K. Jon Taylor
Senior Vice President, Chief Financial Officer and Strategy at FirstEnergy
Thank you, Brian, and good morning, everyone. Despite another mild winter, we are off to a good start this year with strong execution and financial discipline from our team that resulted in operating earnings above the midpoint of our guidance. And we are reaffirming our full year operating earnings guidance range of $2.61 a share to $2.81 a share, which represents a 7% increase versus the midpoint of our 2023 guidance. Today, I'll review financial performance for the quarter, our progress on key strategic regulatory initiatives and close with some details around the balance sheet.
Looking at our financial performance for the quarter, operating earnings were $0.55 a share, which is above the midpoint of our guidance despite the mild temperatures this winter that impacted retail sales and includes a planned increase in operating expenses, as discussed on the fourth quarter call. This compares to 2023 first quarter operating earnings of $0.60 a share.
As we also mentioned on the fourth quarter call, earnings growth this year will be backend loaded, given the effective dates of rate cases in West Virginia and New Jersey and planned increases in operating expenses in the first half of this year associated with the timing of maintenance work. Our first quarter results are detailed in the strategic and financial highlights document we posted to our IR website last night.
At a consolidated level, first quarter earnings of $0.55 per share were impacted by higher planned operating expenses and improved earnings quality from an expected decrease in earnings from signal peak, partially offset by increases from new base rates and rate base growth in formula rate programs. And although customer demand was not a significant driver year-over-year, given the mild winter in the first quarter of 2023, retail sales were down 6% versus plan primarily associated with heating degree days that were 14% below normal, impacting results by $0.07 a share versus our plan.
But let's also take a few minutes to review our segment results, which you will notice in our filings and presentation the segment reporting change consistent with how we're managing the business. We are now organized into easy-to-follow segments of distribution, integrated, standalone transmission and corporate. This streamlined and transparent reporting places entire companies and individual segments, simplifying reporting and eliminating reconciliations.
In our Distribution business, operating earnings were $0.30 a share versus $0.33 per share in the first quarter of last year, impacted largely by the planned increase in operating expenses I mentioned earlier, specifically around vegetation management work, partially offset by an increase in rates from capital investment programs and lower rate credits in Ohio.
In our Integrated segment, operating earnings were $0.15 a share compared to $0.14 per share in the first quarter of last year results increased largely due to the implementation of base rates in all three jurisdictions in this business, and rate base growth in formula rate programs, including integrated transmission investments partially offset by planned increases in operating expenses.
In our Standalone Transmission segment, operating earnings were $0.18 a share versus $0.7 per share in the first quarter of 2023, resulting from a 9% year-over-year rate base growth from our formula rate transmission capital investment program.
And finally, in our Corporate segment, losses were $0.08 per share versus $0.04 per share in the first quarter of 2023, primarily reflecting the lower planned earnings contribution from our one-third ownership interest in the Signal Peak mining operation decreasing from $0.08 per share in the first quarter of last year to $0.03 per share in the first quarter of this year.
Turning briefly to capital investments. First quarter capex totaled just under $900 million, an increase of nearly 22% versus 2023 levels and slightly ahead of our plan across each of our businesses, focusing on grid modernization, transmission and infrastructure renewal investments. As a reminder, capex for this year is planned at $4.3 billion versus $3.7 billion in 2023.
Turning to regulatory activity, we are very pleased with the outcomes in the recent base rate case orders, consistent with our plan that allows for solid, regulated returns for our investors, while keeping rates affordable for customers. And we're committed to our customers and our communities to enhance reliability performance and support the energy transition through our Energize365 capital investment program.
As Brian mentioned in mid February, the New Jersey BPU issued a final order on JCP&L's base rate case. The new rates, which customers will see effective June 1st and continue to be well below our instate peer average, represent an $85 million rate adjustment on rate base totaling $3 billion, an ROE of 9.6% and a 52% equity capitalization ratio. And we are currently working through our energized New Jersey infrastructure improvement proposal initially filed in November, including over $900 million in capital investments over five years, aimed to enhance reliability and modernize the distribution system.
