Act Group, of which FirstEnergy is a member, filed a Petition for Review of the 2024 ELG Rule with the U.S.

Court of Appeals for the Fifth and Eighth Circuit Courts, and on June 18, 2024, the Utility Water Group filed a motion to stay the Rule pending disposition on the merits.

A number of other parties have challenged the final rule in various petitions for review across several circuits.

Those petitions and motions for stay have been consolidated and will be reviewed by the U.S.

Court of Appeals for the Eighth Circuit Court.

On October 10, 2024, the Eighth Circuit denied the motions for stay.

Martin and Harrison power stations from what was approved by the WVPSC in September 2022 to comply with the 2020 ELG rule.

FirstEnergy is currently assessing the impact of the final rule.

Regulation of Waste Disposal

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The final rule allowed for an extension of the closure deadline based on meeting identified site-specific criteria.

AE Supply continues to operate McElroy’s Run as a disposal facility for Pleasants Power Station, which is owned and operated by a non-affiliate.

On November 30, 2020, AE Supply submitted a closure deadline extension request to the EPA seeking to extend the cease accepting waste date for the McElroy's Run CCR impoundment facility to October 2024, which request was withdrawn by AE Supply on July 9, 2024, prior to the completion of the technical review by the EPA.

As of May 31, 2024, AE Supply ceased accepting waste at the McElroy’s Run CCR impoundment facility from Pleasants Power Station.

As of December 31, 2024, AE Supply continues to operate the dry landfill adjacent to McElroy’s Run as a disposal facility for Pleasants Power Station.

During the second quarter of 2024, as a result of the evaluation of closure options for McElroy’s Run and the adjacent landfill, AE Supply reviewed its ARO and future expected costs to remediate, resulting in an increase to the ARO liability and corresponding increase to “Other operating expense” of $87 million at Corporate/Other for segment reporting.

The agreement requires AE Supply to establish a $160 million escrow account that AE Supply will fund over five years.

The escrow funding obligation will be secured by a surety bond, which will be guaranteed by FE.

On May 8, 2024, the EPA finalized changes to the CCR regulations addressing inactive surface impoundments at inactive electric utilities, known as legacy CCR surface impoundments.

The rule extends 2015 CCR Rule requirements for groundwater monitoring and protection, operational and reporting procedures as well as closure requirements to impoundments and landfills that were not originally included for coverage by the 2015 CCR Rule.

Furthermore, the EPA’s interpretations of the EPA CCR regulations continue to evolve through enforcement and other regulatory actions.

FirstEnergy is currently assessing the potential impacts of the final rule, including a review of additional sites to which the new rule might be applicable.

Depending on the outcome of appeals and the ultimate implementation of the final rule, compliance with these standards could require remedial actions, including removal of coal ash.

See Note 8, “Asset Retirement Obligations,” above for a description of the $139 million increase to its ARO that FirstEnergy recorded during 2024 as a result of its analysis.

FE or its subsidiaries have been named as potentially responsible parties at waste disposal sites, which may require cleanup under the CERCLA.

Allegations of disposal of hazardous substances at historical sites and the liability involved are often unsubstantiated and subject to dispute;

Allegations of disposal of hazardous substances at historical sites and the liability involved are often

unsubstantiated and subject to dispute;

however, federal law provides that all potentially responsible parties for a particular site may be liable on a joint and several basis.

Environmental liabilities that are considered probable have been recognized on the Consolidated Balance Sheets as of September 30, 2023, based on estimates of the total costs of cleanup, FirstEnergy’s proportionate responsibility for such costs and the financial ability of other unaffiliated entities to pay.

Environmental liabilities that are considered probable have been recognized on FirstEnergy’s Consolidated Balance Sheets as of December 31, 2024 based on estimates of the total costs of cleanup, FirstEnergy’s proportionate responsibility for such costs and the financial ability of other unaffiliated entities to pay.

Total liabilities of approximately $98 million have been accrued through December 31, 2024, of which approximately $69 million are for environmental remediation of former MGP and gas holder facilities in New Jersey, which are being recovered by JCP&L through a non-bypassable societal benefits charge.

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In March 2023, a jury found Mr.

Householder and his co-defendant, Matthew Borges, guilty and in June 2023, the two were sentenced to prison for 20 and 5 years, respectively.

Householder and his co-defendant, Matthew Borges, guilty and in June 2023, the two were sentenced to prison for 20 and five years, respectively.

Householder and Borges have appealed their sentences.

Also, on July 21, 2020, and in connection with the DOJ’s investigation, FirstEnergy received subpoenas for records from the U.S.

Attorney’s Office for the Southern District Ohio.

Also, on July 21, 2020, and in connection with the U.S.

Attorney’s Office’s investigation, FirstEnergy received subpoenas for records from the U.S.

Attorney’s Office for the Southern District of Ohio.

FirstEnergy was not aware of the criminal allegations, affidavit or subpoenas before July 21, 2020.

On January 17, 2025, the U.S.

Attorney’s Office announced that a federal grand jury charged two former FirstEnergy senior officers with one count of participating in a Racketeer Influenced and Corrupt Organizations Act conspiracy.

