Brian X. Tierney
President and Chief Executive Officer at FirstEnergy
Thank you, Gina. Good morning, everyone. Thank you for joining us today and for your interest in FirstEnergy. Today, I will review our financial performance for the third quarter and discuss key strategic updates. I will also provide updates on recent regulatory developments, address critical issues in our industry and review the value proposition we offer shareholders.
Looking at our third quarter results. GAAP earnings from continuing operations were $0.73 per share compared to $0.74 per share in the third quarter of 2023. Operating earnings for the quarter were $0.85 per share compared to $0.88 in 2023, which included state tax benefits that did not repeat this year. Earnings for the quarter benefited from higher distribution sales, primarily from more normal weather versus 2023, the implementation of new base rates in our integrated segment and the impact of formula rate investments across all of our businesses. These items were primarily offset by higher storm-related expenses, dilution from the 30% sale of FirstEnergy Transmission and the absence of state tax benefits that were recognized in 2023 in our corporate segment.
Our team continues to do a great job maintaining their focus on efficient operations and financial discipline while executing against our plan. We experienced headwinds in the quarter, including significant storm expenses, some of which were not deferred for recovery. Our team responded to the headwinds, demonstrating resilience and discipline to achieve third quarter earnings within our guidance range. I'm proud of their work and I'm confident that we are building the right team and culture focused on our core values and priorities to ensure that we deliver sustainable value for our customers, communities and shareholders.
Today, we are narrowing our [indecipherable] operating earnings range to [indecipherable] from our previous range of $2.61 to $2.81 per share. During 2024, we were able to offset a number of financial headwinds through cost savings and focusing on capital work. In the quarter, we realized significant storm costs that did not meet the regulatory requirements for deferral. This development is leading us to make the guidance adjustment.
We are reaffirming our 5-year capex plan of $26 billion through 2028 as well as our 6% to 8% long-term annual operating earnings growth rate, which is driven by average annual rate base growth of 9%. We plan to provide a more comprehensive update, including a 2025 to 2029 financial plan early next year. We've put in the foundational work to support our goals.
Now we're executing against our operational, financial and regulatory plans to become a premier electric company. We'll continue to make meaningful investments that deliver value to our customers.
Through the third quarter, our capital investments totaled $3.1 billion, an increase of 22% compared to the first 9 months of 2023. We are increasing our 2024 investment plan from $4.3 billion to $4.6 billion, with over 70% in formula rate investments. The enhanced 2024 investment plan reflects increased reliability investments, primarily in our distribution and stand-alone transmission businesses. We're also participating in PJM's 2024 regional transmission expansion plan, which is incremental to our $26 billion Energize365 Investment Plan. We entered into a joint development agreement with Dominion Energy Virginia and American Electric Power to propose several new regional transmission projects across multiple states within the PJM footprint. These include several new 765-, 500-, 345-kv transmission lines in our collective service territories. We believe this collaboration will facilitate joint analysis of constraints, development of long-range buildable solutions and execution of those solutions in a cost-effective and timely manner, leveraging each company's strength, ranging from expertise in constructing and operating different transmission voltage systems to the use of existing corridors and community relationships will allow for higher confidence in the execution of our proposals.
In September, the joint development parties collectively submitted multiple portfolios of solutions to the competitive planning process. The most comprehensive of these options totals $3.8 billion in investment.
FirstEnergy also submitted nearly $1 billion of individual projects to PJM and for needs that are outside the joint development agreement. PJM staff is expected to select recommended projects by the end of the year with final approval expected at the PJM Board meeting in late February.
From an operation standpoint, we're seeing great results from our new business unit structure. And yesterday, we made another key addition to our leadership team. Karen McClendon has been named Senior Vice President and Chief Human Resources Officer, effective November 11. Karen brings to FirstEnergy more than 3 decades of human resources experience, most recently as the CHRO at Paychex. She will spearhead our efforts to integrate and advance our human capital strategy, ensuring alignment with our strategic vision. She will be responsible for functions, including talent management, benefits and compensation, labor and employee relations as well as our commitment to building an inclusive workforce and a workplace reflective of the communities we serve. I am pleased to welcome Karen to FirstEnergy.
Our new business unit structure is driving strong performance. This summer, 4 of our new business unit executives recruited from inside and outside the company, took the helm at our New Jersey, Ohio, Pennsylvania and stand-alone transmission businesses. John Hawkins, President of our Pennsylvania business, led the team to craft the recent rate case settlement, demonstrating our commitment to building constructive regulatory relationships and driving results that support our customers. Torrence Hinton and Doug Mokoid led a tremendous response to challenging summer storms in Ohio and New Jersey. In New Jersey, Doug led JCP&L through 10 separate storm response events since he came on board at the beginning of the summer. These back-to-back events had our crews and storm rotation for 6 consecutive weeks as they restored service to our customers.
