10-KPeriod: FY2022

FIRSTENERGY CORP Annual Report, Year Ended Dec 31, 2022

Filed February 13, 2023For Securities:FE

Summary

FirstEnergy Corp. (FE) operates as a regulated electric utility, primarily focused on transmission and distribution services, serving over six million customers across the Midwest and Mid-Atlantic regions. The company's business is divided into two main segments: Regulated Distribution and Regulated Transmission. Financially, FirstEnergy reported net income attributable to FE of $406 million for the year ended December 31, 2022, a significant decrease from $1,283 million in 2021. This decrease was largely driven by higher operating expenses, particularly fuel and purchased power costs, and a substantial increase in other expenses, including a significant pension and OPEB mark-to-market adjustment. Operationally, the company is executing a long-term strategy to invest in its regulated businesses, focusing on grid modernization, reliability, and the clean energy transition, with significant capital expenditure plans through 2025. Key strategic initiatives include the consolidation of Pennsylvania companies and a significant transaction to sell an incremental 30% equity interest in its transmission subsidiary, FET, to Brookfield, expected to close by early 2024. Despite facing ongoing regulatory and legal matters, including resolutions related to the HB 6 investigation, FirstEnergy maintains substantial liquidity through its credit facilities.

Financial Highlights

48 data points
Beta

Revenue

$12.46B

Net Income

$406.00M

3.3% Net Margin

EPS (Diluted)

$0.71

Total Assets

$46.11B

Cash & Equivalents

$160.00M

Free Cash Flow

$2.68B

Financial Statements
Beta
Revenue$12.46B
Operating Expenses$10.55B
Operating Income$1.91B
Interest Expense$1.04B
Net Income$406.00M
EPS (Basic)$0.71
EPS (Diluted)$0.71
Shares Outstanding (Basic)571.00M
Shares Outstanding (Diluted)572.00M

Key Highlights

  • 1FirstEnergy's net income attributable to FE decreased significantly in 2022 to $406 million from $1,283 million in 2021, primarily due to increased operating expenses and a notable pension and OPEB mark-to-market adjustment.
  • 2The company plans substantial capital investments through 2025, totaling approximately $18 billion, focused on modernizing and strengthening its regulated transmission and distribution infrastructure.
  • 3A significant strategic move involves the planned sale of an additional 30% equity interest in its transmission subsidiary, FET, to Brookfield, valued at $3.5 billion, expected to close by early 2024, which will reduce FE's ownership to 50.1%.
  • 4FirstEnergy is undergoing a consolidation of its Pennsylvania utility operating companies into a single entity, PA NewCo, expected to be completed by early 2024, subject to regulatory approvals.
  • 5The company continues to navigate legal and regulatory scrutiny stemming from the HB 6 investigation, which resulted in a $230 million Deferred Prosecution Agreement payment in 2021 and ongoing compliance monitoring.
  • 6Despite increased interest rates, FirstEnergy maintained compliance with its debt covenants and has access to substantial liquidity through its $4.5 billion in committed credit facilities.
  • 7The company is committed to environmental sustainability, pledging carbon neutrality by 2050 with an interim goal of a 30% reduction in GHGs by 2030 (Scope 1) and plans to transition away from coal generation by 2050.

Frequently Asked Questions

FirstEnergy Corp. is a regulated electric utility primarily engaged in the transmission, distribution, and generation of electricity. Its operations are centered around its Regulated Distribution and Regulated Transmission segments, serving over six million customers across the Midwest and Mid-Atlantic regions of the United States.

For the year ended December 31, 2022, FirstEnergy reported net income attributable to FE of $406 million, a substantial decrease from $1,283 million in 2021. This decline was primarily attributed to higher operating expenses, including fuel and purchased power, and an unfavorable pension and OPEB mark-to-market adjustment. Revenues increased year-over-year, driven by higher transmission revenues and increased electricity sales volumes in the Regulated Distribution segment.

FirstEnergy is focused on investing in its regulated transmission and distribution infrastructure, with plans for approximately $18 billion in capital expenditures from 2021 through 2025. Key initiatives include the consolidation of its Pennsylvania utility companies into a single operating entity and the sale of an additional 30% equity interest in its transmission subsidiary, FET, to Brookfield, which is expected to close in early 2024. The company is also committed to environmental goals, including carbon neutrality by 2050 and reducing GHG emissions.

FirstEnergy entered into a Deferred Prosecution Agreement (DPA) in July 2021 with the U.S. Attorney's Office to resolve investigations related to HB 6, which included a $230 million penalty. The company also reached a settlement for shareholder derivative lawsuits related to HB 6, involving corporate governance enhancements and an $180 million payment from insurance. FERC also finalized a Stipulation and Consent Agreement resolving its investigation, resulting in a $3.86 million civil penalty. The company continues to cooperate with ongoing regulatory reviews.