NYSE:FE FirstEnergy Q3 2023 Earnings Report $42.41 -0.16 (-0.38%) As of 01:51 PM Eastern This is a fair market value price provided by Polygon.io. Learn more. Earnings HistoryForecast FirstEnergy EPS ResultsActual EPS$0.88Consensus EPS $0.85Beat/MissBeat by +$0.03One Year Ago EPS$0.79FirstEnergy Revenue ResultsActual Revenue$3.50 billionExpected Revenue$3.54 billionBeat/MissMissed by -$39.32 millionYoY Revenue Growth+0.70%FirstEnergy Announcement DetailsQuarterQ3 2023Date10/27/2023TimeAfter Market ClosesConference Call DateFriday, October 27, 2023Conference Call Time9:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by FirstEnergy Q3 2023 Earnings Call TranscriptProvided by QuartrOctober 27, 2023 ShareLink copied to clipboard.There are 12 speakers on the call. Operator00:00:00Greetings, and welcome to the FirstEnergy Corp. Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Operator00:00:21It is now my pleasure to introduce your host, Irene Prezel, Vice President, Investor Relations and Communications for FirstEnergy Corp. Thank you. Ms. Frizzell, you may begin. Speaker 100:00:33Thank you. Good morning, everyone, and welcome to FirstEnergy's 3rd Quarter 2023 Earnings Review. Our President and Chief Executive Officer, Brian Tierney, We'll lead our call today and he'll be joined by John Taylor, our Senior Vice President and Chief Financial Officer. Our earnings release, presentation slides and related financial information are available on our website at firstenergycorp.com. Today's discussion will include the use of non GAAP financial measures and forward looking statements. Speaker 100:01:05Factors that could cause our results To differ materially from these statements can be found in our SEC filings. The appendix of today's presentation includes supplemental information along with the reconciliation of non GAAP financial measures. Now, it's my pleasure to turn the call over to Brian. Speaker 200:01:25Thank you, Irene, and good morning, everyone. Today, I'll discuss Q3 and year to date results, some key developments over the last few months and our outlook for the future. For the Q3, we delivered GAAP earnings of $0.74 per share versus $0.58 last year. Operating earnings for the Q3 were strong Speaker 300:01:47at $0.88 per share at the Speaker 200:01:47upper end of our guidance range and compared favorably to $0.79 per share last year. Our financial performance was a result of discipline in operating expenses as well as execution of our regulated capital investment plan to improve system resiliency and reliability. Also, as previewed on the 2nd quarter call, We realized a tax benefit in the quarter related to a state tax adjustment, which reduced our effective tax rate to 17% for the year to date period. Our service territory continued to experience very mild temperatures, impacting earnings by $0.06 per share compared to last year. In addition, quarterly results were impacted by lower pension credit and higher financing costs, primarily as a result of higher debt balances used to fund our capital investment program. Speaker 200:02:37Through strong execution by our treasury group, our consolidated long term borrowing rate remained essentially flat. For the year to date period, we reported GAAP earnings of $1.66 per share versus $1.42 per share last year. Operating earnings for the 9 month period were $1.94 per share compared to $1.91 in 2022. As you know, we have faced some headwinds in 2023 from both the impact of market conditions to our pension plan and the impact of the extremely mild temperatures on distribution sales. Our employees have risen to these challenges by focusing on the things within our control, allowing us to meet our financial commitments despite these headwinds. Speaker 200:03:24Examples include demonstrating financial discipline. Our employees were able to reduce face O and M By over $130,000,000 or 13% year over year by executing on various continuous improvement initiatives, Employees executed on our capital plan with CapEx increasing $410,000,000 year to date, mostly in transmission, which is 50% ahead of 2022 levels. Our treasury organization executed on a strategic Low cost of capital, convertible debt issuance that was used to retire high cost debt and fund our pension. John will discuss these drivers and others in more detail in just a few minutes. The key takeaway is that we've had tremendous operational and financial execution to allow us to meet our targets. Speaker 200:04:14We intend to build on this performance, continue to change our culture and improve resiliency and reliability for our customers. We are providing a 4th quarter guidance range of $0.55 to $0.65 per share, which assumes normal weather. We are also narrowing our 2023 operating earnings guidance range to $2.49 per share to $2.59 per share from our original range of $2.44 per share to $2.64 In addition, We are reaffirming our 6% to 8% targeted long term growth rate off of the original midpoint of prior year's guidance. Before I move to key developments in the quarter, I want to address a couple of other topics. First, I want to briefly address The Ohio Organized Crime Investigations Commission subpoena. Speaker 200:05:09We have no new material update at this time And we continue to cooperate with the commission and address their questions. Their focus continues to be on activities that were detailed in the deferred prosecution agreement with nothing new. FirstEnergy has taken full responsibility for those activities and implemented corrective actions to ensure that those type of activities never happen again. We will continue to cooperate with the OOCIC as we focus on executing our strategy and fulfilling our vision to transform FirstEnergy into a top performing utility. The last subject before we move on is that I believe we are uniquely well positioned for the current interest rate environment. Speaker 200:05:51We expect to close on the FET transaction early next year and to receive the full proceeds of $3,500,000,000 in 2024 with the majority funded at close. In addition, our debt maturities are light over the next couple of years, on average approximating 6% of our total debt outstanding. This positioning supports our robust capital plan. This year, we're on track for $3,700,000,000 in capital investments, up from our original plan of $3,400,000,000 In 2024 2025, our planned capital investments are 3.9 and $4,100,000,000 respectively. This brings our total capital investments over the 3 year period to approximately $12,000,000,000 This capital investment plan is comprised of 47% transmission and 51% distribution, supporting 7% rate based growth over the period and we're reviewing additional investments to serve our customers. Speaker 200:06:56Turning to slide 6, let's review some recent key developments. In September, our Board declared a quarterly dividend of $0.41 per share payable December 1. This represents a 5% increase compared to the quarterly payments of $0.39 per share Paid since March of 2020. The increase corresponds with our targeted payout ratio of 60% to 70% that was approved by the Board earlier this year. It sets the stage for future dividend growth that is aligned with our long term operating earnings growth as we continue to working as we continue working to enhance value for investors. Speaker 200:07:35During the quarter, we also achieved some important regulatory milestones that support our strategy of investing to improve reliability, resiliency and the customer experience. On October 18, the Maryland Public Service Commission approved our distribution base rate case, including a $28,000,000 revenue increase that supports equity returns of 9.5 percent and an equity ratio of 53%. We are pleased with this outcome, which support continued investments in the state and helps us deliver on our commitment to providing dependable and affordable electricity to our customers in Potomac Edison's Maryland service territory. We're also excited to move forward with the first of our 3 utility scale solar generation sites In West Virginia, totaling 30 Megawatts of capacity. Our proposal, along with the small construction surcharge, Was approved by the West Virginia Public Service Commission in August. Speaker 200:08:34We plan to seek approval from the PSC to build an additional 2 solar sites, representing another 20 megawatts once customer subscriptions reach the 85% threshold. John will address the regulatory items and discuss the progress we're making with other filings, including the Pennsylvania Consolidation Case and our rate proceedings in New Jersey, Ohio and West Virginia. We are focused on making the necessary investments in our regulated businesses, our employees and our systems to enhance the customer experience and create new opportunities from the energy transition. To execute that vision, We are shifting decision making and accountability closer to where the work is being done to serve customers. We are making progress to fill several key executive positions in an organization that will be structured to allow greater execution at the business unit level. Speaker 200:09:30In the near future, we expect to announce a President, FirstEnergy Utilities as well as a Chief Operating Officer. President, FirstEnergy Utilities will oversee 5 business unit executives who will lead our state operations and our stand alone transmission companies. In our new organization, the business unit executives will have P and L responsibility and will be accountable for regulatory direction and outcomes as well as operational performance. The Chief Operating Officer will lead the customer experience group and a range of T and D functions, including Planning, construction, system operations, safety and compliance. 5 months into my role, I'm more excited than ever about the future of FirstEnergy. Speaker 200:10:19We are building a strong foundation of operational and financial excellence. We are poised to capitalize on these opportunities to continue to grow the company and create a strong investment opportunity for investors. Thank you for joining us today. I look forward to seeing many of you at the EEI Conference next month and talking more about the progress we're making at FirstEnergy. Now, I will turn the call over to John for more financial detail. Speaker 400:10:58Thank you, Brian, and good morning, everyone. We had a strong quarter, which showcased our commitment to operational excellence and financial discipline. This work enabled us to offset the impact of Continued unseasonably mild temperatures across our service territory and deliver operating results near the top end of our guidance. In addition, we're also making good progress on our regulatory initiatives, which I'll review in more detail in a few minutes. Let's start with a review of our financial performance. Speaker 400:11:27As Brian mentioned earlier, 3rd quarter GAAP earnings were $0.74 a share and operating earnings were $0.88 a share. This compares to 2022 Q3 GAAP earnings of $0.58 a share and operating earnings of $0.79 a share. And on a year to date basis, operating earnings are $1.94 a share compared to $1.91 a share in 2022 despite significant headwinds from our pension plan and lower weather related distribution sales. Our performance in large part is due to intense focus on our operating expenses. Lower company wide O and M improved operating results by $0.08 a share in the 3rd quarter and $0.21 a share on a year to date basis, representing a 13% reduction when compared to the 1st 9 months of 2022. Speaker 400:12:18And our expectation for the full year is an O and M reduction of roughly 15% versus 2022 levels. About 50% of that is unique in nature, including spending we accelerated in 2022, with the other 50% being sustainable cost reductions that we will build upon in 2024 and beyond, primarily related to improved productivity across the entire organization, reduced use of contractors and lower spending on branding and advertising, just to name a few. We're also running ahead of plan with Capital spending in both our transmission and distribution businesses. Strong planning and execution across our operations and supply chain teams as well as the need to respond to more severe and capital intensive storm events resulted in an increase to our 2023 forecasted capital investment