FirstEnergy Corp. · NYSE:FE
FirstEnergy — FY2017 Earnings Presentation
49 slides from FirstEnergy's earnings presentation, Feb 20, 2018
Slide 1: FirstEnergy Factbook
FIRSTENERGY Factbook Published February 20, 2018
Slide 2: Forward-Looking Statements
Forward-Looking Statements This FactBook includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties and readers are cautioned not to place undue reliance on these forward-looking statements. These stateme
Slide 3: Non-GAAP Financial Matters
Non-GAAP Financial Matters This FactBook contains references to non-GAAP financial measures including, among others, Operating earnings (losses), CES’ Adjusted EBITDA, Funds from Operations, and Free Cash Flow. In addition, Basic Earnings (Loss) Per Share – Operating, calculated on a segment basis,
Slide 4: Reference Materials
Reference Materials
Slide 5: FirstEnergy Overview
FirstEnergy Overview OUR MISSION We are a forward-thinking electric utility powered by a diverse team of employees committed to making customers’ lives brighter, the environment better and our communities stronger. $42B $14B 2017 Total Assets 2017 Annual Revenues MI Jointly Owned Plant PA Regulated
Slide 6: Summary Organizational Structure
Summary Organizational Structure FirstEnergy Corp. (1) (FE) Monongahela Power Jersey Central Power & FirstEnergy FirstEnergy Solutions FirstEnergy Nuclear Company (1) Light Company (1) Ohio Edison Company (1) Transmission, LLC Corp. (1) Operating Company (MP) (JCP&L) (OE) (FET) (FES) (FENOC) The Pot
Slide 7: Generation Portfolio
Generation Portfolio MW Maryland Solar 20 Total Solar 20 MW 58% Mansfield 1-3 2,490 Coal Harrison 1-3 (R) 1,984 Pleasants 1 & 2 (1) 1,300 Total 16,093 MW Sammis 6 & 7 1,200 Competitive Fort Martin 1 & 2 (R) 1,098 FES 10,186 MW <1% Solar Total Supercritical Coal 8,072 AE Supply 2,117 MW Blue Creek 10
Slide 8: Regulated Distribution
Regulated Distribution 10 Operating 6 States 6M Customers Companies
Slide 9: Regulated Distribution – Segment Overview
Regulated Distribution – Segment Overview ■ 10 operating companies serving ~6 million customers across 6 states – One of the largest contiguous service territories in the U.S. – Balanced customer sales mix of approximately 1/3 residential, 1/3 commercial, 1/3 industrial – Includes 3,790 MW of regula
Slide 10: Earned vs. Allowed Distribution ROEs
Earned vs. Allowed Distribution ROEs 15% 11.9% Stipulated Revenue Requirement 12% 10.5% 10.5% 10.5% 9.6% 9% 6% 11.8% 11.0% 10.2% 9.1% 9.5% 9.1% 7.2% 3% 6.5% 4.4% 3.4% 2.1% 0% OE CEI TE JC PP ME PN WPP MP PE-WV PE-MD Earned ROE Allowed ROE OH: Significantly Excessive Earnings Test filed with 2016 ROE
Slide 11: Average Customer Bills
Average Customer Bills Rates Effective July 1, 2017 Pennsylvania Ohio $175 $150 $150 $125 $125 $100 $100 $150.21 $151.94 $150.46 $145.76 $129.18 $131.02 $117.54 $106.85 $75 $91.01 $91.45 $93.61 $92.62 $97.41 $91.45 $75 $82.04 $50 $50 ME PN PP WPP DUQ PECO PPL UGI CEI OE TE AEP (CS) AEP (OP) DP&L Duk
Slide 12: Ohio Overview
Ohio Overview Number of Customers Rate Base and ROE Information (000s) Year-End 2017 11/30/17 Allowed Company Rates Effective Allowed ROE OE 1,049 Rate Base Debt / Equity CEI 751 OE January 2009 $1,485M 51% / 49% 10.5% TE 311 CEI May 2009 $1,240M 51% / 49% 10.5% 2,111 TE January 2009 $424M 51% / 49%
Slide 13: Pennsylvania Overview
Pennsylvania Overview Rate Base and ROE Information(1) YE 2017 Filed Company Rates Effective Allowed ROE Rate Base Debt / Equity PN January 2017 $1,614M 47.4% / 52.6% Settled ME January 2017 $1,386M 48.8% / 51.2% Settled PP January 2017 $413M 49.9% / 50.1% Settled WPP January 2017 $1,364M 49.7% / 50
Slide 14: New Jersey Overview
New Jersey Overview As of December 31, 2014 Rate Base and ROE Information Number of Customers Allowed (000s) Year-End 2017 Company Rates Effective Rate Base(1) Allowed ROE Debt / Equity JCP&L 1,127 JCP&L January 2017 $2,217M 55% / 45% 9.6% Principal Industries Served 2017 Reliability Information Che