The allegations in the indictment are largely based on the conduct described in the DPA.

On July 21, 2021, FE entered into a three-year DPA with the U.S.

Attorney’s Office that, subject to court proceedings, resolves this matter.

Under the DPA, FE has agreed to the filing of a criminal information charging FE with one count of conspiracy to commit honest services wire fraud.

The DPA requires that FirstEnergy, among other obligations:

Attorney’s Office that, subject to court proceedings, resolves this matter as to FE.

Under the DPA, FE agreed to the filing of a criminal information charging FE with one count of conspiracy to commit honest services wire fraud.

The DPA required that FirstEnergy, among other obligations:

(i) continue to cooperate with the U.S.

Attorney’s Office in all matters relating to the conduct described in the DPA and other conduct under investigation by the U.S.

(ii) pay a criminal monetary penalty totaling $230 million within sixty days, which shall consist of (x) $115 million paid by FE to the United States Treasury and (y) $115 million paid by FE to the ODSA to fund certain assistance programs, as determined by the ODSA, for the benefit of low-income Ohio electric utility customers;

(ii) pay a criminal monetary penalty totaling $230 million within sixty days, consisting of (x) $115 million paid by FE to the United States Treasury and (y) $115 million paid by FE to the ODSA to fund certain assistance programs, as determined by the ODSA, for the benefit of low-income Ohio electric utility customers;

(iii) publish a list of all payments made in 2021 to either 501(c)(4) entities or to entities known by FirstEnergy to be operating for the benefit of a public official, either directly or indirectly, and update the same on a quarterly basis during the term of the DPA;

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The entire amount of the monetary penalty was recognized as expense in the second quarter of 2021 and paid in the third quarter of 2021.

Under the terms of the DPA, the criminal information will be dismissed after FirstEnergy fully complies with its obligations under the DPA.

As of July 22, 2024, FirstEnergy had successfully completed the obligations required within the three-year term of the DPA.

Under the DPA, FirstEnergy has an obligation to continue (i) publishing quarterly a list of all payments to 501(c)(4) entities and all payments to entities known by FirstEnergy operating for the benefit of a public official, either directly or indirectly;

(ii) not making any statements that contradict the DPA;

(iii) notifying the U.S.

Attorney’s Office of any changes in FirstEnergy’s corporate form;

and (iv) cooperating with the U.S.

Attorney’s Office until the conclusion of any related investigation, criminal prosecution, and civil proceeding brought by the U.S.

Attorney’s Office, including the aforementioned January 17, 2025, indictment.

Within 30 days of those matters concluding, and FirstEnergy’s successful completion of its remaining obligations, the U.S.

Attorney’s Office will dismiss the criminal information.

Legal Proceedings Relating to United States v.

Larry Householder, et al.

On August 10, 2020, the SEC, through its Division of Enforcement, issued an order directing an investigation of possible securities laws violations by FE, and on September 1, 2020, issued subpoenas to FE and certain FE officers.

On April 28, 2021, July 11, 2022, and May 25, 2023, the SEC issued additional subpoenas to FE, with which FE has complied.

While no contingency has been reflected in its consolidated financial statements, FE believes that it is probable that it will incur a loss in connection with the resolution of the SEC investigation.

Given the ongoing nature and complexity of the review, inquiries and investigations, FE cannot yet reasonably estimate a loss or range of loss that may arise from the resolution of the SEC investigation.

FirstEnergy cooperated fully with the SEC investigation, and on September 12, 2024, the SEC issued a settlement order that concluded and resolved the investigation in its entirety.

Under the terms of the settlement, FE agreed to pay a civil penalty of $100 million and to cease and desist from committing or causing any violations and any future violations of specified provisions of the federal securities laws and rules promulgated thereunder, which was recognized as a loss contingency of $100 million in the second quarter of 2024 at Corporate/Other for segment reporting and paid on September 25, 2024.

On June 29, 2023, the OOCIC served FE a subpoena, seeking information relating to the conduct described in the DPA.

FirstEnergy was not aware of the OOCIC’s investigation prior to receiving the subpoena and understands that the OOCIC’s investigation is also focused on the conduct described in the DPA.

FirstEnergy was not aware of the OOCIC’s investigation prior to receiving the subpoena and understood that the OOCIC’s investigation was also focused on the conduct described in the DPA, other than with respect to the March 25, 2024, felony indictment of Mr.

Householder brought in Cuyahoga County, Ohio.

FirstEnergy is cooperating with the OOCIC in its investigation.

On February 12, 2024, and in connection with the OOCIC’s ongoing investigation, an indictment by a grand jury of Summit County, Ohio was unsealed against the former chairman of the PUCO, Samuel Randazzo, and two former FirstEnergy senior officers, Charles E.

Jones, and Michael J.

Dowling, charging each of them with several felony counts, including bribery, telecommunications fraud, money laundering and aggravated theft, related to payments described in the DPA.

No contingency has been reflected in FirstEnergy’s consolidated financial statements, as a loss is neither probable, nor is a loss or range of loss reasonably estimable.