of nearly $300,000,000 to $3,700,000,000 from our original plan of $3,400,000,000 Looking now at the drivers For each of our business units for the Q3, results in our distribution business benefited from the diligent focus on operating expenses as well as our formula rate capital investment programs and rate structures. Together, these help to offset the impact of a lower pension credit, Higher financing costs mostly associated with new debt issuances and the impact of mild weather on distribution sales. Speaker 400:13:42Mild summer temperatures with cooling degree days 17% lower than the Q3 of 2022 and 6% below normal drove a 3% decrease And total customer demand impacted earnings by $0.06 a share compared to last year. Sales to residential customers decreased nearly 4% compared to the Q3 of 2022, resulting from a 6% decrease due to the mild summer weather, partially offset by a 2% increase on a weather adjusted Year to date weather adjusted usage in this customer class is about 2% higher than our forecast and last year and about 5% higher than 2019 pre pandemic levels. In the commercial sector, demand decreased just over 1%, resulting from a 2% decline in the mild temperatures, but increased over 1% quarter over quarter on a weather adjusted basis. Year to date weather adjusted usage is flat to last year and continues to lag pre pandemic levels by about 5%. Finally, sales to industrial customers were flat compared to the Q3 year to date periods of 2022 and remain slightly lower than pre pandemic levels. Speaker 400:14:53Looking at our transmission business, 3rd quarter results increased as a result of rate based growth of 8% Associated with our Energizing the Future investment program. So far this year, we deployed $1,200,000,000 of capital in our transmission business, An increase of $400,000,000 or 50 percent versus last year and nearly $200,000,000 or approximately 20% above our plan. Highlighting Speaker 500:15:17just a Speaker 400:15:17few of the many projects currently underway. In Northeast Pennsylvania, we're rebuilding a 20 mile 115 kV transmission line to enhance service reliability and improve system resiliency. In Ohio, we're rebuilding a 20 mile section of a 138 kV power line in Belmont and Harrison Counties, which is in the 3rd phase of a larger 64 mile project to enhance service reliability, And in West Virginia, we're upgrading 4 miles of a high voltage transmission power line in Preston to reinforce local transmission system against severe weather, meet future energy demands of the region and enhance service reliability for 5,000 customers In the Kingwood area. For the full year, we now anticipate transmission formula rate investments of over $1,800,000,000 versus our original plan of just under $1,700,000,000 In our Corporate segment, our results for the Q3 largely reflect the tax benefit From the expected use of state net operating loss carryforwards, which we discussed on the Q2 call that reduced our consolidated effective tax rate for the year. As Brian mentioned, throughout 2023, our consistent operational and financial execution, including growth from our investment plan, Significant cost control and other financing and tax benefits has more than offset the headwinds from pension And the impact of lower weather related distribution sales, which for the 1st 9 months of this year impacted results by $0.18 per share versus normal. Speaker 400:16:54I'm proud of how all of our employees have addressed these challenges and supported our commitments. While 2023 is not over, Our 2023 debt financing plan is now complete with 6 long term debt transactions at our regulated operating companies totaling $1,600,000,000 with an average coupon of 5.41 percent, slightly below our plan of 5.5%. Also earlier this year, $1,500,000,000 of convertible debt with a coupon of 4% that allowed the company to refinance revolver borrowings costing more than 7% and to make a voluntary pension contribution to eliminate minimum funding requirements in 2025. Additionally, earlier this month, we extended the maturity date on our $4,500,000,000 revolving credit facilities to October 2027 And added 2 new revolving credit facilities, including a $1,000,000,000 facility at FET LLC and $150,000,000 facility at CATCo. Moving forward, we will have $5,650,000,000 of credit facilities to support our increasing capital programs. Speaker 400:18:02As we look to 2024 2025, our debt financing plan is minimal since the majority of the FET asset sale proceeds Will be received at closing, with the remainder anticipated before the end of 2024. We plan to use these proceeds to repay costly revolver borrowings and depending on the interest rate environment will be used to redeem high coupon holdco debt such as the 7.38% notes, of which $460,000,000 remain outstanding, retire maturing utility debt and or defer other utility debt issuances. The funding from the FET transaction, our light debt maturity schedule, plus the decision we made to issue the low cost convertible debt provides significant flexibility with our utility debt financing plan, which other than refinancings and new money requirements at our stand alone transmission companies, Could be as low as $2,100,000,000 over the next 2 years. And as for FE Corp's HoldCo debt, we only have $300,000,000 that matures in 20 All that said, we're uniquely well positioned for the current interest rate environment with minimal earnings sensitivity to interest rate increases over the next couple of years. Now let's turn to an update on our rate proceedings and other regulatory activity. Speaker 400:19:20As we've discussed, we filed 3 base rate cases earlier this year, representing more than $7,000,000,000 of rate base. As Brian said, last week, we received an order in the Maryland base rate case that aligns with our goals to continue meeting the energy demands of Potomac Edison's rapidly growing population. The order authorized an equity capitalization ratio of 53% with an equity return of 9.5%, Recovery of regulatory assets associated with both COVID and electric vehicle infrastructure, while also providing support to help our strategy of strong reliability and resiliency in support of the energy transition. The new rates went into effect October 19. We're also happy with the progress on New Jersey and West Virginia base rate cases. Speaker 400:20:06In New Jersey, we've entered into settlement discussions on our proposed revenue increase of $192,000,000 And in West Virginia, a hearing is set for late January in our $207,000,000 base rate case with new rates expected to be effective in March of next year. Other recent regulatory updates include, in Pennsylvania, FERC approved our application to consolidate our 4 Pennsylvania distribution utilities In August, the parties to the case filed a settlement agreement with the Pennsylvania Public Utility Commission on August 30. The settlement includes $650,000 in bill assistance for income eligible customers over 5 years, supports unification of rates over time and includes a tracking mechanism to share certain cost savings associated with the legal entity consolidation with customers. With the ALJ's recommended approval of the settlement, which is pending final regulatory approval, we expect the consolidation to close by early 2024. This consolidation aligns with our state operating model and is an important step to simplify our legal entity structure and increase the flexibility and In Ohio, hearings for our Grid Mod II filing are scheduled to begin in December. Speaker 400:21:21This 4 year $626,000,000 capital investment plan will support our continued work delivering safe reliable power, offering modern customer experiences and And in November, hearings are scheduled to begin on our 5th Ohio Electric Security Plan, which supports our generation procurement process for non shopping customers as well as investments in the distribution system, storm and vegetation management writers and energy efficiency programs. Our proposal also supports low income customers and electric vehicle incentives. We have requested approval for the new ESP effective June 1st next year. In West Virginia, we reached a unanimous settlement on our depreciation case With an agreed upon $33,000,000 increase in depreciation rates, those rates will be effective upon conclusion of the West Virginia base rate case. And as Brian discussed, we received approval from the West Virginia Public Service Commission in August to move forward with construction Of the first three utility scale solar generation sites in the state, we expect the first site to be in service by the end of this year And all five sites to be completed before the end of 2025 at a total investment cost of approximately $110,000,000 Just as a reminder, summaries of our key filings together with news releases and links to dockets are all available on the Regulatory Corner section of our Investor Relations website. Speaker 400:22:49Looking ahead, we plan to file our New Jersey infrastructure investment program in the next few weeks. And as you know, we are preparing for an active regulatory calendar in 2024. The performance of our team has been second to none By focusing on what we can control and a commitment to continuous improvement, we've delivered outstanding operational and financial performance. We've overcome the impact of historic unseasonable weather and other challenges to deliver solid results through the 1st 9 months of this year. We're on track to meet our financial commitments and we're building a strong foundation for continued growth. Speaker 400:23:27Thank you for your time today. Now let's open the call to your questions. Speaker 200:23:31Hey, John, real quick before we go to Q and A, I'd like to share some late breaking news from last night. Yesterday evening, PJM released the results of its open window process to address reliability concerns with data center load growth in the Dominion and APS service territories. Based on our preliminary review of these results, we are on track to gain a substantial portion of the projects. The recommendations still need to move through TEAC The PJM Board, but we anticipate that happening by year end. While these projects won't come to fruition until the latter half of the decade, we're really excited about this opportunity. Speaker 200:24:07It builds on our successful bid for the onshore transmission construction that supports New Jersey's offshore wind project And it further highlights the significant transmission build out we anticipate in our footprint to support the energy transition. We look forward to talking more about this opportunity at EEI once we've had a chance to fully understand the details. Now let's move to your questions. Operator00:24:30Thank you. We'll now be conducting our question and answer A confirmation tone will indicate your line is in the question Our first question comes from the line of Shar Pourreza Speaker 600:25:05Let me just on the regulatory side, obviously, we're going to be approaching the Ohio case next May. I just I guess, I want to Speaker 700:25:12get a little bit of Speaker 600:25:13a sense Now you're thinking about the bill impact given this environment. Could this case still end up being sort of bill neutral? And just remind us on what sort of the key driver of that case is on the invested capital side, rate base, deferred cost, ONM true ups, I guess any sort of experiences from the ESP proceeding that could dictate how you manage the GRC? Thanks. Speaker 200:25:36Yes. Thank you for the question, Shar. You're really forward looking. So we're still in the midst of the ESP V discussions And the Grid Mod 2. So we're in the throes of that engaging with staff and interveners and trying to come to successful conclusions there. Speaker 200:25:52But as you all the things you mentioned are what we're going to be doing in the base rate case next year. It's going to be taking things out of The trackers and riders that we have, we're getting them put in the base rates, updating fully our rate base, our prudently incurred costs, Storm, tree trimming, regular O and M financing costs, all that, getting that in base rates, and then moving forward with some healthy trackers We'll have at that point. There's nothing that's going to be controversial in that case. It's a