FirstEnergy Corp. · NYSE:FE
FirstEnergy — Q4 2018 Earnings Presentation
46 slides from FirstEnergy's earnings presentation, Feb 19, 2019
Slide 1: FirstEnergy FactBook
FIRSTENERGY FactBook Published February 19, 2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements This FactBook includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 based on information currently available. Unless the context requires otherwise, as used herein, references to “we,” “us,” “our,” and “FirstEnergy”
Slide 3: Non-GAAP Financial Matters
Non-GAAP Financial Matters This FactBook contains references to non-GAAP financial measures including, among others, Operating earnings (loss), Operating earnings (loss) per share, Operating earnings (loss) per share by segment, funds from operations and free cash flow. Generally, a non-GAAP financi
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. Regulated Plants 230, 345 and 500 kV Transmission Lines Utility footprint $40B ~6 Mil
Slide 6: Summary Organizational Structure
Summary Organizational Structure FirstEnergy Corp. (1) (FE) Monongahela Power Jersey Central Power & FirstEnergy Company Light Company Ohio Edison Company Transmission, LLC (MP) (JCP&L) (OE) (FET) Allegheny Metropolitan Edison Pennsylvania Power Generating Company Company Company American Transmissi
Slide 7: FirstEnergy Sustainability Strategy
FirstEnergy Sustainability Strategy 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 Build a sustainable business with… Social and Environmental Employees Customers Env
Slide 8: FirstEnergy Sustainability/ESG Facts
FirstEnergy Sustainability/ESG Facts Environmental Social Governance ■ Participated in CDP Climate and ■ Participated and was selected as one ■ Began implementation of BOD-approved Water Reports of 230 companies for the 2019 sustainability strategy that includes Bloomberg Gender Equality Index initi
Slide 9: Regulated Distribution
Regulated Distribution 10 Operating 6 States 6M Customers Companies
Slide 10: 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 11: Average Customer Bills
Average Customer Bills Rates Effective July 1, 2018 Pennsylvania Ohio $175 $150 $150 $125 $125 $100 $100 $154.62 $145.69 $145.49 $126.77 $127.66 $132.02 $114.65 $75 $98.79 $98.42 $101.08 $99.11 $103.99 $75 $90.12 $84.12 $50 $50 ME PN PP WPP DUQ PECO PPL CEI OE TE AEP (CS) AEP (OP) DP&L Duke New Jers
Slide 12: Ohio Overview
Ohio Overview Number of Customers 2018 Reliability Information (000s) Year-End 2018 Avg. Customer Minutes OE 1,051 Interruptions SAIFI CAIDI CEI 753 1.5 150 TE 312 2,116 1.0 125 0.5 100 Principal Industries Served Primary and Fabricated Metals, 0.0 75 Chemical, Automotive, CEI OE TE CEI OE TE Petrol
Slide 13: Pennsylvania Overview
Pennsylvania Overview 2018 Reliability Information Avg. Customer Interruptions Minutes SAIFI CAIDI 2.0 250 1.5 200 1.0 150 0.5 100 Number of Customers 0.0 50 (000s) Year-End 2018 ME PN PP WPP ME PN PP WPP PN 587 Principal Industries Served 2018 Actuals Minimum Targets ME 572 Primary and Fabricated M
Slide 14: New Jersey Overview
New Jersey Overview Number of Customers 2018 Reliability Information Avg. Customer (000s) Year-End 2018 Minutes Interruptions SAIFI CAIDI JCP&L 1,135 1.5 200 150 1.0 Principal Industries Served 100 0.5 Chemical, Primary and Fabricated 50 Metals, Food Manufacturing, 0.0 0 Plastic & Rubber Central NJ
Slide 15: West Virginia/Maryland Overview
West Virginia/Maryland Overview Number of Customers Principal Industries Served (000s) Year-End 2018 Chemical, Coal Mining, Non-Metallic MP 393 Minerals, Primary and Fabricated PE (WV 144; MD 270) 414 Metals, Oil and Gas Extractions 807 Political Overview 2018 Reliability Information Governor – West
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 MP – 210 MW of generation, which represents JCP&L’s 50% ownership interest in Yards Creek Net Maximum Year Plant 2018 Plant PJM Zone State Utility
Slide 17: Regulated Transmission
Regulated Transmission 3 Standalone ~24,500 Line Miles $1.4B Total Revenues in 2018 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 – Includes FERC-regulated transmission assets recovered through stated rates owne
Slide 19: ATSI Overview
