Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

FirstEnergy’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports, and all other documents filed with or furnished to the SEC pursuant to Section 13(a) of the Securities Exchange Act of 1934 are made available free of charge on or through the “Investors” page of FirstEnergy’s website at www.firstenergycorp.com. These documents are also available to the public from commercial document retrieval services and the website maintained by the SEC at www.sec.gov.

These SEC filings are posted on the website as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Additionally, FirstEnergy routinely posts additional important information, including press releases, investor presentations, investor factbook, and notices of upcoming events under the “Investors” section of FirstEnergy’s website and recognizes FirstEnergy’s website as a channel of distribution to reach public investors and as a means of disclosing material non-public information for complying with disclosure obligations under Regulation FD. Investors may be notified of postings to the website by signing up for email alerts and Rich Site Summary feeds on the “Investors” page of FirstEnergy’s website. FirstEnergy also uses Twitter® and Facebook® as additional channels of distribution to reach public investors and as a supplemental means of disclosing material non-public information for complying with its disclosure obligations under Regulation FD. Information contained on FirstEnergy’s website, Twitter® handle or Facebook® page, and any corresponding applications of those sites, shall not be deemed incorporated into, or to be part of, this report.

Forward-Looking Statements: This Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 based on information currently available to management. Such statements are subject to certain risks and uncertainties and readers are cautioned not to place undue reliance on these forward-looking statements. These statements include declarations regarding management’s intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” “forecast,” “target,” “will,” “intend,” “believe,” “project,” “estimate,” ~~“plan”~~“plan,” and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, which may include the following (see Glossary of Terms for definitions of capitalized terms):

Dividends declared from time to time on our common stock during any period may in the aggregate vary from prior periods due to circumstances considered by our Board of Directors at the time of the actual declarations. A security rating is not a recommendation to buy or hold securities and is subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating.

These forward-looking statements are also qualified by, and should be read together with, the risk factors included in FirstEnergy’s filings with the SEC, including, but not limited to, the most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The foregoing review of factors also should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor assess the impact of any such factor on FirstEnergy’s business or the extent to which any factor, or combination of factors, may

Unless otherwise indicated, defined terms and abbreviations used herein have the meanings set forth in the accompanying Glossary of Terms.

FE was incorporated under Ohio law in 1996. FE’s principal business is the holding, directly or indirectly, of all of the outstanding equity of its principal subsidiaries: OE, CEI, TE, Penn (a wholly owned subsidiary of OE), JCP&L, ME, PN, FESC, ~~AE Supply,~~ MP, AGC (a wholly owned subsidiary of MP), PE, WP, and FET and its principal subsidiaries (ATSI, MAIT and TrAIL). In addition, FE holds all of the outstanding equity of other direct subsidiaries including: ~~AESC,~~AE Supply, FirstEnergy Properties, Inc., FEV, ~~FELHC, Inc.,~~FirstEnergy License Holding Company, GPUN, Allegheny Ventures, Inc., and Suvon, LLC doing business as both FirstEnergy Home and FirstEnergy Advisors.

FE and its subsidiaries follow GAAP and comply with the related regulations, orders, policies and practices prescribed by the SEC, FERC, and, as applicable, ~~the NRC,~~ the PUCO, the PPUC, the MDPSC, the NYPSC, the WVPSC, the VSCC and the NJBPU. The accompanying interim financial statements are unaudited, but reflect all adjustments, consisting of normal recurring adjustments, that, in the opinion of management, are necessary for a fair statement of the financial statements. The preparation of financial statements in conformity with GAAP requires management to make periodic estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. Actual results could differ from these estimates. The reported results of operations are not necessarily indicative of results of operations for any future period. FE and its subsidiaries have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.

FE and its subsidiaries consolidate all majority-owned subsidiaries over which they exercise control and, when applicable, entities for which they have a controlling financial interest. Intercompany transactions and balances are eliminated in consolidation as appropriate and permitted pursuant to GAAP. FE and its subsidiaries consolidate a VIE when it is determined that it is the primary beneficiary. Investments in affiliates over which FE and its subsidiaries have the ability to exercise significant influence, but do not have a controlling financial interest, follow the equity method of accounting. Under the equity method, the interest in the entity is reported as an investment in the Consolidated Balance Sheets and the percentage of FE’s ownership share of the entity’s earnings is reported in the Consolidated Statements of Income and Comprehensive Income.

Certain prior year amounts have been reclassified to conform to the current year presentation.

For each of the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, capitalized financing costs on FirstEnergy’s Consolidated Statements of Income include ~~$12~~$14 million and $9$12 million, respectively, of allowance for equity funds used during construction and $6$7 million and $7$6 million, respectively, of capitalized interest. For each of the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, capitalized financing costs on FirstEnergy’s Consolidated Statements of Income include ~~$23~~$21 million and ~~$22~~$23 million, respectively, of allowance for equity funds used during construction and $13 million and ~~$12~~$13 million, respectively, of capitalized interest.

~~The outbreak of COVID-19 is a global pandemic.~~ FirstEnergy is continuously evaluating the global COVID-19 pandemic and taking steps to mitigate known risks. FirstEnergy is actively monitoring the continued impact COVID-19 is having on its customers’ receivable balances, which include increasing arrears balances since the pandemic has begun. FirstEnergy has incurred, and it is expected to incur for the foreseeable future, ~~incremental uncollectible and other~~ COVID-19 pandemic related expenses. COVID-19 related expenses consist of additional costs that FirstEnergy is incurring to protect its employees, contractors and customers, and to support social distancing ~~requirements resulting from the COVID-19 pandemic.~~requirements. These costs include, but are not limited to, new or added benefits provided to employees, the purchase of additional personal protection equipment and

disinfecting supplies, additional facility cleaning services, initiated programs and communications to customers on utility response, and increased technology expenses to support remote working, where possible. The full impact on FirstEnergy’s business from the COVID-19 pandemic, including the governmental and regulatory responses, is unknown at this time and difficult to predict. FirstEnergy provides a critical and essential service to its customers

~~Currently,~~ FirstEnergy iscontinues to effectively ~~managing~~manage operations during the pandemic in order ~~to continue~~ to provide critical service to customers and believes it is well positioned to manage through the economic slowdown. FirstEnergy Distribution and Transmission revenues benefit from geographic and economic diversity across a five-state service territory, which also allows for flexibility with capital investments and measures to maintain sufficient liquidity over the next twelve months. However, the situation remains fluid and future impacts to FirstEnergy that are presently unknown or unanticipated may occur. Furthermore, the likelihood of an impact to FirstEnergy, and the severity of any impact that does occur, could increase the longer the global pandemic persists.

Receivables from customers include distribution services and retail generation sales to residential, commercial and industrial customers of the Utilities. The allowance for uncollectible customer receivables is based on historical loss information comprised of a rolling 36-month average net write-off percentage of revenues, in conjunction with a qualitative assessment of elements that impact the collectability of receivables to determine if allowances for uncollectible accounts should be further adjusted in accordance with the accounting guidance for credit losses.

FirstEnergy reviews its allowance for uncollectible customer receivables utilizing a quantitative and qualitative assessment. Management contemplates available current information such as changes in economic factors, regulatory matters, industry trends, customer credit factors, amount of receivable balances that are past-due, payment options and programs available to customers, and the methods that the Utilities are able to utilize to ensure payment.

Beginning March 13, 2020, FirstEnergy ~~has~~temporarily suspended customer disconnections for nonpayment and ceased ~~certain other~~ collection activities as a result of the ongoing ~~pandemic.~~pandemic and in accordance with state regulatory requirements. The temporary suspension of disconnections for nonpayment and ceasing of collection activities extended into the fourth quarter of 2020 but resumed for most customers before the end of 2020. Customers are subject to each state's applicable regulations on winter moratoriums for residential customers, which begin as early as November 1, 2020, and were in effect until April 15, 2021. During 2021, FirstEnergy ~~anticipates that it will not disconnect customers~~reviewed its allowance for ~~non-payment prior to September 15, 2020. The impact of COVID-19~~uncollectible customer receivables based on ~~customers’ ability to pay for service, along with the actions, FirstEnergy~~this qualitative assessment and has ~~taken in response to the pandemic, is expected to result in an increase~~experienced a reduction in customer ~~receivable write-offs as compared to historically incurred losses. In order to estimate~~accounts that are past due by greater than 30 days since the ~~additional losses and impacts expected, FirstEnergy analyzed the likelihood~~end of ~~loss based on increases in~~2020. Additionally, customer accounts in arrears ~~since~~continue to decrease in 2021; however customer accounts being moved to the ~~pandemic began~~final stage of the collection process have begun to increase. Furthermore, other factors were also considered in ~~mid-March 2020~~the quarterly analysis, such as ~~well was what collection methods are suspended~~certain state funding being made available to assist with past due utility bills and ~~that have historically been utilized to ensure payment. Based on~~vaccine distribution. As a result of this ~~assessment, and consideration of other qualitative factors described above,~~analysis, FirstEnergy ~~recognized~~did not recognize any incremental uncollectible expense ~~of $43 million~~ in the ~~second quarter of 2020, of which approximately $27 million is not currently being collected through rates and as a result was deferred for future recovery under regulatory mechanisms described below.~~

Receivables from customers also include PJM receivables resulting from transmission and wholesale sales. FirstEnergy’s credit risk on PJM receivables is reduced due to the nature of PJM’s settlement process whereby members of PJM legally agree to share the cost of defaults and as a result there is no allowance for doubtful accounts.

8

~~Restricted Cash~~

FirstEnergy has elected to exclude sales taxes and other similar taxes collected on behalf of third parties from revenue as prescribed in the ~~new~~ standard. As a result, tax collections and remittances are excluded from recognition in the income statement and instead recorded through the balance sheet. Excise and gross receipts taxes that are assessed on FirstEnergy are not subject to the election and are included in revenue. FirstEnergy has elected the optional invoice practical expedient for most of its revenues and utilizes the optional short-term contract exemption for transmission revenues due to the annual establishment of revenue requirements, which eliminates the need to provide certain revenue disclosures regarding unsatisfied performance obligations.

FirstEnergy’s revenues are primarily derived from electric service provided by the Utilities and Transmission Companies.

The following tables represent a disaggregation of revenue from contracts with customers for the three and six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, by type of service from each reportable segment:

For the Three Months Ended June 30, 2019
Revenues by Type of Service Regulated Distribution Regulated Transmission
Corporate/Other and Reconciling Adjustments ⁽¹⁾
Total
(In millions)
Distribution services $ 1,160 $ — $ (21) $ 1,139
Retail generation 806 — (14) 792
Wholesale sales 110 — 3 113
Transmission ⁽²⁾
— 367 — 367
Other 37 — — 37
Total revenues from contracts with customers $ 2,113 $ 367 $ (32) $ 2,448
ARP ⁽³⁾
55 — — 55
Other non-customer revenue 24 5 (16) 13
Total revenues $ 2,192 $ 372 $ (48) $ 2,516

Other non-customer revenue includes revenue from late payment charges of ~~$16~~$18 million and ~~$20~~$16 million for the six months ended June 30, 2021 and 2020, ~~and 2019, respectively, that FirstEnergy expects are collectible.~~respectively. Other non-customer revenue also includes revenue from derivatives of $6$2 million and $5$6 million for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

The Utilities’ distribution customers are metered on a cycle basis. An estimate of unbilled revenues is calculated to recognize electric service provided from the last meter reading through the end of the month. This estimate includes many factors, among which are historical customer usage, load profiles, estimated weather impacts, customer shopping activity and prices in effect for each class of customer. In each accounting period, the Utilities accrue the estimated unbilled amount as revenue and reverse the related prior period estimate. Customer payments vary by state but are generally due within 30 days.

ASC 606 excludes industry-specific accounting guidance for recognizing revenue from ARPs as these programs represent contracts between the utility and its regulators, as opposed to customers. Therefore, ~~revenue~~revenues from these programs are not within the scope of ASC 606 and regulated utilities are permitted to continue to recognize such revenues in accordance with existing practice but are presented separately from revenue arising from contracts with customers. FirstEnergy ~~currently has~~had ARPs in Ohio primarily ~~under the DMR in 2019 and~~for decoupling revenue in ~~2020.~~2020, and has reflected refunds of decoupling revenue owed to customers as reductions to ARPs in 2021. Please see Note 9,8, “Regulatory Matters,” for further discussion on decoupling revenues in Ohio.

Both the forward-looking formula and stated rates recover costs that the regulatory agencies determine are permitted to be recovered and provide a return on transmission capital investment. Under forward-looking formula rates, the revenue requirement is updated annually based on a projected rate base and projected costs, which is subject to an annual true-up based on actual costs. Revenue requirements under stated rates are calculated annually by multiplying the highest one-hour peak load

The following table represents a disaggregation of revenue from contracts with regulated transmission customers ~~by transmission owner~~ for the three and six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, by transmission owner:

By eliminating a significant portion of its competitive generation fleet with the deconsolidation of the FES Debtors, FirstEnergy has concluded the FES Debtors meet the criteria for discontinued operations, as this represents a significant event in management’s strategic review to exit commodity-exposed generation and transition to a fully regulated company.

Summarized results of discontinued operations for the ~~FES Bankruptcy settlement agreement, FirstEnergy entered into an amended~~three and ~~restated shared services agreement~~six months ended June 30, 2021 and 2020, were as follows:

FirstEnergy’s Consolidated Statement of Cash Flows combines cash flows from discontinued operations with cash flows from continuing operations within each cash flow category. For the ~~FES Debtors to extend the availability of shared services until~~six months ended June 30, 2020, ~~subject to reductions in services if requested by the FES Debtors, and extensions~~cash flows from operating activities includes income from discontinued operations of time, subject to FirstEnergy’s approval. Under the amended shared services agreement, and consistent with the prior shared services agreements, costs are directly billed or assigned at no more than cost.$52 million.

For U.S. federal income taxes, the FES Debtors were included in FirstEnergy’s consolidated tax return until emergence from bankruptcy on February 27, 2020. As a result of the FES Debtors’ deconsolidation, FirstEnergy recognized a worthless stock deduction for the remaining tax basis in the FES Debtors of approximately $4.9 billion, net of unrecognized tax benefits of ~~$316~~

$316 million. Tax-effected, the worthless stock deduction is approximately $1$1.1 billion, net of valuation allowances recorded against the state tax benefit ($8319 million) and the aforementioned unrecognized tax benefits ($7268 million).

Additionally, the Tax Act amended Section 163(j) of the Internal Revenue Code of 1986, as amended, limiting interest expense deductions for corporations but with exemption for certain regulated utilities. Based on interpretation of subsequently issued proposed regulations, ~~FirstEnergy has estimated the amount of deductible interest for its consolidated group in 2018~~ and 2019, with nondeductible portions being carried forward with an indefinite life and for which deferred tax assets have been recorded. However, full valuation allowances have been recorded against the deferred tax assets related to the carryforward of nondeductible interest as future utilization of the carryforwards requires profitability from sources other than regulated utility businesses. Final regulations or additional changes to proposed regulations under Section 163(j) could have a material impactbased on ~~FirstEnergy’s results.~~

Basic EPS available to common stockholders is computed using the weighted average number of common shares outstanding during the relevant period as the denominator. The denominator for diluted EPS of common stock reflects the weighted average of common shares outstanding plus the potential additional common shares that could result if dilutive securities and other agreements to issue common stock were exercised.

