FirstEnergy (FE) Risk Factor Changes

FEV currently holds a 33-1/3% equity ownership in Global Holding, the holding company for a joint venture in the Signal Peak mining and coal transportation operations with coal sales predominantly in international mar…

The FE Board will continue to regularly evaluate FE’s common stock dividend and determine whether to declare a dividend, and an appropriate amount thereof, each quarter taking into account such factors as, among other…

FE cannot assure its common shareholders that future dividend payments will be made, or if made, in what amounts they may be paid.

FE may also provide capital contributions or debt financing to its subsidiaries under certain circumstances, which would reduce the funds available to meet financial obligations, including making interest and principa…

FE is a holding company and relies on cash from its subsidiaries to meet its financial obligations and therefore any restrictions on the Electric Companies and Transmission Companies’ ability to pay dividends or make…

Specifically, the IRA of 2022 imposes a corporate AMT and, if applicable, corporations must pay the greater of the regular corporate income tax or the AMT.

Should there be fluctuations in the bank and capital markets as a result of uncertainty, changing or increased regulation, reduced alternatives or failures of significant foreign or domestic financial institutions or…

We rely on the bank and capital markets to meet both our financial commitments and short-term liquidity needs if internal funds are not available from our operations.

FirstEnergy’s debt and credit agreements contain various financial and other covenants including a requirement for FE to maintain a consolidated interest coverage ratio of not less than 2.50 times, measured at the end…

As further described in Item 2., "Properties", FirstEnergy controls approximately 3,160 MWs of coal-fired generation, primarily at MP.

Financial and reputational risks associated with owning coal-fired generation may have an adverse impact on FE's business operations, financial condition and cash flows.

In our regulated operations, energy conservation could negatively impact us depending on the regulatory treatment of the associated impacts and, in particular, whether we would be permitted to recover some or all of t…

A number of regulatory and legislative bodies, including the NJBPU and the New Jersey General Assembly, have introduced requirements and/or incentives, as well as penalties, to reduce peak demand and energy consumption.

Private individuals may seek to enforce environmental laws and regulations against us and could allege personal injury, property damages or other relief.

The EPA has historically taken the view that many companies, including many energy producers, have been modifying emissions sources in violation of NSR standards during work considered by the companies to be routine m…

FirstEnergy may be subject to risks from changing or conflicting interpretations of existing laws and regulations, including, for example, the applicability of the EPA's NSR programs.

The EPA may conduct NSR investigations at FirstEnergy’s electric generation facilities, which could result in the imposition of fines.

Furthermore, certain states have begun to pass their own laws related to GHG emissions and disclosure of such emissions.

Federal and various regional and state authorities regulate GHG emissions, including CO2 emissions and have created financial incentives to reduce them.

government policies limit or restrict the usage of coal as a source of fuel in generating electricity or alternate fuels, such as natural gas, or displace coal on a competitive basis, FE's business and results of oper…

MP has coal-fired generation capacity, which exposes it to risk from regulations relating to coal, GHGs and CCRs, which could lead to increased costs or the need to spend significant resources to defend allegations of…

Standards for tracking and reporting of climate and other environmental matters continue to evolve.

FirstEnergy’s ability to achieve its GHG reduction objective is subject to its ability to make operational changes and is conditioned upon numerous risks, many of which are outside of its control.

We continually focus on limiting and reducing where possible, our operation and maintenance expenses.

Additionally, a significant number of our physical workforce are represented by unions.

We are involved in a number of litigation, arbitration, mediation, and similar proceedings, including with respect to asbestos claims.

Our employees, contractors and the general public may be exposed to dangerous environments due to the nature of our operations.

FirstEnergy’s Energize365 business plan calls for extensive capital investments totaling approximately $36 billion from 2026 through 2030.

FirstEnergy is subject to risks arising from the operation of its electric generation facilities and transmission and distribution equipment which could reduce revenues, increase expenses and have a material adverse e…

Furthermore, change or uncertainty in U.S.

We have in the past and may in the future experience supply chain challenges due to economic conditions that developed during the COVID-19 pandemic and have continued in the years since, with order lead times increasi…

We have near-term exposure to interest rates from outstanding short-term indebtedness indexed to variable interest rates, and we have exposure to future interest rates to the extent we seek to raise long-term debt in…

Economic conditions, including those that may arise from government fiscal policy, tariffs, recessions, inflationary and interest rate pressures, may impact the demand for electricity and, therefore, any decline in ec…

Weather conditions directly influence the demand for electric power.