On February 12, 2024, and in connection with the OOCIC’s ongoing investigation, an indictment by a grand jury of Summit County, Ohio was unsealed against the now-deceased, former chairman of the PUCO, and two former FirstEnergy senior officers, charging each of them with several felony counts, including bribery, telecommunications fraud, money laundering and

aggravated theft, related to payments described in the DPA.

On August 12, 2024, FirstEnergy entered into a settlement with the OAG's Office and the Summit County Prosecutor’s Office to resolve both the OOCIC investigation and State of Ohio ex rel.

Dave Yost, Ohio Attorney General v.

FirstEnergy Corp., et al.

and City of Cincinnati and City of Columbus v.

FirstEnergy Corp., noted below.

The settlement includes, among other things, a non-prosecution agreement and a payment of $19.5 million, which was recorded as a loss contingency in the second quarter of 2024 in FirstEnergy’s Consolidated Statements of Income at Corporate/Other for segment reporting and was paid on August 16, 2024.

In addition to the subpoenas referenced above under “ United States v.

Larry Householder, et.

al.” and the SEC investigation, certain FE stockholders and FirstEnergy customers filed several lawsuits against FirstEnergy and certain current and former directors, officers and other employees, and the complaints in each of these suits is related to allegations in the complaint and supporting affidavit relating to HB 6 and the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr.

” and the SEC investigation, certain FE stockholders and FirstEnergy customers filed several lawsuits against FirstEnergy and certain current and former directors, officers and other employees, and the complaints in each of these suits is related to allegations in the complaint and supporting affidavit relating to HB 6 and the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr.

The plaintiffs in each of the below cases seek, among other things, to recover an unspecified amount of damages (unless otherwise noted).

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A consolidated complaint was filed on February 26, 2021.

The consolidated complaint alleges, on behalf of a proposed class of persons who purchased FE securities between February 21, 2017 and July 21, 2020, that FE and certain current or former FE officers violated Sections 10(b) and 20(a) of the Exchange Act by issuing misrepresentations or omissions concerning FE’s business and results of operations.

The consolidated complaint alleges, on behalf of a proposed class of persons who purchased FE securities between February 21, 2017 and July 21, 2020, that FE and certain current or former FE officers violated Sections 10(b) and 20(a) of the Exchange Act by issuing alleged misrepresentations or omissions concerning FE’s business and results of operations.

The consolidated complaint also alleges that FE, certain current or former FE officers and directors, and a group of underwriters violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 as a result of alleged misrepresentations or omissions in connection with offerings of senior notes by FE in February and June 2020.

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On April 14, 2023, FE filed a petition in the U.S.

Court of Appeals for the Sixth Circuit seeking to appeal that order, which the Sixth Circuit granted on November 16, 2023.

Court of Appeals for the Sixth Circuit seeking to appeal that order;

the Sixth Circuit granted FE’s petition on November 16, 2023, and heard oral argument on July 17, 2024.

On November 30, 2023, FE filed a motion with the S.D.

Ohio to stay all proceedings pending the circuit court appeal.

All discovery is stayed during the pendency of the district court motion.

Ohio to stay all proceedings pending that circuit court appeal.

Discovery was stayed during the pendency of that motion to stay all proceedings and on August 20, 2024, the S.D.

Ohio denied FE’s motion and lifted the stay as to fact discovery.

On July 29, 2024, FE filed in the U.S.

Court of Appeals for the Sixth Circuit a Petition for Writ of Mandamus asking the Sixth Circuit to direct the district court to deny plaintiffs’ motion to compel disclosure of FE’s privileged internal investigation materials.

On September 11, 2024, FE filed in the U.S.

Court of Appeals for the Sixth Circuit a motion to stay discovery of the privileged internal investigation materials pending resolution of the Petition for Writ of Mandamus.

FE believes that it is probable that it will incur a loss in connection with the resolution of this lawsuit.

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FirstEnergy Corp., et al.

Ohio) on December 17, 2021 and February 21, 2022, purported stockholders of FE filed complaints against FE, certain current and former officers, and certain current and former officers of EH.

on December 17, 2021 and February 21, 2022, purported stockholders of FE filed complaints against FE, certain current and former officers, and certain current and former officers of EH.

The complaints allege that the defendants violated Sections 10(b) and 20(a) of the Exchange Act by issuing alleged misrepresentations or omissions regarding FE’s business and its results of operations, and seek the same relief as the In re FirstEnergy Corp.

Securities Litigation described above.

All discovery is stayed during the pendency of the district court motion in In re FirstEnergy Corp.

Securities Litigation described above.

FE believes that it is probable that it will incur losses in connection with the resolution of these lawsuits.

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In connection with the partial settlement, the Ohio Companies filed an application on February 1, 2021, with the PUCO to set their respective decoupling riders (Conservation Support Rider) to zero.

On February 2, 2021, the PUCO approved the application of the Ohio Companies setting the rider to zero, and no additional customer bills will include new decoupling rider charges after February 8, 2021.

On February 2, 2021, the PUCO approved the application of the Ohio Companies setting the rider to zero, and no additional customer bills included new decoupling rider charges after February 8, 2021.

On August 13, 2021, new defendants were added to the complaint, including two former officers of FirstEnergy.

