FirstEnergy Corp.

Greetings and welcome to the First Energy Corp's second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Irene Brezel, Vice President of Investor Relations for First Energy Corp. Thank you, Ms. Brezel. You may begin.

Thank you. Welcome to our second quarter earnings call. Today we will make various forward-looking statements regarding revenue, earnings, performance, strategies, prospects, and other matters. These statements are based on current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from those indicated by these statements can be found on the investor section of our website, under the earnings information link, and in our SEC filings. We will also discuss certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP financial measures, the presentation that supports today's discussion, and other detailed information about the quarter and year can be found in the Strategic and Financial Highlights document on the Investor section of our website. We'll begin today's call with presentations from Steve Straw, our President and Chief Executive Officer, and John Taylor, our Senior Vice President and Chief Financial Officer. Several other executives will be available for the Q&A session. Now I'll turn the call over to Steve.

Thank you, Irene, and good morning, everyone. I'm glad you could join us today. Yesterday, we reported second quarter gap earnings of 33 cents per share and operating earnings of 53 cents per share at the upper end of our guidance range. Today, we are reaffirming our 2022 operating earnings guidance of $2.30 to $2.50 per share. We are also affirming our long-term annual operating earnings growth rate of 6% to 8% and accelerating our FFO to debt target of 13% by one year to 2023 from 2024 with targeted metrics in the mid-teens thereafter. As John will discuss later, given our strong year-to-date performance, we have begun strategically investing in maintenance activities in our distribution businesses to further improve reliability and get ahead of future planned work. This provides tremendous flexibility in our long-term plan. We will continue to accelerate these operating expenses during the second half based on the strong outlook for the remainder of the year. Through the first half of 2022, we've made significant progress to strengthen our culture, optimize our operations, bolster our financial position, and support the grid of the future, continuing our momentum to become a more customer-focused and sustainable utility. Across the company, we're continuing to amplify our core values of safety, integrity, diversity, equity, and inclusion, performance excellence, and stewardship. We've recently launched a new employee communication campaign to focus on each of these values and how they drive our success. In addition, I've personally connected with thousands of employees over the past several months to discuss our core values and to hear directly from them on what we can do to get better as a company. Since March, I've held about 50 virtual and in-person listening sessions with more than 4,000 employees across First Energy. We've had a lot of great engagement during these sessions, And it's been incredibly valuable for me to interact with employees and get their feedback. I'm very proud of how our employees are executing on our plan and of the company and the culture we're creating together. I'd also like to take a moment to welcome two new directors who were elected to the board at our annual meeting in May. Sean Klimczak of Blackstone and Janet Kroom of Kimball Electronics. In related developments, John Sommerhalder was elected board chair and no longer serves as an executive of the company. And Lisa Winston-Hicks was elected lead independent director. I welcome the guidance, leadership, and support from our refreshed board. Now let's turn to some key accomplishments in the quarter. First, in May, we completed the sale of the 19.9 minority stake in First Energy Transmission LLC to Brookfield for approximately $2.4 billion. The proceeds from this historic transaction, together with the billion dollar Blackstone equity investment that closed in December, have been deployed to strengthen our balance sheet and fund our regulated capital investments. And as John will discuss in more detail later, By paying down over $2.5 billion in long-term debt this year, we are driving meaningful progress and are ahead of our original plan to improve the credit profile of the company. Our transmission business continues to be one of the focal points of our strategy. Our Energizing the Future program has a relentless focus on reliability improvements for our customers. We began the investment program in the AFSI region in 2014, and since that time we have seen a 53% reduction in interruptions to customers caused by transmission outages, a 49% decrease in transmission line outages, and an 88% improvement of our protection systems. We're striving to build on this success within ATSI and across our territory as we continue to expand this investment program. So far this year, we've completed important work across our footprint to reconfigure several substations, rebuild transmission lines, replace transformers, and enhance network, cyber, and physical security. These projects improve operational flexibility, upgrade the condition of equipment, and enhance system performance. Our goals for the transmission business are aggressive, yet achievable, and we have the right strategies in place to ensure our success. We're also making continued progress to advance our customer-focused sustainable growth strategies on the distribution side of our business. In Ohio, earlier this month, We filed for the second phase of our grid modernization program, which builds off the system upgrades we've completed in the state since the PUCO approved our GridMod 1 program in 2019. The new four-year GridMod 2 plan proposes a $626 million capital investment to expand our deployment of GridMod technologies designed to enhance the delivery of safe, reliable power, promote modern experiences for customers, offering emerging technologies, and provide opportunities to help lower customer bills. The second phase of our GridMod program includes installing automated equipment on nearly 240 distribution circuits that can isolate problems, minimize the number of customers impacted by an outage, and quickly restore electric service. Energy saving voltage regulating equipment on nearly 220 circuits that can reduce the amount of energy that must be generated and more evenly distribute electricity down a power line. And an additional 700,000 smart meters along with the supporting communications infrastructure and data management systems. In addition, the filing includes several pilot programs expected to provide enhanced customer benefits. These include supporting the adoption of EVs across our Ohio service territory by offering incentives to residential and commercial customers who participate in utility-managed charging of their electric vehicles. and installing a battery storage system along the Ohio Turnpike that's designed to support increased EV charging load and enhance grid reliability. In the aggregate, we estimate the benefits to our Ohio customers of enhanced reliability, energy efficiency opportunities, and the innovative products and services to exceed the costs of the GridMod2 program by nearly $280 million in today's dollars. Moving to West Virginia, in April, the Public Service Commission provided conditional approval of our requested tariff to build a total of 50 megawatts of utility-scale solar generation in the state at a cost of approximately $100 million. In their order, the PSC required our Manpower and Potomac Edison subsidiaries to subscribe at least 85% of the output before beginning construction on these facilities. We began accepting commitments from residential, commercial, and industrial customers to purchase solar recs in May. We're making progress to meet the 85% threshold And at that time, Monpower and Potomac Edison will seek final approval from the Commission for a surcharge to cover the balance of the project costs and begin full-scale construction. We expect the first solar generation site to be in service by the end of 2023, with the construction completed at the four other sites no later than the end of 2025. Finally, in New Jersey, JCP&L reached a settlement on our electric vehicle program with BPU staff, New Jersey Rate Council, and others, which was approved by the BPU without modifications in June. Our four-year, $40 million EV-driven program is designed to accelerate the adoption of light duty electric vehicles with incentives and rate structures that continue to support the development of EV charging infrastructure throughout our JCP&L service territory. The cost of the program will be deferred into a regulatory asset. Capital costs will earn a return of 9.6% with recovery of those costs determined in JCP&L's next base rate case. Before I pass the call over to John, we recognize there's significant interest in our pension plan performance in light of rising interest rates and the current bear market. We're committed to being transparent and flexible on this issue, and we'll keep you informed on our expectations and our plan as the year progresses. In addition to the details John will provide on today's call, we've also published two new slides on this topic, in our highlights document. I'm very pleased with our progress throughout the first half of this year. We remain committed to continuing our transformation and becoming an industry-leading utility that provides value to our investors, customers, employees, and communities. Now I'll turn the call over to John.