14

The following table reconciles basic and diluted EPS of common stock:

For the three and six months ended June 30, ~~2020~~2021 and ~~2019,~~June 30, 2020, 0 shares from stock options and awards were excluded from the calculation of diluted shares outstanding. For the three and six months ended June 30, 2019, 8 million shares associated with the assumed conversion of preferred stock were excluded as their inclusion would be antidilutive to basic EPS from continuing operations.

FirstEnergy recognizes a pension and OPEB mark-to-market adjustment for the change in fair value of plan assets and net actuarial gains and losses annually in the fourth quarter of each fiscal year and whenever a plan is determined to qualify for remeasurement. Under the approved bankruptcy settlement agreement discussed above, upon emergence, FES and FENOC employees ceased earning years of service under the FirstEnergy pension and OPEB plans. The emergence on February 27, 2020, triggered a remeasurement of the affected pension and OPEB plans and as a result, FirstEnergy recognized a non-cash, pre-tax pension and OPEB mark-to-market adjustment of approximately $423 million in the first quarter of 2020. ~~The pension~~

FirstEnergy’s interim effective tax rates reflect the estimated annual effective tax rates for ~~2020~~2021 and ~~2019.~~2020. These tax rates are affected by estimated annual permanent items, such as AFUDC equity and other flow-through items, as well as discrete items that may occur in any given period but are not consistent from period to period.

FirstEnergy’s effective tax rate on continuing operations for the three months ended June 30, 2021 and 2020, was 62.3% and ~~2019, was~~ 17.7% ~~and 19.2%~~, respectively. The change in ~~the~~ effective tax rate was primarily due to the non-deductibility of the DPA monetary penalty and

tax expense of $9 million recorded in the second quarter of 2021 related to the remeasurement of West Virginia deferred income taxes resulting from a state tax law change (as discussed further below), as well as the absence of a $10 million benefit from ~~the~~ accelerated amortization of certain investment tax ~~credits.~~credits recorded in the second quarter of 2020.

FirstEnergy’s effective tax rate on continuing operations for the six months ended June 30, 2021 and 2020, was 31.8% and ~~2019, was~~ 1.8% ~~and 20.0%~~, respectively. The change in the effective tax rate was primarily due to the items in the second quarter discussed above, as well as the absence of a $52 million reduction in valuation allowances in the first quarter of 2020 from the recognition of deferred gains on prior intercompany generation asset transfers triggered by the FES Debtors’ emergence from bankruptcy and deconsolidation from FirstEnergy’s consolidated federal income tax ~~group in the first quarter of 2020, and a $10 million benefit from accelerated amortization of certain investment tax credits in the second quarter of 2020.~~group. See Note 3, “Discontinued Operations,” for other tax matters relating to the FES Bankruptcy that were recognized in discontinued ~~operations.~~operations in 2020.

On April 9, 2021, West Virginia enacted legislation changing the state’s corporate income tax apportionment rules, including adopting a single sales factor formula and market-based sourcing for sales of services and intangibles, effective for taxable years beginning on or after January 1, 2022. Enactment of this law triggered a remeasurement of state deferred income taxes for entities included in FirstEnergy’s West Virginia combined unitary return, resulting in a net impact of approximately $9 million in additional tax expense in the second quarter of 2021.

During the three months ended June 30, ~~2020,~~2021, FirstEnergy ~~effectively settled an~~recorded a $7 million decrease to the reserve for uncertain tax ~~position~~positions due to the remeasurement of certain positions for athe change in West Virginia deferred taxes, which had no impact on earnings because the positions are recorded against state ~~income tax audit, resulting in an income tax benefit of approximately $2 million.~~net operating losses with full valuation allowances. During the six months ended June 30, ~~2020,~~2021, FirstEnergy ~~also remeasured~~recorded a net $4 million increase in its reserve for uncertain tax positions for ~~federal and state tax~~ benefits related to certain federal tax credits, which were partially offset by the ~~worthless stock deduction, resulting in a net decrease to the reserve of approximately $28 million, none of which had an impact on the effective tax rate.~~remeasurement for West Virginia deferred taxes discussed further above. As of June 30, ~~2020,~~2021, it is reasonably possible that within the next twelve months FirstEnergy could record a net decrease of approximately ~~$57~~$55 million to its reserve for uncertain tax positions due to the expiration of the statute of limitations or resolution with taxing authorities, of which approximately ~~$55~~$53 million would impact FirstEnergy’s effective tax rate.

On March 27, 2020, the President signed into law the CARES Act, an economic stimulus package in response to the COVID-19 pandemic. The CARES Act contains several corporate income tax provisions, including making remaining AMT credits immediately refundable; providing a 5-year carryback of NOLs generated in tax years 2018, 2019, and 2020, and removing the 80% taxable income limitation on utilization of those NOLs if carried back to prior tax years or utilized in tax years beginning before 2021; and temporarily liberalizing the interest deductibility rules under Section 163(j) of the Tax Act, by raising the adjusted taxable income limitation from 30% to 50% for tax years 2019 and 2020 and giving taxpayers the election of using 2019 adjusted taxable income for purposes of computing 2020 interest deductibility. FirstEnergy has approximately $18 million of refundable AMT credits that will be fully refundable through the CARES Act, however, does not expect to generate additional income tax refunds from the NOL carryback provision and expects interest to be fully deductible starting in 2020. FirstEnergy does not currently expect the other provisions of the CARES Act to have a material effect on current income tax expense or the realizability of deferred income tax assets.

The following table provides quantitative information for FTRs ~~and NUG~~ contracts that are classified as Level 3 in the fair value hierarchy for the period ended June 30, ~~2020:~~2021:

All temporary cash investments purchased with an initial maturity of three months or less are reported as cash equivalents on the Consolidated Balance Sheets at cost, which approximates their fair market value. Investments other than cash and cash equivalents include equity securities, AFS debt securities and other investments. FirstEnergy has no debt securities held for trading purposes.

JCP&L ~~ME and PN hold~~holds debt ~~and equity~~ securities within ~~their respective NDT and~~the spent nuclear fuel disposal ~~trusts. The debt securities~~trust, which are classified as AFS securities, recognized at fair market value. ~~As further discussed in Note 10, "Commitments, Guarantees and Contingencies", assets and liabilities held~~The trust is intended for ~~sale on~~funding spent nuclear fuel disposal fees to the ~~FirstEnergy Consolidated Balance Sheets~~DOE associated with the TMI-2 transaction consist of an ARO of $709 million, NDTs of $882 million, as well as property, plant and equipment with a net book value of zero, which are included in the regulated distribution segment.previously owned nuclear plants.

The following table summarizes the amortized cost basis, unrealized gains, unrealized losses and fair values of investments held in ~~NDT and~~spent nuclear fuel disposal trusts as of June 30, ~~2020,~~2021, and December 31, ~~2019:~~2020:

Other investments include employee benefit trusts, which are primarily invested in corporate-owned life insurance policies and equity method investments. Other investments were ~~$297~~$338 millionand~~$299~~ $322 million as of June 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, respectively, and are excluded from the amounts reported above.

All borrowings with initial maturities of less than one year are defined as short-term financial instruments under GAAP and are reported as Short-term borrowings on the Consolidated Balance Sheets at cost. Since these borrowings are short-term in nature, FirstEnergy believes that their costs approximate their fair market value. The following table provides the approximate fair value and related carrying amounts of long-term debt, which excludes finance lease obligations and net unamortized debt issuance costs, unamortized fair value adjustments, premiums and discounts as of June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

The fair values of long-term debt and other long-term obligations reflect the present value of the cash outflows relating to those securities based on the current call price, the yield to maturity or the yield to call, as deemed appropriate at the end of each

respective period. The yields assumed were based on securities with similar characteristics offered by corporations with credit ratings similar to those of FirstEnergy. FirstEnergy classified short-term borrowings, long-term debt and other long-term obligations as Level 2 in the fair value hierarchy as of June 30, ~~2020,~~2021, and December 31, ~~2019.~~2020.

During the six months ended June 30, 2021, the following long-term debt was issued:

Each of the ~~Utilities’~~Utilities' retail rates, conditions of service, issuance of securities and other matters are subject to regulation in the states in which it operates - in Maryland by the MDPSC, in New Jersey by the NJBPU, in Ohio by the PUCO, in Pennsylvania by the PPUC, in West Virginia by the WVPSC and in New York by the NYPSC. The transmission operations of PE in Virginia, ATSI in Ohio, and the Transmission Companies in Pennsylvania are subject to certain regulations of the ~~VSCC.~~VSCC, PUCO and PPUC, respectively. In addition, under Ohio law, municipalities may regulate rates of a public utility, subject to appeal to the PUCO if not acceptable to the utility. Further, if any of the FirstEnergy affiliates were to engage in the construction of significant new transmission facilities, depending on the state, they may be required to obtain state regulatory authorization to site, construct and operate the new transmission facility.

PE operates under MDPSC approved base rates that were effective as of March 23, 2019. PE also provides SOS pursuant to a combination of settlement agreements, MDPSC orders and regulations, and statutory provisions. SOS supply is competitively procured in the form of rolling contracts of varying lengths through periodic auctions that are overseen by the MDPSC and a third-party monitor. Although settlements with respect to SOS supply for PE customers have expired, service continues in the same manner until changed by order of the MDPSC. PE recovers its costs plus a return for providing SOS.

The EmPOWER Maryland program requires each electric utility to file a plan to reduce electric consumption and demand 0.2% per year, up to the ultimate goal of 2% annual savings, for the duration of the 2018-2020 and 2021-2023 EmPOWER Maryland program cycles, to the extent the MDPSC determines that cost-effective programs and services are available. ~~PE’s~~PE's approved 2018-2020 EmPOWER Maryland plan continues and expands upon prior ~~years’~~years' programs, and adds new programs, for a projected total cost of $116 million over the three-year period. PE recovers program costs through an annually reconciled surcharge, with most costs subject to a five-year amortization. Maryland law only allows for the utility to recover lost distribution revenue attributable to energy efficiency or demand reduction programs through a base rate case proceeding, and to date, such recovery has not been sought or obtained by PE. On September 1, 2020, PE filed its proposed plan for the 2021-2023 EmPOWER Maryland program cycle. The new plan largely continues PE’s existing programs and is estimated to cost approximately $148 million over the three-year period. The MDPSC approved the plan on December 18, 2020.

On January 19, 2018, PE filed a joint petition along with other utility companies, work group stakeholders and the MDPSC electric vehicle work group leader to implement a statewide electric vehicle portfolio in connection with a 2016 MDPSC proceeding to consider an array of issues relating to electric distribution system design, including matters relating to electric vehicles, distributed energy resources, advanced metering infrastructure, energy storage, system planning, rate design, and impacts on low-income customers. PE proposed an electric vehicle charging infrastructure program at a projected total cost of $12 million, to be recovered over a five-year amortization. On January 14, 2019, the MDPSC approved the petition subject to certain reductions in the scope of the program. The MDPSC approved PE’s compliance filing, which implements the pilot program, with minor modifications, on July 3, 2019.

Maryland’s Governor issued an order on March 16, 2020, forbidding utilities from terminating residential service or charging late fees for non-payment for the duration of the COVID-19 pandemic. On April 9, 2020, the MDPSC issued an order allowing utilities

to track and create a regulatory asset for future recovery of all ~~prudently-incurred~~prudently incurred incremental costs arising from the COVID-19 pandemic, including incremental uncollectible ~~expenses. On~~expense, incurred from the date of the Governor’s order (or earlier if the utility could show that the expenses related to suspension of service terminations). In July 8, 2020, the MDPSC subsequently issued ~~a notice opening a public conference~~orders allowing Maryland electric and gas utilities to ~~collect information from~~resume residential service terminations for non-payment on November 15, 2020, subject to various restrictions, and clarifying that utilities ~~and other stakeholders about~~could resume charging late fees on October 1, 2020. On June 16, 2021, the ~~impacts~~MDPSC assigned $4 million to PE of COVID-19 relief that was allocated by the ~~COVID-19 pandemic on the utilities and their customers, and indicated that it would hold a hearing~~Maryland General Assembly to ~~discuss that information in late August 2020.~~retire residential customer utility arrearages.

JCP&L operates under NJBPU approved rates that were effective as of January 1, 2017. JCP&L provides BGS for retail customers who do not choose a third-party EGS and for customers of third-party EGSs that fail to provide the contracted service. All New Jersey EDCs participate in this competitive BGS procurement process and recover BGS costs directly from customers as a charge separate from base rates.

On April 18, 2019, pursuant to the May 2018 New Jersey enacted legislation establishing a ZEC program to provide ratepayer funded subsidies of New Jersey nuclear energy supply, the NJBPU approved the implementation of a non-bypassable, irrevocable ZEC charge for all New Jersey electric utility customers, including JCP&L’s customers. Once collected from customers by JCP&L, these funds will be remitted to eligible nuclear energy generators.

On February 18, 2020, JCP&L submitted a filing with the NJBPU requesting a distribution base rate increase. On October 28, 2020, the NJBPU approved a stipulated settlement between JCP&L and various parties, providing for, among other things, a $94 million annual base distribution revenues increase ~~of $186.9 million~~for JCP&L based on an ~~annual basis,~~ROE of 9.6%, which ~~represents~~will become effective for customers on November 1, 2021. Until the rates become effective, and starting on January 1, 2021, JCP&L began to amortize an ~~overall average increase in JCP&L rates of 7.8%. The filing seeks~~existing regulatory liability totaling approximately $86 million to recover certain costs associated with providing safe and reliable electric service to JCP&L customers, along with recovery of previously incurred storm costs. JCP&L proposed a rate effective date of March 19, 2020. On March 9, 2020,offset the Board issued an order suspending JCP&L’s proposed rates for four months. Based on the historical procedures of the NJBPU Board a second suspension order is expected with revised base rates becoming effective in late November 2020. JCP&L filed updates to the requested distribution base rate in both June and July 2020, resulting in JCP&L seeking a total annual distribution base rate increase that otherwise would have occurred in this period. The parties also agreed that the actual net gain from the sale of JCP&L’s interest in the Yards Creek pumped-storage hydro generation facility in New Jersey (210 MWs), as further discussed below, be applied to reduce JCP&L’s existing regulatory asset for previously deferred storm costs. Lastly, the parties agreed that approximately ~~$185 million. On August 11,~~$95 million of Reliability Plus capital investment for projects through December 31, 2020, ~~the administrative law judge issued a prehearing order~~is included in rate base effective December 31, 2020, with a ~~procedural schedule that calls for evidentiary hearings~~final prudence review of only those capital investment projects from July 1, 2020, through December 31, 2020, to occur in January 2021. During the ~~week~~first quarter of ~~November 16, 2020.~~2021, JCP&L submitted its review of storm costs, filed a written report for its Reliability Plus projects placed in service from July 1, 2020 through December 31, 2020, and submitted the vegetation management report, all required under the stipulation of settlement. On March 24, 2021, JCP&L, NJ Rate Counsel and the NJBPU Staff submitted a stipulation of settlement to the NJBPU, which was approved on April 7, 2021, providing that the Reliability Plus projects placed into service from July 1, 2020 through December 31, 2020 were reasonable and prudent.