On December 2, 2021, the cities and FE entered a stipulated dismissal with

prejudice of the cities’ suit.

After a stay, pending final resolution of the United States v.

On December 2, 2021, the cities and FE entered a stipulated dismissal with prejudice of the cities’ suit.

This matter was stayed through a criminal trial in United States v.

Larry Householder, et al .

criminal proceeding described above, the litigation has resumed pursuant to an order, dated March 15, 2023.

Discovery is ongoing.

On July 31, 2023, FE and other defendants filed motions to dismiss in part the OAG’s section amended complaint, which the OAG opposed.

described above, but resumed pursuant to an order, dated March 15, 2023.

On July 31, 2023, FE and other defendants filed motions to dismiss in part the OAG’s amended complaint, which the OAG opposed.

On February 16, 2024, the OAG moved to stay discovery in the case in light of the February 9, 2024, indictments against defendants in this action, which the court granted on March 14, 2024.

As described above, FE reached a settlement with the OAG of this civil action and the OOCIC investigation, which resolves this civil action.

FE recognized a loss contingency of $19.5 million in the second quarter of 2024, which was paid on August 16, 2024.

On February 9, 2022, FE, acting through the SLC, agreed to a settlement term sheet to resolve the following shareholder derivative lawsuits relating to HB 6 and the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr.

7 unchanged sentences

on July 26, 2020 and July 31, 2020, respectively, purported stockholders of FE filed shareholder derivative action lawsuits against certain current and former FE directors and officers, alleging, among other things, breaches of fiduciary duty.

On August 30, 2022, the parties filed a joint motion to dismiss the state court action, which the court granted on September 2, 2022.

Anderson, et al.

on August 7, 2020, purported stockholders of FE filed shareholder derivative actions alleging the then FE Board and officers breached their fiduciary duties and committed violations of Section 14(a) of the Exchange Act.

On August 24, 2022, the parties filed a joint motion to dismiss the action pending in the N.D.

Ohio based upon the approval of the settlement by the S.D.

Ohio, which was granted on May 17, 2024.

• Bloom, et al.

11 unchanged sentences

Ohio, all actions have been consolidated);

beginning on August 7, 2020, purported stockholders of FE filed shareholder derivative actions alleging the FE Board and officers breached their fiduciary duties and committed violations of Section 14(a) of the Exchange Act.

on September 1, 2020, purported stockholders of FE filed shareholder derivative actions alleging the then FE Board and officers breached their fiduciary duties and committed violations of Section 14(a) of the Exchange Act.

On March 11, 2022, the parties executed a stipulation and agreement of settlement, and filed a motion the same day requesting preliminary settlement approval in the S.D.

2 unchanged sentences

Subsequently, following a hearing on August 4, 2022, the S.D.

Ohio granted final approval of the settlement on August 23, 2022.

The settlement includes a series of corporate governance enhancements and a payment to FE of $180 million, to be paid by insurance after the judgment has become final, less approximately $36 million in court-ordered attorney’s fees awarded to plaintiffs.

On September 20, 2022, a purported FE stockholder filed a motion for reconsideration of the S.D.

Ohio’s final settlement approval.

The parties filed oppositions to that motion on October 11, 2022, and the S.D.

Ohio denied that motion on May 22, 2023.

On June 15, 2023, the purported FE stockholder filed an appeal in the U.S.

Court of Appeals for the Sixth Circuit.

Ohio’s final settlement approval is affirmed by the U.S.

Court of Appeals for the Sixth Circuit, the settlement agreement is expected to resolve fully these shareholder derivative lawsuits.

On June 2, 2022, the N.D.

Ohio entered an order to show cause why the court should not appoint new plaintiffs’ counsel, and thereafter, on June 10, 2022, the parties filed a joint motion to dismiss the matter without prejudice, which the N.D.

Ohio denied on July 5, 2022.

On August 15, 2022, the N.D.

Ohio issued an order stating its intention to appoint one group of applicants as new plaintiffs’ counsel, and on August 22, 2022, the N.D.

Ohio ordered that any objections to the appointment be submitted by August 26, 2022.

The parties filed their objections by that deadline, and on September 2, 2022, the applicants responded to those objections.

In the meantime, on August 25, 2022, a purported FE stockholder represented by the applicants filed a motion to intervene, attaching a proposed complaint-in-intervention purporting to assert claims that the FE Board and officers breached their fiduciary duties and committed violations of Section 14(a) of the Exchange Act as well as a claim against a third party for professional negligence and malpractice.

The parties filed oppositions to that motion to intervene on September 8, 2022, and the proposed intervenor's reply in support of his motion to intervene was filed on September 22, 2022.

On August 24, 2022, the parties filed a joint motion to dismiss the action pending in the N.D.

Ohio based upon and in light of the approval of the settlement by the S.D.

On August 30, 2022, the parties filed a joint motion to dismiss the state court action, which the court granted on September 2, 2022.

On September 29, 2023, the N.D.

Ohio issued a stay of the case pending the appeal in the U.S.

Court of Appeals for the Sixth Circuit.

