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CAPITALIZATION | 12 Months Ended
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Dec. 31, 2024
Capitalization, Long-Term Debt and Equity [Abstract] |
CAPITALIZATION | CAPITALIZATION COMMON STOCK Dividends Dividends declared and paid per share of common stock during 2024 and 2023 were as follows:
| Dividends Declared |  | Dividends Paid
| 2024 |  | 2023 |  | 2024 |  | 2023
Q1 | $ | 0.425 |  |  | $ | 0.390 |  |  | $ | 0.410 |  |  | $ | 0.390 |
Q2 | — |  |  | 0.390 |  |  | 0.425 |  |  | 0.390 |
Q3 | 0.850 |  |  | 0.410 |  |  | 0.425 |  |  | 0.390 |
Q4 | 0.425 |  |  | 0.410 |  |  | 0.425 |  |  | 0.410 |
Total | $ | 1.700 |  |  | $ | 1.600 |  |  | $ | 1.685 |  |  | $ | 1.580 |
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, and other factors. In addition to declaring dividends from retained earnings, FE can declare dividends from paid-in capital accounts. When FE makes distributions to shareholders, it is required to subsequently determine and report the tax characterization of those distributions for purposes of shareholders’ income taxes. Whether a distribution is characterized as a dividend or a return of capital (and possible capital gain) depends upon an internal tax calculation to determine earnings and profits for income tax purposes. Earnings and profits should not be confused with earnings or net income under GAAP. Further, after FE reports the expected tax characterization of distributions it has paid, the actual characterization could vary from its expectation with the result that holders of FE's common stock could incur different income tax liabilities than expected. In general, distributions are characterized as dividends to the extent the amount of such distributions do not exceed FE's calculation of current or accumulated earnings and profits. Distributions in excess of current and accumulated earnings and profits may be treated as a non-taxable return of capital. Generally, a non-taxable return of capital will reduce an investor’s basis in FirstEnergy's stock for federal tax purposes, which will impact the calculation of gain or loss when the stock is sold. Based on the closing of the FET Equity Interest Sale on March 25, 2024, FE realized an approximate $7 billion tax gain in 2024. FE expects that this tax gain created sufficient earnings and profits to cause distributions made during 2024 and the next several years, to be characterized as dividends for federal income tax purposes. Upon such characterization, shareholders are urged to consult their own tax advisors regarding the income tax treatment of FE's distributions to them. In addition to paying dividends from retained earnings, the Ohio Companies and JCP&L 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 governance documents, indentures, regulatory limitations, 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, 2024. Common Stock Issuance FE issued approximately 3 million shares of common stock in 2024, 2 million shares of common stock in 2023 and 2 million shares of common stock in 2022 to registered shareholders and its directors and the employees of its subsidiaries under its Stock Investment Plan and certain share-based benefit plans. PREFERRED AND PREFERENCE STOCK FirstEnergy and certain of its subsidiaries are authorized to issue preferred stock and preference stock as of December 31, 2024, 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 |  |  |  |  |
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 |  |  |  |
MP |  | 940,000 |  |  | $ | 100 |  |  |  |  |
PE |  | 10,000,000 |  |  | $ | 0.01 |  |  |  |  |
As of December 31, 2024 and 2023, 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, 2024 and 2023:
|  | As of December 31, 2024 |  | As of December 31,
|  | Maturity Date |  | Interest Rate |  | 2024 |  | 2023
|  |  |  |  |  | (In millions)
FMBs and secured notes - fixed rate |  | 2026-2059 |  | 2.650% - 8.250% |  | $ | 4,963 |  |  | $ | 5,709 |
Unsecured notes - fixed rate |  | 2025-2050 |  | 1.600% - 6.875% |  | 18,631 |  |  | 18,545 |
Finance lease obligations |  |  |  |  |  | 12 |  |  | 14 |
Unamortized debt discounts |  |  |  |  |  | (14) |  |  | (9) |
Unamortized debt issuance costs |  |  |  |  |  | (122) |  |  | (127) |
Unamortized fair value adjustments |  |  |  |  |  | 3 |  |  | 3 |
Currently payable long-term debt |  |  |  |  |  | (977) |  |  | (1,250) |
Total long-term debt and other long-term obligations |  |  |  |  |  | $ | 22,496 |  |  | $ | 22,885 |
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, 2024:
Company | Type | Redemption/Issuance Date | Interest Rate | Maturity | Amount (In millions) | Description
Redemptions(1)
FE | Unsecured Notes | April, 2024 | 7.375% | 2031 | $463 | FE redeemed all of its remaining $463 million of 2031 Notes including a premium of approximately $80 million ($63 million after-tax). In addition, FE recognized approximately $4 million ($3 million after-tax) of deferred cash flow hedge losses and $1 million in other unamortized debt costs and fees associated with the FE debt redemptions.