In Ohio, in historic storm on August 6 in the Cleveland area disrupted power for more than 600,000 customers. This included 5 confirmed tornadoes, resulting in significant damage to the electric distribution system. It was the most impactful storm to hit the Cleveland area since 1993. Our response to this storm totaled more than $120 million and involved more than 7,500 workers, including thousands of FirstEnergy employees and contractors from 12 states. This massive restoration effort with coordination and collaboration across state and local government agencies was executed at a high level and allowed us to restore power ahead of our original targets.
In Ohio, we received positive media coverage and community recognition for our storm response and our consistent, reliable communications. Coming together to help our communities is a hallmark of our industry. We're grateful for the assistance we received from outside crews, and we're proud to step in when we're needed elsewhere. More than 1,000 of our own employees and contractors were dispatched this fall to help restore power in communities devastated by hurricanes Helene and Milton. The work that these men and women do is critical to our country, and I thank them for their service.
Turning to regulatory matters. In Pennsylvania, as I mentioned, John Hawkins led the effort to engage with parties and reach a settlement in our rate review. The $225 million settlement reflects a carefully balanced compromise with key stakeholders, including Public Utility Commission staff, the Office of Consumer Advocate and various industrial energy user groups and unions. The rate adjustment builds on the service reliability enhancements we've made in Pennsylvania in recent years. It supports upgrading additional distribution grid equipment, ongoing tree trimming and improving customer service levels. At the same time, it provides additional resources to help vulnerable and low-income customers manage their bills. This month, the administrative law judge recommended that the commission approved the settlement. We anticipate approval in December with new rates taking effect on January 1, 2025.
In Ohio yesterday, after careful consideration, we filed to withdraw our fifth electric security plan referred to as ESP V. As we have discussed previously, the ESP V order did not give us clarity on key conditions throughout the term of the ESP. Specifically, conditions for our distribution capital recovery rider and the vegetation management rider were only defined through the base rate case and not the 5-year period of the ESP. Although we had previously requested a rehearing on these issues, a recent Ohio Supreme Court ruling limited the time frame the commission has to grant rehearing, effectively resulting in our application for rehearing being denied by operation of law. The withdraw, which is subject to a commission order, will result in the Ohio companies reverting back to ESP IV until an ESP VI is filed and approved. We expect to file ESP VI by early next year, better aligning the review of that ESP with the review of our Ohio base rate case. This alignment should reduce risk and provide needed certainty for our customers and the company.
Turning to other regulatory matters. We anticipate an order by the end of the year in our Ohio Grid Mod II case. You will recall, we filed a partial settlement agreement in April, focused on deploying automated meters for all of our Ohio customers, similar to our end-state peers. In New Jersey, we expect BPU approval this week for JCP&L's Energy Efficiency and Conservation Plan. Program costs of $817 million from January 2025 and to June 2027 are included in our financial plan. As a reminder, JCP&L earns its authorized return on the included program investments.
Currently, we are in settlement discussions on JCP&L's infrastructure investment plan, EnergizeNewJersey, which includes significant investments over five years to provide customer benefits through system resiliency and grid and substation modernization. As we look to the future needs of our customers, we must address the challenges that are rapidly coming to the U.S. electric system. Analysts forecast that data center and AI share of U.S. electricity consumption will triple to 390 terawatt hours by 2030, equal to the energy use of approximately one-third of U.S. homes.
In our own footprint, load study requests for facilities of 500 megawatts or more have already more than tripled compared to 2023. While we have transmission capacity to support data center investments, we are being thoughtful about our approach to ensure that our existing customers have adequate protections and that we appropriately manage risks.
In PJM, the July capacity auction produced record high prices that will impact monthly residential bills by 11% to 19% beginning in June of next year. Despite the increase in prices, there wasn't any new dispatchable generation that cleared the auction. This is concerning to us on behalf of our 6 million customers as we think about service reliability and customer affordability. These are complex demand and supply side issues that require long-term thinking and strategy to appropriately support customers' energy needs.
We will always advocate on behalf of our customers to ensure reliable and affordable electric service, and we're committed to working collaboratively across the industry to address this challenge on our customers' behalf. We are laser focused on executing against our plan, which significantly improves the customer experience through resiliency and reliability investments, grid modernization investments and enhanced tools and communications. It also supports a cleaner grid and increased load growth through operational flexibility.
Delivering these benefits to our customers and communities fuels attractive returns and the compelling value proposition we offer to shareholders. Our updated 2024 capital investment plan of $4.6 billion is 24% more than we invested in the full-year of 2023 and 7% more than originally budgeted. Our prudent infrastructure investments to support the customer experience together with incremental opportunities such as PJM's RTEP process offer FirstEnergy a long runway for growth.
With our Pennsylvania rate case settlement, we achieved another milestone, demonstrating our ability to reach constructive and reasonable regulatory outcomes that support our customers, our strong affordability position and our attractive risk profile. Our year-to-date results represent improved earnings quality that is driven by growth in our core regulated business. This earnings growth and strong dividend yield represent a compelling shareholder return with upside potential. We are building the right team and culture and we have the financial strength to deliver on this plan. This is a new FirstEnergy. I'm proud of the progress we've made and excited about our future.
With that, I'll turn the call over to Jon.