In letters dated January 26, and February 22, 2021, staff of FERC's Division of Investigations notified FirstEnergy that the Division was conducting an investigation of FirstEnergy’s lobbying and governmental affairs activities concerning HB 6, and staff directed FirstEnergy to preserve and maintain all documents and information related to the same as such have been developed as part of an ongoing non-public audit being conducted by FERC's Division of Audits and Accounting.

On December 30, 2022, FERC approved a Stipulation and Consent Agreement that resolves the investigation.

The agreement includes a FirstEnergy admission of violating FERC’s “duty of candor” rule and related laws, and obligates FirstEnergy to pay a civil penalty of $3.86 million, and to submit two annual compliance monitoring reports to FERC’s Office of Enforcement regarding improvements to FirstEnergy’s compliance programs.

FE paid the civil penalty on January 4, 2023 and it will not be recovered from customers.

The first annual compliance monitoring report was submitted in December 2023.

Ohio granted final approval of the settlement on August 23, 2022, which was appealed by a purported FE stockholder on June 15, 2023.

Court of Appeals for the Sixth Circuit affirmed the district court’s final settlement approval.

All appeal options were exhausted on May 16, 2024.

The above settlement included a series of corporate governance enhancements and a payment to FE of $180 million, less approximately $36 million in court-ordered attorney’s fees awarded to plaintiffs, and a $7 million net return on deposited funds, which was received in the second quarter of 2024.

The judgment and settlement are final and, therefore, the derivative lawsuits are now fully resolved.

The outcome of any of these lawsuits, governmental investigations and audit is uncertain and could have a material adverse effect on FE’s or its subsidiaries’ reputation, business, financial condition, results of operations, liquidity, and cash flows.

7 unchanged sentences

SEGMENT INFORMATION

FE and its subsidiaries are principally involved in the transmission, distribution and generation of electricity through its reportable segments, Regulated Distribution and Regulated Transmission.

FirstEnergy evaluates segment performance based on earnings attributable to FE from continuing operations.

The Regulated Distribution segment distributes electricity through FirstEnergy’s utility operating companies, serving approximately six million customers within 65,000 square miles of Ohio, Pennsylvania, West Virginia, Maryland, New Jersey and New York, and purchases power for its POLR, SOS, SSO and default service requirements in Ohio, Pennsylvania, New Jersey, and Maryland.

This segment also controls 3,580 MWs of regulated electric generation capacity located primarily in West Virginia and Virginia.

The segment's results reflect the costs of securing and delivering electric generation from transmission facilities to customers, including the deferral and amortization of certain related costs.

The segment's revenues are derived from primarily forward-looking formula rates, pursuant to which the revenue requirement is updated annually based on a projected rate base and projected costs, which is subject to an annual true-up based on actual rate base and costs.

FirstEnergy’s reportable segments are as follows, and FirstEnergy continues to evaluate segment performance based on earnings attributable to FE from continuing operations:

• Distribution Segment, which consists of the Ohio Companies and FE PA;

• Integrated Segment, which consists of MP, PE and JCP&L;

• Stand-Alone Transmission Segment, which consists of FE's ownership in FET and KATCo.

FE and its subsidiaries are principally involved in the transmission, distribution and generation of electricity through its reportable segments:

Distribution, Integrated and Stand-Alone Transmission.

The segment reporting structure was modified to increase transparency for leadership and investors, simplify the presentation to corresponding legal entities, and align FirstEnergy’s earnings, cash flows and balance sheets at the business unit level.

accordance with GAAP, the modification to the segments in the first quarter of 2024 resulted in a transfer of goodwill between the segments based on the relative fair value of the reporting units, and as such, the segment goodwill balances do not necessarily represent the goodwill balances of the specific legal entities within the segments.

The external segment reporting is consistent with the internal financial reports used by FirstEnergy's Chair, President and Chief Executive Officer, its CODM.

FirstEnergy's CODM uses earnings attributable to FE from continuing operations to assess performance and considers budget versus actual results on a monthly basis when making decisions about allocating resources to the segments.

Disclosures for FirstEnergy's reportable operating segments for 2023 and 2022 have been reclassified to conform to the current presentation reflecting the new reportable segments.

The Distribution segment, which consists of the Ohio Companies and FE PA, distributes electricity through FirstEnergy’s electric operating companies in Ohio and Pennsylvania.

The Distribution segment serves approximately 4.3 million customers in Ohio and Pennsylvania across its distribution footprint and purchases power for its provider of last resort, SOS, standard service offer and default service requirements.

The segment’s results reflect the costs of securing and delivering electric generation to customers, including the deferral and amortization of certain costs.

The Integrated segment includes the distribution and transmission operations under JCP&L, MP and PE, as well as MP’s regulated generation operations.

The Integrated segment distributes electricity to approximately 2 million customers in New Jersey, West Virginia and Maryland across its distribution footprint;

provides transmission infrastructure in New Jersey, West Virginia, Maryland and Virginia to transmit electricity and operates 3,604 MWs of regulated net maximum generation capacity located primarily in West Virginia and Virginia.

The segment will also include MP and PE’s 50 MWs of solar generation at five sites in West Virginia once complete.