On April 6, 2020, JCP&L signed an asset purchase agreement with Yards Creek Energy, LLC, a subsidiary of LS Power to sell its 50% interest in the Yards Creek pumped-storage hydro generation ~~facility in NJ (210 MWs).~~facility. Subject to terms and conditions of the agreement, the base purchase price is $155 million. ~~Completion~~As of ~~the transaction is subject to several closing conditions, including approval by the NJBPU and FERC. On July~~December 31, 2020, FERC approved transfer of JCP&L’s interest in the hydroelectric operating license; however, JCP&L’s application for authorization to transfer its ownership interest in the Yards Creek facility remains pending at FERC. There can be no assurance that all regulatory approvals will be obtained and/or all closing conditions will be satisfied or that the transaction will be consummated. JCP&L currently anticipates closing of the transaction to occur in the first half of 2021. Assetsassets held for sale on ~~the FirstEnergy~~FirstEnergy’s Consolidated Balance ~~Sheet~~Sheets associated with the transaction consist of property, plant and equipment of ~~$44~~$45 million, which is included in the regulated distribution segment. ~~Treatment~~On July 31, 2020, FERC approved the transfer of JCP&L’s interest in the hydroelectric operating license. On October 8, 2020, FERC issued an order authorizing the transfer of JCP&L’s ownership interest in the hydroelectric facilities. On October 28, 2020, the NJBPU approved the sale of Yards Creek. With the receipt of all required regulatory approvals, the transaction was consummated on March 5, 2021 and resulted in a $109 million gain within the regulated distribution segment. As further discussed above, the gain ~~is subject~~from the transaction was applied against and reduced JCP&L’s existing regulatory asset for previously deferred storm costs and, as a result, was offset by expense in the “Amortization of regulatory assets, net”, line on the Consolidated Statements of Income, resulting in no earnings impact to ~~NJBPU approval.~~FirstEnergy or JCP&L.

On August 27, 2020, JCP&L filed an AMI Program with the NJBPU, which proposes the deployment of approximately 1.2 million advanced meters over a three-year period beginning on January 1, 2023, at a total cost of approximately $418 million, including the pre-deployment phase. The 3-year deployment is part of the 20-year AMI Program that is expected to cost a total of approximately $732 million and proposes a cost recovery mechanism through a separate AMI tariff rider. On February 26, 2021, JCP&L filed a letter requesting a suspension of the procedural schedule to allow for settlement discussions, which was granted on March 5, 2021.

On June 10, 2020, the NJBPU issued an order establishing a framework for the filing of utility-run energy efficiency and peak demand reduction programs in accordance with the New Jersey Clean Energy Act. Under the established framework, JCP&L will recover its program investments over a ~~ten year~~ten-year amortization period and its operations and maintenance expenses on an annual basis, be eligible to receive lost revenues on energy savings that resulted from its programs and be eligible for incentives or subject to penalties based on its annual program performance, beginning in the fifth year of its program offerings. On September 25, 2020, JCP~~&L’s~~&L filed its energy efficiency and peak demand reduction program. JCP&L’s program ~~plan is required~~consists of 11 energy efficiency and peak demand reduction programs and subprograms to be ~~filed no later than September 25, 2020, and is anticipated to be implemented~~run from July 1, ~~2021.~~2021 through June 30, 2024. The program also seeks approval of cost recovery totaling approximately $230 million as well as lost revenues associated with the energy savings resulting from the programs. On April 23, 2021, JCP&L filed a Stipulation of Settlement with the NJBPU for approval of a three-year plan including $203 million in total cost, as well as recovery of lost revenues resulting from the programs. On April 27, 2021, the NJBPU issued an Order approving the Stipulation of Settlement.

On July 2, 2020, the NJBPU issued an order allowing New Jersey utilities to track and create a regulatory asset for future recovery of all ~~prudently-incurred~~prudently incurred incremental costs arising from the COVID-19 pandemic beginning March 9, 2020 through September 30, 2021, or until the Governor issues an order stating that the COVID-19 pandemic is no longer in effect. New Jersey utilities can request recovery of such regulatory asset in a stand-alone COVID-19 regulatory asset filing or future base rate case. On October 28, 2020, the NJBPU issued an order expanding the scope of the proceeding to examine all pandemic issues, including recovery of the COVID-19 regulatory assets, by way of a generic proceeding. Through various Executive Orders issued by Governor Murphy, the moratorium period is extended to December 31, 2021.

The recent credit rating actions taken on October 28, 2020, by S&P and Fitch triggered a requirement from various NJBPU orders that JCP&L file a mitigation plan, which was filed on November 5, 2020, to demonstrate that JCP&L has sufficient liquidity to meet its BGS obligations. On December 11, 2020, the NJBPU held a public hearing on the mitigation plan. Written comments on JCP&L’s mitigation plan were submitted on January 8, 2021.

On September 23, 2020, the NJBPU issued an Order requiring all New Jersey electric distribution companies to file electric vehicle programs. JCP&L filed its electric vehicle program on March 1, 2021, which consists of six sub-programs, including a consumer education and outreach initiative that would begin on January 1, 2022, and continue over a four-year period. The total proposed budget for the electric vehicle program is approximately $50 million, of which $16 million is capital expenditures and $34 million is for operations and maintenance expenses. JCP&L is proposing to recover the electric vehicle program costs via a non-bypassable rate clause applicable to all distribution customer rate classes, which would become effective on January 1, 2022. On May 26, 2021, a procedural schedule was set to include evidentiary hearings the week of October 18, 2021. On July 16, 2021, the procedural schedule was extended by thirty days as requested by JCP&L to continue settlement discussions.

On October 28, 2020, the NJBPU approved a settlement in JCP&L’s distribution rate, and voted that JCP&L will be subject to an upcoming management audit. The management audit began at the end of May 2021 and is currently ongoing.

ESP IV further provided for the Ohio Companies to collect ~~through~~DMR revenues, but the DMR $132.5 million annually for three years beginning in 2017, grossed up for federal income taxes, resulting in an approved amount of approximately $168 million annually in 2018 and 2019. On appeal, the SCOH ~~on June 19, 2019,~~ reversed the PUCO’s ~~determination that~~decision to include DMR in ESP IV and subsequently the ~~DMR is lawful, and remanded the matter to the PUCO with instructions to remove the DMR from ESP IV. On August 20, 2019, the SCOH denied the Ohio Companies’ motion for reconsideration. The~~ PUCO entered an ~~Order~~order directing the Ohio Companies to cease further collection through the DMR and credit back to customers a refund of the DMR funds collected since July 2, ~~2019, and remove the DMR from ESP IV.~~2019. On July 15, 2019, the OCC filed ~~a Notice of Appeal~~an appeal with the SCOH, challenging the PUCO’s exclusion of DMR revenues from the determination of the existence of significantly excessive earnings under ESP IV for OE for calendar year 2017, and claiming a $42 million refund is due to OE customers. On December 1, 2020, the SCOH reversed the PUCO’s exclusion of the DMR revenues from the determination of the existence of significantly excessive earnings under ESP IV for OE for calendar year 2017, and ~~claiming a $42 million refund~~remanded the case to the PUCO with instructions to conduct new proceedings which include the DMR revenues in the analysis, determine

the threshold against which the earned return is ~~due to OE customers. The Ohio Companies are contesting this appeal but are~~measured, and make other necessary determinations. FirstEnergy is unable to predict the outcome of ~~this matter. The SCOH heard the argument on this matter on May 12, 2020.~~these proceedings but has not deemed a liability probable as of June 30, 2021.

On July 23, 2019, Ohio enacted ~~legislation establishing support for nuclear energy supply in Ohio. In addition to the~~HB 6, which included provisions supporting nuclear energy, ~~the legislation included a provision implementing~~as well as a decoupling mechanism for Ohio electric utilities and ending current energy efficiency program mandates. Under HB 6 the energy efficiency program mandates would end on December 31, 2020, provided that statewide energy efficiency mandates are achieved as determined by the PUCO. On February ~~26, 2020,~~24, 2021, the PUCO found that statewide energy efficiency mandates had been achieved, and ordered that ~~a wind-down of statutorily required~~Ohio electric utilities’ energy efficiency ~~programs shall commence on September 30, 2020,~~ and ~~the programs shall terminate on December 31, 2020, and that the Ohio Companies’ existing portfolio plans are extended through 2020 without changes.~~peak demand reduction cost recovery riders terminate.

On ~~November 21, 2019, the Ohio Companies applied to the PUCO for approval of a decoupling mechanism,~~March 31, 2021, Governor DeWine signed HB 128, which, would set residential and commercial base distribution related revenues at the levels collected in 2018. As such, those base distribution revenues would no longer be based on electric consumption, which allows continued support of energy efficiency initiatives while also providing revenue certainty to the Ohio Companies. On January 15, 2020, the PUCO approved the Ohio Companies’ decoupling application, and the decoupling mechanism took effect on February 1, 2020. Ohio Senate Bill 346 and Ohio House Bill 738 were introduced on July 28, 2020 and July 29, 2020, respectively, and each would, among other things, ~~repeal~~repealed parts of HB 6, the ~~Ohio~~ legislation that established support for nuclear energy supply in Ohio, ~~and a provision that provides~~provided for a decoupling mechanism for Ohio electric utilities, ~~as well as~~and provided for the ending of current energy efficiency program mandates. HB 128 was effective June 30, 2021. As FirstEnergy would not have financially benefited from the mechanism to provide support to nuclear energy in Ohio, there is no expected additional impact to FirstEnergy due to the repeal of that provision in HB 128.

As further discussed below, in connection with a partial settlement with the OAG and other parties, the Ohio Companies filed an application with the PUCO on February 1, 2021, to set the respective decoupling riders (CSR) to zero. On February 2, 2021, the PUCO approved the application. While the partial settlement with the OAG focused specifically on decoupling, the Ohio Companies will of their own accord not seek to recover lost distribution revenue. FirstEnergy is committed to pursuing an open dialogue with stakeholders in an appropriate manner with respect to the numerous regulatory proceedings currently underway as further discussed herein. As a result of the partial settlement, and the decision to not seek lost distribution revenue, FirstEnergy recognized a $108 million pre-tax charge ($84 million after-tax) in the fourth quarter of 2020, and $77 million (pre-tax) of which is associated with forgoing collection of lost distribution revenue. On March 31, 2021, FirstEnergy announced that the Ohio Companies will proactively refund to customers amounts previously collected under decoupling, with interest, which total approximately $27 million. On April 22, 2021, in anticipation of the effective date of HB 128 and in accordance with HB 128’s provisions regarding the prompt refund of decoupling funds, the Ohio Companies filed an application with the PUCO to modify CSR to return such amount over twelve months commencing June 1, 2021. On June 17, 2021, the Ohio Companies agreed to modify their proposal to return such amount in a single lump sum to customers, beginning on July 1, 2021, or promptly upon obtaining PUCO approval. On July 7, 2021, the PUCO issued an order approving the Ohio Companies’ modified application and directed that all funds collected through CSR be refunded to customers over a single billing cycle beginning August 1, 2021.

On July 17, 2019, the PUCO approved, with no material modifications, a settlement agreement that provides for the implementation of the Ohio Companies’ first phase of grid modernization plans, including the investment of $516 million over three years to modernize the Ohio Companies’ electric distribution system, and for all tax savings associated with the Tax Act to flow back to customers. The settlement had broad support, including PUCO ~~Staff,~~staff, the OCC, representatives of industrial and commercial customers, a low-income advocate, environmental advocates, hospitals, competitive generation suppliers and other parties.

In March 2020, the PUCO issued entries directing utilities to review their service disconnection and restoration policies and suspend, for the duration of the COVID-19 pandemic, otherwise applicable requirements that may impose a service continuity hardship or service restoration hardship on customers. The Ohio Companies are utilizing their existing approved cost recovery mechanisms where applicable to address the financial impacts of these directives. On July 31, 2020, the Ohio Companies filed with the PUCO their transition plan and requests for waivers to allow for the safe resumption of normal business operations, including service disconnections for non-payment. On September 23, 2020, the PUCO approved the Ohio Companies’ transition plan, including approval of the resumption of service disconnections for non-payment, which the Ohio Companies began on ~~or after September 15,~~October 5, 2020.

On July 29, 2020, the PUCO consolidated the Ohio Companies’ ~~Applications~~applications for determination of the existence of significantly excessive earnings, or SEET, under ESP IV for calendar years 2018 and 2019, which had been previously filed on July 15, 2019, and May 15, 2020, respectively, and set a procedural schedule with evidentiary ~~hearings scheduled~~hearings. On September 4, 2020, the PUCO opened its quadrennial review of ESP IV, consolidated it with the Ohio Companies’ 2018 and 2019 SEET Applications, and set a procedural schedule for the consolidated matters. On October 29, ~~2020.~~2020, the PUCO issued an entry extending the deadline for the Ohio Companies to file quadrennial review of ESP IV testimony and supplemental SEET testimony to March 1, 2021, with the evidentiary hearings to commence no sooner than May 3, 2021. On January 12, 2021, the PUCO consolidated these matters with the determination of the existence of significantly excessive earnings under ESP IV for calendar year 2017, which the SCOH had remanded to the PUCO. On March 1, 2021, the Ohio Companies filed testimony in the quadrennial review and supplemental testimony in the SEET cases for calendar years 2017 through 2019. The calculations included in the quadrennial review for 2020 through 2024 demonstrate that the prospective effect of ESP IV is not substantially likely to provide the Ohio Companies with significantly excessive earnings during the balance of ESP IV. In addition, the Ohio Companies’ quadrennial review testimony demonstrated that ESP IV continues to be more favorable in the aggregate and during the remaining term of ESP IV as compared to the expected results of a market rate offer. Further, the revised calculations included in the Ohio Companies’ supplemental SEET ~~filings~~testimony for calendar years ~~2018 and~~2017 through 2019 ~~demonstrate~~demonstrated that the Ohio Companies did not have significantly excessive earnings, ~~however, FirstEnergy and the Ohio Companies are unable to predict the PUCO’s ultimate determination of the applications.~~on an individual company basis or on a consolidated basis. On August 3, 2020, the OCC filed an interlocutory appeal asking the PUCO to stay the SEET proceeding until the SCOH determines whether DMR should be excluded from the SEET, as further discussed above. Further, on July 29, 2020, OhioMarch 31, 2021, Governor DeWine signed House Bill ~~740 was introduced,~~128, which ~~would repeal~~repeals legislation passed ~~last year~~in 2019 that permitted the Ohio Companies to file their SEET results on a consolidated basis instead of on an individual company basis. HB 128 was effective June 30, 2021. Further, the

OCC and another party filed testimony on April 5, 2021, recommending refunds for one or more of the Ohio Companies for calendar years 2017 through 2019. On April 20, 2021, the Ohio Companies filed supplemental testimony in the quadrennial review providing prospective SEET values on an individual company basis, which demonstrate that the Ohio Companies are not projected to have significantly excessive earnings, on an individual company basis, during the balance of ESP IV. On May 28, 2021, the attorney examiner issued a procedural schedule setting hearings for August 30, 2021. No contingency has been reflected in FirstEnergy’s consolidated financial statements with respect to these matters as a loss is neither probable, nor is a loss or range of a loss reasonably estimable.

