FEFirstenergyQ2 2026Earnings Analysis

Earnings Growth Driven by Transmission Investments

Q2 2026 earnings attributable to FE increased $20 million (7%) to $288 million ($0.50/share) versus $268 million ($0.46/share) in Q2 2025, primarily due to higher transmission revenues from regulated capital investments, true-up adjustments from annual forward-looking transmission rate filings, and the absence of 2025 Ohio Stipulation customer credits, partially offset by higher interest expense and higher investigation-related costs.

Source: 10-Q Item 2 MD&A

Energize365 Capital Plan Expanded to $36 Billion

FirstEnergy's 2026-2030 Energize365 investment plan totals $36 billion, approximately 25% higher than the prior 2025-2029 plan, allocated 28% to Distribution, 35% to Integrated, and 35% to Stand-Alone Transmission segments to strengthen grid reliability and support data center and customer demand growth.

Source: 10-Q Item 2 MD&A

Segment Performance Diverged

Stand-Alone Transmission earnings rose $22 million to $97 million and Integrated segment earnings rose $7 million to $123 million in Q2 2026, while Distribution segment earnings declined $18 million to $143 million due to milder weather reducing customer usage and higher planned maintenance and financing costs.

Source: 10-Q Item 2 MD&A

Ohio Base Distribution Rate Case Filed

On May 22, 2026, the Ohio Companies filed for a three-year rate plan proposing net base distribution revenue increases of approximately $254 million in year one, $59 million in year two, and $80 million in year three, with a requested 10.2% ROE and 47%/53% debt/equity capital structure; evidentiary hearings are set to begin March 1, 2027.

Source: 10-Q Item 2 MD&A

West Virginia Generation Expansion and Rate Filings

MP and PE filed a CPCN for the ~$2.7 billion Maidsville Energy Center (1,200 MW gas turbine plant plus 70 MW solar), and separately filed a base rate proceeding on May 15, 2026 proposing a $188.4 million (10.6%) electric rate increase, with a WVPSC order expected by end of July 2026.

Source: 10-Q Item 2 MD&A

The company noted higher investigation and other related costs associated with ongoing government investigations and ongoing litigation as a factor reducing Q2 2026 and first-half 2026 earnings versus the prior year, indicating continued financial exposure from these matters.

Source: 10-Q Item 2 MD&A

FirstEnergy faces pending and unresolved regulatory proceedings in Ohio (rate case rehearing and Supreme Court appeal of ESP IV return), West Virginia (base rate case and Maidsville Energy Center CPCN), Maryland (new Utility RELIEF Act limiting cost recovery and forecasted costs), and New Jersey (upcoming base rate filing), creating uncertainty over timing and amount of cost recovery and authorized returns.

Source: 10-Q Item 2 MD&A

The Utility RELIEF Act signed into law May 12, 2026 limits forecasted costs in rate proceedings, modifies multi-year rate plan approval standards, eliminates certain earnings incentives, and restricts recovery of administrative compensation costs, which FirstEnergy states may affect PE's timing and amount of cost recovery, authorized returns, and future earnings opportunities.

Source: 10-Q Item 2 MD&A

Interest expense increased in both Q2 2026 (to $337 million from $299 million) and the first six months (to $663 million from prior year), driven by new long-term debt and convertible note issuances, which partially offset earnings growth and reflects increasing financing costs to fund the expanded $36 billion Energize365 capital plan.

Source: 10-Q Item 2 MD&A

Milder weather reduced residential and commercial distribution deliveries in Q2 2026 (residential down 1.9%, commercial down 1.2% on an actual basis), contributing to an $18 million decline in Distribution segment earnings, highlighting revenue sensitivity to weather variability.

Source: 10-Q Item 2 MD&A