The first two solar generation sites were completed and placed in service in January and September 2024, representing 24 MWs of net maximum generating capacity.

The remaining three sites, once completed, are expected to provide 26 MWs of additional net maximum generation capacity.

The Stand-Alone Transmission segment, which consists of FE's ownership in FET and KATCo, includes transmission infrastructure owned and operated by the Transmission Companies and used to transmit electricity.

The segment’s revenues are primarily derived from forward-looking formula rates, pursuant to which the revenue requirement is updated annually based on a projected rate base and projected costs, which is subject to an annual true-up based on actual rate base and costs.

The segment’s results also reflect the net transmission expenses related to the delivery of electricity on FirstEnergy’s transmission facilities.

KATCo, which was a subsidiary of FET, became a wholly owned subsidiary of FE prior to the closing of the FET P&SA I and remains in the Regulated Transmission segment.

On February 2, 2023, FE, along with FET, entered into the FET P&SA II with Brookfield and the Brookfield Guarantors, pursuant to which FE agreed to sell to Brookfield at the closing, and Brookfield agreed to purchase from FE, an incremental 30% equity interest in FET for a purchase price of $3.5 billion.

As a result of the consummation of the transaction, Brookfield’s interest in FET will increase from 19.9% to 49.9%, while FE will retain the remaining 50.1% ownership interests of FET.

The transaction is subject to customary closing conditions, including approval from the PPUC.

In addition, pursuant to the FET P&SA II, FirstEnergy made the necessary filings with the applicable regulatory authorities for the PA Consolidation.

The FET Minority Equity Interest Sale is expected to close by the end of the first quarter of 2024.

Upon closing, FET will continue to be consolidated in FirstEnergy’s financial statements.

Corporate/Other reflects corporate support and other costs not charged or attributable to the Utilities or Transmission Companies, including FE's retained Pension and OPEB assets and liabilities of former subsidiaries, interest expense on FE’s holding company debt and other investments or businesses that do not constitute an operating segment, including FEV's investment of 33-1/3% equity ownership in Global Holding.

KATCo, which was a subsidiary of FET, became a wholly owned subsidiary of FE prior to the closing of the FET P&SA I and remains in the Stand-Alone Transmission segment.

On January 1, 2024, WP transferred certain of its Pennsylvania-based transmission assets to KATCo and prior year results in the Stand-Alone Transmission segment reflect the earnings and results of those WP transmission assets.

Corporate/Other reflects corporate support and other costs not charged or attributable to the Electric Companies or Transmission Companies, including FE’s retained pension and OPEB assets and liabilities of former subsidiaries, interest expense on FE’s holding company debt and other investments or businesses that do not constitute an operating segment, including FEV’s investment of 33-1/3% equity ownership in Global Holding.

Reconciling adjustments for the elimination of inter-segment transactions are shown separately in the following table of Segment Financial Information.

As of December 31, 2023, 67 MWs of electric generating capacity, representing AE Supply's OVEC capacity entitlement, was also included in Corporate/Other for segment reporting.

Also included in Corporate/Other for segment reporting is 67 MWs of net maximum generation capacity, representing AE Supply’s OVEC capacity entitlement.

As of December 31, 2024, Corporate/Other had approximately $ 6.1 billion of external FE holding company debt.

2024 Segment Changes

Beginning in 2024, FirstEnergy changed its reportable segments to include Distribution, which will consist of the Ohio Companies and FE PA;

Integrated, which will consist of MP, PE and JCP&L;

and Stand-Alone Transmission, which will consist of FE's ownership in FET and KATCo.

On January 1, 2024, WP transferred certain of its Pennsylvania-based transmission assets to KATCo.

Corporate/Other will reflect corporate support and other support costs not charged or attributable to the Utilities or Transmission Companies, including FE's retained Pension and OPEB assets and liabilities of former subsidiaries, interest expense on FE's holding company debt and other investments or businesses that do not constitute an operating segment, including FEV's investment of 33-1/3% equity ownership in Global Holding.

Financial information for FirstEnergy’s business segments and reconciliations to consolidated amounts is presented below:

For the Years Ended December 31,

(In millions) 2023 2022 2021

(In millions) Distribution Integrated Stand-Alone Transmission Total Reportable Segments Corporate/Other Reconciling Adjustments FirstEnergy Consolidated

For the Years Ended

December 31, 2024

External revenues $ 6,824 $ 4,871 $ 1,768 $ 13,463 $ 9 $ — $ 13,472

Regulated Distribution $ 10,810 $ 10,569 $ 9,510

Regulated Transmission 2,049 1,863 1,608

Corporate/Other 11 27 14

Reconciling Adjustments — — —

Total external revenues $ 12,870 $ 12,459 $ 11,132

Internal revenues 39 5 19 63 — ( 63 ) —

Regulated Distribution $ 228 $ 232 $ 201

Regulated Transmission 5 5 10

Corporate/Other — — —

Reconciling Adjustments ( 233 ) ( 237 ) ( 211 )

