FirstEnergy Corp - Third Quarter 2026 Earnings Call - FIRSTENERGY CORP

Explicit Guidance:

• Reaffirmed 2026 core EPS guidance of $2.62 to $2.82; expects to finish at or slightly above the midpoint.
• Expects core earnings growth of 6–8% annually through 2030.
• Expects to update the 2026–2030 financial plan in the Fourth Quarter 2026 earnings call (February 2027).
• Transmission investment plan (currently $19B) expected to increase by at least 25% upon release of the updated five-year plan; total 5-year plan currently $36 billion.
• Financing for the current $36B plan to utilize up to $2 billion in equity/equity-like securities through 2030.
• Financing for incremental investments (e.g., West Virginia generation) to utilize up to 35% equity or equity-like securities.
• Expected common equity issuance capped at approximately 1% of market cap annually for the foreseeable future.
• New Jersey base rate case filed with a request for $253 million in rate increases; proposal aims to delay rate impacts until 2028.
• Maryland base rate case filed for $53 million revenue increase; expected regulatory outcome in April 2027.

Business-Segment Outlook:

• West Virginia: Maidsville energy generating facility expected to receive an order from the West Virginia Public Service Commission in Q4 2026; Siemens turbines reserved for 2030 delivery. Active negotiations for an additional 3 gigawatts (GW) of combined cycle capacity; update expected in early 2027. Bridge power options (RICE, fuel cells, batteries) being explored for temporary/behind-the-meter solutions to support customers prior to permanent grid infrastructure.
• Data Center Load: Contracted and pipeline demand up ~60% since year-end; contracted demand specifically up 90%. Total contracted data center demand across the footprint at 7.9 GW, with ~4 GW in active negotiations. Pipeline demand in West Virginia up 6x to nearly 6 GW. Demand expected to extend beyond 2030–2031.
• Transmission & Distribution: PJM network serves 65+ million people. Reliability improved 11% in Pennsylvania and 40% in New Jersey since 2024. New Jersey reliability improved 16% in 2025 and 22% year-over-year through September 2026.
• Investment Timing: Competitive transmission projects expected to be awarded by PJM in Q1 2027. Additional transmission investments driven by reliability needs and large load growth to be reflected in the 2027–2031 plan.

Market and Competitive Outlook:

• Demand trends driven by industrial growth (metals, oil & gas, chemicals) and data centers; weather-adjusted load increased 1.2% in Q3 2026 and has been positive for four consecutive quarters.
• Anticipated increase in transmission investments to support a "more flexible and resilient grid" as a structural change necessitated by growing demand.
• PJM "open window" competitive processes are viewed as a continuing feature rather than a transient opportunity; expects "big opportunities" for longer-term solutions in future cycles.
• New generation opportunities in West Virginia seen as a potential "blueprint" for future growth across the service territory.

Macro / Industry Outlook:

• Management views the broader economic trend in the PJM footprint as strong, with large customers (hyperscalers, developers) planning well beyond 2030.
• West Virginia regulatory environment described as "constructive," driving economic development and offering a template for managing large load risks and benefits.
• Interest rate exposure mitigated by formula rate mechanisms covering approx 50% of long-term debt financing needs.
• No specific macro economic forecasts provided, but confidence expressed in the "durability" of growth across the footprint.

Strategic Initiatives:

• Maidsville Project: Key investment to support West Virginia demand; targeting 2030 in-service date.
• RFP Issuance: Request for proposal issued for 3 GW of additional combined cycle turbines in West Virginia; update expected early 2027.
• Bridge Solutions: Exploring temporary behind-the-meter solutions (batteries, RICE, fuel cells) for 100 MW+ campuses to provide power faster than natural gas combined cycles; assets viewed as reusable.
• New Jersey Rate Case: Proposal to delay rate impacts until 2028 to balance investment needs with affordability; engaged with Sherrill administration and Board of Public Utilities.
• Maryland Rate Case: Hearing scheduled for January 2027 with outcome expected in April 2027.
• Financing: Continued use of equity-like instruments; subsidiary debt financings completed for the year ($2.6B at 4.7% average coupon).

Risks and Headwinds to Outlook:

• Regulatory Timing: Finalization of Maidsville depends on receiving the West Virginia CPCN order in Q4 2026; delays could impact investment schedules.
• Uncontracted Demand: Current investment plans rely on contracted demand; uncontracted demand is not included in the plan to ensure "solid" justification for investments.
• Customer Offtake: Negotiations regarding pricing, delivery schedules, and risk mitigation with large load customers are ongoing; outcomes affect financial structure.
• Financing Flexibility: The 35% equity requirement for new generation is "up to" and subject to change based on specific project structures (e.g., surcharge mechanisms).
• Regulatory Outcomes: Future rate cases (NJ, MD) depend on regulator acceptance of proposed rate increases and affordability frameworks.

Management Tone on the Future:

• Confidence: High confidence in meeting 2026 objectives and executing on the 2030 growth trajectory ("challenge accepted").
• Discipline: Emphasis on investing only where "constructive regulatory environment" exists and where existing customers are protected/benefited.
• Forward-Looking: Shift from "data center interest" to "active negotiations" and "contracted demand," indicating a transition from opportunity to execution.
• No Guidance Downgrade: Reaffirmed EPS guidance and growth targets despite significant new investment opportunities, indicating confidence in rate-making and execution capabilities.

Miscellaneous:

• Siemens turbines for Maidsville reserved specifically for 2030 delivery to protect the schedule.
• Total weather-adjusted load growth led by the industrial class (+3.3% in Q3, +2.1% over 12 months).
• PJM competitive process awarded over $5 billion in investments since 2022.