On May 17, 2021, the Ohio Companies filed their application for the determination of significantly excessive earnings for calendar year 2020. The calculations included in the application demonstrated that the Ohio Companies, on an individual company basis, did not have significantly excessive earnings.

In connection with the audit of the Ohio Companies’ Rider DCR for 2017, the PUCO issued an order on June 16, 2021, directing the Ohio Companies to prospectively discontinue capitalizing certain vegetation management costs and reduce the 2017 Rider DCR revenue requirement by $3.7 million associated with these costs.

On September 8, 2020, the OCC filed motions in the Ohio Companies’ corporate separation audit and DMR audit dockets, requesting the PUCO to open an investigation and management audit, hire an independent auditor, and require FirstEnergy to show it did not improperly use money collected from consumers or violate any utility regulatory laws, rules or orders in its activities regarding HB 6. On December 30, 2020, in response to the OCC's motion, the PUCO reopened the DMR audit docket, and directed PUCO staff to solicit a third-party auditor and conduct a full review of the DMR to ensure funds collected from ratepayers through the DMR were only used for the purposes established in ESP IV. On June 2, 2021, the PUCO selected an auditor, and a final audit report is to be filed by October 29, 2021.

On September 15, 2020, the PUCO opened a new proceeding to review the political and charitable spending by the Ohio Companies in support of HB 6 and the subsequent referendum effort, directing the Ohio Companies to show cause, demonstrating that the costs of any political or charitable spending in support of HB 6, or the subsequent referendum effort, were not included, directly or indirectly, in any rates or charges paid by ratepayers. The Ohio Companies filed a response on September 30, 2020, stating that any political and charitable spending in support of HB 6 or the subsequent referendum were not included in rates or charges paid for by its customers. Several parties requested that the PUCO broaden the scope of the review of political and charitable spending. Discovery is ongoing.

In connection with an ongoing audit of the Ohio Companies’ policies and procedures relating to the code of conduct rules between affiliates, on November 4, 2020, the PUCO initiated an additional corporate separation audit as a result of the FirstEnergy leadership transition announcement made on October 29, 2020, as further discussed below. The additional audit is to ensure compliance by the Ohio Companies and their affiliates with corporate separation laws and the Ohio Companies’ corporate separation plan. The additional audit is for the period from November 2016 through October 2020, with a final audit report to be filed by August 6, 2021. On January 27, 2021, the PUCO selected an auditor, and the auditor’s investigation is ongoing.

On November 24, 2020, the Environmental Law and Policy Center filed motions to vacate the PUCO’s orders in proceedings related to the Ohio Companies’ settlement that provides for the implementation of the first phase of grid modernization plans and for all tax savings associated with the Tax Act to flow back to customers, the Ohio Companies’ energy efficiency portfolio plans for the period from 2013 through 2016, and the Ohio Companies’ application for a two-year extension of the DMR, on the grounds that the former Chairman of the PUCO should have recused himself in these matters. On December 30, 2020, the PUCO denied the motions, and reinstated the requirement under ESP IV that the Ohio Companies file a base distribution rate case by May 31, 2024, the end of ESP IV, which the Ohio Companies had indicated they would not oppose.

In the fourth quarter of 2020, motions were filed with the PUCO requesting that the PUCO amend the Ohio Companies’ riders for collecting charges required by HB 6, which the Ohio Companies are further required to remit to other Ohio electric distribution utilities or to the State Treasurer, to provide for refunds in the event such provisions of HB 6 are repealed. The Ohio Companies contested the motions, which are pending before the PUCO.

On December 7, 2020, the Citizens’ Utility Board of Ohio filed a complaint with the PUCO against the Ohio Companies. The complaint alleges that the Ohio Companies’ new charges resulting from HB 6, and any increased rates resulting from proceedings over which the former PUCO Chairman presided, are unjust and unreasonable, and that the Ohio Companies violated Ohio corporate separation laws by failing to operate separately from unregulated affiliates. The complaint requests, among other things, that any rates authorized by HB 6 or authorized by the PUCO in a proceeding over which the former Chairman presided be made refundable; that the Ohio Companies be required to file a new distribution rate case at the earliest possible date; and that the Ohio Companies’ corporate separation plans be modified to introduce institutional controls. The Ohio Companies are contesting the complaint.

In connection with an ongoing annual audit of the Ohio Companies’ Rider DCR for 2020, and as a result of disclosures in FirstEnergy’s Form 10-K for the year ended December 31, 2020 (filed on February 18, 2021), the PUCO expanded the scope of the audit on March 10, 2021, to include a review of certain transactions that were either improperly classified, misallocated, or

lacked supporting documentation, and to determine whether funds collected from ratepayers were used to pay the vendors, and if so, whether or not the funds associated with those payments should be returned to ratepayers through Rider DCR or through an alternative proceeding. A final audit report is to be filed by August 3, 2021.

See Note 9, "Commitments, Guarantees and Contingencies" for additional details on the government investigations and subsequent litigation surrounding the investigation of HB 6.

The Pennsylvania Companies operate under rates approved by the PPUC, effective as of January 27, 2017. These rates were adjusted for the net impact of the Tax Act, effective March 15, 2018. The net impact of the Tax Act for the period January 1, 2018 through March 14, 2018 was separately tracked and its treatment will be addressed in a future rate proceeding. The Pennsylvania Companies operate under DSPs for the June 1, 2019 through May 31, 2023 delivery period, which provide for the competitive procurement of generation supply for customers who do not choose an alternative EGS or for customers of alternative EGSs that fail to provide the contracted service. Under the 2019-2023 DSPs, supply will be provided by wholesale suppliers through a mix of 3, 12 and 24-month energy contracts, as well as two RFPs for 2-year SREC contracts for ME, PN and Penn.

Pursuant to Pennsylvania Act 129 of 2008 and PPUC orders, Pennsylvania EDCs implement energy efficiency and peak demand reduction programs. The Pennsylvania Companies’ Phase III EE&C plans for the June 2016 through May 2021 period, which were approved in March 2016, with expected costs up to $390 million, are designed to achieve the targets established in the PPUC’s Phase III Final Implementation Order with full recovery through the reconcilable EE&C riders. On June 18, 2020, the PPUC entered a Final Implementation Order for a Phase IV EE&C Plan, operating from June 2021 through May 2026. The Final Implementation Order set demand reduction targets, relative to 2007 to 2008 peak demands, at 2.9% MW for ME, 3.3% MW for PN, 2.0% MW for Penn, and 2.5% MW for WP; and energy consumption reduction targets, as a percentage of the Pennsylvania Companies’ historic 2009 to 2010 reference load at 3.1% MWH for ME, 3.0% MWH for PN, 2.7% MWH for Penn, and 2.4% MWH for WP. The Pennsylvania Companies’ Phase IV plans ~~must be~~were filed by November 30, 2020. A settlement has been reached in this matter, and a joint petition seeking approval of that settlement by the parties was filed on February 16, 2021. On March 25, 2021, the PPUC issued an order approving the settlement without modification.

Pennsylvania EDCs ~~may file with the~~are permitted to seek PPUC ~~for~~ approval of an LTIIP for infrastructure improvements and costs related to highway relocation projects, after which a DSIC may be approved to recover LTIIP costs. On ~~August 30, 2019,~~January 16, 2020, the PPUC approved the Pennsylvania ~~Companies filed Petitions for approval of new~~Companies’ LTIIPs for the five-year period beginning January 1, 2020 and ending December 31, 2024 for a total capital investment of approximately $572 million for certain infrastructure improvement initiatives. On ~~January 16, 2020,~~June 25, 2021, the ~~PPUC approved the LTIIPs without modification~~. ~~The~~ Pennsylvania ~~Companies’ approved DSIC riders for quarterly cost recovery went into effect July 1, 2016. On August 30, 2019, Penn~~OCA filed a ~~Petition seeking approval of a waiver~~complaint against Penn’s quarterly DSIC rate, disputing the recoverability of the ~~statutory~~Companies’ automated distribution management system investment under the DSIC cap of 5% of distribution rate revenue and approval to increase the maximum allowable DSIC to 11.81% of distribution rate revenue for the five-year period of its proposed LTIIP. On March 12, 2020, an order was entered approving a settlement by all parties to that case which provides for a temporary increase in the recoverability cap from 5% to 7.5%, to expiremechanism. Penn responded on ~~the earlier of the effective date of new base rates following Penn’s next base rate case or the expiration of its LTIIP II program.~~July 19, 2021.

Following the Pennsylvania Companies’ 2016 base rate proceedings, the PPUC ruled in a separate proceeding related to the DSIC mechanisms that the Pennsylvania Companies were not required to reflect federal and state income tax deductions related to DSIC-eligible property in DSIC rates, which decision was appealed by the Pennsylvania OCA to the Pennsylvania Commonwealth Court. The Commonwealth Court reversed the PPUC’s decision and remanded the matter to require the Pennsylvania Companies to revise their tariffs and DSIC calculations to include ADIT and state income taxes. On April 7, 2020, the Pennsylvania Supreme Court issued an ~~Order~~order granting Petitions for Allowance of Appeal by both the PPUC and the Pennsylvania Companies of the Commonwealth Court’s Opinion and Order. Briefs and Reply Briefs of the parties were filed, and oral argument before the Supreme Court was held on ~~June 25,~~October 21, 2020. An adverse ruling by the Pennsylvania Supreme Court is not expected to result in a material impact to FirstEnergy.

The PPUC issued an order on March 13, 2020, forbidding utilities from terminating ~~residential~~ service for non-payment for the duration of the COVID-19 pandemic. On May 13, 2020, the PPUC issued a Secretarial letter directing utilities to track all ~~prudently-incurred~~prudently incurred incremental costs arising from the COVID-19 pandemic, and to create a regulatory asset for future recovery of incremental uncollectibles incurred as a result of the COVID-19 pandemic and termination moratorium. On October 13, 2020, the PPUC entered an order lifting the service termination moratorium effective November 9, 2020, subject to certain additional notification, payment procedures and exceptions, and permits the Pennsylvania Companies to create a regulatory asset for all incremental expenses associated with their compliance with the order. On March 19, 2021, the PPUC entered an order lifting the moratorium in total effective March 31, 2021, subject to certain additional guidelines regarding the duration of payment arrangements and reporting obligations.

MP and PE provide electric service to all customers through traditional cost-based, regulated utility ratemaking and ~~operates~~operate under rates approved by the WVPSC effective February 2015. MP and PE recover net power supply costs, including fuel costs, purchased power costs and related expenses, net of related market sales revenue through the ENEC. MP’s and PE’s ENEC rate is updated annually.

On March 13, 2020, the WVPSC urged all utilities to suspend utility service terminations except where necessary as a matter of safety or where requested by the customer. On May 15, 2020, the WVPSC issued an order to authorize MP and PE to record a deferral of additional, extraordinary costs directly related to complying with the various COVID-19 government shut-down orders and operational precautions, including impacts on uncollectible expense and cash flow related to temporary discontinuance of service terminations for non-payment and any credits to minimum demand charges associated with business customers adversely impacted by shut-downs or temporary closures related to the pandemic. MP and PE resumed disconnection activity for commercial and industrial customers on September 15, 2020, and for residential customers on November 4, 2020.

On August 28, 2020, MP and PE filed with the WVPSC their annual ENEC case requesting a decrease in ENEC rates of $55 million beginning January 1, 2021, representing a 4% decrease in rates compared to those in effect on August 28, 2020. The decrease in the ENEC rates is net of recovering approximately $10.5 million in previously deferred, incremental uncollectible and other related costs resulting from the COVID-19 pandemic. The WVPSC approved a unanimous settlement by the parties on December 16, 2020 with rates effective January 1, 2021.

Also, on August 28, 2020, MP and PE filed with the WVPSC for recovery of costs associated with modernization and improvement program for their coal-fired boilers. The proposed annual revenue increase for these environmental compliance projects is $5 million beginning January 1, 2021. The WVPSC approved a unanimous settlement by the parties on December 16, 2020 approving the recovery of those costs.

On December 30, 2020, MP and PE filed an integrated resource plan with the WVPSC. The plan projects a small capacity deficit but an energy surplus in MP’s and PE’s supply resources when compared with current WV load demand and projects the capacity deficit growing over the next 15 years. The plan does not recommend additional supply-side resources with a possible exception for small utility-scale solar resources and recommends that the capacity deficit be met through the PJM capacity market. MP currently expects to seek approval in 2021 to construct solar generation sources of up to 50 MWs. On July 13, 2021, the WVPSC accepted MP’s and PE’s integrated resource plan and closed the case.

On December 30, 2020, MP and PE filed with the WVPSC a determination of the rate impact of the Tax Act with respect to ADIT. The filing proposes an annual revenue reduction of $2.6 million annually, effective January 1, 2022, with reconciliation and any resulting adjustments incorporated into the annual ENEC proceedings. A hearing is set for August 18, 2021.

Under the FPA, FERC regulates rates for interstate wholesale sales, transmission of electric power, accounting and other matters, including construction and operation of hydroelectric projects. With respect to their wholesale services and rates, the Utilities, AE Supply and the Transmission Companies are subject to regulation by FERC. FERC regulations require JCP&L, MP, PE, WP and the Transmission Companies to provide open access transmission service at FERC-approved rates, terms and conditions. Transmission facilities of JCP&L, MP, PE, WP and the Transmission Companies are subject to functional control by PJM and transmission service using their transmission facilities is provided by PJM under the PJM Tariff.

FERC regulates the sale of power for resale in interstate commerce in part by granting authority to public utilities to sell wholesale power at market-based rates upon showing that the seller cannot exert market power in generation or transmission or erect barriers to entry into markets. The Utilities and AE Supply each have been authorized by FERC to sell wholesale power in interstate commerce at market-based rates and have a market-based rate tariff on file with FERC, although in the case of the Utilities major wholesale purchases remain subject to review and regulation by the relevant state commissions.

~~Federally-enforceable~~Federally enforceable mandatory reliability standards apply to the bulk electric system and impose certain operating, record-keeping and reporting requirements on the Utilities, AE Supply, and the Transmission Companies. NERC is the ERO designated by FERC to establish and enforce these reliability standards, although NERC has delegated day-to-day implementation and enforcement of these reliability standards to six regional entities, including RFC. All of the facilities that FirstEnergy operates are located within the RFC region. FirstEnergy actively participates in the NERC and RFC stakeholder processes, and otherwise monitors and manages its companies in response to the ongoing development, implementation and enforcement of the reliability standards implemented and enforced by RFC.

FirstEnergy believes that it is in material compliance with all currently effective and enforceable reliability standards. Nevertheless, in the course of operating its extensive electric utility systems and facilities, FirstEnergy occasionally learns of isolated facts or circumstances that could be interpreted as excursions from the reliability standards. If and when such occurrences are found, FirstEnergy develops information about the occurrence and develops a remedial response to the specific circumstances, including in appropriate cases “self-reporting” an occurrence to RFC. Moreover, it is clear that NERC, RFC and FERC will continue to refine existing reliability standards as well as to develop and adopt new reliability standards. Any inability on FirstEnergy’s part to comply with the reliability standards for its bulk electric system could result in the imposition of financial penalties, or obligations to upgrade or build transmission facilities, that could have a material adverse effect on its financial condition, results of operations and cash flows.