Slide 15: West Virginia/Maryland Overview
West Virginia/Maryland Overview Number of Customers Principal Industries Served (000s) Year-End 2017 Chemical, Coal Mining, Non-Metallic MP 392 Minerals, Primary and Fabricated PE 409 Metals, Oil and Gas Extractions 801 Rate Base and ROE Information YE 2016 Allowed Company Rates Effective Allowed RO
Slide 16: Regulated Generation Overview
Regulated Generation Overview ■ Regulated Distribution segment includes: – 3,580 MW of generation serving West Virginia customers owned and controlled by Mon Power – 210 MW of generation, which represents JCP&L’s 50% ownership interest in Yards Creek Net Maximum Year Plant 2017 Plant PJM Zone State
Slide 17: Regulated Transmission
Regulated Transmission 3 Standalone ~24,500 Line Miles $1.3B Total Revenues in 2017 Operating Companies
Slide 18: Regulated Transmission – Segment Overview
Regulated Transmission – Segment Overview ■ One of the largest transmission systems in PJM with ~24,500 miles – Includes FERC-regulated transmission assets recovered through formula rates owned by ATSI, TrAIL, and MAIT(1) – Includes FERC-regulated transmission assets recovered through stated rates o
Slide 19: ATSI Overview
ATSI Overview Jurisdiction FERC Test Year Forward-Looking Term January – December Filing Month October Allowed ROE 10.38% Rate Base $2.6B(1) Cap Structure 40% Debt / 60% Equity Location OE, PP, CEI, and TE True-Up Mechanism Yes (1) Represents projected average rate base from its 2018 Projected Trans
Slide 20: TrAILCo Overview
TrAILCo Overview Jurisdiction FERC OH PA Test Year Forward-Looking Term June – Following May MD Filing Month May 12.7% (TrAIL the Line & Black Oak SVC) VA Allowed ROE 11.7% (All other projects) WV Rate Base $1.6B(1) Cap Structure 40% Debt / 60% Equity WPP, MP, and PE as well as some Location portion
Slide 21: MAIT Overview
MAIT Overview Jurisdiction FERC Test Year Forward-Looking Term January – December Filing Month October Settlement ROE 10.3% Rate Base $661M(1) Hypothetical Cap Structure 50% Debt / 50% Equity Location ME, PN True-Up Mechanism Yes 46 kV 230 kV Penelec (1) Represents annual projected average rate base
Slide 22: JCP&L Transmission Overview
JCP&L Transmission Overview Jurisdiction FERC Test Year Stated Rate(1) 34.5kV Location JCP&L 115 kV 230 kV 500 kV ■ Capital spend is supported by the revenues received Jersey Central Power & Light from the stated rates ■ FERC regulations require utilities to provide open access transmission service
Slide 23: Former Allegheny Transmission Overview
Former Allegheny Transmission Overview 115 kV 138 kV 230 kV 345 kV Jurisdiction FERC 500 kV West Penn Power Test Year Stated Rate Mon Power Location WPP, MP, PE Potomac Edison ■ Capital spend is supported by the revenues received from the stated rates ■ FERC regulations require utilities to provide
Slide 24: Competitive Energy Services (CES)
Competitive Energy Services (CES)
Slide 25: CES Segment Overview
CES Segment Overview ■ Segment primarily comprised of three legal entities: FirstEnergy Solutions, FENOC and PA Allegheny Energy Supply ■ Diverse portfolio of 12,303(1) MW OH ■ 2017 Operating Statistics: AE Supply Plants – $3.5B of revenues FES Plants WV – 63M(2) MWH of generation output VA – 43M MW
Slide 26: Progress Toward Becoming a Regulated Business
Progress Toward Becoming a Regulated Business FirstEnergy Solutions 2016 Updates ■ Announced a strategic review of Competitive Generation ■ Announced plans to sell or deactivate Bay Shore and deactivate Sammis Units 1-4 ■ FES appointed two new independent board members, John Blickle and James Boland
Slide 27: Progress Toward Becoming a Regulated Business