traditional rate case. Nothing special about it, but all the things that you'd expect a regulated utility to be doing. Speaker 200:26:34We found over time that the Ohio Commission Has been very supportive of wire's investments and we're poised to continue making those and look forward to investing in the State of Ohio. A couple of things that we're going to be cognizant of in that case. One is where we're earning right now relative to what we think A normal authorized return should be. We're well below 9.5% to 10.5% return on equity and we need to get that Increased and our rates today are about 14% below our in state peers. So To be honest with you, Shar, it's too early for us to know what the bill impact is going to be, but we're always looking for ways to minimize the bill impact to customers. Speaker 600:27:24Got it. Perfect. And then lastly for me, just on the O and M side and just pension, dollars 0.31 of benefit is Sort of very material year over year. I guess, how much should we assume with this benefit as tactical, so really short term in nature versus How much of it is maybe more perpetual, so if you can put a multiple on it and assume that benefit carries into 2025 and beyond? And then any sense on the pension performance year to date? Speaker 600:27:51Thanks guys. I appreciate it. Speaker 400:27:54Hey, Shar, this is John. Thanks for the question. So, Yes. If you look at our O and M performance year over year, about a 15% Reduction from what we incurred in 2022, which is about $200,000,000 a little bit more than that. I would tell you about 50% of that is associated with timing of work that we accelerated from 2023 into 2022 and some unique items, but the other 50% is sustainable savings associated with just Productivity improvements, getting contractors off the property, doing the work ourselves, we had some benefits associated with Contract terminations associated with sponsorships and branding relationships that we had and just a Real intense focus on just general business items that we spend. Speaker 400:28:48So I would say about half of it is kind of unique. I would say the other half of it is sustainable savings that we'll build upon as we go into next year. With respect to the pension, the pension performance year to date is about flat. So that is something that we have our eye on. A lot of that is associated with the interest rate environment, but we're taking that into account as Speaker 600:29:19Perfect. I appreciate it, guys. That's all I had. And Brian, good luck with the search for the COO and President. Appreciate it. Speaker 200:29:26Thank you, Shahriar. Operator00:29:29Thank you. Our next question comes from the line of Jeremy Tonet with JPMorgan. Please proceed with your question. Speaker 500:29:36Hi, good morning. Speaker 200:29:37Good morning, Jeremy. Speaker 500:29:40Just wanted to touch base, I guess, on the financing plans a bit here. Given your CapEx refresh, could you clarify, I guess, what's in the financing needs at this point? It looks like There was prior language last quarter about no equity needs except for $100,000,000 SIP or DRIP and didn't see that messaging in this deck. And just wondering If anything has changed there, what we should expect on that front? Speaker 400:30:06Yes. That's still the case. I mean, Jeremy, if you think about where we are Relative to our cash flow metrics and our projections, if you think about 14% to 15% FFO to debt, you think about $3,500,000,000 of proceeds coming in next year from the FET sale, That has significant impact on our financing plan in a meaningful way. And so we have a lot of financial flexibility In the plan and so no new equity requirements fully supports the CapEx plans that we have in place Plus the ability to do some balance sheet improvement initiatives to take out additional holding company debt. So no issues there. Speaker 500:30:56Got it. That's helpful there. And then continuing along on the CapEx front, just want to kind of run through some of the numbers by Had it straight here, but looking at the 2023 to 2025 plan, the $12,000,000,000 how that compares to the $18,000,000,000 in the 20 21 25 plan. I think you might have spent 2.4 in 2021, 2.75 in 2022. And it looks like your Prior plan might imply 12.8 CapEx for 2023 to 25. Speaker 500:31:25And so the Currently, an $800,000,000 less. Just want to know if I had those numbers right or if there were other moving pieces here I should be thinking about or CapEx was decreased to any of the different subs? Speaker 400:31:39CapEx hasn't been decreased. I mean, if you look at where we're going to spend this year, it's $3,700,000,000 And then in 2024 and 2025, it's going to be 3.9 and 4.1 respectively. So no change In the 2024 and 2025 capital plans from what we introduced back in February of this year, And in fact, we increased the capital plan in 'twenty three by $300,000,000 Speaker 500:32:06Got it. That's helpful. Thanks. Just the last one, if I could. I think you talked about incremental business disclosures that could be Coming forward here, just wondering if you might be able to offer any incremental thoughts with regards to what type of information we could see there? Speaker 200:32:25Yes. So I think what we're going to plan on doing is looking at our segment reporting For 2024 and going forward and making it a little simpler and more transparent for The Street and quite frankly for us, It will reflect how we're going to manage the business going forward. So we're probably going to move to segments that is Distribution, 1, transmission, another and integrated, another. And that will allow us to not have to split companies between the segments. And it will require us to not have to do reconciliations for analysts that cover us investors that are interested in us. Speaker 200:33:05And it just makes The presentation of our results simpler and more in line with how we manage the business. Speaker 500:33:12Got it. That's very helpful. I'll leave it there. Thanks. Speaker 200:33:15Perfect. Thank Operator00:33:17you. Thank you. Our next question comes from the line of Nick Campanella with Barclays. Please proceed with your question. Speaker 800:33:26Hey, good morning, everyone. Happy Friday. Thanks for taking my question. So I guess thanks for previewing the PJM transmission opportunity. As we kind of think about rolling that into our models, is this opportunity in the 100 of 1,000,000 of dollars? Speaker 800:33:41And I think you said back half of the plan or Any idea that how to size it at this point? Speaker 200:33:47We're still working through that, Nick. We just got the news last night. We do believe it will be in the 100 of 1,000,000 of dollars range, which side $500,000,000 we're still trying to figure out today, but really it's late breaking news for us. We have our engineers working on it today. We hope to be able to provide more detail on that Eddie, EI. Speaker 800:34:11Great. And then I guess just the cadence of updates from here because I know that there's a lot of moving pieces with The COO, Serge, to your point, some of the resegmenting and everything, should we still expect fiscal 'twenty four guidance on the Q4? And then how do you think about financing, CapEx, etcetera? Yes. We will provide that CapEx, etcetera. Speaker 200:34:29Yes. We will provide that guidance on the Q4 call. And look, there's going to be some Late breaking news. I'm trying to forecast what it is that we're going to be what the news is going to be, so nobody's surprised. And of course, we're going to be updating you as that news comes in and becomes available. Speaker 200:34:49But I don't want people to be surprised by the positions that we're looking for, How we're going to manage the company going forward, how we're going to report going forward, and that's really why we're forecasting all that and then we'll update it as the news becomes Reality, but we anticipate doing all that here over the next several months. Speaker 700:35:09Okay, thanks. And if I Speaker 800:35:10could just squeeze one more in, just I know that we'll get 2024 guidance in Q4, but There were just some more one time items in the fiscal 2023 walk. I acknowledge you kind of brought up the pension headwinds in prepared remarks. How do you kind of think about the offsets to those future headwinds like pension, the tax item, etcetera? I know we get a better comp on weather next But any guidance you could give would be helpful. Speaker 400:35:39So Nick, this is John. So I guess the way I'm thinking about this year, If you think about where we are with the pension, if you just look at the year over year weather impacts And you look at what the company has done to offset that in terms of rates and investments, taking advantage of opportunities In the capital markets with low cost convertible debt and how we deploy that proceeds, if you just look at the tight Cost controls that we put in place year over year, I think that overshadows the benefits associated with The income tax. And so as you think about next year and beyond, it's right you're right. We're going to get a benefit from going back To normal weather, we have the rate cases that we have in flight. We have the capital programs associated with our distribution companies that are in a formula As well as our transmission formula rate CapEx. Speaker 400:36:45And so if you think about where the returns are for the 3 rate cases that we filed this year And if you look at where the returns are for the cases that we'll file next year, I think you can do the math in terms of what's going to carry the day for the earnings of the company. Speaker 500:37:02Thank you. Speaker 200:37:04Thanks, Nick. Operator00:37:07Thank you. Our next question comes from the line of David Ocara with Morgan Stanley, please proceed with your question. Speaker 700:37:14Hey, good morning. Thanks so much Speaker 900:37:15for taking my question. Speaker 1000:37:17Good morning, David. Speaker 900:37:20I was wondering if you could maybe give the latest on the status of the New Jersey rate case, current thoughts on the settlement potential and Maybe specifically on the pension normalization mechanism, how optimistic you are in that coming through? Speaker 200:37:35So we're as you know, they've stayed the schedule for now to allow settlement discussions To continue and we're working all of those things that you just mentioned are still in play and we're still working, engaging with Staff, intervenors, others to try and bring a successful conclusion to that case and without having to take it through adjudication. Speaker 900:38:02Okay. Sounds good. And then also curious if you could give the latest feedback from rating agencies on Prospects going forward to achieve investment grade ratings at the parent and how the FFO to debt outlook Sitting right now as you're heading into 2024 as well. Speaker 400:38:22Yes. I think we continue to have dialogue with the rating agencies. Those have been constructive conversations. They have our projections. It clearly shows that we're going to be in that 14% to 15 I will say that we've kind of taken a little bit of a step back this year In terms of our performance in the metrics and a lot of that is because of the unseasonable weather, the fact that we made a voluntary pension contribution. Speaker 400:38:53We've we had some one off items associated with severance, associated with the voluntary retirement program. So if you kind of take those out of the mix, I mean, we're back closer to that 11% range. But clearly, With the rate cases that we have in flight, which we risk adjusted in terms of what we're going to get, the fact that we're going to get now 100% of the FET proceeds in 2024, whereas before it was going to be about 50% Next year 50% in 2025, so we'll have an opportunity to deploy all that. It clearly shows that we'll be in the 14% to 15% range next Speaker 900:39:37year. Okay. Excellent. I appreciate that color. Thanks so much. Speaker 200:39:42Thank you, David. Operator00:39:45Thank you. Our next question comes from the line of Angie Storozynski with Seaport Global. Please proceed with your question. Speaker 1100:39:53Thank you. Just following up on that FFO to that question. So I'm looking at your financials. I mean, the FFO looks 60 week, right, for the 1st 9 months. And I hear the explanation of