JCP&L | Unsecured Notes | April, 2024 | 4.70% | 2024 | $500 | JCP&L redeemed unsecured notes that became due.
MP | FMBs | April, 2024 | 4.10% | 2024 | $400 | MP redeemed FMBs that became due.
CEI | FMBs | August, 2024 | 5.50% | 2024 | $300 | CEI redeemed FMBs that became due.
FE PA | Unsecured Notes | December, 2024 | 4.00% | 2025 | $250 | On December 30, 2024, FE PA caused to be redeemed $250 million of 4.00% senior notes due 2025.
FE PA | Unsecured Notes | December, 2024 | 4.15% | 2025 | $200 | On December 30, 2024, FE PA caused to be redeemed $200 million of 4.15% senior notes due 2025.
FET | Unsecured Notes | December, 2024 | 4.35% | 2025 | $600 | On December 30, 2024, FET caused to be redeemed $600 million of 4.35% senior notes due 2025.
Issuances
ATSI | Unsecured Notes | March, 2024 | 5.63% | 2034 | $150 | Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.
MAIT | Unsecured Notes | May, 2024 | 5.94% | 2034 | $250 | Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.
FET | Unsecured Notes with registration rights | September, 2024 | 4.55% | 2030 | $400 | Proceeds were used to repay short-term borrowings, to redeem FET's $600 million 4.35% notes due 2025, to finance capital expenditures and for other general corporate purposes.
FET | Unsecured Notes with registration rights | September, 2024 | 5.00% | 2035 | $400 | Proceeds were used to repay short-term borrowings, to redeem FET's $600 million 4.35% notes due 2025, to finance capital expenditures and for other general corporate purposes.
KATCo | Unsecured Notes | November, 2024 | 5.17% | 2035 | $200 | Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.
JCP&L | Unsecured Notes with registration rights | December, 2024 | 5.10% | 2035 | $700 | Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.
(1) Excludes principal payments on securitized bonds. As noted above, on September 5, 2024, FET issued $400 million of unsecured senior notes due in 2030 and $400 million of unsecured senior notes due in 2035 in a private offering that included a registration rights agreement in which FET agreed to conduct an exchange offer of these senior notes for like principal amounts registered under the Securities Act. On October 8, 2024, FET filed a registration statement on Form S-4 for the exchange offer with the SEC, which was declared effective on December 20, 2024. On January 24, 2025, FET completed an exchange offer of these senior notes for like principal amounts registered under the Securities Act. As noted above, on December 5, 2024, JCP&L issued $700 million of unsecured senior notes due in 2035 in a private offering that included a registration rights agreement in which JCP&L agreed to conduct an exchange offer of these senior notes for like principal amounts registered under the Securities Act. JCP&L also agreed to file a shelf registration statement with the SEC to cover resales of the senior notes under certain circumstances. In the event that JCP&L's exchange offer is not completed or the shelf registration statement, if required, is not effective by the 366th day after December 5, 2024, or the effective shelf registration stops being effective for 60 days during any 12-month period, then additional interest will accrue on the coupon. Interest will accrue at a rate of 25 basis points for the first 90 days and an additional 25 basis points in the subsequent 90-day period, but not to exceed 50 basis points per year. However, if the additional interest is triggered, the interest rate will reset to the original notes rate once the registration statement is effective, or the shelf registration, if required, becomes effective. JCP&L plans to file a registration statement for the exchange offer before the end of the first quarter of 2025. 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, 2024.