On May 1, 2020, ATSI filed amendments to its formula rate to recover regulatory assets for certain costs that ATSI incurred as a

On March 15, 2018, FERC initiated proceedings on the question of how to address possible changes to ADIT and bonus depreciation as a result of the Tax Act. Such possible changes could impact FERC-jurisdictional rates, including transmission rates. On November 21, 2019, FERC issued a final rule (Order No. 864). Order No. 864 requires utilities with transmission formula rates to update their formula rate templates to include mechanisms toto: (i) deduct any excess ADIT from or add any deficient ADIT to their rate base; (ii) raise or lower their income tax allowances by any amortized excess or deficient ADIT; and (iii) incorporate a new permanent worksheet into their rates that will annually track information related to excess or deficient ADIT. Per FERC directives, ATSI submitted its compliance filing on May 1, 2020. MAIT submitted its compliance filing on June 1, 2020. Certain intervenors filed protests of the compliance filings, to which ATSI and MAIT responded. On October 28, 2020, FERC staff requested additional information about ATSI’s proposed rate base adjustment mechanism, and ATSI submitted the requested information on November 25, 2020. On May 4, 2021, FERC staff requested additional information about MAIT’s proposed rate base adjustment mechanism, and MAIT submitted the requested information on June 3, 2021. On June 24, 2021, an intervenor protested the supplemental information that MAIT submitted, to which MAIT responded. On May 15, 2020, TrAIL submitted its compliance filing and on June 1, 2020, PATH submitted its required compliance filing. On May 4, 2021, FERC staff requested additional information about PATH’s proposed rate base adjustment mechanism, and PATH submitted the requested information on June 3, 2021. On July 12, 2021, FERC staff requested additional information about TrAIL’s proposed rate base adjustment mechanism; the due date for TrAIL’s response is August 11, 2021. These compliance filings each remain pending before FERC. MP, WP and PE ~~– as~~(as holders of a “stated” transmission ~~rate –~~rate) are ~~allowed to address~~addressing these requirements in the ~~course of their next~~ transmission formula rates ~~proceeding.~~amendments that were filed on October 29, 2020, and which have been accepted by FERC effective January 1, 2021, subject to refund, pending further hearing and settlement procedures. JCP&L ~~is addressing~~addressed these requirements as part of its ~~pending~~ transmission formula rate ~~case.~~case, which was resolved by a settlement approved by FERC on April 15, 2021, addressed further below.

FERC’s methodology for calculating electric transmission utility ROE has been in transition as a result of an April 14, 2017 ruling by the D.C. Circuit that vacated FERC’s then-effective methodology. On October 16, 2018, FERC issued an order in which it proposed a revised ROE methodology. FERC proposed that, for complaint proceedings alleging that an existing ROE is not just and reasonable, FERC will rely on three financial models - discounted cash flow, capital-asset pricing, and expected earnings - to establish a composite zone of reasonableness to identify a range of just and reasonable ROEs. FERC then will utilize the transmission utility’s risk relative to other utilities within that zone of reasonableness to assign the transmission utility to one of three quartiles within the zone. FERC would take no further action (i.e., dismiss the complaint) if the existing ROE falls within the identified quartile. However, if the replacement ROE falls outside the quartile, FERC would deem the existing ROE presumptively unjust and unreasonable and would determine the replacement ROE. FERC would add a fourth financial model risk premium to the analysis to calculate a ROE based on the average point of central tendency for each of the four financial models. On March 21, 2019, FERC established NOIs to collect industry and stakeholder comments on the revised ROE methodology that is described in the October 16, 2018 decision, and also whether to make changes to FERC’s existing policies and practices for awarding transmission rates incentives. On November 21, 2019, FERC announcedMay 20, 2021, in a ~~complaint proceeding~~case not involving MISO utilities that FERC would rely on the discounted cash flow and capital-asset pricing models as the basis for establishing ROE. Certain parties, including the Utilities, sought rehearing of FERC’s decision in the MISO utilities proceeding and, on May 21, 2020,FirstEnergy, FERC issued Opinion No. ~~569-A that changed FERC’s~~575 in which it reiterated the nationwide ROE ~~methodology.~~methodology set forth in 2020 in Opinion No. 569-A. Under this methodology, FERC ~~established an ROE that is based on~~employs three financial models – discounted cash flow, capital-asset pricing, and risk premium – to calculate a composite zone of reasonableness. As it has done in other recent ROE cases, FERC ~~noted that utilities could, in utility-specific proceedings, ask to have~~rejected the use of the expected earnings methodology ~~included~~ in calculating the ~~utility’s~~ authorized ROE. ~~FERC also noted that, going forward, it will divide that zone into three equal parts, to be used for high risk, normal risk, and low risk utilities.~~ A given utility will be assigned to one of these three parts of the zone of reasonableness, and its ROE will be set at the median or midpoint of the other utilities that are in the applicable third of the zone. FirstEnergy filed a request for clarification or, alternatively, rehearing ~~which FERC denied~~of Opinion No. 575 was filed on ~~July 22, 2020. FirstEnergy also initiated appellate proceedings of~~June 21, 2021, and remains pending before FERC. FERC’s Opinion Nos. ~~569~~569-A and ~~569-A.~~569-B, upon which Opinion No. 575 is based, have been appealed to the D.C. Circuit. FirstEnergy is not participating in the appeal. Any changes to FERC’s transmission rate ROE and incentive policies for the Utilities would be applied on a prospective basis.

OnIn March ~~20,~~ 2020, FERC initiated a rulemaking proceeding on the transmission rate incentives provisions of Section 219 of the 2005 Energy Policy Act. ~~Initial~~FirstEnergy submitted comments ~~were submitted July 1, 2020, and reply comments were filed on July 16, 2020. FirstEnergy participated~~ through EEI and ~~through~~as part of a consortium of PJM Transmission Owners. In a supplemental rulemaking proceeding that was initiated on April 15, 2021, FERC requested comments on, among other things, whether to require utilities that have been members of an RTO for three years or more and that have been collecting an “RTO membership” ROE incentive adder to file tariff updates that would terminate collection of the incentive adder. Initial comments on the proposed rule were filed on June 25, 2021, and reply comments are due on July 26, 2021. FirstEnergy is a member of PJM and its transmission subsidiaries could be affected by the supplemental proposed rule. FirstEnergy is participating in comments that are to be submitted by various industry trade groups. If there were to be any changes to FirstEnergy transmission incentive ROE, such changes will be applied on a prospective basis.

On October 30, 2019, JCP&L filed tariff amendments with FERC to convert JCP&L’s existing stated transmission rate to a forward-looking formula transmission rate. JCP&L requested that the tariff amendments become effective January 1, 2020. On December 19, 2019, FERC issued its initial order in the case, allowing JCP&L to transition to a forward-looking formula rate as of January 1, 2020 as requested, subject to refund, pending further hearing and settlement proceedings. JCP&L and the parties to the FERC proceeding subsequently were able to reach settlement, and on February 2, 2021, JCP&L filed an offer of settlement with FERC. On April 15, 2021, FERC approved the settlement agreement as filed, with no changes, effective January 1, 2021. JCP&L submitted a compliance filing on May 14, 2021 to implement aspects of the settlement, which is pending before FERC.

On October 29, 2020, MP, PE and WP filed tariff amendments with FERC to convert their existing stated transmission rate to a forward-looking formula transmission rate, effective January 1, 2021. In addition, on October 30, 2020, KATCo filed a proposed new tariff to establish a forward-looking formula rate and requested that the new rate become effective January 1, 2021. In its filing, KATCo explained that while it currently owns no transmission assets, it may build new transmission facilities in the Allegheny zone, and that it may seek required state and federal authorizations to acquire transmission assets from PE and WP by January 1, 2022. These transmission rate filings were accepted for filing by FERC on December 31, 2020, subject to refund, pending further hearing and settlement procedures and were consolidated into a single proceeding. MP, PE and WP, and KATCo are engaged in settlement ~~negotiations.~~

FirstEnergy has various financial and performance guarantees and indemnifications, which are issued in the normal course of business. These contracts include performance guarantees, stand-by letters of credit, debt guarantees, surety bonds and indemnifications. FirstEnergy enters into these arrangements to facilitate commercial transactions with third parties by enhancing the value of the transaction to the third party.

As of June 30, ~~2020,~~2021, outstanding guarantees and other assurances aggregated approximately ~~$1.7~~$1.2 billion, consisting of parental guarantees on behalf of its consolidated subsidiaries ($~~1.0~~0.6 billion), other guarantees ($~~114 million)~~0.1 billion) and other assurances ($~~503 million)~~0.5 billion).

In the normal course of business, FE and its subsidiaries may enter into physical or financially settled contracts for the sale and purchase of electric capacity, energy, fuel and emission allowances. Certain agreements contain provisions that require FE or its subsidiaries to post collateral. This collateral may be posted in the form of cash or credit support with thresholds contingent upon FE’s or its subsidiaries’ credit rating from each of the major credit rating agencies. The collateral and credit support requirements vary by contract and by counterparty.

~~Certain agreements entered into by FE and its subsidiaries have margining provisions that require posting of collateral.~~ As of June 30, ~~2020, $1~~2021, $33 million of collateral has been posted by FE or its ~~subsidiaries.~~subsidiaries, of which, $32 million was posted as a result of the credit rating downgrades in the fourth quarter of 2020.

These credit-risk-related contingent features stipulate that if the subsidiary were to be downgraded or lose its investment grade credit rating (based on its senior unsecured debt rating), it would be required to provide additional collateral. The following table discloses the potential additional credit rating contingent contractual collateral obligations as of June 30, ~~2020:~~2021:

FE is a guarantor under a $120 million syndicated senior secured term loan facility due November 12, 2024, under which Global Holding’s outstanding principal balance ~~is $114~~was $108 million as of June 30, ~~2020. In addition to FE,~~2021. Signal Peak, Global Rail, Global Mining Group, LLC and Global Coal Sales Group, LLC, each being a direct or indirect subsidiary of Global Holding, and FE continue to provide their joint and several guaranties of the obligations of Global Holding under the facility.

In connection with the facility, 69.99% of Global Holding’s direct and indirect membership interests in Signal Peak, Global Rail and their affiliates along with FEV’s and WMB Marketing Ventures, LLC’s respective 33-1/3% membership interests in Global Holding, are pledged to the lenders under the current facility as collateral.

Various federal, state and local authorities regulate FirstEnergy with regard to air and water quality, hazardous and solid waste disposal, and other environmental matters. While FirstEnergy’s environmental policies and procedures are designed to achieve compliance with applicable environmental laws and regulations, such laws and regulations are subject to periodic review and potential revision by the implementing agencies. FirstEnergy cannot predict the timing or ultimate outcome of any of these reviews or how any future actions taken as a result thereof may materially impact its business, results of operations, cash flows and financial condition.

~~In February 2019, the EPA announced its final decision to retain without changes the NAAQS for SO~~₂~~, specifically retaining the 2010 primary (health-based) 1-hour standard of 75 PPB. As of June 30, 2020, FirstEnergy has no power plants operating~~Also, during this time, in ~~areas designated as non-attainment by the EPA.~~

There are ~~a number of~~several initiatives to reduce GHG emissions at the state, federal and international level. Certain northeastern states are participating in the RGGI and western states led by California, have implemented programs, primarily cap and trade mechanisms, to control emissions of certain GHGs. Additional policies reducing GHG emissions, such as demand reduction programs, renewable portfolio standards and renewable subsidies have been implemented across the nation.

At the international level, the United Nations Framework Convention on Climate Change resulted in the Kyoto Protocol requiring participating countries, which does not include the U.S., to reduce GHGs commencing in 2008 and has been extended through 2020. The Obama Administration submitted in March 2015, a formal pledge for the U.S. to reduce its economy-wide GHG emissions by 26 to 28 percent below 2005 levels by 2025. In 2015, FirstEnergy set a goal of reducing company-wide CO₂ ~~emissions by at least 90 percent below 2005 levels by 2045. As of December 31, 2018, FirstEnergy has reduced its CO~~₂~~emissions by approximately 62 percent.~~ In September 2016, the U.S. joined in adopting the agreement reached on December 12, 2015, at the United Nations Framework Convention on Climate Change meetings in ~~Paris.~~Paris to reduce GHG. The Paris Agreement’s non-binding obligations to limit global warming to below two degrees Celsius became effective on November 4, 2016. On June 1, 2017, the Trump Administration announced that the U.S. would cease all participation in the Paris Agreement. On January 20, 2021, President Biden signed an executive order re-adopting the agreement on behalf of the U.S. In November 2020, FirstEnergy published its Climate Story which includes its climate position and strategy, as well as a new comprehensive and ambitious GHG emission goal. FirstEnergy

pledged to achieve carbon neutrality by 2050 and set an interim goal for a 30% reduction in GHG within FirstEnergy’s direct operational control by 2030, based on 2019 levels. FirstEnergy cannot currently estimate the financial impact of climate change policies, although potential legislative or regulatory programs restricting CO₂CO2 emissions, or litigation alleging damages from GHG emissions, could require material capital and other expenditures or result in changes to its operations.

In December 2009, the EPA released its final “Endangerment and Cause or Contribute Findings for GHG under the Clean Air ~~Act”~~Act,” concluding that concentrations of several key GHGs ~~constitutes~~constitute an ~~“endangerment”~~"endangerment" and may be regulated as ~~“air pollutants”~~"air pollutants" under the CAA and mandated measurement and reporting of GHG emissions from certain sources, including electric generating plants. ~~The~~Subsequently, the EPA released its final CPP regulations in August 2015 to reduce CO₂CO2 emissions from existing fossil fuel-fired EGUs

Various water quality regulations, the majority of which are the result of the federal CWA and its amendments, apply to FirstEnergy’s facilities. In addition, the states in which FirstEnergy operates have water quality standards applicable to FirstEnergy’s operations.

The EPA finalized CWA Section 316(b) regulations in May 2014, requiring cooling water intake structures with an intake velocity greater than 0.5 feet per second to reduce fish impingement when aquatic organisms are pinned against screens or other parts of a cooling water intake system to a 12% annual average and requiring cooling water intake structures exceeding 125 million gallons per day to conduct studies to determine site-specific controls, if any, to reduce entrainment, which occurs when aquatic life is drawn into a facility’s cooling water system. Depending on any final action taken by the states with respect to impingement and entrainment, the future capital costs of compliance with these standards may be material.

