K. Jon Taylor
Senior Vice President, Chief Financial Officer, Strategy at FirstEnergy
Thanks, John, and good morning, everyone.
Although we were significantly impacted by the record-breaking mild temperatures this winter, our underlying business fundamentals remain strong and on track. I'll begin my remarks with a regulatory update, then I'll review our first-quarter financial results. Last month, we kicked off a period of significant regulatory activity. Since early March, this includes an application to consolidate our four Pennsylvania utilities, which is an important step to align with our state operating model, simplify our legal entity structure and increase the flexibility and efficiency of our financing strategy.
We also filed rate cases in New Jersey and Maryland that support critical reliability investments, a modern electric grid and enhancements to the customer experience while maintaining the lowest residential customer rates among regulated electric distribution companies in both states.
Since our last JCP&L rate case in 2020, we've made nearly $800 million in investments to modernize and strengthen the electric grid. The JCP&L proposal represents a $185 million revenue increase and supports distribution equity returns of 10.4%. It features enhanced recovery of storm balance costs, expanded vegetation management programs, recovery of program costs related to AMI and electric vehicles, and a proposal to normalize pension OPEB costs. The proposal also confirms our plan to file an infrastructure investment program later this year.
In Maryland, our proposal for a $44 million net revenue increase supports equity returns of 10.6%. It includes a proposal for the second phase of the Electric Distribution Investment surcharge program, a pension OPEB normalization mechanism, and a cost recovery proposal related to COVID and electric vehicle balances.
And in Ohio, we filed our fifth electric security plan to support our generation procurement process for non-shopping customers, continued investments in the distribution system, storm and vegetation management riders, and energy efficiency programs. The filing also includes proposals to support low-income customers and the electric vehicle customer experience.
We requested approval for the new ESP to be effective on June 1, 2024, when the ESP IV ends. We've included a summary of the key filings together with news releases and links to the dockets on the new regulatory corner section of our IR website. We received a lot of positive feedback about this resource and we'll continue to update the site as we move through each of the proceedings.
Later this quarter, we plan to file a rate case in West Virginia. And looking further ahead, we are considering the appropriate time to file for new base rates in our third long-term Infrastructure Investment program in Pennsylvania. And we will file a rate case in Ohio, in May of 2024.
While each utility in each case have unique circumstances, we have noted that recent base rate cases involving other investor-owned utilities in Ohio have been resolved with equity capital structures in the 50% to 54% range and supportive ROEs in the 9.5% to 9.9% range. These outcomes align with our plan, which includes the financial impact of our 2021 approved settlement that provided for over $300 million in refunds and bill credits to customers, as well as continued rate base growth in the accounting changes that we previously discussed, all of which significantly lower the returns at our Ohio utilities.
I want to spend a few extra minutes on the recent generation filing in West Virginia, where we're working with a broad group of stakeholders to ensure we find the best outcome for our customers. Last December, the Public Service Commission ordered Mon Power to provide an evaluation of purchasing and operating the Pleasants Power Station, the coal-fired plant that we understand is currently slated for closure on May 31. The concept of a potential acquisition of Pleasants was suggested by stakeholders in West Virginia as a replacement for our Fort Martin station which has a proposed end-of-life date of 2035. We responded to the Commission last month indicating that additional time and analysis are needed to properly complete the necessary and complex assessment. Mon Power proposed an option to enter into an interim arrangement with Pleasants' current owner that would keep the plant operational beyond its May 31 deactivation date. This would allow the needed time to do a thorough analysis and evaluation as requested by the West Virginia PSC.
On Monday, the Commission approved our proposal. We will begin negotiations with the plant's current owner. If we reach an interim agreement that we believe is in the interest of customers and FirstEnergy, we will submit it to the Commission, and if approved, this would allow recovery of associated costs through a surcharge. If we can't reach an agreement that is in the interest of our customers, we will file an update with the commission. To be clear, we don't see it as a viable option for Mon Power to operate three coal-fired power plants in West Virginia. We will continue to work through the process with the PSC and strive for an outcome that best serves our customers, communities and employees in West Virginia.
At the same time, we are moving forward with our efforts to support the energy transition across our footprint and we remain committed to our climate strategy and our goal to achieve carbon neutrality from our Scope 1 Emissions by 2050. Mon Power continues securing commitments from residential, commercial and industrial customers in the state to purchase Solarex [Phonetic], and on our [Phonetic] five-plan utility-scale solar generation facilities totaling 50 megawatts. This week, we filed an update with the Commission to begin moving forward with three of the five sites, totaling 30 megawatts of capacity and to obtain approval of a small surcharge.
Turning to first-quarter results and other financial matters. First-quarter GAAP earnings were $0.51 per share and operating earnings were $0.60 per share, which is just below the midpoint of our guidance, despite the impact of a very mild winter across our footprint. Absent the impact of weather, we were on plan for the quarter. In our distribution business, first-quarter results benefited primarily from our capital investment programs, higher weather-adjusted load and lower operating expenses, including employee benefit costs and the maintenance work we accelerated into 2022. These were offset by a significant decrease in weather-related demand, lower pension credits and higher financing costs related to our financing activity in the second half of 2022.
Record-setting mild temperatures this winter with heating degree days 18% below last year impacted total customer demand by 8% or $0.12 per share. On a weather-adjusted basis, distribution deliveries increased more than 2%, which was very nice to see. Residential sales decreased 8% from the first quarter of 2022, but increased 5% on a weather-adjusted basis. Compared to pre-pandemic levels, weather-adjusted sales to residential customers are trending about 4% higher.
In the commercial sector, deliveries decreased 7% compared to the first quarter of 2022 due to lower weather-related demand but increased almost 2% on a weather-adjusted basis. While sales to commercial customers continue to recover, they lack 2019 levels by more than 4%. Finally, first quarter 2023 sales to industrial customers decreased slightly compared to the first quarter of 2022, driven by the chemicals, metals and plastic sectors. Industrial sales remained just below pre-pandemic levels, but we continue to see fairly strong growth in some of our other industrial sectors such as steel, services and other manufacturing.
As for weather-adjusted load, we do expect a positive trend to continue relative to our plan, especially in the residential class, helping offset some of the lower weather-related sales we experienced in the first quarter. Additionally, operating expenses in our distribution business reflect the continued focus on our cost structure and we are pursuing additional cost reductions to further offset the impact of mild first-quarter temperatures.
Turning to first-quarter drivers in our transmission business, results primarily benefited from rate base growth of 8% compared to the first quarter of 2022, associated with our Energizing the Future investment program, offset by dilution from the minority interest sale in FET that closed in May of 2022. As John mentioned, we started the year off strong with our Capital Investment program and our transmission business, deploying nearly $350 million of capital, which is significantly above our internal plan.
First-quarter results in our Corporate segment benefited from higher investment earnings from Signal Peak and lower financing costs associated with holding company debt redemptions in 2022, which more than offset the lower pension credit. Signal Peak's contribution in Q1 of this year was $0.08 per share, but we expect a slight decrease to its projected earnings for the full year due to current forward market prices for coal. While weather had a significant impact for the first three months of the year, it's not taking us off our plan. We expect to offset the weather impacts this quarter as well as projected lower earnings contribution from Signal Peak through stronger weather-adjusted load, additional cost-reduction opportunities, as well as opportunities to optimize our financing plans.
Thank you for your time this morning. We recognize we have some work to do, given the mild winter temperatures this quarter, but we see this as manageable. We remain focused on executing our plan and creating long-term value for our investors, customers, communities and employees. Now, let's open the call to your questions.