why that is. Speaker 1100:40:09But I thought that we are waiting for some improvement, not even to hit that 14% to 15%, but just some improvement in the FFO to that To warrant any upgrades and it doesn't seem like it will happen this year. Is that fair to say that the trailing 12 months doesn't seem to have Speaker 400:40:32Yes. Like I said, I think the trailing 12 months and where we are this year, we have taken a little bit Of a step back, some of that was planned because we wanted to make the voluntary pension contribution. Some of it Was associated with non recurring items such as the severance that I mentioned, that's really going to have about a 1 year payback if you think about it. So that will improve the metrics next year. And you can't discount the impact of weather in it, what's that done to cash flow, right, in terms of The lower weather related sales. Speaker 400:41:07So, I understand your question, but we're very confident in the plan. We're very confident in the metrics that we've provided to the rating agencies, and we'll see where we get to. Speaker 1100:41:24Okay. And my bigger question here, and I know that this is what we're all sort of debating is that You obviously have this bullish EPS and now dividend growth plan. It's pretty much contingent on the outcome of the distribution case in Ohio, and we won't know that what happens there until Probably very late 2025. So, how do we get comfortable with that validation of your growth profile between now and Speaker 200:41:57I just so, I don't think we're all debating that at all. I just disagree with that. The things that you look And how we hit our growth rate or how we perform in the rate cases that are before us. And you're going to have signpost To that, long before the end of 'twenty five, we have the Ohio ESP, Grid Mod 2. We have the New Jersey case, the West Virginia case. Speaker 200:42:23And if we're performing well on those, I think you'll be able to see you'll be able to get an indication that we're being successful in prosecuting rate cases, Engaging with staffs and interveners and come to positive outcomes. So no need to wait until the end of 2025. Speaker 1100:42:41And then just lastly on the tax benefit, very big tax benefits. And I understand that you're trying to address The weather impact, I mean, lots of headwinds actually this year, but you're also flexing the O and M lever. I mean, did you expect To have this tax benefit this year, again, and is it cash related? Speaker 400:43:08So at the beginning of the year, we did not anticipate the effective tax rate being at that 17%, 18%. We anticipated it being probably in that 19% to 19.5% range. So some of the benefit that we achieved this year was not planned, but something that came up mid year And that the team executed on. I would tell you long term, long term though Angie, If you think about our blended effective tax rate, it's probably going to be 17%, 18% this year. But longer term, it will be a more normal tax rate in that 20% to 21% range. Speaker 1100:43:54And that's already reflected in your growth plan? Speaker 400:43:57Correct. Speaker 1100:43:58Along with those additional costs that will come with basically those additional Managers that you're hiring for the utilities and the COO, right, all of this is reflected in your EPS growth plan? Speaker 200:44:14It's all in there, Angie. Operator00:44:17Thank you. Speaker 200:44:18Thank you. Operator00:44:21Thank you. Our next question comes from the line of Jeremy Tonet with JPMorgan. Please proceed with your question. Speaker 500:44:28Hi, good morning. Thanks for squeezing me back in here. Just wanted to kind of clarify, I guess, the cadence of updates of what we should be expecting for Updates on 4Q are for EEI. Just wondering when 2024, I guess, future As far as long term plan revisions might be, if that's a 4Q event, just want to kind of clarify some of the prior comments there. Speaker 200:44:55Yes. We're going to provide an update on the Q4 earnings call. So we'll do specific guidance for 2024 And we'll also update the capital plan at that time. Speaker 500:45:08Got it. And this could include everything EPS long term EPS CAGR as well or Those two items are really the focus. Speaker 200:45:16Yes. We're there's going to be no change in the long term EPS CAGR. Speaker 500:45:21Got it. Great. Very helpful. I'll leave it there. Thank you. Speaker 200:45:24Thanks, Jeremy. Operator00:45:27Thank you. Our next question comes from the line Anthony Crowdell with Mizuho Securities. Please proceed with your question. Speaker 700:45:35Hey, good morning. Just hopefully, two quick questions on one on Slide 25. And I'm not trying to run your rate case decisions in the jurisdictions, but when you kind of think that We could see like normalized earnings coming from the utilities or maybe worded a different way. Do you guys have a target Of what you think you could earn across the OpCos? Speaker 200:46:00Yes. I think we can be earning in that 9.5% to low 10% range in terms of ROEs. And so if you look at this, that's a significant component of our earnings growth is Going back and having these rate cases, updating our rate base, getting ROEs higher, getting Current costs reflected in rates and adjusting what you can see is Lower than normal earned ROEs on that slide. Speaker 700:46:37I guess you've answered my sorry. Speaker 200:46:40No. It's the normal stuff that utilities do, Anthony. It's just the normal work pale that you expect us to do. We invest for the benefit of our customers. We then operate. Speaker 200:46:54We then recover and finance. And that's what we'll be doing. This part of the presentation is the recover where we go back in to get our hard work reflected in current rates. Speaker 700:47:08Okay. I think that actually answers my second question of, I think earlier in one of the slides, I apologize, I forgot the number. You guys give us our Appreciate the detail. Rate based growth of about 7%. And to Jeremy's question earlier about the long term growth rate of earnings growth rate of 6% to 8%, I guess I was curious if you think there's going to be any lag or spread between the rate base growth and the earnings growth, but it seems that they are aligned because of this improvement in ROE. Speaker 700:47:35Am I thinking of that correctly? Speaker 200:47:36Yes. So we're getting ahead of this now, right? We have very active rate cases to get What you reflected on slide 25, up to more normal levels. And as we do that, we'll have Some growth associated with that. And then going forward, we said rate base growth for 2024, 2025 was going to be about 7% And we're looking to add to that as we go forward. Speaker 200:48:00So a combination of continued investment, growth in rate base, rate cases for the foreseeable future and continuing to invest for the benefit of our customers. All of that will put us in that 6% to 8% long term growth rate. Speaker 700:48:16Great. Thanks so much for taking my question and looking forward to seeing the DEI. Speaker 200:48:20Thanks, Anthony. We are too. Operator00:48:24Thank you. Our next question comes from the line of Greg Oro with UBS. Please proceed with your question. Speaker 1000:48:31Hi, Brian. Hi, John. Hi, Greg. Speaker 400:48:35Just, Speaker 1000:48:37Brian, where do you Stan, in terms of the key management hires that you're looking to do, I know you announced 2 of them already. Are there more To come there? And then just secondly, how are you thinking about moving beyond the So the legacy investigations that remain and Do you see concerns with that at this point? Thank you. Speaker 200:49:09Thank you, Greg. Appreciate that. In terms of the key hires, I'm spending and our Senior executive team here is spending a significant amount of our time recruiting. I feel some of this we need to do sequentially. I need to get a COO in place, President of FE Utilities in place, and I'd like those people to help us recruit then The people who are going to be reporting to the President of FE Utilities and they'll be the 5 people running our major businesses. Speaker 200:49:39So Sort of and by the way, we're not waiting to interview a candidate pool for those 5 people. We're proceeding ahead on that as well. So, Sequentially, trying to get the COO, President of FE Utilities, then next, the people to run our 5 businesses, and get those people seated as quickly as possible. But moving very much forward on that, it's active. We're trying to Get this done as quickly as possible, but at the same time making sure that we're getting the right people in the place who will Bring the right skills to bear for the things that we're trying to do. Speaker 200:50:15And we have a very strong candidate pool, for all of those positions that we're recruiting for. So I'm confident we'll get success. The timing of it is going to be here in the I'd say in the near term and hope to be able to make those announcements shortly. In terms of putting the past behind us, a lot of that heavy lifting had been done by the Board and the management team Before I got here, there's active engagement with the OOCIC. We're providing our updates Per the DPA with the Department of Justice and then for the remaining litigation that's out there, we're Moving forward with that, trying to settle what we can, but put that past behind us and strongly focused on the future. Speaker 200:51:06And I don't anticipate any unexpected hiccups there. Speaker 1000:51:13Okay. Good luck. Thanks. Speaker 200:51:15Thanks, Greg. Operator00:51:18Thank you. Our next question comes from the line of Steve Fleishman with Wolfe Research. Please proceed with your question. Speaker 300:51:25Yes. Hi, good morning. Speaker 600:51:27Good morning, Speaker 300:51:28Steve. Good morning. The Cases in Ohio, the grid mod and the ESP filing, can you just talk to the schedule there coming up? And I know Some of the other utilities have actually been able have been able to settle ESPs and the like. Is that possible for you? Speaker 200:51:51Yes. So we're in the midst of ESP 5 right now. That case is in flight. We've seen intervenors testimony. I think Staff testimony comes out on Monday. Speaker 200:52:04But as you would expect us to do, we are actively engaged In settlement discussions in those cases, trying to positively engage people like the staff and the other interveners and hopeful That we'll be able to come to a settlement similar to what the other companies have settled at. I don't see any reason to think that we won't be able to do that. Speaker 300:52:28And then on the grid mod, would that be kind of part of the same thing or separate? Speaker 200:52:34Same thing, Slightly behind where we are in ESP V, but as soon as we get through the ESP, we'll get to grid mod and hope to be able to settle that as well. There's nothing, Steve, that's controversial in these. It's normal course of business Trying to update the rate base and costs that are reflected in those riders and then hopefully leave those in place until we get to the May 24 rate case and then try to get those cleared out and get them reflected in base rates. Speaker 600:53:12Got it. Speaker 300:53:12Okay. Thank you. Speaker 1000:53:14Thanks, Steve. Operator00:53:18Thank you. Ladies and gentlemen, this concludes our question and answer session and concludes our call today. A replay of the call will be available on FirstEnergy's Investor Relations Web Thank you for your participation. You may now disconnect your lines.