On September 29, 2016, FirstEnergy received a request from the EPA for information pursuant to CWA Section 308(a) for information concerning boron exceedances of effluent limitations established in the NPDES Permit for the former Mitchell Power Station’s Mingo landfill, owned by WP. On November 1, 2016, WP provided an initial response that contained information related to a similar boron issue at the former Springdale Power Station’s ~~landfill.~~landfill, also owned by WP. The EPA requested additional information regarding the Springdale landfill and on November 15, 2016, WP provided a comprehensive response for both facilities and ~~intends to~~has fully ~~comply~~complied with the Section 308(a) information request. On March 3, 2017, WP proposed to the PA DEP a re-route of its wastewater discharge to eliminate potential boron exceedances at the Springdale ~~landfill. On~~landfill and on January 29, 2018, WP submitted an NPDES permit renewal application to PA DEP proposing to re-route its wastewater discharge to eliminate potential boron exceedances at the Mingo landfill. On February 20, 2018, the ~~DOJ~~Department of Justice issued a letter and tolling agreement to WP on behalf of the EPA alleging violations of the CWA at the Springdale and Mingo ~~landfill while~~landfills and seeking to enter settlement negotiations in lieu of filing a complaint. ~~The EPA has proposed a penalty of $900,000 to~~To settle alleged past boron exceedances at both facilities, WP has agreed to a penalty amount of $610,000 to be paid over two years. It is expected that the ~~Mingo~~parties will sign a Consent Decree memorializing the pipeline construction milestones and ~~Springdale landfills. Negotiations are continuing and WP is unable to predict~~ the ~~outcome~~civil penalty payments in the third quarter of ~~this matter.~~2021.

Federal and state hazardous waste regulations have been promulgated as a result of the RCRA, as amended, and the Toxic Substances Control Act. Certain CCRs, such as coal ash, were exempted from hazardous waste disposal requirements pending the EPA’s evaluation of the need for future regulation.

In April 2015, the EPA finalized regulations for the disposal of CCRs (non-hazardous), establishing national standards for landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring and protection procedures and other operational and reporting procedures to assure the safe disposal of CCRs from electric generating plants. On September 13, 2017, the EPA announced that it would reconsider certain provisions of the final regulations. On July 17, 2018, the EPA Administrator signed a final rule extending the deadline for certain CCR facilities to cease disposal and commence

closure activities, as well as, establishing less stringent groundwater monitoring and protection requirements. On August 21, 2018, the D.C. Circuit remanded sections of the CCR Rule to the EPA to provide for additional safeguards for unlined CCR impoundments that are more protective of human health and the environment. On December 2, 2019, the EPA published a proposed rule accelerating the date that certain CCR impoundments must cease accepting waste and initiate closure to August

On July 21, 2020, a complaint and supporting affidavit containing federal criminal allegations were unsealed against the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. Also, on July 21, 2020, and in connection with the investigation, FirstEnergy received subpoenas for records from the U.S. Attorney’s Office for the S.D. Ohio. FirstEnergy was not aware of the criminal allegations, affidavit or subpoenas before July 21, 2020.

On August 10, 2020, the SEC, through its Division of Enforcement, issued an order directing an investigation of possible securities laws violations by FE, and on September 1, 2020, issued subpoenas to FE and certain FE officers. On April 28, 2021, the SEC issued an additional subpoena to FE. While no contingency has been reflected in its consolidated financial statements, FE believes that it is probable that it will incur a loss in connection with the resolution of the SEC investigation. Given the ongoing nature and complexity of the review, inquiries and investigations, FE cannot yet reasonably estimate a loss or range of loss that may arise from the resolution of the SEC investigation.

In addition to the subpoenas referenced above under “—United States v. Larry Householder, et. ~~al,~~al.”, and the SEC investigation, certain FE stockholders and FirstEnergy customers filed several lawsuits against FirstEnergy and certain current and former directors, officers and other employees, and the complaints in each of these suits is related to allegations in the complaint and supporting affidavit relating to ~~Ohio House Bill~~HB 6 and the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. The plaintiffs in each of the below cases seek, among other things, to recover an unspecified amount of damages (unless otherwise noted). No contingency has been reflected in FirstEnergy’s consolidated financial statements with respect to these lawsuits as a loss is neither probable, nor is a loss or range of a loss reasonably estimable.

~~The plaintiffs~~In letters dated January 26, and February 22, 2021, staff of FERC's Division of Investigations notified FirstEnergy that the Division is conducting an investigation of FirstEnergy’s lobbying and governmental affairs activities concerning HB 6, and staff directed FirstEnergy to preserve and maintain all documents and information related to the same as such have been developed as part of an ongoing non-public audit being conducted by FERC's Division of Audits and Accounting. While no contingency has been reflected in ~~each~~its consolidated financial statements, FirstEnergy believes that it is probable that it will incur a loss in connection with the resolution of the ~~above cases, seek, among other things, to recover an unspecified amount~~FERC investigation. Given the ongoing nature and complexity of ~~damages. The Ohio Attorney General~~the review, inquiries and investigations, FirstEnergy cannot yet reasonably estimate a loss or range of loss that may ~~be considering legal action and, in a letter dated July 24, 2020, notified FE~~arise from the resolution of ~~its duty to not destroy documents in its custody or control regarding Ohio House Bill 6.~~ the FERC investigation.

The outcome of any of these lawsuits, isgovernmental investigations and audit are uncertain and could have a material adverse effect on FE’s or its subsidiaries’ reputation, business, financial condition, results of operations, liquidity, and cash flows. ~~No contingency~~

As previously disclosed, a committee of independent members of the Board of Directors has been ~~reflected~~directing an internal investigation related to ongoing government investigations. In connection with FirstEnergy’s internal investigation, such committee determined on October 29, 2020, to terminate FirstEnergy’s Chief Executive Officer, Charles E. Jones, together with two other executives: Dennis M. Chack, Senior Vice President of Product Development, Marketing, and Branding; and Michael J. Dowling, Senior Vice President of External Affairs. Each of these terminated executives violated certain FirstEnergy policies and its code of conduct. These executives were terminated as of October 29, 2020. Such former members of senior management did not maintain and promote a control environment with an appropriate tone of compliance in certain areas of FirstEnergy’s ~~consolidated financial statements as~~business, nor sufficiently promote, monitor or enforce adherence to certain FirstEnergy policies and its code of conduct. Furthermore, certain former members of senior management did not reasonably ensure that relevant information was communicated within our organization and not withheld from our independent directors, our Audit Committee, and our independent auditor. Among the matters considered with respect to the determination by the committee of independent members of the Board of Directors that certain former members of senior management violated certain FirstEnergy policies and its code of conduct related to a ~~loss is neither probable, nor is a loss or range~~payment of approximately $4 million made in early 2019 in connection with the termination of a ~~loss reasonably estimable.~~purported consulting agreement, as amended, which had been in place since 2013. The counterparty to such agreement was an entity associated with an individual who subsequently was appointed to a full-time role as an Ohio government official directly involved

in regulating the Ohio Companies, including with respect to distribution rates. Additionally, on November 8, 2020, the Senior Vice President and Chief Legal Officer, and the Vice President, General Counsel, and Chief Ethics Officer, were separated from FirstEnergy due to inaction and conduct that the Board determined was influenced by the improper tone at the top. Subsequently, effective May 26, 2021, the Vice President, Rates and Regulatory Affairs, and Acting Vice President, External Affairs was separated from FirstEnergy related to her inaction regarding an amendment in 2015 of the purported consulting agreement discussed above.

Additionally, on February 17, 2021, the Board appointed Mr. John W. Somerhalder II to the positions of Vice Chairperson of the Board and Executive Director of FE, each effective as of March 1, 2021. Mr. Donald T. Misheff will continue to serve as Non-Executive Chairman of the Board. Mr. Somerhalder will help lead efforts to enhance FirstEnergy’s reputation. On March 7, 2021, the Board appointed Mr. Steven E. Strah to the position of Chief Executive Officer of FirstEnergy, effective as of March 8, 2021. On March 7, 2021, at the recommendation of the FirstEnergy Corporate Governance and Corporate Responsibility Committee, the Board also elected Mr. Strah as a Director of FirstEnergy, effective as of March 8, 2021.

Also, in connection with the internal investigation, FirstEnergy identified certain transactions, which, in some instances, extended back ten years of more, including vendor service, that were either improperly classified, misallocated to certain of the Utilities and Transmission Companies, or lacked proper supporting documentation. These transactions resulted in amounts collected from customers that were immaterial to FirstEnergy. The Utilities and Transmission Companies are working with the appropriate regulatory agencies to address these amounts.

The internal investigation has revealed no new material issues since FirstEnergy’s Form 10-K was filed on February 18, 2021. The focus of the internal investigation has transitioned from a proactive investigation to continued cooperation with the ongoing government investigations.

Under NRC regulations, JCP&L, ME and PN must ensure that adequate funds will be available to decommission their retired nuclear facility, TMI-2. As of June 30, 2020, JCP&L, ME and PN had in total approximately $882 million invested in external trusts to be used for the decommissioning and environmental remediation of their retired TMI-2 nuclear generating facility. The values of these NDTs also fluctuate based on market conditions. If the values of the trusts decline by a material amount, the obligation to JCP&L, ME and PN to fund the trusts may increase. Disruptions in the capital markets and their effects on particular businesses and the economy could also affect the values of the NDTs.

There are various lawsuits, claims (including claims for asbestos exposure) and proceedings related to FirstEnergy’s normal business operations pending against FE or its subsidiaries. The loss or range of loss in these matters is not expected to be material to FE or its subsidiaries. The other potentially material items not otherwise discussed above are described under Note 9,8, “Regulatory Matters.”

FirstEnergy accrues legal liabilities only when it concludes that it is probable that it has an obligation for such costs and can reasonably estimate the amount of such costs. In cases where FirstEnergy determines that it is not probable, but reasonably possible that it has a material obligation, it discloses such obligations and the possible loss or range of loss if such estimate can be made. If it were ultimately determined that FE or its subsidiaries have legal liability or are otherwise made subject to liability based on any of the matters referenced above, it could have a material adverse effect on FE’s or its subsidiaries’ financial condition, results of operations and cash flows.

The financial results discussed below include revenues and expenses from transactions among FirstEnergy’s business segments. A reconciliation of segment financial results is provided in Note ~~11,~~10, “Segment Information,” of the Notes to Consolidated Financial Statements.

Financial results for FirstEnergy’s business segments in the second quarter of ~~2020~~2021 and ~~2019~~2020 were as follows:

The $4$70 million ~~decrease~~increase in total revenues resulted from the following sources:

Distribution revenues increased ~~$41~~$48 million in the second quarter of ~~2020,~~2021, as compared to the same period of ~~2019,~~2020, primarily resulting from ~~increased residential sales due to the COVID-19 stay-at-home orders mandated by governmental authorities in our service territories,~~higher weather-related demands, higher rates associated with ~~incremental~~ riders in Ohio and Pennsylvania, including the recovery of ~~distribution~~ capital investment programs and transmission expenses, and ~~higher weather-related customer usage, partially offset by lower~~increased weather-adjusted commercial and industrial sales, ~~resulting from the pandemic and~~partially offset by the absence of lost distribution revenues in Ohio, the ~~DMR~~elimination of energy efficiency mandates and energy efficiency programs in Ohio, the expiration of a NUG contract, and lower weather-adjusted residential sales. The change in distribution revenues ~~that ended in 2019.~~by sales class are primarily due to the cancellation of state mandated COVID-19 stay-at-home orders. Distribution services by customer class are summarized in the following table:

Distribution ~~services~~deliveries to residential, commercial and industrial customers ~~primarily reflects an increase in customer load due to~~reflect the cancellation of the state mandated COVID-19 stay-at-home ~~orders mandated~~orders. Residential and commercial deliveries were also impacted by ~~governmental authorities in our service territories and~~ higher weather-related ~~usage. Deliveries to commercial customers were lower due to the impact of the COVID-19 pandemic, partially offset by higher weather-related~~customer usage. Cooling degree days were 6%21% above ~~2019,~~2020 and ~~2% above normal, and heating degree days were 58% above 2019, and 27%~~24% above normal. ~~Deliveries to~~Increases in industrial ~~customers~~deliveries were ~~also negatively impacted by~~primarily seen in the ~~COVID-19 pandemic contributing to lower steel, mining,~~manufacturing and educational ~~services, and automotive customer usage, partially offset by higher shale customer usage.~~

The following table summarizes the price and volume factors contributing to the ~~$40~~$29 million ~~decrease~~increase in generation revenues for the second quarter of ~~2020,~~2021, as compared to the same period of ~~2019:~~2020:

The increase in retail generation sales volumes was primarily due to ~~decreased customer shopping in New Jersey and Pennsylvania, an increase in residential load due to the COVID-19 stay-at-home orders mandated by governmental authorities in our service territories, and~~ higher weather-related ~~usage.~~usage, partially offset by increased shopping. Total generation provided by alternative suppliers as a percentage of total MWH deliveries ~~decreased~~in the second quarter of 2021, as compared to ~~48%~~the same period of 2020, increased to 65% from ~~51% in New Jersey and to~~ 64% ~~from 69%~~ in Pennsylvania. The decrease in retail generation prices primarily resulted from lower non-shopping generation auction ~~rates in New Jersey and Pennsylvania.~~rates.

Wholesale generation revenues ~~decreased $60~~increased $24 million in the second quarter of ~~2020,~~2021, as compared to the same period ~~in 2019, primarily~~of 2020, due to ~~lower wholesale~~increased sales ~~volumes and capacity revenues.~~volumes. The difference between current wholesale generation revenues and certain energy costs incurred are deferred for future recovery or refund, with no material impact to earnings.

Other revenues decreased $7 million in the second quarter of 2021, as compared to the same period of 2020, primarily due to lower pole attachment revenue.

Total operating expenses increased ~~$49~~$36 million in the second quarter of ~~2020,~~2021, as compared to the same period of ~~2019,~~2020, primarily due to the following:

Total revenues increased ~~$12~~$35 million in the second quarter of ~~2020,~~2021, as compared to the same period of ~~2019,~~2020, primarily due to recovery of incremental operating expenses and a higher rate base at ~~ATSI~~MAIT and ~~MAIT, partially offset by the impact of a true-up of the forward-looking rate.~~ATSI.

The following table shows revenues by transmission asset owner:

Total operating expenses increased $9$25 million in the second quarter of ~~2020,~~2021, as compared to the same period of ~~2019,~~2020, primarily due to higher operation and maintenance costs, and increased property taxes ~~and depreciation~~ due to a higher asset ~~base, partially offset by lower operating and maintenance expenses.~~base. The majority of operating expenses are recovered through formula rates, resulting in no material impact on current period earnings.

~~Higher net miscellaneous income,~~Other expenses increased $5 million due to ~~lower pension and OPEB non-service costs, was offset by the impact of~~ higher ~~net financing costs from money pool borrowing and lending activity and~~interest expense associated with new debt issuances at ~~MAIT.~~FET and increased borrowings under the FET Revolving Facility.

Regulated Transmission’s effective tax rate was ~~23.0%~~24.2% and ~~20.5%~~23.0% for the three months ended June 30, 2021 and 2020, ~~and 2019,~~ respectively.