ATSI Overview Jurisdiction FERC Test Year Forward-Looking Term January – December Filing Month October Allowed ROE 10.38% Rate Base $2.9B(1) Cap Structure 40% Debt / 60% Equity(1) Location OE, PP, CEI, and TE True-Up Mechanism Yes (1) Represents projected average rate base and capital structure from
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) Allowed ROE VA 11.7% (All other projects) WV Rate Base $1.5B(1) Cap Structure 40% Debt / 60% Equity(1) WPP, MP, and PE as well as some Location port
Slide 21: MAIT Overview
MAIT Overview Jurisdiction FERC Test Year Forward-Looking Term January – December Filing Month October Allowed ROE 10.3% Rate Base $1.0B(1) Cap Structure 41% Debt / 59% Equity(1) Location ME, PN True-Up Mechanism Yes (1) Represents projected average rate base and capital structure from its 2019 Proj
Slide 22: JCP&L Transmission Overview
JCP&L Transmission Overview Jurisdiction FERC Test Year Stated Rate 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 at
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 Potomac Edison Location WPP, MP, PE ■ Capital spend is supported by the revenues received from the stated rates ■ FERC regulations require utilities to provide
Slide 24: 2018-2021 Financial Plan
2018-2021 Financial Plan
Slide 25: FE's Value Proposition
Ticker: FE FE’s Value Proposition A premier customer-focused, pure-play regulated utility Driving sustainable, long-term regulated Improving balance sheet with investment-grade earnings growth and a competitive dividend credit ratings 10 distribution utilities, Proven track record of 6M customers, 6
Slide 26: 2019 Operating EPS Guidance
2019 Operating EPS Guidance + Increased wires revenues + Transmission rate base growth + FE Tomorrow savings + Lower effective tax rate $2.59 2018 Actual /sh (1) + $2.60 2019 midpoint $2.45 – $2.75 /sh (1) - range (2) – Higher depreciation $2.40 /sh – Higher general taxes +8% y-o-y growth 2018 origi
Slide 27: 2019 Operating EPS Guidance
2019 Operating EPS(1) Guidance Projecting 7% weather-adjusted, year-over-year Operating EPS growth 2019 Operating EPS Guidance Range Regulated Distribution $2.16 – $2.36 Regulated Transmission $0.81 – $0.89 $2.60 Corp / Other ($0.52) – ($0.50) $2.59 $2.45 – $2.75 $0.85 $0.74 Transmission +$0.11 Rate
Slide 28: 2018 GAAP to Operating (Non-GAAP) Earnings Reconciliation
2018 GAAP to Operating (Non-GAAP) Earnings(1) Reconciliation 2018 Actual Regulated Regulated Corporate/ FirstEnergy (In $M, except per share amounts) Distribution Transmission Other Consolidated 2018A Net Income (Loss) attributable to Common Stockholders (GAAP) $1,242 $397 ($658) $981 2018A Basic Ea
Slide 29: 2018A Special Items
2018A Special Items(1) ■ Regulatory charges – Primarily reflects the impact of regulatory agreements or orders requiring certain commitments and/or disallowing the recoverability of costs, net of related credits. ■ Mark-to-market adjustments: Pension/OPEB actuarial assumptions – Reflects the change
Slide 30: 2019 FFO and FCF Forecast
2019 FFO and FCF Forecast FE Consolidated ($ Millions) 2019F Cash from Operations (GAAP) $2,090 – $2,290 Working Capital (1) (25) – (55) Pension Contribution (2) 500 Funds From Operations (FFO) (Non-GAAP) $2,565 – $2,735 Capital Expenditures (2,850) – (2,950) Cash Before Other Items ($285) – ($215)
Slide 31: 2018-2021 Operating EPS CAGR
2018-2021 Operating EPS CAGR Affirming our 6% - 8% operating EPS CAGR target 6% - 8% Growth (excludes Ohio DMR) $2.15 + T&D growth opportunities + Organic utility growth + FE Tomorrow initiatives Original 2018 – Depreciation and general taxes 2021F Guidance Midpoint Load growth (excluding Ohio DMR)
Slide 32: Financing Plan (2019-2021)
Financing Plan (2019-2021) Committed to maintaining investment-grade credit ratings FE Corp Regulated Distribution Year Entity Amount Purpose Year Entity Amount Purpose FE Corp Up to $628M New tax notes to FES creditors ✓ ME $500M $300M at 7.70% maturing 1/15/19 2019F FE Corp Up to $1.25B $1.25B Ter
Slide 33: Pension/OPEB Overview
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 Final Average Pay formula ■
Slide 34: 2018 Pension/OPEB Summary
2018 Pension/OPEB Summary ■ Pension/OPEB Funded Status: Year-End 2018A $ Millions Corp FEU FES/FENOC Total Notes 77% funded at 12/31/18; excludes 2/1/19 $500M Qualified Pension ($893) ($403) ($797) ($2,093) Contribution Non-Qualified Pension (160) (156) (69) (385) No minimum funding requirements OPE