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallFirstEnergy Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) FirstEnergy Earnings HeadlinesJCP&L's EnergizeNJ Infrastructure Upgrade Program Approved by New Jersey Board of Public UtilitiesApril 24 at 1:00 PM | prnewswire.comFirstEnergy Corp. 2025 Q1 - Results - Earnings Call PresentationApril 24 at 10:27 AM | seekingalpha.comSilicon Valley Gold RushA new technology has sparked a modern-day gold rush in Silicon Valley. OpenAI’s Sam Altman invested $375M. Bill Gates has backed four companies in this space. The World Economic Forum calls it “the most exciting human discovery since fire.” Whitney Tilson believes this trend could mint a new class of wealthy investors—and he’s sharing one stock to watch now, for free.April 24, 2025 | Stansberry Research (Ad)FirstEnergy price target raised to $47 from $46 at Morgan StanleyApril 24 at 5:12 AM | markets.businessinsider.comFirstEnergy upgraded to Neutral from Underperform at BofAApril 24 at 12:11 AM | markets.businessinsider.comFirstEnergy upgraded to Neutral at BofA with Ohio risk priced inApril 24 at 12:11 AM | markets.businessinsider.comSee More FirstEnergy Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like FirstEnergy? Sign up for Earnings360's daily newsletter to receive timely earnings updates on FirstEnergy and other key companies, straight to your email. Email Address About FirstEnergyFirstEnergy (NYSE:FE), through its subsidiaries, generates, transmits, and distributes electricity in the United States. It operates through Regulated Distribution and Regulated Transmission segments. The company owns and operates coal-fired, nuclear, hydroelectric, wind, and solar power generating facilities. It operates 24,080 circuit miles of overhead and underground transmission lines; and electric distribution systems, including 274,518 miles of overhead pole line and underground conduit carrying primary, secondary, and street lighting circuits. The company serves approximately 6 million customers in Ohio, Pennsylvania, West Virginia, Maryland, New Jersey, and New York. FirstEnergy Corp. was incorporated in 1996 and is headquartered in Akron, Ohio.View FirstEnergy ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step InWhy It May Be Time to Buy CrowdStrike Stock Heading Into EarningsCan IBM’s Q1 Earnings Spark a Breakout for the Stock? 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There are 12 speakers on the call. Operator00:00:00Greetings, and welcome to the FirstEnergy Corp. Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Operator00:00:21It is now my pleasure to introduce your host, Irene Prezel, Vice President, Investor Relations and Communications for FirstEnergy Corp. Thank you. Ms. Frizzell, you may begin. Speaker 100:00:33Thank you. Good morning, everyone, and welcome to FirstEnergy's 3rd Quarter 2023 Earnings Review. Our President and Chief Executive Officer, Brian Tierney, We'll lead our call today and he'll be joined by John Taylor, our Senior Vice President and Chief Financial Officer. Our earnings release, presentation slides and related financial information are available on our website at firstenergycorp.com. Today's discussion will include the use of non GAAP financial measures and forward looking statements. Speaker 100:01:05Factors that could cause our results To differ materially from these statements can be found in our SEC filings. The appendix of today's presentation includes supplemental information along with the reconciliation of non GAAP financial measures. Now, it's my pleasure to turn the call over to Brian. Speaker 200:01:25Thank you, Irene, and good morning, everyone. Today, I'll discuss Q3 and year to date results, some key developments over the last few months and our outlook for the future. For the Q3, we delivered GAAP earnings of $0.74 per share versus $0.58 last year. Operating earnings for the Q3 were strong Speaker 300:01:47at $0.88 per share at the Speaker 200:01:47upper end of our guidance range and compared favorably to $0.79 per share last year. Our financial performance was a result of discipline in operating expenses as well as execution of our regulated capital investment plan to improve system resiliency and reliability. Also, as previewed on the 2nd quarter call, We realized a tax benefit in the quarter related to a state tax adjustment, which reduced our effective tax rate to 17% for the year to date period. Our service territory continued to experience very mild temperatures, impacting earnings by $0.06 per share compared to last year. In addition, quarterly results were impacted by lower pension credit and higher financing costs, primarily as a result of higher debt balances used to fund our capital investment program. Speaker 200:02:37Through strong execution by our treasury group, our consolidated long term borrowing rate remained essentially flat. For the year to date period, we reported GAAP earnings of $1.66 per share versus $1.42 per share last year. Operating earnings for the 9 month period were $1.94 per share compared to $1.91 in 2022. As you know, we have faced some headwinds in 2023 from both the impact of market conditions to our pension plan and the impact of the extremely mild temperatures on distribution sales. Our employees have risen to these challenges by focusing on the things within our control, allowing us to meet our financial commitments despite these headwinds. Speaker 200:03:24Examples include demonstrating financial discipline. Our employees were able to reduce face O and M By over $130,000,000 or 13% year over year by executing on various continuous improvement initiatives, Employees executed on our capital plan with CapEx increasing $410,000,000 year to date, mostly in transmission, which is 50% ahead of 2022 levels. Our treasury organization executed on a strategic Low cost of capital, convertible debt issuance that was used to retire high cost debt and fund our pension. John will discuss these drivers and others in more detail in just a few minutes. The key takeaway is that we've had tremendous operational and financial execution to allow us to meet our targets. Speaker 200:04:14We intend to build on this performance, continue to change our culture and improve resiliency and reliability for our customers. We are providing a 4th quarter guidance range of $0.55 to $0.65 per share, which assumes normal weather. We are also narrowing our 2023 operating earnings guidance range to $2.49 per share to $2.59 per share from our original range of $2.44 per share to $2.64 In addition, We are reaffirming our 6% to 8% targeted long term growth rate off of the original midpoint of prior year's guidance. Before I move to key developments in the quarter, I want to address a couple of other topics. First, I want to briefly address The Ohio Organized Crime Investigations Commission subpoena. Speaker 200:05:09We have no new material update at this time And we continue to cooperate with the commission and address their questions. Their focus continues to be on activities that were detailed in the deferred prosecution agreement with nothing new. FirstEnergy has taken full responsibility for those activities and implemented corrective actions to ensure that those type of activities never happen again. We will continue to cooperate with the OOCIC as we focus on executing our strategy and fulfilling our vision to transform FirstEnergy into a top performing utility. The last subject before we move on is that I believe we are uniquely well positioned for the current interest rate environment. Speaker 200:05:51We expect to close on the FET transaction early next year and to receive the full proceeds of $3,500,000,000 in 2024 with the majority funded at close. In addition, our debt maturities are light over the next couple of years, on average approximating 6% of our total debt outstanding. This positioning supports our robust capital plan. This year, we're on track for $3,700,000,000 in capital investments, up from our original plan of $3,400,000,000 In 2024 2025, our planned capital investments are 3.9 and $4,100,000,000 respectively. This brings our total capital investments over the 3 year period to approximately $12,000,000,000 This capital investment plan is comprised of 47% transmission and 51% distribution, supporting 7% rate based growth over the period and we're reviewing additional investments to serve our customers. Speaker 200:06:56Turning to slide 6, let's review some recent key developments. In September, our Board declared a quarterly dividend of $0.41 per share payable December 1. This represents a 5% increase compared to the quarterly payments of $0.39 per share Paid since March of 2020. The increase corresponds with our targeted payout ratio of 60% to 70% that was approved by the Board earlier this year. It sets the stage for future dividend growth that is aligned with our long term operating earnings growth as we continue to working as we continue working to enhance value for investors. Speaker 200:07:35During the quarter, we also achieved some important regulatory milestones that support our strategy of investing to improve reliability, resiliency and the customer experience. On October 18, the Maryland Public Service Commission approved our distribution base rate case, including a $28,000,000 revenue increase that supports equity returns of 9.5 percent and an equity ratio of 53%. We are pleased with this outcome, which support continued investments in the state and helps us deliver on our commitment to providing dependable and affordable electricity to our customers in Potomac Edison's Maryland service territory. We're also excited to move forward with the first of our 3 utility scale solar generation sites In West Virginia, totaling 30 Megawatts of capacity. Our proposal, along with the small construction surcharge, Was approved by the West Virginia Public Service Commission in August. Speaker 200:08:34We plan to seek approval from the PSC to build an additional 2 solar sites, representing another 20 megawatts once customer subscriptions reach the 85% threshold. John will address the regulatory items and discuss the progress we're making with other filings, including the Pennsylvania Consolidation Case and our rate proceedings in New Jersey, Ohio and West Virginia. We are focused on making the necessary investments in our regulated businesses, our employees and our systems to enhance the customer experience and create new opportunities from the energy transition. To execute that vision, We are shifting decision making and accountability closer to where the work is being done to serve customers. We are making progress to fill several key executive positions in an organization that will be structured to allow greater execution at the business unit level. Speaker 200:09:30In the near future, we expect to announce a President, FirstEnergy Utilities as well as a Chief Operating Officer. President, FirstEnergy Utilities will oversee 5 business unit executives who will lead our state operations and our stand alone transmission companies. In our new organization, the business unit executives will have P and L responsibility and will be accountable for regulatory direction and outcomes as well as operational performance. The Chief Operating Officer will lead the customer experience group and a range of T and D functions, including Planning, construction, system operations, safety and compliance. 