Financial results at Corporate/Other resulted in a ~~$25~~$276 million increase in net loss ~~from continuing operations~~ in the second quarter of ~~2020,~~2021, as compared to the same period of ~~2019,~~2020, primarily due to the $230 million DPA monetary penalty, higher other operating expenses from legal expenses related to the ongoing government investigations, higher interest expense due to increased long-term debt, and lower ~~returns on certain equity method investments~~tax benefits from the remeasurement of West Virginia deferred income taxes resulting from a state tax law change passed in 2021, and ~~decreased Pension and OPEB non-service costs, partially offset by $10 million in~~the absence of tax benefits from accelerated amortization of certain investment tax credits ~~and lower net benefit expenses.~~

Financial results for FirstEnergy’s business segments in the first six months of ~~2020~~2021 and ~~2019~~2020 were as follows:

The ~~$219~~$82 million ~~decrease~~increase in total revenues resulted from the following sources:

Distribution services revenues increased ~~$17~~$36 million in the first six months ~~of 2020,~~2021, as compared to the same period of ~~2019,~~2020, primarily resulting from ~~the implementation of Ohio decoupling rates in 2020,~~ higher rates associated with ~~incremental~~ riders in Ohio and Pennsylvania including the recovery of ~~distribution~~ capital investment programs and transmission expenses ~~increased residential sales due to the COVID-19 stay-at-home orders mandated by governmental authorities in our service territories,~~ and ~~the implementation of the New Jersey Zero Emission Program in June 2019,~~higher weather-related usage, partially offset by the absence of decoupling and lost distribution revenues, the ~~DMR revenues that ended~~elimination of energy efficiency mandates and energy efficiency programs in ~~2019,~~Ohio, and ~~lower weather-related customer usage.~~the expiration of a NUG contract. Distribution services by customer class are summarized in the following table:

~~Lower distribution services~~Distribution deliveries to residential, commercial and industrial customers reflects the cancellation of the state mandated COVID-19 stay-at-home orders. Residential and commercial ~~customers reflect lower~~deliveries were also impacted by higher weather-related ~~usage and the impact of COVID-19. Heating~~customer usage. Cooling degree days were ~~7% below 2019,~~21% above 2020 and ~~11%~~24% above normal and heating degree days were 6% above 2020 and 4% below normal. ~~Deliveries to~~Increases in industrial ~~customers~~deliveries were ~~also negatively impacted by~~primarily seen in the ~~COVID-19 pandemic contributing to lower steel, mining,~~manufacturing and educational ~~services, and automotive customer usage, partially offset by higher shale customer usage.~~sectors.

The following table summarizes the price and volume factors contributing to the ~~$229~~$58 million ~~decrease~~increase in generation revenues for the first six months of ~~2020,~~2021, as compared to the same period of ~~2019:~~2020:

The ~~decrease~~increase in retail generation sales volumes was primarily due to ~~lower~~higher weather-related ~~usage.~~usage and decreased customer shopping in New Jersey and Pennsylvania. Total generation provided by alternative suppliers as a percentage of total MWH deliveries in the first six months of 2021, as compared to the same period of 2020, decreased to 47% from 49% in New Jersey and to 63% from 65% in Pennsylvania. The decrease in retail generation prices primarily resulted from lower non-shopping generation auction ~~rates in New Jersey and Pennsylvania.~~rates.

Wholesale generation revenues ~~decreased $95~~increased $22 million in the first six months of ~~2020,~~2021, as compared to the same period in ~~2019,~~2020, primarily due to ~~lower wholesale~~increased sales volumes and an increase in spot market energy prices, partially offset by lower capacity revenues. The difference between current wholesale generation revenues and certain energy costs incurred are deferred for future recovery or refund, with no material impact to earnings.

Other revenues decreased $12 million in the first six months of 2021, as compared to the same period in 2020, primarily due to lower pole attachment revenue.

Total operating expenses ~~decreased $86~~increased $47 million, primarily due to the following:

~~Total other~~Other expense ~~increased $188~~decreased $283 million in the first six months of ~~2020,~~2021, as compared to the same period of ~~2019,~~2020, primarily due to a $257 million pension and OPEB mark-to-market adjustment in ~~the first quarter of~~ 2020 and higher net miscellaneous income resulting from lower pension non-service costs, partially offset by higher interest expense from ~~debt issuances primarily at WP~~increased borrowings under the FE Revolving Facility to increase cash position and ~~MP, partially offset by higher net miscellaneous income primarily resulting from lower pension and OPEB non-service costs.~~preserve financial flexibility.

Regulated Distribution’s effective tax rate was ~~8.3%~~20.7% and ~~21.0%~~8.3% for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The change in the effective tax rate was primarily due to the recognition of $52 million in deferred gains relating to prior intercompany transfers of generation assets that were triggered by the deconsolidation of the FES Debtors from FirstEnergy’s consolidated federal income tax group as a result of their emergence from bankruptcy in the first quarter of 2020.

Total revenues increased ~~$57~~$39 million, primarily due to the recovery of incremental operating expenses and a higher rate base at ATSI and MAIT, partially offset by ~~the impact of~~ a ~~true-up of the forward-looking rate.~~lower rate base at TrAIL.

The following table shows revenues by transmission asset owner:

Total operating expenses increased ~~$15~~$46 million in the first six months of ~~2020,~~2021, as compared to the same period of ~~2019,~~2020, primarily due to higher operation and maintenance costs, priority pole maintenance costs, and increased property taxes and depreciation due to a higher asset ~~base, partially offset by lower operating and maintenance expenses.~~base. The majority of operating expenses are recovered through formula rates, resulting in no material impact on current period earnings.

Total other expense ~~increased $24~~decreased $3 million in the first six months of ~~2020,~~2021, as compared to the same period of ~~2019,~~2020, primarily due to a $19 million pension and OPEB mark-to-market adjustment in the first quarter of 2020, ~~and~~partially offset by higher interest expense associated with new debt issuances at ~~ATSI, MAIT~~FET and ~~FET.~~increased borrowings under the FET Revolving Facility.

Financial results at Corporate/Other resulted in a ~~$176~~$184 million ~~increased~~increase in net loss ~~from continuing operations~~ in the first six months of ~~2020,~~2021, as compared to the same period of ~~2019,~~2020, primarily due to the ~~$147~~$230 million ~~pension~~DPA monetary penalty, higher interest expense due to increased long-term debt, lower tax benefits from the remeasurement of West Virginia deferred income taxes resulting from a state tax law change passed in 2021 and ~~OPEB mark-to-market adjustment in~~ the ~~first quarter~~absence of ~~2020, higher other operating expenses and lower returns on certain equity method investments, partially offset by $10 million in~~ tax benefits from accelerated amortization of certain investment tax credits recognized in 2020, and ~~decreased other Pension~~the absence of a gain from discontinued operations, net of tax, partially offset by the absence of a pension and OPEB ~~non-service costs.~~mark-to-market adjustment in 2020.

For the six months ended June 30, 2020, FirstEnergy recorded ~~income~~a gain from discontinued operations, net of tax, of $52 million. The gain primarily related to settlement expense of $1 million, ~~compared to a loss,~~accelerated net pension and OPEB prior service credits of $18 million and income tax ~~of $64 million for the six months ended June 30, 2019. The change in discontinued operations, net of tax, was primarily due to lower settlement-related expenses, including adjustments to~~benefits (including the estimated worthless stock deduction and ~~Intercompany Tax Allocation Agreement~~adjustments from the tax sharing agreement with the FES ~~Debtors, as well as the acceleration~~Debtors) of ~~net pension and OPEB service credits in 2020 and the absence of tax expense in 2019 associated with non-deductible interest.~~$35 million.

Regulatory assets represent incurred costs that have been deferred because of their probable future recovery from customers through regulated rates. Regulatory liabilities represent amounts that are expected to be credited to customers through future regulated rates or amounts collected from customers for costs not yet incurred. FirstEnergy, the Utilities and the Transmission Companies net their regulatory assets and liabilities based on federal and state jurisdictions.

Management assesses the probability of recovery of regulatory assets at each balance sheet date and whenever new events occur. Factors that may affect probability include changes in the regulatory environment, issuance of a regulatory commission order or passage of new legislation. Management applies judgment in evaluating the evidence available to assess the probability of recovery of regulatory assets from customers, including, but not limited to evaluating evidence related to precedent for similar items at ~~the Company~~FirstEnergy and information on comparable companies within similar jurisdictions, as well as assessing progress of communications between ~~the Company~~FirstEnergy and regulators. Certain of these regulatory assets, totaling approximately ~~$114 million and $111~~$117 million as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, are recorded based on prior precedent or anticipated recovery based on rate making premises without a specific order, of which, ~~$76~~$78 million and ~~$73~~$79 million as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, are being sought for recovery in a formula rate amendment filing at ATSI that is pending before FERC. See Note 9,8, "Regulatory Matters" for additional information.

The following table provides information about the composition of net regulatory assets and liabilities as of June 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, and the changes during the six months ended June 30, ~~2020:~~2021:

The following is a description of the regulatory assets and liabilities described above:

The following table provides information about the composition of net regulatory assets that do not earn a current return as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, of which approximately ~~$193~~$180 million and ~~$228~~$195 million, respectively, are currently being recovered through rates over varying periods, through 2068, depending on the nature of the deferral and the jurisdiction.

FirstEnergy’s business is capital intensive, requiring significant resources to fund operating expenses, construction expenditures, scheduled debt maturities and interest payments, dividend payments, and potential contributions to its pension plan.

The $2.5 billion equity issuance in 2018 strengthened FirstEnergy’s balance sheet, supported the company’s transition to a fully regulated utility company and positions FirstEnergy for sustained investment-grade credit metrics. The shares of preferred stock participated in the dividend paid on common stock on an as-converted basis and were non-voting except in certain limited circumstances. Because of this investment, FirstEnergy does not currently anticipate the need to issue additional equity through 2021 and expects to issue, subject to, among other things, market conditions, pricing terms and business operations, up to $600 million of equity annually in 2022 and 2023, including ~~approximately~~up to $100 million in equity for its regular stock investment and employee benefit plans. FirstEnergy is also exploring various alternatives to raise equity capital in a manner that could be more value-enhancing to all stakeholders. FirstEnergy’s expectations regarding the amount and timing of any potential equity issuances are subject to, among other matters, the ongoing government investigations and related lawsuits and regulatory actions.

~~In addition to this equity investment,~~ FE and its distribution and transmission subsidiaries expect their existing sources of liquidity to remain sufficient to meet their respective anticipated obligations. In addition to internal sources to fund liquidity and capital requirements for ~~2020~~2021 and beyond, FE and its distribution and transmission subsidiaries expect to rely on external sources of funds. Short-term cash requirements not met by cash provided from operations are generally satisfied through short-term borrowings. Long-term cash needs may be met through the issuance of long-term debt by FE and certain of its distribution and transmission subsidiaries to, among other things, fund capital expenditures and refinance short-term and maturing long-term debt, subject to market conditions and other factors.

With an operating territory of 65,000 square miles, the scale and diversity of the ten Utilities that comprise the Regulated Distribution business uniquely position this business for growth through opportunities for additional ~~investment.~~investment, with plans to invest up to $6.6 billion in capital from 2020 to 2023. Over the past several years, Regulated Distribution has experienced rate base growth through investments that have improved reliability and added operating flexibility to the distribution infrastructure, which provide benefits to the customers and communities those Utilities serve. Based on its current capital plan, which includes over $10 billion in forecasted capital investments from 2018 through 2023, Regulated Distribution’s rate base compounded annual growth rate is expected to be approximately 4% from 2018 through 2023. Additionally, this business is exploring other opportunities for growth, including investments in electric system improvement and modernization projects to increase reliability and improve service to customers, as well as exploring opportunities in customer engagement that focus on the electrification of customers’ homes and businesses by providing a full range of products and services.

FirstEnergy believes there are incremental investment opportunities for its existing transmission infrastructure of over $20 billion beyond those identified through 2023, which are expected to strengthen grid and cyber-security and make the transmission system more reliable, robust, secure and resistant to extreme weather events, with improved operational flexibility.

In alignment with FirstEnergy’s strategy to invest in its Regulated Transmission and Regulated Distribution segments as a fully regulated company, FirstEnergy is ~~also~~ focused on ~~improving the~~maintaining balance sheet ~~over time consistent with its business profile~~strength and ~~maintaining investment grade ratings at its regulated businesses and FE.~~flexibility. Specifically, at the regulated businesses, regulatory authority has been obtained for various regulated distribution and transmission subsidiaries to issue and/or refinance debt.

Any financing plans by FE or any of its consolidated subsidiaries, including the issuance of equity and debt, and the refinancing of short-term and maturing long-term debt are subject to market conditions and other factors. No assurance can be given that any such issuances, financing or refinancing, as the case may be, will be completed as anticipated or at all. Any delay in the completion of financing plans could require FE or any of its consolidated subsidiaries to utilize short-term borrowing capacity, which could impact available liquidity. In addition, FE and its consolidated subsidiaries expect to continually evaluate any planned financings, which may result in changes from time to time.

On March 31, 2018, the FES Debtors announced that, in order to facilitate an orderly financial restructuring, they filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code with the Bankruptcy Court. In September 2018, the Bankruptcy Court approved a FES Bankruptcy settlement agreement by and among FirstEnergy, two groups of key FES creditors (collectively, the FES Key Creditor Groups), the FES Debtors and the UCC. The FES Bankruptcy settlement agreement resolved certain claims by FirstEnergy against the FES Debtors, all claims by the FES Debtors and the FES Key Creditor Groups against FirstEnergy, as well as releases from third parties who voted in favor the FES Debtors' plan of reorganization, in return for among other things, a cash payment of $853 million upon emergence. The FES Bankruptcy settlement was conditioned on the FES Debtors confirming and effectuating a plan of reorganization acceptable to FirstEnergy.

~~The outbreak of COVID-19 is a global pandemic.~~ FirstEnergy is continuously evaluating the global COVID-19 pandemic and taking steps to mitigate known risks. FirstEnergy is actively monitoring the continued impact COVID-19 is having on its customers’ receivable balances, which include increasing arrears balances since the pandemic has begun. FirstEnergy has incurred, and it is expected to incur for the foreseeable future, ~~incremental uncollectible and other~~ COVID-19 pandemic related expenses. COVID-19 related expenses consist of additional costs that FirstEnergy is incurring to protect its employees, contractors and customers, and to support social distancing ~~requirements resulting from the COVID-19 pandemic.~~requirements. These costs include, but are not limited to, new or added benefits provided to employees, the purchase of additional personal protection equipment and disinfecting supplies, additional facility cleaning services, initiated programs and communications to customers on utility response, and increased technology expenses to support remote working, where possible. The full impact on FirstEnergy’s business from the COVID-19 pandemic, including the governmental and regulatory responses, is unknown at this time and difficult to predict. FirstEnergy provides a critical and essential service to its customers and the health and safety of its employees, contractors and customers is its first priority. FirstEnergy is continuously monitoring its supply chain and is working closely with essential vendors to understand the continued impact ofthe COVID-19 topandemic is having on its ~~business and~~business; however, FirstEnergy does not currently expect disruptions in its ability to deliver service ~~disruptions~~to customers or any material impact on its capital spending plan.

FirstEnergy iscontinues to effectively ~~managing~~manage operations during the pandemic in order to ~~continue to~~ provide critical ~~and essential~~ service to customers and believes it is well positioned to manage through the economic slowdown. FirstEnergy Distribution and Transmission revenues benefit from geographic and economic diversity across a five-state service territory, which also allows for flexibility with capital investments and measures to maintain sufficient liquidity over the next twelve months. ~~As of August 10, 2020, the Company had $3.6 billion of available liquidity, and projects to remain at this level for the next twelve months.~~ However, the situation remains fluid and future impacts to FirstEnergy that are presently unknown or unanticipated may occur. Furthermore, the likelihood of an impact to FirstEnergy, and the severity of any impact that does occur, could increase the longer the global pandemic persists. ~~The extent to which COVID-19 may materially impact results, if at all, is highly uncertain and will depend on future developments.~~

On July 21, 2020, a complaint and supporting affidavit containing federal criminal allegations were unsealed against the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. Also, on July 21, 2020, and in connection with the investigation, FirstEnergy received subpoenas for records from the U.S. Attorney’s Office for the S.D. Ohio. FirstEnergy was not aware of the criminal allegations, affidavit or subpoenas before July 21, 2020.