The hazards described above, along with other safety hazards associated with our operations, can cause significant personal injury or loss of life, severe damage to and destruction of PP&E, contamination of, or damage…

Recent industry projections reflect the potential for significant growth in energy demand over the next decade.

Our operations are subjected to audit by FERC, NERC and RFC, which may conduct routine or special audits and issue requests designed to ensure compliance with applicable rules, regulations, policies and procedures.

FERC policy currently permits recovery of prudently incurred costs associated with cost-of-service-based wholesale power rates and the expansion and updating of transmission infrastructure within its jurisdiction.

PPUC, in West Virginia by the WVPSC and in New York by the NYPSC – through traditional, cost-based regulated utility ratemaking.

The success of our growth strategy will depend, in part, on the successful growth of revenue resulting from our transmission investments in line with our expectations.

FirstEnergy is engaged in an ongoing effort to create a culture of continuous improvement to strategically reduce our operating expenditures and continually reinvest in a more diverse capital program in support of our…

Risks Associated with the Execution of Our Strategic Initiatives and the Regulation of Our Distribution and Transmission Businesses

Our reputation is important towards maintaining new and ongoing positive relationships with customers, regulators, investors, and other stakeholders.

These matters are likely to continue to have an adverse impact on the trading prices of our securities, which could be material.

This securities class-action litigation could divert management’s focus and have resulted in, and could continue to result in, substantial expenses, and the commitment of substantial corporate resources.

As of July 22, 2024, we successfully completed the obligations required within the three-year term of the DPA.

Securities class-action litigation against us could have a material adverse effect on our reputation, business, financial condition, results of operations, our ability to access capital, liquidity or cash flows.

Risks Associated with Damage to Our Reputation and Securities Class-Action Litigation

We operate in a business environment that involves significant risks, many of which are beyond the Registrants’ control.

We cannot predict whether, when or to what extent new U.S.

The IRA of 2022, among other things, imposes a new 15% corporate AMT based on AFSI applicable to corporations with a three-year average AFSI over $1 billion.

The IRA of 2022 could change the rate of taxes imposed on us and could negatively affect our cash flows and financial condition.

A breach of any of the covenants contained in our credit agreements, including any breach related to alleged failures to comply with anti-corruption and anti-bribery laws, could result in an event of default under suc…

The price for Signal Peak’s coal depends upon factors beyond our control, including but not limited to: overall global economic and geopolitical conditions, the effect of worldwide energy consumption, including the im…

Our results of operations and financial condition may be adversely affected by certain risks related to our minority interest in a coal mine.

Signal Peak operates a single underground coal mine in south-central Montana and must obtain numerous governmental permits and approvals that impose strict conditions and obligations relating to, among other things, v…

FEV currently holds a 33-1/3% equity ownership in Global Holding, the holding company for a joint venture in the Signal Peak mining and coal transportation operations with coal sales predominantly in international mar…

We have a minority ownership stake in a coal mine that requires governmental permits and approvals to operate, and a failure of the coal mine to renew and maintain such permits and approvals may adversely affect our r…

In 2010, the EPA adopted regulations pertaining to GHG emissions that require new and existing sources of GHG emissions to potentially obtain new source review permits from the EPA prior to construction or modification.

changes, salary increases, the demographics of plan participants and regulatory requirements.

result of economic or other events that are beyond the control of our risk management processes.

For all of these reasons, any such cyber incident could result in significant lost revenue, the inability to conduct critical business functions and serve customers for a significant period of time, the loss of confid…

As cyber threats continually evolve and become more difficult to detect and successfully defend against, there can be no assurance that we can implement or maintain adequate preventive measures, accurately assess the…

Any actual or perceived cyber-attack, data security breach, damage, interruption and/or defect could: (i) disable our generation, transmission and/or distribution services for a significant period of time; (ii) delay…

Our generation, transmission and distribution infrastructure, as well as the transmission facilities of third parties with whom we are interconnected, may be increasingly vulnerable to such attacks as a result of the…

In addition, the increased use of smartphones, tablets, and other wireless devices, as well as ongoing remote work-from-home arrangements, may also heighten these and other operational risks.