5 months into my role, I'm more excited than ever about the future of FirstEnergy. Speaker 200:10:19We are building a strong foundation of operational and financial excellence. We are poised to capitalize on these opportunities to continue to grow the company and create a strong investment opportunity for investors. Thank you for joining us today. I look forward to seeing many of you at the EEI Conference next month and talking more about the progress we're making at FirstEnergy. Now, I will turn the call over to John for more financial detail. Speaker 400:10:58Thank you, Brian, and good morning, everyone. We had a strong quarter, which showcased our commitment to operational excellence and financial discipline. This work enabled us to offset the impact of Continued unseasonably mild temperatures across our service territory and deliver operating results near the top end of our guidance. In addition, we're also making good progress on our regulatory initiatives, which I'll review in more detail in a few minutes. Let's start with a review of our financial performance. Speaker 400:11:27As Brian mentioned earlier, 3rd quarter GAAP earnings were $0.74 a share and operating earnings were $0.88 a share. This compares to 2022 Q3 GAAP earnings of $0.58 a share and operating earnings of $0.79 a share. And on a year to date basis, operating earnings are $1.94 a share compared to $1.91 a share in 2022 despite significant headwinds from our pension plan and lower weather related distribution sales. Our performance in large part is due to intense focus on our operating expenses. Lower company wide O and M improved operating results by $0.08 a share in the 3rd quarter and $0.21 a share on a year to date basis, representing a 13% reduction when compared to the 1st 9 months of 2022. Speaker 400:12:18And our expectation for the full year is an O and M reduction of roughly 15% versus 2022 levels. About 50% of that is unique in nature, including spending we accelerated in 2022, with the other 50% being sustainable cost reductions that we will build upon in 2024 and beyond, primarily related to improved productivity across the entire organization, reduced use of contractors and lower spending on branding and advertising, just to name a few. We're also running ahead of plan with Capital spending in both our transmission and distribution businesses. Strong planning and execution across our operations and supply chain teams as well as the need to respond to more severe and capital intensive storm events resulted in an increase to our 2023 forecasted capital investment of nearly $300,000,000 to $3,700,000,000 from our original plan of $3,400,000,000 Looking now at the drivers For each of our business units for the Q3, results in our distribution business benefited from the diligent focus on operating expenses as well as our formula rate capital investment programs and rate structures. Together, these help to offset the impact of a lower pension credit, Higher financing costs mostly associated with new debt issuances and the impact of mild weather on distribution sales. Speaker 400:13:42Mild summer temperatures with cooling degree days 17% lower than the Q3 of 2022 and 6% below normal drove a 3% decrease And total customer demand impacted earnings by $0.06 a share compared to last year. Sales to residential customers decreased nearly 4% compared to the Q3 of 2022, resulting from a 6% decrease due to the mild summer weather, partially offset by a 2% increase on a weather adjusted Year to date weather adjusted usage in this customer class is about 2% higher than our forecast and last year and about 5% higher than 2019 pre pandemic levels. In the commercial sector, demand decreased just over 1%, resulting from a 2% decline in the mild temperatures, but increased over 1% quarter over quarter on a weather adjusted basis. Year to date weather adjusted usage is flat to last year and continues to lag pre pandemic levels by about 5%. Finally, sales to industrial customers were flat compared to the Q3 year to date periods of 2022 and remain slightly lower than pre pandemic levels. Speaker 400:14:53Looking at our transmission business, 3rd quarter results increased as a result of rate based growth of 8% Associated with our Energizing the Future investment program. So far this year, we deployed $1,200,000,000 of capital in our transmission business, An increase of $400,000,000 or 50 percent versus last year and nearly $200,000,000 or approximately 20% above our plan. Highlighting Speaker 500:15:17just a Speaker 400:15:17few of the many projects currently underway. In Northeast Pennsylvania, we're rebuilding a 20 mile 115 kV transmission line to enhance service reliability and improve system resiliency. In Ohio, we're rebuilding a 20 mile section of a 138 kV power line in Belmont and Harrison Counties, which is in the 3rd phase of a larger 64 mile project to enhance service reliability, And in West Virginia, we're upgrading 4 miles of a high voltage transmission power line in Preston to reinforce local transmission system against severe weather, meet future energy demands of the region and enhance service reliability for 5,000 customers In the Kingwood area. For the full year, we now anticipate transmission formula rate investments of over $1,800,000,000 versus our original plan of just under $1,700,000,000 In our Corporate segment, our results for the Q3 largely reflect the tax benefit From the expected use of state net operating loss carryforwards, which we discussed on the Q2 call that reduced our consolidated effective tax rate for the year. As Brian mentioned, throughout 2023, our consistent operational and financial execution, including growth from our investment plan, Significant cost control and other financing and tax benefits has more than offset the headwinds from pension And the impact of lower weather related distribution sales, which for the 1st 9 months of this year impacted results by $0.18 per share versus normal. Speaker 400:16:54I'm proud of how all of our employees have addressed these challenges and supported our commitments. While 2023 is not over, Our 2023 debt financing plan is now complete with 6 long term debt transactions at our regulated operating companies totaling $1,600,000,000 with an average coupon of 5.41 percent, slightly below our plan of 5.5%. Also earlier this year, $1,500,000,000 of convertible debt with a coupon of 4% that allowed the company to refinance revolver borrowings costing more than 7% and to make a voluntary pension contribution to eliminate minimum funding requirements in 2025. Additionally, earlier this month, we extended the maturity date on our $4,500,000,000 revolving credit facilities to October 2027 And added 2 new revolving credit facilities, including a $1,000,000,000 facility at FET LLC and $150,000,000 facility at CATCo. Moving forward, we will have $5,650,000,000 of credit facilities to support our increasing capital programs. Speaker 400:18:02As we look to 2024 2025, our debt financing plan is minimal since the majority of the FET asset sale proceeds Will be received at closing, with the remainder anticipated before the end of 2024. We plan to use these proceeds to repay costly revolver borrowings and depending on the interest rate environment will be used to redeem high coupon holdco debt such as the 7.38% notes, of which $460,000,000 remain outstanding, retire maturing utility debt and or defer other utility debt issuances. The funding from the FET transaction, our light debt maturity schedule, plus the decision we made to issue the low cost convertible debt provides significant flexibility with our utility debt financing plan, which other than refinancings and new money requirements at our stand alone transmission companies, Could be as low as $2,100,000,000 over the next 2 years. And as for FE Corp's HoldCo debt, we only have $300,000,000 that matures in 20 All that said, we're uniquely well positioned for the current interest rate environment with minimal earnings sensitivity to interest rate increases over the next couple of years. Now let's turn to an update on our rate proceedings and other regulatory activity. Speaker 400:19:20As we've discussed, we filed 3 base rate cases earlier this year, representing more than $7,000,000,000 of rate base. As Brian said, last week, we received an order in the Maryland base rate case that aligns with our goals to continue meeting the energy demands of Potomac Edison's rapidly growing population. The order authorized an equity capitalization ratio of 53% with an equity return of 9.5%, Recovery of regulatory assets associated with both COVID and electric vehicle infrastructure, while also providing support to help our strategy of strong reliability and resiliency in support of the energy transition. The new rates went into effect October 19. We're also happy with the progress on New Jersey and West Virginia base rate cases. Speaker 400:20:06In New Jersey, we've entered into settlement discussions on our proposed revenue increase of $192,000,000 And in West Virginia, a hearing is set for late January in our $207,000,000 base rate case with new rates expected to be effective in March of next year. Other recent regulatory updates include, in Pennsylvania, FERC approved our application to consolidate our 4 Pennsylvania distribution utilities In August, the parties to the case filed a settlement agreement with the Pennsylvania Public Utility Commission on August 30. The settlement includes $650,000 in bill assistance for income eligible customers over 5 years, supports unification of rates over time and includes a tracking mechanism to share certain cost savings associated with the legal entity consolidation with customers. With the ALJ's recommended approval of the settlement, which is pending final regulatory approval, we expect the consolidation to close by early 2024. This consolidation aligns with our state operating model and is an important step to simplify our legal entity structure and increase the flexibility and In Ohio, hearings for our Grid Mod II filing are scheduled to begin in December. Speaker 400:21:21This 4 year $626,000,000 capital investment plan will support our continued work delivering safe reliable power, offering modern customer experiences and And in November, hearings are scheduled to begin on our 5th Ohio Electric Security Plan, which supports our generation procurement process for non shopping customers as well as investments in the distribution system, storm and vegetation management writers and energy efficiency programs. Our proposal also supports low income customers and electric vehicle incentives. We have requested approval for the new ESP effective June 1st next year. In West Virginia, we reached a unanimous settlement on our depreciation case With an agreed upon $33,000,000 increase in depreciation rates, those rates will be effective upon conclusion of the West Virginia base rate case. And as Brian discussed, we received approval from the West Virginia Public Service Commission in August to move forward with construction Of the first three utility scale solar generation sites in the state, we expect the first site to be in service by the end of this year And all five sites to be completed before the end of 2025 at a total investment cost of approximately $110,000,000 Just as a reminder, summaries of our key filings together with news releases and links to dockets are all available on the Regulatory Corner section of our Investor Relations website. Speaker 400:22:49Looking ahead, we plan to file our New Jersey infrastructure investment program in the next few weeks. And as you know, we are preparing for an active regulatory calendar in 2024. The performance of our team has been second to none By focusing on what we can control and a commitment to continuous improvement, we've delivered outstanding operational and financial performance. We've overcome the impact of historic unseasonable weather and other challenges to deliver solid results through the 1st 9 months of this year. We're on track to meet our financial commitments and we're building a strong foundation for continued growth. Speaker 400:23:27Thank you for your time today. Now let's open the call to your questions. Speaker 200:23:31Hey, John, real quick before we go to Q and A, I'd like to share some late breaking news from last night. Yesterday evening, PJM released the results of its open window process to address reliability concerns with data center load growth in the Dominion and APS service territories. Based on our preliminary review of these results, we are on track to gain a substantial portion of the projects. The recommendations still need to move through TEAC The PJM Board, but we anticipate that happening by year end. While these projects won't come to fruition until the latter half of the decade, we're really excited about this opportunity. Speaker 200:24:07It builds on our successful bid for the onshore transmission construction that supports New Jersey's offshore wind project And it further highlights the significant transmission build out we anticipate in our footprint to support the energy transition. We look forward to talking more about this opportunity at EEI once we've had a chance to fully understand the details. Now let's move to your questions. Operator00:24:30Thank you. We'll now be conducting our question and answer A confirmation tone will indicate your line is in the question Our first question comes from the line of Shar Pourreza Speaker 600:25:05Let me just on the regulatory side, obviously, we're going to be approaching the Ohio case next May. I just I guess, I want to Speaker 700:25:12get a little bit of Speaker 600:25:13a sense Now you're thinking about the bill impact given this environment. Could this case still end up being sort of bill neutral? And just remind us on what sort of the key driver of that case is on the invested capital side, rate base, deferred cost, ONM true ups, I guess any sort of experiences from the ESP proceeding that could dictate how you manage