Total internal revenues $ — $ — $ —

Total revenues $ 6,863 $ 4,876 $ 1,787 $ 13,526 $ 9 $ ( 63 ) $ 13,472

Regulated Distribution $ 1,021 $ 967 $ 911

Regulated Transmission 367 335 325

Corporate/Other 4 7 3

Reconciling Adjustments 69 66 63

Total depreciation $ 1,461 $ 1,375 $ 1,302

Other operating expenses (1)

2,408 1,324 359 4,091 78 ( 10 ) 4,159

Depreciation (1)

648 521 336 1,505 76 — 1,581

Amortization (deferral) of regulatory assets, net ( 171 ) ( 66 ) 6 ( 231 ) — — ( 231 )

Regulated Distribution $ ( 256 ) $ ( 362 ) $ 260

Regulated Transmission ( 5 ) ( 3 ) 9

Corporate/Other — — —

Reconciling Adjustments — — —

Total amortization (deferral) of regulatory assets, net $ ( 261 ) $ ( 365 ) $ 269

Corporate/Other $ — $ — $ 230

Total DPA penalty $ — $ — $ 230

Equity method investment earnings

Regulated Distribution $ — $ — $ —

Regulated Transmission — — —

Corporate/Other 175 168 31

Reconciling Adjustments — — —

Total equity method investment earnings $ 175 $ 168 $ 31

Equity method investment earnings, net — — — — 58 — 58

Interest expense (1)

Regulated Distribution $ 618 $ 526 $ 522

Regulated Transmission 256 230 247

Corporate/Other 334 350 382

Reconciling Adjustments ( 84 ) ( 67 ) ( 12 )

Total interest expense $ 1,124 $ 1,039 $ 1,139

432 262 275 969 360 ( 185 ) 1,144

Income taxes (benefits) (1)

Regulated Distribution $ 167 $ 251 $ 364

Regulated Transmission 179 110 127

Corporate/Other ( 79 ) 639 ( 171 )

Reconciling Adjustments — — —

Total income taxes $ 267 $ 1,000 $ 320

For the Years Ended December 31,

(In millions) 2023 2022 2021

135 153 173 461 ( 84 ) — 377

Other expense (income) items (2)

2,787 2,147 344 5,278 59 185 5,522

Earnings (losses) attributable to FE from continuing operations 624 535 294 1,453 ( 475 ) — 978

Regulated Distribution $ 740 $ 957 $ 1,288

Regulated Transmission 514 361 408

Corporate/Other ( 131 ) ( 912 ) ( 457 )

Reconciling Adjustments — — —

Total earnings attributable to FE from continuing operations $ 1,123 $ 406 $ 1,239

Cash Flows from Investing Activities

Capital investments $ 1,130 $ 1,542 $ 1,266 $ 3,938 $ 92 $ — $ 4,030

Regulated Distribution $ 1,631 $ 1,605 $ 1,437

Regulated Transmission 1,610 1,192 958

Corporate/Other 115 51 92

Reconciling Adjustments — — —

Total capital investments $ 3,356 $ 2,848 $ 2,487

December 31, 2023

External revenues $ 6,813 $ 4,315 $ 1,731 $ 12,859 $ 11 $ — $ 12,870

Internal revenues 41 5 17 63 — ( 63 ) —

Total revenues $ 6,854 $ 4,320 $ 1,748 $ 12,922 $ 11 $ ( 63 ) $ 12,870

Other operating expenses (1)

2,129 1,156 338 3,623 ( 19 ) ( 10 ) 3,594

Depreciation (1)

620 462 304 1,386 75 — 1,461

Amortization (deferral) of regulatory assets, net ( 259 ) ( 10 ) 8 ( 261 ) — — ( 261 )

Equity method investment earnings, net — — — — 175 — 175

Interest expense (1)

390 257 245 892 340 ( 108 ) 1,124

Income taxes (benefits) (1)

147 37 146 330 ( 63 ) — 267

Other expense (income) items (2)

3,240 2,118 308 5,666 ( 37 ) 108 5,737

Earnings (losses) attributable to FE from continuing operations 587 300 399 1,286 ( 163 ) — 1,123

Cash Flows from Investing Activities

Capital investments $ 936 $ 1,212 $ 1,093 $ 3,241 $ 115 $ — $ 3,356

December 31, 2022

External revenues $ 6,386 $ 4,465 $ 1,581 $ 12,432 $ 27 $ — $ 12,459

Internal revenues 39 5 16 60 — ( 60 ) —

Total revenues $ 6,425 $ 4,470 $ 1,597 $ 12,492 $ 27 $ ( 60 ) $ 12,459

Other operating expenses (1)

2,094 1,226 428 3,748 79 ( 10 ) 3,817

Depreciation (1)

593 430 277 1,300 75 — 1,375

Amortization (deferral) of regulatory assets, net ( 241 ) ( 128 ) 4 ( 365 ) — — ( 365 )

Equity method investment earnings, net — — — — 168 — 168

Interest expense (1)

325 225 263 813 354 ( 128 ) 1,039

Income taxes (benefits) (1)

202 80 111 393 607 — 1,000

Other expense (income) items (2)

2,778 2,372 199 5,349 ( 122 ) 128 5,355

Earnings (losses) attributable to FE from continuing operations 674 265 315 1,254 ( 848 ) — 406