(In millions) |  | 2025 |  | 2026 |  | 2027 |  | 2028 |  | 2029
Scheduled debt repayments |  | $973 |  | $2,876 |  | $2,003 |  | $2,453 |  | $1,064
Convertible Notes As discussed above, on May 4, 2023, FE issued $1.5 billion aggregate principal amount of 2026 Convertible Notes, with a fixed interest rate of 4.00% per year, payable semiannually in arrears on May 1 and November 1 of each year, beginning on November 1, 2023. The 2026 Convertible Notes are unsecured and unsubordinated obligations of FE, and will mature on May 1, 2026, unless required to be converted or repurchased in accordance with their terms. However, FE may not elect to redeem the 2026 Convertible Notes prior to the maturity date. The 2026 Convertible Notes are included within “Long-term debt and other long-term obligations” on the FirstEnergy Consolidated Balance Sheets. Proceeds from the issuance were approximately $1.48 billion, net of issuance costs. Prior to the close of business on the business day immediately preceding February 1, 2026, the 2026 Convertible Notes will be convertible at the option of the holders only under the following conditions: •During any calendar quarter, if the last reported sale price of FE’s common stock for at least 20 trading days during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; •During the five consecutive business day period immediately after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of the 2026 Convertible Notes for each trading day of such 10 trading day period was less than 98% of the product of the last reported sale price of FE’s common stock and the conversion rate on each such trading day; or •Upon the occurrence of certain corporate events specified in the indenture governing the 2026 Convertible Notes. On and after February 1, 2026, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the 2026 Convertible Notes may convert all or any portion of their 2026 Convertible Notes at their option at any time at the conversion rate then in effect, irrespective of these conditions. FE will settle conversions of the 2026 Convertible Notes, if any, by paying cash up to the aggregate principal amount of the 2026 Convertible Notes being converted and by paying cash or delivering shares of FE’s common stock (or a combination of each), at its election, of its conversion obligation in excess of the aggregate principal amount of the 2026 Convertible Notes being converted. The conversion rate for the 2026 Convertible Notes will initially be 21.3620 shares of FE’s common stock per $1,000 principal amount of the 2026 Convertible Notes (equivalent to an initial conversion price of approximately $46.81 per share of FE’s common stock). The initial conversion price of the 2026 Convertible Notes represents a premium of approximately 20% over the last reported sale price of FE’s common stock on the New York Stock Exchange on May 1, 2023. The conversion rate and the corresponding conversion price will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. FE may not elect to redeem the 2026 Convertible Notes prior to the maturity date. If FE undergoes a fundamental change (as defined in the relevant indenture), subject to certain conditions, holders of the 2026 Convertible Notes may require FE to repurchase for cash all or any portion of their 2026 Convertible Notes at a repurchase price equal to 100% of the principal amount of the 2026 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date (as defined in the relevant indenture). In addition, if certain fundamental changes occur, FE may be required, in certain circumstances, to increase the conversion rate for any 2026 Convertible Notes converted in connection with such fundamental changes by a specified number of shares of its common stock. 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, 2024 and 2023, $188 million and $218 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, 2024 and 2023, $175 million and $191 million of the phase-in recovery bonds were outstanding, respectively. FMBs The Ohio Companies, FE PA, MP and PE 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. The outstanding debt under the FMBs of specific FE PA predecessors (WP and Penn) were assumed by FE PA. 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, 2024, 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 Electric Companies 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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