the GRC? Thanks. Speaker 200:25:36Yes. Thank you for the question, Shar. You're really forward looking. So we're still in the midst of the ESP V discussions And the Grid Mod 2. So we're in the throes of that engaging with staff and interveners and trying to come to successful conclusions there. Speaker 200:25:52But as you all the things you mentioned are what we're going to be doing in the base rate case next year. It's going to be taking things out of The trackers and riders that we have, we're getting them put in the base rates, updating fully our rate base, our prudently incurred costs, Storm, tree trimming, regular O and M financing costs, all that, getting that in base rates, and then moving forward with some healthy trackers We'll have at that point. There's nothing that's going to be controversial in that case. It's a traditional rate case. Nothing special about it, but all the things that you'd expect a regulated utility to be doing. Speaker 200:26:34We found over time that the Ohio Commission Has been very supportive of wire's investments and we're poised to continue making those and look forward to investing in the State of Ohio. A couple of things that we're going to be cognizant of in that case. One is where we're earning right now relative to what we think A normal authorized return should be. We're well below 9.5% to 10.5% return on equity and we need to get that Increased and our rates today are about 14% below our in state peers. So To be honest with you, Shar, it's too early for us to know what the bill impact is going to be, but we're always looking for ways to minimize the bill impact to customers. Speaker 600:27:24Got it. Perfect. And then lastly for me, just on the O and M side and just pension, dollars 0.31 of benefit is Sort of very material year over year. I guess, how much should we assume with this benefit as tactical, so really short term in nature versus How much of it is maybe more perpetual, so if you can put a multiple on it and assume that benefit carries into 2025 and beyond? And then any sense on the pension performance year to date? Speaker 600:27:51Thanks guys. I appreciate it. Speaker 400:27:54Hey, Shar, this is John. Thanks for the question. So, Yes. If you look at our O and M performance year over year, about a 15% Reduction from what we incurred in 2022, which is about $200,000,000 a little bit more than that. I would tell you about 50% of that is associated with timing of work that we accelerated from 2023 into 2022 and some unique items, but the other 50% is sustainable savings associated with just Productivity improvements, getting contractors off the property, doing the work ourselves, we had some benefits associated with Contract terminations associated with sponsorships and branding relationships that we had and just a Real intense focus on just general business items that we spend. Speaker 400:28:48So I would say about half of it is kind of unique. I would say the other half of it is sustainable savings that we'll build upon as we go into next year. With respect to the pension, the pension performance year to date is about flat. So that is something that we have our eye on. A lot of that is associated with the interest rate environment, but we're taking that into account as Speaker 600:29:19Perfect. I appreciate it, guys. That's all I had. And Brian, good luck with the search for the COO and President. Appreciate it. Speaker 200:29:26Thank you, Shahriar. Operator00:29:29Thank you. Our next question comes from the line of Jeremy Tonet with JPMorgan. Please proceed with your question. Speaker 500:29:36Hi, good morning. Speaker 200:29:37Good morning, Jeremy. Speaker 500:29:40Just wanted to touch base, I guess, on the financing plans a bit here. Given your CapEx refresh, could you clarify, I guess, what's in the financing needs at this point? It looks like There was prior language last quarter about no equity needs except for $100,000,000 SIP or DRIP and didn't see that messaging in this deck. And just wondering If anything has changed there, what we should expect on that front? Speaker 400:30:06Yes. That's still the case. I mean, Jeremy, if you think about where we are Relative to our cash flow metrics and our projections, if you think about 14% to 15% FFO to debt, you think about $3,500,000,000 of proceeds coming in next year from the FET sale, That has significant impact on our financing plan in a meaningful way. And so we have a lot of financial flexibility In the plan and so no new equity requirements fully supports the CapEx plans that we have in place Plus the ability to do some balance sheet improvement initiatives to take out additional holding company debt. So no issues there. Speaker 500:30:56Got it. That's helpful there. And then continuing along on the CapEx front, just want to kind of run through some of the numbers by Had it straight here, but looking at the 2023 to 2025 plan, the $12,000,000,000 how that compares to the $18,000,000,000 in the 20 21 25 plan. I think you might have spent 2.4 in 2021, 2.75 in 2022. And it looks like your Prior plan might imply 12.8 CapEx for 2023 to 25. Speaker 500:31:25And so the Currently, an $800,000,000 less. Just want to know if I had those numbers right or if there were other moving pieces here I should be thinking about or CapEx was decreased to any of the different subs? Speaker 400:31:39CapEx hasn't been decreased. I mean, if you look at where we're going to spend this year, it's $3,700,000,000 And then in 2024 and 2025, it's going to be 3.9 and 4.1 respectively. So no change In the 2024 and 2025 capital plans from what we introduced back in February of this year, And in fact, we increased the capital plan in 'twenty three by $300,000,000 Speaker 500:32:06Got it. That's helpful. Thanks. Just the last one, if I could. I think you talked about incremental business disclosures that could be Coming forward here, just wondering if you might be able to offer any incremental thoughts with regards to what type of information we could see there? Speaker 200:32:25Yes. So I think what we're going to plan on doing is looking at our segment reporting For 2024 and going forward and making it a little simpler and more transparent for The Street and quite frankly for us, It will reflect how we're going to manage the business going forward. So we're probably going to move to segments that is Distribution, 1, transmission, another and integrated, another. And that will allow us to not have to split companies between the segments. And it will require us to not have to do reconciliations for analysts that cover us investors that are interested in us. Speaker 200:33:05And it just makes The presentation of our results simpler and more in line with how we manage the business. Speaker 500:33:12Got it. That's very helpful. I'll leave it there. Thanks. Speaker 200:33:15Perfect. Thank Operator00:33:17you. Thank you. Our next question comes from the line of Nick Campanella with Barclays. Please proceed with your question. Speaker 800:33:26Hey, good morning, everyone. Happy Friday. Thanks for taking my question. So I guess thanks for previewing the PJM transmission opportunity. As we kind of think about rolling that into our models, is this opportunity in the 100 of 1,000,000 of dollars? Speaker 800:33:41And I think you said back half of the plan or Any idea that how to size it at this point? Speaker 200:33:47We're still working through that, Nick. We just got the news last night. We do believe it will be in the 100 of 1,000,000 of dollars range, which side $500,000,000 we're still trying to figure out today, but really it's late breaking news for us. We have our engineers working on it today. We hope to be able to provide more detail on that Eddie, EI. Speaker 800:34:11Great. And then I guess just the cadence of updates from here because I know that there's a lot of moving pieces with The COO, Serge, to your point, some of the resegmenting and everything, should we still expect fiscal 'twenty four guidance on the Q4? And then how do you think about financing, CapEx, etcetera? Yes. We will provide that CapEx, etcetera. Speaker 200:34:29Yes. We will provide that guidance on the Q4 call. And look, there's going to be some Late breaking news. I'm trying to forecast what it is that we're going to be what the news is going to be, so nobody's surprised. And of course, we're going to be updating you as that news comes in and becomes available. Speaker 200:34:49But I don't want people to be surprised by the positions that we're looking for, How we're going to manage the company going forward, how we're going to report going forward, and that's really why we're forecasting all that and then we'll update it as the news becomes Reality, but we anticipate doing all that here over the next several months. Speaker 700:35:09Okay, thanks. And if I Speaker 800:35:10could just squeeze one more in, just I know that we'll get 2024 guidance in Q4, but There were just some more one time items in the fiscal 2023 walk. I acknowledge you kind of brought up the pension headwinds in prepared remarks. How do you kind of think about the offsets to those future headwinds like pension, the tax item, etcetera? I know we get a better comp on weather next But any guidance you could give would be helpful. Speaker 400:35:39So Nick, this is John. So I guess the way I'm thinking about this year, If you think about where we are with the pension, if you just look at the year over year weather impacts And you look at what the company has done to offset that in terms of rates and investments, taking advantage of opportunities In the capital markets with low cost convertible debt and how we deploy that proceeds, if you just look at the tight Cost controls that we put in place year over year, I think that overshadows the benefits associated with The income tax. And so as you think about next year and beyond, it's right you're right. We're going to get a benefit from going back To normal weather, we have the rate cases that we have in flight. We have the capital programs associated with our distribution companies that are in a formula As well as our transmission formula rate CapEx. Speaker 400:36:45And so if you think about where the returns are for the 3 rate cases that we filed this year And if you look at where the returns are for the cases that we'll file next year, I think you can do the math in terms of what's going to carry the day for the earnings of the company. Speaker 500:37:02Thank you. Speaker 200:37:04Thanks, Nick. Operator00:37:07Thank you. Our next question comes from the line of David Ocara with Morgan Stanley, please proceed with your question. Speaker 700:37:14Hey, good morning. Thanks so much Speaker 900:37:15for taking my question. Speaker 1000:37:17Good morning, David. Speaker 900:37:20I was wondering if you could maybe give the latest on the status of the New Jersey rate case, current thoughts on the settlement potential and Maybe specifically on the pension normalization mechanism, how optimistic you are in that coming through? Speaker 200:37:35So we're as you know, they've stayed the schedule for now to allow settlement discussions To continue and we're working all of those things that you just mentioned are still in play and we're still working, engaging with Staff, intervenors, others to try and bring a successful conclusion to that case and without having to take it through adjudication. Speaker 900:38:02Okay. Sounds good. And then also curious if you could give the latest feedback from rating agencies on Prospects going forward to achieve investment grade ratings at the parent and how the FFO to debt outlook Sitting right now as you're heading into 2024 as well. Speaker 400:38:22Yes. I think we continue to have dialogue with the rating agencies. Those have been constructive conversations. They have our projections. It clearly shows that we're going to be in that 14% to 15 I will say that we've kind of taken a little bit of a step back this year In terms of our performance in the metrics and a lot of that is because of the unseasonable weather, the fact that we made a voluntary pension contribution. Speaker 400:38:53We've we had some one off items associated with severance, associated with the voluntary retirement program. So if you kind of take those out of the mix, I mean, we're back closer to