Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 2025, for FirstEnergy Corp. (FE) and its wholly-owned subsidiary, Jersey Central Power & Light Company (JCP&L). FirstEnergy is a major investor-owned electric utility holding company serving over six million customers across Ohio, Pennsylvania, West Virginia, Maryland, New Jersey, and New York. The company operates through three reportable segments: Distribution, Integrated, and Stand-Alone Transmission. The filing reflects a strategic shift toward a fully regulated business model, with a significant increase in the five-year capital investment plan ("Energize365") to $36 billion for 2026–2030.
Key Financial Metrics (2025 vs. 2024)
| Metric | 2025 (in millions) | 2024 (in millions) | Change |
|---|---|---|---|
| Total Revenues | $15,090 | $13,472 | +12% |
| Operating Expenses | $12,884 | $11,097 | +16% |
| Operating Income | $2,206 | $2,375 | -7% |
| Net Income | $1,271 | $1,127 | +13% |
| Earnings Attributable to FE | $1,020 | $978 | +4% |
| Diluted EPS | $1.76 | $1.70 | +4% |
| Operating Cash Flow | $3,700 | $2,891 | +28% |
| Capital Investments | $5,556 | $4,499 | +23% |
Debt and Liquidity: As of December 31, 2025, FirstEnergy held approximately $26.4 billion in long-term debt. The company maintained compliance with all debt covenants, including a consolidated interest coverage ratio of approximately 4.4 times. Available liquidity from revolving credit facilities and cash totaled approximately $4.8 billion as of February 16, 2026.
Material Changes and Drivers
The 4% increase in earnings attributable to FE was driven by the absence of significant one-time charges incurred in 2024, including a $100 million SEC civil penalty, a $19.5 million Ohio Attorney General settlement, and $200 million in asset retirement obligation (ARO) charges. These positive factors were partially offset by two major charges in the fourth quarter of 2025:
- Ohio Base Rate Case Impairment: A $352 million pre-tax impairment charge resulting from the Public Utilities Commission of Ohio (PUCO) disallowing certain previously capitalized amounts.
- Ohio Settlement Charges: A $275 million pre-tax charge to provide restitution and refunds to customers following a PUCO-approved settlement regarding HB 6 investigations.
Revenue growth of 12% was primarily due to higher customer usage (driven by colder weather in Q1 and Q4), higher revenues from regulated capital investments, and the implementation of new base rates in New Jersey, West Virginia, and Pennsylvania.
Guidance, Outlook, and Risks
Capital Plan: FirstEnergy increased its "Energize365" capital investment plan to $36 billion for 2026–2030, a 25% increase over the previous plan. This investment focuses on grid reliability, resiliency, and supporting growing demand, particularly from data centers.
Dividends: In February 2026, the Board declared a quarterly dividend of $0.465 per share, a 4.5% increase from the prior year.
Regulatory and Legal Risks:
- HB 6 Litigation: While the company completed its Deferred Prosecution Agreement (DPA) obligations in July 2024, it remains subject to ongoing civil litigation and a securities class-action lawsuit. The company believes a loss is probable but cannot estimate the amount.
- Ohio Regulation: The PUCO approved a new base rate case in November 2025 with a 9.63% ROE, but the matter is subject to rehearing. The repeal of the Electric Supply Plan (ESP) statute in Ohio (HB 15) creates uncertainty regarding future rate recovery mechanisms.
- Transmission Investments: The company faces risks related to FERC's evolving policies on transmission cost recovery, particularly regarding network upgrades for large loads like data centers.
Key Facts for Investor Verification
- Regulatory Asset Recoverability: Verify the probability of recovering the $1.4 billion in regulatory assets not currently earning a return, particularly storm-related costs and deferred distribution costs, given the volatile regulatory environment in Ohio.
- Ohio Settlement Impact: Confirm the timing and cash flow impact of the $275 million customer restitution payment scheduled to begin in February 2026.
- Capital Expenditure Execution: Monitor the ability to execute the $36 billion capital plan amidst supply chain constraints, inflation, and potential labor shortages.
- Legal Exposure: Track developments in the In re FirstEnergy Corp. Securities Litigation and the status of the PUCO rehearing on the Ohio base rate case.
- Debt Covenants: Ensure continued compliance with the consolidated interest coverage ratio (minimum 2.50x) and debt-to-total-capitalization ratios, especially as interest rates fluctuate.