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CAPITALIZATION | 12 Months Ended
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Dec. 31, 2022
Capitalization, Long-Term Debt and Equity [Abstract] |
CAPITALIZATION | CAPITALIZATION COMMON STOCK Retained Earnings and Dividends As of December 31, 2022, FirstEnergy had an accumulated deficit of $1 billion. Dividends declared in 2022 and 2021 totaled $1.56 per share in each period. Dividends of $0.39 per share were paid in the first, second, third and fourth quarters in 2022 and 2021, respectively. On December 13, 2022, the FE Board declared a quarterly dividend of $0.39 per share to be paid from OPIC in the first quarter of 2023. The amount and timing of all dividend declarations are subject to the discretion of the FE Board and its consideration of business conditions, results of operations, financial condition, risks and uncertainties of the government investigations, and other factors. In addition to paying dividends from retained earnings, the Ohio Companies, Penn, JCP&L, ME and PN have authorization from FERC to pay cash dividends to FE from paid-in capital accounts, as long as their FERC-defined equity-to-total-capitalization ratio remains above 35%. In addition, AGC has authorization from FERC to pay cash dividends to its parent, MP, from paid-in capital accounts, as long as its FERC-defined equity-to-total-capitalization ratio remains above 45%. The articles of incorporation, indentures, regulatory limitations, FET P&SA I and FET P&SA II, and various other agreements, including those relating to the long-term debt of certain FirstEnergy subsidiaries contain provisions that could further restrict the payment of dividends on their common stock. None of these provisions materially restricted FirstEnergy subsidiaries’ abilities to pay cash dividends to FE as of December 31, 2022. Common Stock Issuance FE issued approximately 2 million shares of common stock in 2022, 1 million shares of common stock in 2021 and 2 million shares of common stock in 2020 to registered shareholders and its directors and the employees of its subsidiaries under its Stock Investment Plan and certain share-based benefit plans. On November 6, 2021, FE entered into a Common Stock Purchase Agreement with BIP Securities II-B L.P., an affiliate of Blackstone Infrastructure Partners L.P., for the private placement of 25,588,535 shares of FE common stock, par value $0.10 per share, at a price of $39.08 per share, representing an investment of $1.0 billion. The transaction settled on December 13, 2021. Issuance costs associated with the transaction were approximately $26 million as of December 31, 2021. PREFERRED AND PREFERENCE STOCK FirstEnergy and the Utilities were authorized to issue preferred stock and preference stock as of December 31, 2022, as follows:
|  | Preferred Stock |  | Preference Stock
|  | Shares Authorized |  | Par Value |  | Shares Authorized |  | Par Value
FE |  | 5,000,000 |  |  | $ | 100 |  |  |  |  |
OE |  | 6,000,000 |  |  | $ | 100 |  |  | 8,000,000 |  |  | no par
OE |  | 8,000,000 |  |  | $ | 25 |  |  |  |  |
Penn |  | 1,200,000 |  |  | $ | 100 |  |  |  |  |
CEI |  | 4,000,000 |  |  | no par |  | 3,000,000 |  |  | no par
TE |  | 3,000,000 |  |  | $ | 100 |  |  | 5,000,000 |  |  | $ | 25 |
TE |  | 12,000,000 |  |  | $ | 25 |  |  |  |  |
JCP&L |  | 15,600,000 |  |  | no par |  |  |  |
ME |  | 10,000,000 |  |  | no par |  |  |  |
PN |  | 11,435,000 |  |  | no par |  |  |  |
MP |  | 940,000 |  |  | $ | 100 |  |  |  |  |
PE |  | 10,000,000 |  |  | $ | 0.01 |  |  |  |  |
WP |  | 32,000,000 |  |  | no par |  |  |  |
As of December 31, 2022 and 2021, there were no preferred stock or preference stock outstanding. LONG-TERM DEBT AND OTHER LONG-TERM OBLIGATIONS The following tables present outstanding long-term debt and finance lease obligations for FirstEnergy as of December 31, 2022 and 2021:
|  | As of December 31, 2022 |  | As of December 31,
(Dollar amounts in millions) |  | Maturity Date |  | Interest Rate |  | 2022 |  | 2021
FMBs and secured notes - fixed rate |  | 2023-2059 |  | 2.650% - 8.250% |  | $ | 5,153 |  |  | $ | 5,021 |
Unsecured notes - fixed rate |  | 2023-2050 |  | 1.600% - 7.375% |  | 16,488 |  |  | 18,925 |
Finance lease obligations |  |  |  |  |  | 23 |  |  | 36 |
Unamortized debt discounts |  |  |  |  |  | (5) |  |  | (8) |
Unamortized debt issuance costs |  |  |  |  |  | (110) |  |  | (126) |
Unamortized fair value adjustments |  |  |  |  |  | 5 |  |  | 6 |
Currently payable long-term debt |  |  |  |  |  | (351) |  |  | (1,606) |
Total long-term debt and other long-term obligations |  |  |  |  |  | $ | 21,203 |  |  | $ | 22,248 |
See Note 8, "Leases," for additional information related to finance leases. FirstEnergy had the following redemptions and issuances during the twelve months ended December 31, 2022:
Company | Type | Redemption/Issuance Date | Interest Rate | Maturity | Amount (in Millions) | Description
Redemptions
FE | Unsecured Notes | January, 2022 | 4.25% | 2023 | $850 | In December 2021, FE provided notice of redemption with a make-whole premium of approximately $38 million ($30 million after-tax).
TE | Senior Secured Notes | February, 2022 | 2.65% | 2028 | $25 | On January 27, 2022, TE instructed its indenture trustee to provide notice of partial redemption.