As a source of critical infrastructure, the energy industry is at heightened threat of cyber-attacks, which are becoming increasingly more difficult to anticipate and prevent due to their rapidly evolving nature.

Over the last several years, there has been an increase in the frequency of cyber-attacks by terrorists, hackers, international activist organizations, foreign governments and individuals.

In the ordinary course of our business, we depend on information technology systems that utilize sophisticated operational systems and network infrastructure to run all facets of our generation, transmission and distr…

Risks Associated with the Execution of Our Strategic Initiatives

We are unable to predict the adverse impacts of such regulatory matters, including with respect to rates, and, therefore, any of these risks could impact us significantly beyond expectations.

While FirstEnergy is committed to pursuing an open dialogue with stakeholders in an appropriate manner with respect to the numerous regulatory proceedings currently underway, FirstEnergy shareholders in particular are…

See Note 14, "Regulatory Matters" of the Notes to Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates…

•On March 10, 2021, the PUCO expanded the scope of an ongoing annual audit of the Ohio Companies’ Rider DCR for 2020 to include a review of certain transactions that were either improperly classified, misallocated, or…

•On December 30, 2020, the PUCO directed PUCO staff to solicit a third-party auditor and conduct a full review of the DMR to ensure funds collected from customers through the DMR were only used for the purposes establ…

•On September 15, 2020, the PUCO opened a new proceeding to review the political and charitable spending by the Ohio Companies in support of HB 6 and the subsequent referendum effort.

•On September 8, 2020, the OCC filed motions in the Ohio Companies’ corporate separation audit and DMR audit dockets, requesting the PUCO to open an investigation and management audit, hire an independent auditor, and…

There are several ongoing HB 6 related state regulatory matters including, but not limited to, the below HB 6-related matters, each of which was stayed for a third time by the PUCO on August 23, 2023, at the request o…

The HB 6 related state regulatory investigations could have a material adverse effect on our reputation, business, financial condition, results of operations, liquidity or cash flows.

JCP&L had approximately $1.8 billion of goodwill on our balance sheet as of December 31, 2025.

JCP&L may recognize impairments of recorded goodwill, which would result in write-offs of the impaired amounts and could have an adverse effect on its results of operations.

energy markets could lead to pressures for greater regulation of those markets or attempts to replace those market structures with other mechanisms for the sale of power, including the requirement of long-term contrac…

consolidated interest coverage ratio and the Electric Companies, the Transmission Companies, and FET were each in compliance with their debt-to-total-capitalization ratio covenants.

imposed.

In 2010, the EPA adopted regulations pertaining to GHG emissions that require new and existing sources of GHG emissions to potentially obtain new source review permits from the EPA prior to construction or modification.

MP owns and maintains coal-fired electric generation facilities located in West Virginia.

our business reputation and adversely affect our operating results through reduced revenues, increased capital and operating costs, litigation or the imposition of penalties/fines or other adverse regulatory outcomes.

Additionally, the operations of the Electric Companies are affected by the economic conditions in their respective service territories and those conditions could negatively impact the rate of delinquent customer accou…

We rely on complex information technology systems to operate our generation, transmission and distribution networks and to store sensitive business, employee and customer data.

Regulatory agencies may also require utilities to offset portions of rising costs related to grid modernization, resilience investments, environmental compliance, or rapidly evolving market conditions if they determin…

mitigation requirements, or disallowances, any of which could adversely affect our ability to recover costs or earn our authorized return on equity.

Our investments in transmission and distribution infrastructure modernization, reliability improvements, environmental compliance and storm hardening may increase customer bills over time and the resulting higher elec…

In addition, the parties to the Statement of Principles suggested that PJM should conduct a “backstop” auction to procure additional generation capacity, with the costs to be allocated first to “new” data centers and…

PJM’s recent capacity auctions have been subject to a “price collar” that has resulted from all-time high generation capacity prices in recent auction outcomes.

External pressures beyond our control may increase customer rates and, when combined with state and federal regulatory action to mitigate bill impacts, may impair our ability to earn a fair and equitable return on our…

FERC, at the instruction of the U.S.

The retail rates for each of the Electric Companies are set by each of its respective regulatory agency for utilities in the state in which it operates - in Maryland by the MDPSC, in New Jersey by the NJBPU, in Ohio b…