Slide 35: 2018-2021 Qualified Pension Funding
2018-2021 Qualified Pension Funding Significant improvement in funded status projected through 2021 Qualified Pension Plan Projected Funding Status – Qualified Pension Plan ■ 2018 actual investment return of -4.2% $ Millions PBO Plan Assets $10,000 $9,747 ■ Pension Contributions $9,077 $9,049 $9,034
Slide 36: Capital Expenditures Forecast Summary
Capital Expenditures Forecast Summary $11B – $12B in capital investments 2018-2021 ~55% based on formula rates Annually 2018A 2019F – 2021F FE Consolidated Total $3.0B $2.8B - $3.0B ($ Millions) 2018A 2019F 2020F 2021F Regulated Distribution (~40% formula rates) $1,635 $1,600-$1,700 $1,500-$1,700 $1
Slide 37: Regulated Distribution Capital Plan (2018-2021)
Regulated Distribution Capital Plan (2018-2021) $6.2B – $6.7B in capital investments 2018-2021 $ Millions 2018A 2019F 2020F 2021F Ohio $370 $505 - $510 $480 - $545 $490 - $555 Stated 85 70 70 70 Formula 285 435 - 440 410 - 475 420 - 485 Pennsylvania $666 $590 - $595 $500 - $515 $485 - $495 Stated 44
Slide 38: 2018A-2019F Regulated Distribution Capital Expenditures
2018A-2019F Regulated Distribution Capital Expenditures Total Total $ Millions 2018A 2019F CEI $156 $155 OE 165 295 – 300 OH TE 49 55 Sub-total 370 505 - 510 NJ JCP&L 268 205 - 290 ME 194 180 PN 191 150 PA PP 54 50 WPP 227 210 - 215 Sub-total 666 590 - 595 MP 217 190 – 195 WV / MD PE 114 110 Sub-tot
Slide 39: Regulated Distribution Rate Base Growth (2018-2021)
Regulated Distribution Rate Base Growth (2018-2021) $M $18,000 $16,000 $14,000 MD $12,000 WV $10,000 NJ $8,000 PA OH $6,000 $4,000 $2,000 $0 2018F 2019F 2020F 2021F FirstEnergy FactBook Published February 19, 2019 39
Slide 40: Weather-Adjusted Distribution Deliveries
Weather-Adjusted Distribution Deliveries 2018A-2021F Total Deliveries M MWH 2018A 2019F 2020F 2021F CAGR % Sub-Total 53.4 53.3 52.7 52.4 -0.7% Residential OH 17.0 16.9 16.7 16.7 -0.6% PA 18.5 18.1 17.8 17.8 -1.4% 2018A-2021F WV 5.4 5.7 5.7 5.6 1.1% M MWH 2018A 2019F 2020F 2021F CAGR % NJ 9.3 9.3 9.2
Slide 41: Regulated Distribution Guidance Sensitivities
Regulated Distribution Guidance Sensitivities Estimated Impact of Annual Retail Sales Volumes + / - 1% Change in Residential Deliveries ~$0.03/share + / - 1% Change in Commercial Deliveries ~$0.01/share + / - 1% Change in Industrial Deliveries ~$0.004/share Weather Impact on Residential/Commercial S
Slide 42: Regulated Transmission Capital Deployment Plan
Regulated Transmission Capital Deployment Plan WPP, MP, PE ~$495M | ~10% JCP&L ~$665M | ~14% ATSI ~$1,735M | ~37% $4.8B ~$1,200M CapEx per year 2018-2021 MAIT ~$1,710M | ~36% TrAIL Co. ~$160M | ~3% $ 20 FUTURE B+ OPPORTUNITIES beyond 2021… FirstEnergy FactBook Published February 19, 2019 42
Slide 43: Regulated Transmission Capital Plan (2018-2021)
Regulated Transmission Capital Plan (2018-2021) Energizing the Future Plan – Phase 2 ~$4.8B in capital investments $ Millions 2018A 2019F 2020F 2021F ATSI $465 $445 $390 $435 TrAIL Co. 35 65 30 30 MAIT 409 435 415 450 JCP&L 107 140 245 175 WPP, MP, PE 149 115 120 110 Regulated Transmission – Total $
Slide 44: Regulated Transmission Rate Base Growth (2018-2021)
Regulated Transmission Rate Base Growth (2018-2021) $M $9,000 $8,000 $7,000 $6,000 Stated TrAIL $5,000 MAIT ATSI $4,000 $3,000 $2,000 $1,000 $0 2018F 2019F 2020F 2021F FirstEnergy FactBook Published February 19, 2019 44
Slide 45: Commonly Used Terms & Acronyms
Commonly Used Terms & Acronyms ABO Accumulated Benefit Obligation OVEC Ohio Valley Electric Corporation ADIT Accumulated Deferred Income Taxes PA PUC Pennsylvania Public Utility Commission AFUDC Allowance for Funds Used During Construction PBO Projected Benefit Obligation AMI Advanced Metering Infra
Slide 46: FirstEnergy Investor Relations Contacts
FirstEnergy Investor Relations Contacts Irene M. Prezelj, Vice President Gina E. Caskey, Senior Advisor prezelji@FirstEnergyCorp.com caskeyg@FirstEnergyCorp.com 330-384-3859 330-761-4185 Jake M. Mackin, Consultant mackinj@FirstEnergyCorp.com 330-384-4829 For our e-mail distribution list, please cont