CEI | Senior Notes, Series A | March, 2022 | 2.77% | 2034 | $150 | On February 11, 2022, CEI instructed its indenture trustee to provide notice of full redemption.
WP | FMBs | April, 2022 | 3.34% | 2022 | $100 | WP redeemed FMBs that became due.
FE | Unsecured Notes | June, 2022 | 2.85% | 2022 | $500 | On May 23, 2022 FE provided notice of redemption.
FE | Unsecured Notes | June, 2022 | 7.375% | 2031 | $715 | On May 25, 2022, FE commenced an offer to purchase for cash a portion of its 2031 Notes and 2047 Notes, which had $1.5 billion and $1 billion principal amounts outstanding, respectively. A portion of these notes were redeemed for approximately $1.1 billion, including a tender premium of approximately $101 million ($80 million after-tax). In addition, FE recognized approximately $7 million ($5 million after-tax) of deferred cash flow hedge losses and $10 million ($8 million after-tax) in other unamortized debt costs and fees associated with the FE debt redemptions.
FE | Unsecured Notes | June, 2022 | 4.85% | 2047 | $284
Penn | FMBs | June, 2022 | 6.09% | 2022 | $100 | Penn redeemed FMBs that became due.
FE | Unsecured Notes | August-November 2022 | 7.375% | 2031 | $128 | Beginning in the third quarter of 2022, FE repurchased a portion of the principal amount of its 2031 Notes and 2047 Notes through the open market for approximately $249 million including a premium of approximately $11 million ($9 million after tax). In addition, FE recognized approximately $3 million ($2 million after-tax) in other unamortized debt costs related to the FE open market repurchases.
FE | Unsecured Notes | August-September 2022 | 4.85% | 2047 | $110
Issuances
OE | Senior Unsecured Notes | September, 2022 | 5.50% | 2033 | $300 | Proceeds were used to repay borrowings outstanding under the regulated money pool, to finance capital expenditures, to fund working capital needs and for other general corporate purposes.
Penn | FMBs | November, 2022 | 3.79% | 2032 | $150 | Proceeds were used to repay short-term borrowings.
WP | FMBs | November, 2022 | 5.29% | 2033 | $250 | Proceeds were used to repay short-term borrowings.
On November 29, 2022, WP issued $300 million of 5.29% FMBs due 2033. $250 million was funded on December 13, 2022, and the remaining $50 million was funded on January 10, 2023. Proceeds of the issuance of the FMBs were used to repay short term borrowings. The following table presents scheduled debt repayments or debt that has been noticed for redemption for outstanding long-term debt, excluding finance leases, fair value purchase accounting adjustments and unamortized debt discounts and premiums, for the next five years as of December 31, 2022.
(In millions) |  | 2023 |  | 2024 |  | 2025 |  | 2026 |  | 2027
Scheduled debt repayments |  | $344 |  | $1,246 |  | $2,023 |  | $1,076 |  | $2,003
Securitized Bonds Environmental Control Bonds The consolidated financial statements of FirstEnergy include environmental control bonds issued by two bankruptcy remote, special purpose limited liability companies that are indirect subsidiaries of MP and PE. Proceeds from the bonds were used to construct environmental control facilities. Principal and interest owed on the environmental control bonds is secured by, and payable solely from, the proceeds of the environmental control charges. Creditors of FirstEnergy, other than the limited liability company SPEs, have no recourse to any assets or revenues of the special purpose limited liability companies. As of December 31, 2022 and 2021, $247 million and $274 million of environmental control bonds were outstanding, respectively. Phase-In Recovery Bonds In June 2013, the SPEs formed by the Ohio Companies issued approximately $445 million of pass-through trust certificates supported by phase-in recovery bonds to securitize the recovery of certain all electric customer heating discounts, fuel and purchased power regulatory assets. The phase-in recovery bonds are payable only from, and secured by, phase in recovery property owned by the SPEs. The bondholder has no recourse to the general credit of FirstEnergy or any of the Ohio Companies. Each of the Ohio Companies, as servicer of its respective SPE, manages and administers the phase in recovery property including the billing, collection and remittance of usage-based charges payable by retail electric customers. The SPEs are considered VIEs and each one is consolidated into its applicable utility. As of December 31, 2022 and 2021, $206 million and $222 million of the phase-in recovery bonds were outstanding, respectively. FMBs The Ohio Companies and Penn each have a first mortgage indenture under which they can issue FMBs secured by a direct first mortgage lien on substantially all of their property and franchises, other than specifically excepted property. Debt Covenant Default Provisions FirstEnergy has various debt covenants under certain financing arrangements, including its revolving credit facilities and term loans. The most restrictive of the debt covenants relate to the nonpayment of interest and/or principal on such debt and the maintenance of certain financial ratios. The failure by FirstEnergy to comply with the covenants contained in its financing arrangements could result in an event of default, which may have an adverse effect on its financial condition. As of December 31, 2022, FirstEnergy remains in compliance with all debt covenant provisions. Additionally, there are cross-default provisions in a number of the financing arrangements. These provisions generally trigger a default in the applicable financing arrangement of an entity if it, or any of its significant subsidiaries, default under another financing arrangement in excess of a certain principal amount, typically $100 million. Such defaults by any of the Utilities or Transmission Companies would cross-default certain FE financing arrangements containing these provisions, and a certain FET Financing arrangement, with respect to the Transmission Companies only, such defaults by AE Supply would not cross-default to applicable financing arrangements of FE. Also, defaults by FE would generally not cross-default applicable financing arrangements of any of FE’s subsidiaries. Cross-default provisions are not typically found in any of the senior notes or FMBs of FE or its subsidiaries.

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