that 11% range. But clearly, With the rate cases that we have in flight, which we risk adjusted in terms of what we're going to get, the fact that we're going to get now 100% of the FET proceeds in 2024, whereas before it was going to be about 50% Next year 50% in 2025, so we'll have an opportunity to deploy all that. It clearly shows that we'll be in the 14% to 15% range next Speaker 900:39:37year. Okay. Excellent. I appreciate that color. Thanks so much. Speaker 200:39:42Thank you, David. Operator00:39:45Thank you. Our next question comes from the line of Angie Storozynski with Seaport Global. Please proceed with your question. Speaker 1100:39:53Thank you. Just following up on that FFO to that question. So I'm looking at your financials. I mean, the FFO looks 60 week, right, for the 1st 9 months. And I hear the explanation of why that is. Speaker 1100:40:09But I thought that we are waiting for some improvement, not even to hit that 14% to 15%, but just some improvement in the FFO to that To warrant any upgrades and it doesn't seem like it will happen this year. Is that fair to say that the trailing 12 months doesn't seem to have Speaker 400:40:32Yes. Like I said, I think the trailing 12 months and where we are this year, we have taken a little bit Of a step back, some of that was planned because we wanted to make the voluntary pension contribution. Some of it Was associated with non recurring items such as the severance that I mentioned, that's really going to have about a 1 year payback if you think about it. So that will improve the metrics next year. And you can't discount the impact of weather in it, what's that done to cash flow, right, in terms of The lower weather related sales. Speaker 400:41:07So, I understand your question, but we're very confident in the plan. We're very confident in the metrics that we've provided to the rating agencies, and we'll see where we get to. Speaker 1100:41:24Okay. And my bigger question here, and I know that this is what we're all sort of debating is that You obviously have this bullish EPS and now dividend growth plan. It's pretty much contingent on the outcome of the distribution case in Ohio, and we won't know that what happens there until Probably very late 2025. So, how do we get comfortable with that validation of your growth profile between now and Speaker 200:41:57I just so, I don't think we're all debating that at all. I just disagree with that. The things that you look And how we hit our growth rate or how we perform in the rate cases that are before us. And you're going to have signpost To that, long before the end of 'twenty five, we have the Ohio ESP, Grid Mod 2. We have the New Jersey case, the West Virginia case. Speaker 200:42:23And if we're performing well on those, I think you'll be able to see you'll be able to get an indication that we're being successful in prosecuting rate cases, Engaging with staffs and interveners and come to positive outcomes. So no need to wait until the end of 2025. Speaker 1100:42:41And then just lastly on the tax benefit, very big tax benefits. And I understand that you're trying to address The weather impact, I mean, lots of headwinds actually this year, but you're also flexing the O and M lever. I mean, did you expect To have this tax benefit this year, again, and is it cash related? Speaker 400:43:08So at the beginning of the year, we did not anticipate the effective tax rate being at that 17%, 18%. We anticipated it being probably in that 19% to 19.5% range. So some of the benefit that we achieved this year was not planned, but something that came up mid year And that the team executed on. I would tell you long term, long term though Angie, If you think about our blended effective tax rate, it's probably going to be 17%, 18% this year. But longer term, it will be a more normal tax rate in that 20% to 21% range. Speaker 1100:43:54And that's already reflected in your growth plan? Speaker 400:43:57Correct. Speaker 1100:43:58Along with those additional costs that will come with basically those additional Managers that you're hiring for the utilities and the COO, right, all of this is reflected in your EPS growth plan? Speaker 200:44:14It's all in there, Angie. Operator00:44:17Thank you. Speaker 200:44:18Thank you. Operator00:44:21Thank you. Our next question comes from the line of Jeremy Tonet with JPMorgan. Please proceed with your question. Speaker 500:44:28Hi, good morning. Thanks for squeezing me back in here. Just wanted to kind of clarify, I guess, the cadence of updates of what we should be expecting for Updates on 4Q are for EEI. Just wondering when 2024, I guess, future As far as long term plan revisions might be, if that's a 4Q event, just want to kind of clarify some of the prior comments there. Speaker 200:44:55Yes. We're going to provide an update on the Q4 earnings call. So we'll do specific guidance for 2024 And we'll also update the capital plan at that time. Speaker 500:45:08Got it. And this could include everything EPS long term EPS CAGR as well or Those two items are really the focus. Speaker 200:45:16Yes. We're there's going to be no change in the long term EPS CAGR. Speaker 500:45:21Got it. Great. Very helpful. I'll leave it there. Thank you. Speaker 200:45:24Thanks, Jeremy. Operator00:45:27Thank you. Our next question comes from the line Anthony Crowdell with Mizuho Securities. Please proceed with your question. Speaker 700:45:35Hey, good morning. Just hopefully, two quick questions on one on Slide 25. And I'm not trying to run your rate case decisions in the jurisdictions, but when you kind of think that We could see like normalized earnings coming from the utilities or maybe worded a different way. Do you guys have a target Of what you think you could earn across the OpCos? Speaker 200:46:00Yes. I think we can be earning in that 9.5% to low 10% range in terms of ROEs. And so if you look at this, that's a significant component of our earnings growth is Going back and having these rate cases, updating our rate base, getting ROEs higher, getting Current costs reflected in rates and adjusting what you can see is Lower than normal earned ROEs on that slide. Speaker 700:46:37I guess you've answered my sorry. Speaker 200:46:40No. It's the normal stuff that utilities do, Anthony. It's just the normal work pale that you expect us to do. We invest for the benefit of our customers. We then operate. Speaker 200:46:54We then recover and finance. And that's what we'll be doing. This part of the presentation is the recover where we go back in to get our hard work reflected in current rates. Speaker 700:47:08Okay. I think that actually answers my second question of, I think earlier in one of the slides, I apologize, I forgot the number. You guys give us our Appreciate the detail. Rate based growth of about 7%. And to Jeremy's question earlier about the long term growth rate of earnings growth rate of 6% to 8%, I guess I was curious if you think there's going to be any lag or spread between the rate base growth and the earnings growth, but it seems that they are aligned because of this improvement in ROE. Speaker 700:47:35Am I thinking of that correctly? Speaker 200:47:36Yes. So we're getting ahead of this now, right? We have very active rate cases to get What you reflected on slide 25, up to more normal levels. And as we do that, we'll have Some growth associated with that. And then going forward, we said rate base growth for 2024, 2025 was going to be about 7% And we're looking to add to that as we go forward. Speaker 200:48:00So a combination of continued investment, growth in rate base, rate cases for the foreseeable future and continuing to invest for the benefit of our customers. All of that will put us in that 6% to 8% long term growth rate. Speaker 700:48:16Great. Thanks so much for taking my question and looking forward to seeing the DEI. Speaker 200:48:20Thanks, Anthony. We are too. Operator00:48:24Thank you. Our next question comes from the line of Greg Oro with UBS. Please proceed with your question. Speaker 1000:48:31Hi, Brian. Hi, John. Hi, Greg. Speaker 400:48:35Just, Speaker 1000:48:37Brian, where do you Stan, in terms of the key management hires that you're looking to do, I know you announced 2 of them already. Are there more To come there? And then just secondly, how are you thinking about moving beyond the So the legacy investigations that remain and Do you see concerns with that at this point? Thank you. Speaker 200:49:09Thank you, Greg. Appreciate that. In terms of the key hires, I'm spending and our Senior executive team here is spending a significant amount of our time recruiting. I feel some of this we need to do sequentially. I need to get a COO in place, President of FE Utilities in place, and I'd like those people to help us recruit then The people who are going to be reporting to the President of FE Utilities and they'll be the 5 people running our major businesses. Speaker 200:49:39So Sort of and by the way, we're not waiting to interview a candidate pool for those 5 people. We're proceeding ahead on that as well. So, Sequentially, trying to get the COO, President of FE Utilities, then next, the people to run our 5 businesses, and get those people seated as quickly as possible. But moving very much forward on that, it's active. We're trying to Get this done as quickly as possible, but at the same time making sure that we're getting the right people in the place who will Bring the right skills to bear for the things that we're trying to do. Speaker 200:50:15And we have a very strong candidate pool, for all of those positions that we're recruiting for. So I'm confident we'll get success. The timing of it is going to be here in the I'd say in the near term and hope to be able to make those announcements shortly. In terms of putting the past behind us, a lot of that heavy lifting had been done by the Board and the management team Before I got here, there's active engagement with the OOCIC. We're providing our updates Per the DPA with the Department of Justice and then for the remaining litigation that's out there, we're Moving forward with that, trying to settle what we can, but put that past behind us and strongly focused on the future. Speaker 200:51:06And I don't anticipate any unexpected hiccups there. Speaker 1000:51:13Okay. Good luck. Thanks. Speaker 200:51:15Thanks, Greg. Operator00:51:18Thank you. Our next question comes from the line of Steve Fleishman with Wolfe Research. Please proceed with your question. Speaker 300:51:25Yes. Hi, good morning. Speaker 600:51:27Good morning, Speaker 300:51:28Steve. Good morning. The Cases in Ohio, the grid mod and the ESP filing, can you just talk to the schedule there coming up? And I know Some of the other utilities have actually been able have been able to settle ESPs and the like. Is that possible for you? Speaker 200:51:51Yes. So we're in the midst of ESP 5 right now. That case is in flight. We've seen intervenors testimony. I think Staff testimony comes out on Monday. Speaker 200:52:04But as you would expect us to do, we are actively engaged In settlement discussions in those cases, trying to positively engage people like the staff and the other interveners and hopeful That we'll be able to come to a settlement similar to what the other companies have settled at. I don't see any reason to think that we won't be able to do that. Speaker 300:52:28And then on the grid mod, would that be kind of part of the same thing or separate? Speaker 200:52:34Same thing, Slightly behind where we are in ESP V, but as soon as we get through the ESP, we'll get to grid mod and hope to be able to settle that as well. There's nothing, Steve, that's controversial in these. It's normal course of business Trying to update the rate base and costs that are reflected in those riders and then hopefully leave those in place until we get to the May 24 rate case and then try to get those cleared out and get them reflected in base rates. Speaker 600:53:12Got it. Speaker 300:53:12Okay. Thank you. Speaker 1000:53:14Thanks, Steve. Operator00:53:18Thank you. Ladies and gentlemen, this concludes our question and answer session and concludes our call today. A replay of the call will be available on FirstEnergy's Investor Relations Web Thank you for your participation. You may now disconnect your lines.Read morePowered by