FirstEnergy Earnings Call: Growth, Capex And Affordability

FirstEnergy Corp ((FE)) has held its Q1 earnings call. Read on for the main highlights of the call.

FirstEnergy’s latest earnings call struck an upbeat but cautious tone, as management highlighted solid earnings growth, accelerating investment and improving credit metrics while acknowledging mounting political and regulatory pressure around customer bills. Executives stressed that disciplined financing, cost cuts and close stakeholder engagement will be key to sustaining growth without triggering backlash on affordability.

Quarterly Earnings Beat

FirstEnergy opened the call with a clean beat on quarterly results, posting GAAP EPS of $0.70 versus $0.62 a year earlier. Core EPS climbed to $0.72 from $0.67, a 7.5% gain that underscored the contribution from higher rate base and ongoing cost control initiatives.

Reaffirmed Guidance and Long-Term Growth

Management reaffirmed 2026 core earnings guidance of $2.62 to $2.82 per share, anchoring expectations around a $2.72 midpoint. They also reiterated a 6% to 8% long‑term core earnings growth rate through 2030 and signaled confidence in landing near the top of that range.

Accelerating Capital Investments

The company confirmed its $6.0 billion 2026 capital plan and pointed to $1.4 billion of customer‑focused investment in the first quarter, up 33% year over year. Roughly three‑quarters of total capital is now under formula‑rate mechanisms, providing more predictable recovery and earnings visibility.

Transmission and Rate Base Growth

Transmission remains a central growth engine, with rate base expanding 13% in the quarter, driven by 19% growth in integrated businesses and 11% in stand‑alone transmission. Once its planned West Virginia project is approved, FirstEnergy expects consolidated rate base growth to tick up from just over 10% to just over 11%.

Material O&M Reductions and Efficiency Gains

Management emphasized significant progress on costs, noting that base O&M has fallen more than $200 million, around 15%, since 2022. In the latest quarter alone, base O&M declined close to 5% year over year, supported by automation, data analytics and organizational changes viewed as structurally sustainable.

Credit and Financing Strength

The company’s balance sheet story improved as Moody’s shifted its outlook on senior unsecured debt to positive, reflecting stronger credit metrics. FirstEnergy also executed an $850 million Pennsylvania debt deal at a 4.4% average coupon that was more than five times oversubscribed, alongside $250 million and $175 million offerings at MAIT and ATSI.

Significant Competitive Transmission Wins

Beyond its core system work, FirstEnergy has quietly built a sizable competitive transmission franchise, winning over $5 billion of regional projects over the last four years. Management expects the PJM open‑window process to generate further opportunities, with new approvals anticipated early next year.

Growing Data Center Pipeline and Generation Opportunity

West Virginia has emerged as a strategic load‑growth story, with a pipeline of about 1.8 GW of highly credible data center projects, up 50% since February. Prospective customers represent more than 6 GW of potential load and roughly 4 GW are already in final contract talks that could nearly double contracted demand in the near term.

West Virginia Generation Project Advancement

To serve that prospective load, FirstEnergy is advancing a 1.2 GW combined‑cycle gas plant in West Virginia, with a filed cost estimate around $2.5 billion. The company is targeting equipment deliveries to support a 2031 in‑service date, expects a regulatory decision in the second half of 2026 and plans to fund roughly 35% of the project with equity.

Operational Reliability Improvements

Executives linked their investment plan directly to reliability gains, citing measurable improvements across key jurisdictions. In Pennsylvania, the average customer outage duration fell by 27 minutes since 2024, while in New Jersey outage duration improved about 16%, translating to roughly 49 minutes less downtime per customer.

Affordability and Political/Regulatory Pressure

Still, the company acknowledged that affordability is a rising flashpoint across territories such as Pennsylvania and New Jersey, where political scrutiny of rate increases is intense. Management warned that public pressure and new capacity auction caps could influence the timing and outcomes of future rate cases and investment approvals.

Capacity Market and PJM Uncertainty

FirstEnergy argued that a demand‑supply imbalance in capacity markets is a key driver of higher customer costs, sharpening focus on PJM’s evolving reforms. The team flagged uncertainty around reliability backstop auctions and new rules that could muddle cost allocation and reduce transparency on future market outcomes.

Potential Higher Equipment Costs

Project execution risk is also on the radar, particularly for the planned West Virginia gas plant amid a seller’s market for turbines and other large equipment. Management cautioned that supplier pricing could push project costs higher than the current $2.5 billion estimate, with knock‑on implications for customer affordability.

Ongoing Large-Scale Capital Needs

Even beyond the current plan, FirstEnergy sees substantial capital needs to modernize aging infrastructure and address future load growth. Notably, about 80% to 85% of transmission capex is tied to core system work rather than competitive projects, implying that elevated spending levels are likely to persist.

Market/Regulatory Constraints on Ownership Models

The company also faces structural constraints, as state laws and recent legislative actions in markets like Ohio limit utility ownership of generation. These rules complicate development and contracting models and, in some instances, restrict FirstEnergy’s ability to directly own new generation serving emerging loads.

Financing and Equity Dilution Risk

On the capital‑structure side, management outlined a five‑year plan that could include up to $2 billion of equity or equity‑like issuance, including about $100 million annually from benefit programs. They also expect to issue common shares equivalent to roughly 1% of market cap each year, creating some dilution risk if needs rise beyond current plans.

Uncertainty Around PJM Phase 2 and Contracting

FirstEnergy signaled caution about taking commodity or generation risk under PJM’s proposed Phase 2 market structures, which could limit its participation in some wholesale deals. This hesitance may complicate the company’s ability to secure long‑term arrangements that fully monetize its growth opportunities while staying within its risk appetite.

Forward-Looking Guidance and Outlook

Looking ahead, the company’s guidance implies steady, utility‑style growth built on a $6.0 billion 2026 capex plan and a targeted 6% to 8% earnings CAGR off the $2.72 midpoint. Management is banking on regulated investment in transmission and distribution, disciplined O&M cuts and manageable equity issuance to fund a growing rate base while navigating affordability and market uncertainty.

FirstEnergy’s earnings call painted the picture of a utility leaning into growth with improving execution and credit quality but operating in a tougher political and market environment. For investors, the story balances visible rate‑base‑driven upside, a strengthening balance sheet and promising data center and generation projects against regulatory, cost and equity‑dilution risks that will need careful monitoring.