Cash Flows from Investing Activities

Capital investments $ 925 $ 998 $ 874 $ 2,797 $ 51 $ — $ 2,848

As of December 31, 2024

(In millions) 2023 2022

Regulated Distribution $ 32,929 $ 31,749

Regulated Transmission 15,155 13,835

Corporate/Other 683 524

Reconciling Adjustments — —

Total Assets $ 19,949 $ 18,637 $ 13,528 $ 52,114 $ 1,975 $ ( 2,045 ) $ 52,044

Regulated Distribution $ 5,004 $ 5,004

Regulated Transmission 614 614

Corporate/Other — —

Reconciling Adjustments — —

Total Goodwill (3)

DISCONTINUED OPERATIONS

On March 31, 2018, the FES Debtors announced that, in order to facilitate an orderly financial restructuring, they filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code with the Bankruptcy Court.

On February 27, 2020, the FES Debtors effectuated their plan, emerged from bankruptcy and FirstEnergy tendered the Bankruptcy Court approved settlement payments totaling $ 853 million and a $ 125 million tax sharing payment to the FES Debtors.

The settlement was conditioned on the FES Debtors confirming and effectuating a plan of reorganization acceptable to FirstEnergy.

By eliminating a significant portion of its competitive generation fleet with the deconsolidation of the FES Debtors, FirstEnergy has concluded the FES Debtors meet the criteria for discontinued operations, as this represents a significant event in management’s strategic review to exit commodity-exposed generation and transition to a fully regulated company.

As a result of the FES Debtors’ tax return deconsolidation, FirstEnergy recognized a worthless stock deduction, of approximately $ 4.9 billion, net of unrecognized tax benefits of $ 316 million, for the remaining tax basis in the stock of the FES Debtors.

Based upon completion of the IRS’s review of the 2020 federal income tax return during fourth quarter 2021, FirstEnergy recognized the full tax benefit of the worthless stock deduction of approximately $ 5.2 billion, or $ 1.1 billion on a tax-effected basis, net of valuation allowances recorded against the state tax benefit ($ 21 million), eliminating associated uncertain tax position reserves.

Upon emergence, FirstEnergy paid the FES Debtors $ 125 million to settle all reconciliations under the Intercompany Tax Allocation Agreement for 2018, 2019 and 2020 tax years, including all issues regarding nondeductible interest.

In conjunction with filing the 2020 consolidated federal income tax return during the third quarter of 2021, FirstEnergy computed a final federal NOL allocation between the FES Debtors and FirstEnergy consolidated that resulted in FirstEnergy recording an increase to the consolidated NOL carryforward of approximately $ 289 million ($ 61 million tax-effected).

Summarized Results of Discontinued Operations

Summarized results of discontinued operations for the years ended December 31, 2023, 2022, and 2021 were as follows:

For the Years Ended December 31,

(In millions) 2023 2022 2021

Other expense, net — — ( 4 )

Loss from discontinued operations, before tax — — ( 4 )

Income tax benefit — — ( 1 )

Loss from discontinued operations, net of tax — — ( 3 )

Income tax expense (benefit), including worthless stock deduction 21 — ( 47 )

Gain (loss) on disposal, net of tax ( 21 ) — 47

Income (loss) from discontinued operations (1)

$ 3,222 $ 1,953 $ 443 $ 5,618 $ — $ — $ 5,618

(1) Income from discontinued operations is included in Corporate/Other.

On February 27, 2020, the FES Debtors emerged from bankruptcy and were deconsolidated from FirstEnergy’s consolidated federal income tax group.

The bankruptcy, emergence and deconsolidation resulted in FirstEnergy recognizing certain income tax benefits and charges, which were classified as discontinued operations.

This adjustment was immaterial to the 2023 and prior period financial statements.

FirstEnergy's Consolidated Statements of Cash Flows combines cash flows from discontinued operations with cash flows from continuing operations within each cash flow category.

The following table summarizes the major classes of cash flow items from discontinued operations for the years ended December 31, 2023, 2022 and 2021:

For the Years Ended December 31,

(In millions) 2023 2022 2021

CASH FLOWS FROM OPERATING ACTIVITIES:

Income (loss) from discontinued operations $ ( 21 ) $ — $ 44

Loss (gain) on disposal, net of tax 21 — ( 47 )

As of December 31, 2023

Total Assets $ 19,235 $ 17,466 $ 12,142 $ 48,843 $ 2,372 $ ( 2,448 ) $ 48,767

Total Goodwill (3)

$ 3,222 $ 1,953 $ 443 $ 5,618 $ — $ — $ 5,618

(1) FirstEnergy considers this line to be a significant expense.

(2) Consists of Fuel, Purchased power, General taxes, Debt redemption costs, Miscellaneous income, net, Capitalized financing costs, Pension and OPEB mark-to-market adjustments, and Income attributable to noncontrolling interest.

(3) In accordance with GAAP, the modification to the segments in the first quarter of 2024, as discussed above, resulted in a transfer of goodwill between the segments based on the relative fair value of the reporting units, and as such, the segment goodwill balances do not necessarily represent the goodwill balances of the specific legal entities within the segments.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data