In West Virginia, on March 26th, we received a final order from the Public Service Commission on our base rate case with rates effective March 27th. The case resulted in $105 million rate adjustment on rate base of $3.2 billion, an allowed ROE of 9.8% and a 49.6% equity ratio. Rates for our West Virginia customers remain about 22% below our instate peers. Additionally, as Brian mentioned, in West Virginia, we received an order on our ENEC case for an increase of $55 million. We have been successful in reducing the $255 million deferral down to $168 million, with full recovery expected by 2026.
Now let's move on to current activity with Pennsylvania. Earlier this month, we thought a base rate case requesting a $502 million rate adjustment on rate base of $7.2 billion and 11.3% proposed return on equity and a 53.8% equity capitalization ratio. The case builds on our service reliability enhancements in the state, with additional investments in a smart modern energy grid and customer focused programs, while keeping rates comparable to other Pennsylvania utilities.
Key components of the case include implementing a 10-year enhanced vegetation management program to reduce tree caused outages, reduce outage restoration time and reduce future maintenance costs. Recovery of costs associated with major storms, COVID-19 and LED streetlight conversions and changing pension and OPEB recovery to the delayed recognition method, which is based on traditional pension expense, with amortization of previously recognized cumulative actuarial losses.
The case also includes a blended federal state statutory tax rate of approximately 27%, but also continues to provide customer savings from previous changes to federal and state tax rates. Additionally, the application proposes a pension OPEB normalization mechanism to track and defer differences between actual and test your expense using the delayed recognition method. In addition to the base rate case, we plan to file a third phase of our long-term infrastructure improvement program this summer, which will include capital investment programs to improve reliability for the customers of Pennsylvania.
And finally turning to Ohio earlier this month, we filed a settlement for the second phase of our distribution grid modernization plan, Grid Mod II. The settlement includes a $421 million four-year capital investment program to continue modernizing the distribution electric system by completing the deployment of 1.4 million smart meters to our customers in Ohio.
Finally, next week we plan to file a prefiling notice of our Ohio base rate case with a full application and supporting schedules by the end of May. Key highlights of the case will include a 2024 test year with over $4.3 billion in rate base and an equity capitalization ratio reflecting the actual capital structure of the companies, a plan to recover investments in riders DCR and AMI, which includes the grid mod capital investments and base rates and reset those riders to zero. And some of the same other features that we included in other rate case applications, including pension recovery and pension tracking mechanisms. The current expectation is a proposal of a modest net increase to customers of less than $100 million compared to current revenues, and an overall average impact of less than 5% of total revenues across all customers, which will be refined over the coming months.
And finally, just to touch on the balance sheet and the closing of the FET transaction. Obviously, a lot of hard work goes into any transaction like this, but this was a great team effort, and we couldn't be more pleased with the results. Of the $3.5 billion in total proceeds, $2.3 billion was received at the end of March and was deployed immediately, consistent with our plan to pay off short term debt and to redeem long term debt totaling close to $1.4 billion of which $460 million was at FE Corp. We expect to receive the remaining $1.2 billion later this year, which will be used to fund our capital programs and additional liability management depending on market conditions.
This transaction completes a series of transactions over the last 2.5 years that resulted in over $3 billion in high-cost debt redemptions at FE Corp. close to $2 billion in utility long term debt redemptions and $2 billion to pay off short term debt that would have otherwise been financed with long term debt at our utilities. And we are pleased to be back with an investment grade credit rating with all three rating agencies and understand and appreciate and respect the importance of this to all of our stakeholders.
Thank you for your time today. We're off to a solid start this year with strong execution and a significantly stronger balance sheet to fuel our growth going forward.
Now let's open the call to Q&A.