Progress Toward Becoming a Regulated Business AE Supply ■ March 7, 2017 – Mon Power and AE Supply signed an asset purchase agreement to transfer AE Supply’s ownership of Pleasants plant, subject to regulatory approval by WVPSC and FERC – January 12, 2018 – FERC denied the proposed transaction withou
Slide 28: Financial Materials
Fi nancial Materials Unlocking Value for Investors ~ DS BW
Slide 29: Financial Support
Financial Support
Slide 30: 2016 – 2017 Earnings Per Share
Consolidated 2016 – 2017 Earnings Per Share FE Consolidated Summary Basic EPS (1) Special Items (2) Basic EPS – Operating (Non-GAAP) 2016A 2017A 2016A 2017A 2016A 2017A Regulated Distribution $1.53 $2.06 $0.28 $0.25 $1.81 $2.31 Regulated Transmission $0.78 $0.76 - $0.07 $0.78 $0.83 Competitive Energ
Slide 31: 2016A GAAP to Operating (Non-GAAP) Earnings Reconciliation
Consolidated 2016A GAAP to Operating (Non-GAAP) Earnings(1) Reconciliation 2016 Actual Regulated FirstEnergy Regulated Regulated Distribution and Competitive Corporate/ (In $M, except per share amounts) Consolidated Distribution Transmission Transmission Energy Services Other Subtotal Net Income (Lo
Slide 32: 2017A GAAP to Operating (Non-GAAP) Earnings Reconciliation
Consolidated 2017A GAAP to Operating (Non-GAAP) Earnings(1) Reconciliation 2017 Actual Regulated FirstEnergy Regulated Regulated Distribution and Competitive Corporate/ (In $M, except per share amounts) Consolidated Distribution Transmission Transmission Energy Services Other Subtotal Net Income (Lo
Slide 33: 2016A – 2017A Special Items
Consolidated 2016A – 2017A Special Items(1) ■ Mark-to-market adjustments – Pension/OPEB actuarial assumptions – Reflects changes in fair value of plan assets and net actuarial gains and losses associated with the company’s pension and other post-employment benefit plans – Other – Primarily reflects
Slide 34: 2016-2017 Capital Expenditures Summary
Consolidated 2016-2017 Capital Expenditures Summary 2016A 2017A FE Consolidated $2.9B $2.8B ($ Millions) 2016A 2017A Regulated Distribution $1,281 $1,362 ($ Millions) 2016A 2017A Corp / Other $93 $99 Stated Rate $791 $861 Formula Rate $490 $501 ($ Millions) 2016A 2017A CES $550 $280 Baseline - FENOC
Slide 35: 2016A-2017A Funds From Operations
Consolidated 2016A-2017A Funds From Operations ($ Millions) FE Consolidated 2016A 2017A Cash From Operations $3,383 $3,808 Working Capital/Collateral/Other (1) (50) (68) Pension Contribution (2) 382 - Funds From Operations (Non-GAAP) $3,715 $3,740 (1) Primarily includes changes in working capital an
Slide 36: 2016A-2017A Free Cash Flow
Consolidated 2016A-2017A Free Cash Flow ($ Millions) FE Consolidated 2016A 2017A Funds From Operations (FFO) (Non-GAAP) $3,715 $3,740 Capital Expenditures (1) (2,888) (2,737) Nuclear Fuel (232) (254) Cash Before Other Items $595 $749 Pension Contribution (382) - Asset Sale Proceeds 15 388 Working Ca
Slide 37: Financial – Pension/OPEB Overview
Consolidated Financial – Pension/OPEB Overview ■ FE is the sponsor of the benefit plans for employees at all of FE’s subsidiaries ■ Pension Status is Open – The plan design was changed to a Cash Balance formula for new hires beginning 1/1/2014 – Employees hired before 1/1/2014 are covered under a Fi
Slide 38: Financial – Pension/OPEB Overview
Consolidated Financial – Pension/OPEB Overview ■ Pension/OPEB Funded Status: Year-End 2017 Actual $ Millions Corp FEU FES FENOC Total Notes 69% funded at 12/31/17; $1,250 of contributions were made in Qualified Pension ($1,587) ($723) ($70) ($663) ($3,043) January 2018 Non-Qualified Pension (178) (1
Slide 39: Regulated Financial Support
Regulated Financial Support
Slide 40: Weather-Adjusted Distribution Deliveries
Regulated Distribution Weather-Adjusted Distribution Deliveries Total Deliveries Residential Commercial M MWH 2016A 2017A M MWH 2016A 2017A M MWH 2016A 2017A Total 146.5 147.0 Sub-Total 53.2 53.1 Sub-Total 43.1 42.6 OH 52.6 52.3 OH 17.0 16.9 OH 15.4 14.9 PA 51.5 52.0 PA 18.3 18.3 PA 13.0 12.9 WV 15.
