Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2026, for FirstEnergy Corp. (FE) and its wholly-owned subsidiary, Jersey Central Power & Light Company (JCP&L). FirstEnergy is a public electric power holding company serving over six million customers across the Midwest and Mid-Atlantic regions through its Distribution, Integrated, and Stand-Alone Transmission segments. JCP&L operates as a regulated electric utility in New Jersey. The filing includes revised prior-year financial statements for JCP&L to correct immaterial errors related to smart meter removal costs.
Key Financial Metrics (Six Months Ended June 30, 2026)
| Metric | FirstEnergy Corp. (Consolidated) | Jersey Central Power & Light (JCP&L) |
|---|---|---|
| Total Revenues | $7,880 million | $1,325 million |
| Net Income | $818 million | $145 million |
| Earnings Attributable to FE | $693 million | N/A (Wholly-owned) |
| Earnings Per Share (Diluted) | $1.20 | N/A |
| Operating Cash Flow | $1,137 million | $107 million |
| Capital Investments | $2,600 million | $635 million |
| Total Assets | $58,221 million | $11,975 million |
| Total Debt (Current + Noncurrent) | $28,107 million | $3,374 million |
| Working Capital | ($2,723 million) Deficit | ($207 million) Deficit |
Material Changes vs. Prior Period
- Revenue Growth: Consolidated revenues increased 10% year-over-year (YoY) to $7.88 billion, driven by higher transmission revenues from rate base growth and increased generation sales volumes.
- Earnings Increase: Earnings attributable to FE rose 10% to $693 million ($1.20 per share). Key drivers included the absence of 2025 debt redemption costs, higher pension/OPEB non-service credits, and reduced Asset Retirement Obligation (ARO) liabilities.
- Expense Pressures: Operating expenses increased 11% YoY. Significant factors included higher purchased power costs (impacted by Winter Storm Fern), increased storm restoration expenses, and higher interest expenses from new debt issuances.
- Cash Flow Decline: Net cash provided by operating activities decreased 34% to $1.14 billion, primarily due to $266 million in customer restitution/refunds paid to Ohio customers and higher storm restoration costs.
- Debt Activity: The company issued $2.075 billion in new long-term debt and repaid $694 million. Notable transactions included the settlement of $294 million in 2026 Convertible Notes and the issuance of new senior unsecured notes by various subsidiaries.
Guidance, Outlook, and Risks
Management Commentary and Outlook
- Investment Strategy: FirstEnergy is executing the Energize365 plan, a $36 billion investment strategy for 2026–2030 focused on grid reliability, resiliency, and supporting data center load growth.
- Dividend: The Board declared a quarterly dividend of $0.465 per share, a 4.5% increase from the prior year.
- Regulatory Developments:
- Ohio: The Ohio Companies resumed operating under ESP IV. A new three-year rate plan was filed in May 2026 proposing revenue increases totaling approximately $393 million over three years.
- West Virginia: MP and PE filed a base rate proceeding proposing a 10.6% revenue increase and a Certificate of Public Convenience and Necessity (CPCN) for a new 1,200 MW gas plant (Maidsville Energy Center).
- New Jersey: JCP&L expects to file a base rate case in August 2026. The NJBPU authorized the termination of certain offshore wind transmission projects, with JCP&L seeking recovery of prudently incurred costs.
Risks and Contingencies
- Legal Proceedings: Ongoing securities class action litigation related to the HB 6 scandal remains active; the company believes a loss is probable but cannot estimate the amount. Two former senior officers were indicted in January 2025.
- Regulatory Penalties: JCP&L is facing a potential $44 million penalty from the NJBPU for failing to meet reliability standards in 2022–2024. Settlement discussions are ongoing.
- Environmental: The EPA rescinded the 2009 Endangerment Finding in February 2026, creating regulatory uncertainty regarding GHG emissions. Compliance with legacy Coal Combustion Residuals (CCR) rules remains a significant cost driver.
- Weather Events: Winter Storm Fern in Q1 2026 resulted in significant PJM charges ($145 million) deferred for future recovery.
Investor Verification Checklist
- Ohio Restitution: Verify the impact of the $275 million customer restitution/refund program on future cash flows and rate recovery mechanisms.
- Debt Covenant Compliance: Confirm continued compliance with the consolidated interest coverage ratio (currently ~4.2x) and debt-to-capitalization ratios across subsidiaries.
- Transmission Project Viability: Monitor the status of the terminated New Jersey offshore wind transmission projects and the approval of cost recovery for abandoned investments.
- Legal Exposure: Track developments in the securities class action litigation and the potential $44 million NJBPU reliability penalty.
- Regulatory Rate Cases: Watch for outcomes of the pending West Virginia base rate case and the Ohio three-year rate plan filed in May 2026.