Slide 41: Regulated Distribution Capital Plan (2016A – 2017A)
Regulated Distribution Regulated Distribution Capital Plan (2016A – 2017A) Stated Rate Formula Rate Total $ Millions 2016A 2017A 2016A 2017A 2016A 2017A CEI $30 $30 $103 $100 $133 $130 OE 30 30 126 125 156 155 OH TE 10 10 34 30 44 40 Sub-total 70 70 263 255 333 325 NJ JCP&L 191 189 0 0 191 189 ME 76
Slide 42: Regulated Transmission Capital Plan (2016A – 2017A)
Regulated Transmission Regulated Transmission Capital Plan (2016A – 2017A) $ Millions 2016A 2017A 2014A - 2017A Spend WPP, MP, PE $53 $76 ME, PN 55 - ATSI 487 541 20% TrAIL Co. 217 45 MAIT(1) - 247 JCP&L 189 122 Regulated Transmission – Total $1,001 $1,031 80% Energizing the Future $2B Phase 1 – Fin
Slide 43: Competitive Financial Support
Competitive Financial Support
Slide 44: 2017A Adjusted EBITDA
Competitive 2017A Adjusted EBITDA Competitive Energy Services Average $/MWH 2017A ($M) $50 Contract Rate less ($18) Supply Cost Contract Sales: 43M MWH less ($11) Delivery Cost $912 $21 avg. net margin $29 Wholesale Price plus $1 Financial Gain Wholesale: 22M MWH less ($18) Supply Cost $264 $12 avg.
Slide 45: Notes on 2017A Adjusted EBITDA
Competitive Notes on 2017A Adjusted EBITDA Competitive Energy Services Contract Sales: ▪ Includes actual physical volume of contract sales through 12/31/2017. ▪ Contract Rate represents average realized rate based on actual committed contract prices and customer usage. ▪ Supply Cost rate represents
Slide 46: Net Income (Loss) to Adjusted EBITDA Reconciliation
Competitive Net Income (Loss) to Adjusted EBITDA1 Reconciliation Competitive Energy Services ($ Millions) 2017A Net Income (Loss) – GAAP ($2,641) Special Items (after tax) (1) 2,846 Operating Earnings $205 Income Taxes(2) 120 Interest Expense, Net 152 Depreciation 118 Amortization(3) 54 Investment I
Slide 47: 2017 Funds From Operations
Competitive 2017 Funds From Operations Competitive Energy Services ($ Millions) 2017A Net Income (Loss) – GAAP ($2,641) Income Taxes(1) 155 Income (Loss) Before Income Taxes (2,486) Cash Receipts on Income Tax Benefits(2) 94 Depreciation & Amortization(3) 388 Asset Impairments(4) 2,365 Lease Payment
Slide 48: 2017A Free Cash Flow
Competitive 2017A Free Cash Flow Competitive Energy Services ($ Millions) 2017A Funds From Operations (FFO) (Non-GAAP) $699 Capital Expenditures(1) (280) Nuclear Fuel (254) Cash Before Other Items $165 Sale-Leaseback Repurchases (38) Asset Sale Proceeds, Net 388 Collateral 30 Working Capital/Other(2
Slide 49: FirstEnergy Investor Relations Contacts
FirstEnergy Investor Relations Contacts Irene M. Prezelj, Vice President Meghan G. Beringer, Director prezelji@FirstEnergyCorp.com mberinger@FirstEnergyCorp.com 330-384-3859 330-384-5832 Jake Mackin, Manager mackinj@FirstEnergyCorp.com 330-384-4829 For our e-mail distribution list, please contact: L