On July 21, 2021, FE entered into a three-year DPA with the U.S. Attorney’s Office that, subject to court proceedings, resolves the U.S. Attorney’s Office investigation into FirstEnergy relating to FirstEnergy’s lobbying and governmental affairs activities concerning HB 6, which, among other things requires FE to pay a monetary penalty of $230 million within the next sixty days. Under the DPA, FE has agreed to the filing of a criminal information charging FE with one count of conspiracy to commit honest services wire fraud. The $230 million payment will neither be recovered in rates or charged to FirstEnergy customers nor will FirstEnergy seek any tax deduction related to such payment. Under the terms of the DPA, the criminal information will be dismissed after FirstEnergy fully complies with its obligations under the DPA.

In addition to the subpoenas referenced above, the OAG, certain FE shareholders and FirstEnergy customers filed several lawsuits against FirstEnergy and certain current and former directors, officers and other employees, each relating to the allegations against the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. In addition, on August 10, 2020, the SEC, through its Division of Enforcement, issued an order directing an investigation of possible securities laws violations by FE, and on September 1, 2020, issued subpoenas to FE and certain FE officers. Subsequently, on April 28, 2021, the SEC issued an additional subpoena to FE. Further, in a letter dated February 22, 2021, staff of FERC's Division of Investigations notified FirstEnergy that the Division is conducting an investigation of FirstEnergy’s lobbying and governmental affairs activities concerning HB 6.

Despite the many disruptions FirstEnergy is currently facing, the leadership team remains committed and focused on executing its strategy and running the business. See “Outlook - Other Legal Proceedings” below for additional details on the government investigations, the DPA, and subsequent litigation surrounding the investigation of HB 6. See also “Outlook - State Regulation - Ohio” below for details on the PUCO proceeding reviewing political and charitable spending and legislative activity in response to the investigation of HB 6. The outcome of the government investigations, PUCO proceedings, legislative activity, and any of these lawsuits is uncertain and could have a material adverse effect on FE’s or its subsidiaries’ financial condition, results of operations and cash flows. As discussed below, FirstEnergy has made reductions to its Regulated Distribution and Regulated Transmission capital investment plans and is considering reductions to operating expenses, as well as changes to its planned equity issuances, to allow for flexibility to address the outcomes of the ongoing government investigations and related lawsuits and regulatory actions.

As of June 30, ~~2020,~~2021, FirstEnergy’s net deficit in working capital (current assets less current liabilities) was primarily due ~~in large part~~ to accounts payable, short-term borrowings, current portions of ~~$882 million, accrued taxes of $563 million, currently payable~~ long-term debt, ~~of $81 million,~~ and ~~other current liabilities of $367 million, primarily attributable to customer deposits. Currently payable long-term debt as of June 30, 2020, consisted of the following:~~

FE and the Utilities and FET and certain of its subsidiaries participate in two separate five-year syndicated revolving credit facilities providing for aggregate commitments of $3.5 billion, which are available until December 6, 2022. Under the FE ~~credit facility,~~Revolving Facility, an aggregate amount of $2.5 billion is available to be borrowed, repaid and reborrowed, subject to separate borrowing ~~sub-limits~~sublimits for each borrower including FE and its regulated distribution subsidiaries. Under the FET ~~credit facility,~~Revolving Facility, an aggregate amount of $1.0 billion is available to be borrowed, repaid and reborrowed under a syndicated credit facility, subject to separate borrowing ~~sub-limits~~sublimits for each borrower including FE's transmission subsidiaries. On July 21, 2021, FE and the Utilities and FET and certain of its subsidiaries entered into amendments to the FE Revolving Facility and the FET Revolving Facility, respectively. The amendments provide for modifications and/or waivers of (i) certain representations and warranties, (ii) certain affirmative and negative covenants, contained therein, and (iii) any resulting event of default, which, in each case, resulted either from FE entering into the DPA or as a consequence of the facts and circumstances described in the DPA, thus allowing FirstEnergy to be in compliance with the revolving credit facilities and maintain access to the liquidity provided thereunder.

Borrowings under the credit facilities may be used for working capital and other general corporate purposes, including intercompany loans and advances by a borrower to any of its subsidiaries. Generally, borrowings under each of the credit facilities are available to each borrower separately and mature on the earlier of 364 days from the date of borrowing or the commitment termination date, as the same may be extended. Each of the credit facilities contains financial covenants requiring each borrower to maintain a consolidated debt-to-total-capitalization ratio (as defined under each of the credit facilities) of no more than 65%, and 75% for FET, measured at the end of each fiscal quarter.

FirstEnergy’s revolving credit facilities bear interest at fluctuating interest rates, primarily based on LIBOR. LIBOR tends to fluctuate based on general interest rates, rates set by the U.S. Federal Reserve and other central banks, the supply of and demand for credit in the London interbank market and general economic conditions. FirstEnergy has not hedged its interest rate exposure with respect to its floating rate debt. Accordingly, FirstEnergy’s interest expense for any particular period will fluctuate based on LIBOR and other variable interest rates. On July 27, 2017, the Financial Conduct Authority (the authority that regulates LIBOR), or FCA, announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. Subsequently, on March 5, 2021, ICE Benchmark Administration Limited (the entity that calculates and publishes LIBOR), or IBA, and FCA made public statements regarding the future cessation of LIBOR. According to the FCA, IBA will permanently cease to publish each of the LIBOR settings on either December 31, 2021 or June 30, 2023. IBA did not identify any successor administrator in its announcement. The announced final publication date for 1-week and 2-month LIBOR settings and all settings for non-USD LIBOR is December 31, 2021. The announced final publication date for overnight, 1-month, 3-month, 6-month and 12-month LIBOR settings is June 30, 2023. It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after ~~2021.~~such end dates, and there is considerable uncertainty regarding the publication or representativeness of LIBOR beyond such end dates. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, is ~~considering replacing~~seeking to replace U.S. dollar LIBOR with a newly created index (the secured overnight financing rate or SOFR), calculated based on repurchase agreements backed by treasury securities. It is not possible to predict the effect of these changes, other reforms or the establishment of alternative reference rates in the United Kingdom, the United States or elsewhere. To the extent these interest rates increase, interest expense will increase. If sources of capital for ~~FirstEnergy~~us are

On November 17, 2020, FE and the Utilities and FET and certain of its subsidiaries entered into amendments to the FE Revolving Facility and the FET Revolving Facility, respectively. The amendments provide for modifications and/or waivers of: (i) certain representations and warranties and (ii) certain affirmative and negative covenants, contained therein, which allowed FirstEnergy to regain compliance with such provisions. In addition, among other things, the amendment to the FE Revolving Facility reduces the sublimit applicable to FE to $1.5 billion, and the amendments increased certain tiers of pricing applicable to borrowings under the credit facilities.

On November 23, 2020, JCP&L, ME, Penn, TE and WP, borrowed $950 million in the aggregate under the FE Revolving Facility, bringing the outstanding principal balance under the FE Revolving Facility to $1.2 billion, with $1.3 billion of remaining availability under the FE Revolving Facility. On November 23, 2020, FET and ATSI, borrowed $1 billion in the aggregate under the FET Revolving Facility, bringing the outstanding principal balance under the FET Revolving Facility to $1 billion, with no remaining availability under the FET Revolving Facility. FE, FET and certain of their respective subsidiaries increased their borrowings under the Revolving Facilities as a proactive measure to increase their respective cash positions and preserve financial flexibility.

The following table summarizes the borrowings and repayments under the FE and FET Revolving Credit Facilities since December 31, 2020:

FirstEnergy had ~~$115~~$500 million and ~~$1,000 million~~$2.2 billion of short-term borrowings as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. FirstEnergy’s available liquidity from external sources as of ~~August 10, 2020,~~July 21, 2021, was as follows:

The following table summarizes the borrowing ~~sub-limits~~sublimits for each borrower under the facilities, the limitations on short-term indebtedness applicable to each borrower under current regulatory approvals and applicable statutory and/or charter limitations as of June 30, ~~2020:~~2021:

~~$250~~Subject to each borrower’s sublimit, $250 million of the FE Revolving Facility and $100 million of the FET Revolving Facility, ~~subject to each borrower's sub-limit,~~ is available for the issuance of LOCs (subject to borrowings drawn under the Facilities) expiring up to one year from the date of issuance. The stated amount of outstanding LOCs will count against total commitments available under each of the Facilities and against the applicable borrower’s borrowing ~~sub-limit.~~sublimit.

The Facilities do not contain provisions that restrict the ability to borrow or accelerate payment of outstanding advances in the event of any change in credit ratings of the borrowers. Pricing is defined in “pricing grids,” whereby the cost of funds borrowed under the Facilities is related to the credit ratings of the company borrowing the funds. Additionally, borrowings under each of the Facilities are subject to the usual and customary provisions for acceleration upon the occurrence of events of default, including a cross-default for other indebtedness in excess of $100 million.

As of June 30, ~~2020,~~2021, the borrowers were in compliance with the applicable debt-to-total-capitalization ratio covenants in each case as defined under the respective Facilities. ~~The minimum interest charge coverage ratio no longer applies following FE's upgrade to an investment grade credit rating.~~

FirstEnergy’s utility operating subsidiary companies also have the ability to borrow from each other and FE to meet their short-term working capital requirements. Similar but separate arrangements exist among FirstEnergy’s unregulated companies with AE Supply, FE, FET, FEV and certain other unregulated subsidiaries. FESC administers these money pools and tracks surplus funds of FE and the respective regulated and unregulated subsidiaries, as the case may be, as well as proceeds available from bank borrowings. Companies receiving a loan under the money pool agreements must repay the principal amount of the loan, together with accrued interest, within 364 days of borrowing the funds. The rate of interest is the same for each company receiving a loan from their respective pool and is based on the average cost of funds available through the pool. The average interest rate for borrowings in the ~~first six months~~second quarter of ~~2020~~2021 was ~~1.14%~~1.75% per annum for the regulated companies’ money pool and ~~1.38%~~1.06% per annum for the unregulated companies’ money pool.

FE’s and its subsidiaries’ access to capital markets and costs of financing are influenced by the credit ratings of their securities. The following table displays FE’s and its subsidiaries’ credit ratings asas of ~~August 14, 2020:~~July 19, 2021:

~~On May 27, 2020, Moody’s upgraded~~The applicable undrawn and drawn margin on the ~~issuer~~FE and FET credit facilities are subject to ratings based pricing grids. The applicable fee paid on the undrawn commitments under the FE and FET credit facilities are based on FE and FET’s senior unsecured non-credit enhanced debt ratings ~~of JCP&L to A3 from Baa1~~as determined by S&P and ~~the rating outlook was changed to stable.~~Moody’s. The fee paid on actual borrowings are determined based on each borrower’s senior unsecured non-credit enhanced debt ratings as determined by S&P and Moody’s.

~~On July 23, 2020,~~The interest rate payable on approximately $3.85 billion in FE’s senior unsecured notes are subject to adjustments from time to time if the ratings on the notes from any one or more of S&P, ~~placed~~Moody’s and Fitch decreases to a rating set forth in the ~~ratings~~applicable documents. Generally a one-notch downgrade by the applicable rating agency may result in a 25 bps coupon rate increase beginning at BB, Ba1, and BB+ for S&P, Moody’s and Fitch, respectively, to the extent such rating is applicable to the series of ~~FE and its subsidiaries on CreditWatch with negative implications.~~

Debt capacity is subject to the consolidated debt-to-total-capitalization limits in the credit facilities previously discussed. As of June 30, ~~2020,~~2021, FE and its subsidiaries could issue additional debt of approximately ~~$6.9~~$5.3 billion, or incur a ~~$3.7~~$2.9 billion reduction to equity, and remain within the limitations of the financial covenants required by the FE Revolving Facility.

As of June 30, ~~2020,~~2021, FirstEnergy had ~~$116 million~~approximately $1.3 billion of cash and cash equivalents and ~~approximately $49~~$58 million of restricted cash compared to ~~$627 million~~approximately $1.7 billion of cash and cash equivalents and ~~approximately $52~~$67 million of restricted cash as of December 31, ~~2019,~~2020, on the Consolidated Balance Sheets.

FirstEnergy's most significant sources of cash are derived from electric service provided by its distribution and transmission operating subsidiaries. ~~The~~Beyond the cash settlement and tax sharing payments to the FES Debtors in the first quarter of 2020, the most significant use of cash from operating activities is buying electricity to serve non-shopping customers and paying fuel suppliers, employees, tax authorities, lenders and others for a wide range of materials and services.

FirstEnergy’s Consolidated Statement of Cash Flows combines cash flows from discontinued operations with cash flows from continuing operations within each cash flow category. For the six months ended June 30, 2020, ~~and 2019,~~ cash flows from operating activities includes income ~~(loss)~~ from discontinued operations of $52 ~~million and $(64) million, respectively.~~million.

In the first six months of ~~2020,~~2021, cash provided from operating activities was ~~$150 million~~approximately $1.3 billion compared to ~~$625~~$150 million in the same period of ~~2019.~~2020. The ~~decrease~~increase in cash provided ~~for~~from operating activities is primarily due to the absence of a $978 million cash settlement and tax sharing ~~payments~~payment made to the FES Debtors upon their emergence in February 2020, ~~partially offset by~~increased sales, impact of the ~~absence~~distribution rider and transmission investment recovery, and increased collections of ~~a $500 million cash contribution to the qualified pension plan in February 2019.~~customer account receivable balances.

In the first six months of ~~2020,~~2021, cash provided from (used for) financing activities was ~~$742~~$(662) million compared to ~~$756~~$742 million induring the same period of ~~2019.~~2020. The following table summarizes new debt financing, redemptions, repayments, short-term borrowings and dividends:

On March ~~31, 2020, MAIT~~19, 2021, FET issued ~~$125~~$500 million of ~~3.60%~~2.866% senior unsecured notes due ~~2032 and $125 million of 3.70% senior notes due 2035.~~2028. Proceeds from the issuance ~~of the senior notes were used: (i) to refinance existing debt, (ii) for capital expenditures, and (iii) for general corporate purposes.~~

On April 9, 2021, MP issued an additional $200 million of its 3.55% first mortgage bonds due 2027 at an effective interest rate of approximately 2.06%. Proceeds from the issuance were used to fund MP’s ongoing capital expenditures, for working capital needs and for other general corporate purposes.

On ~~July 20, 2020, CEI~~May 6, 2021, TE issued $150 million of ~~2.77%~~2.65% senior ~~unsecured~~secured notes due ~~2034 and $100 million of 3.23% senior unsecured notes due 2040.~~2028. Proceeds from the issuance ~~of the senior notes~~ were used to ~~refinance existing~~repay short-term borrowings, to fund TE’s ongoing capital expenditures and for other general corporate ~~purposes, or any combination of the above.~~purposes.

On May 24, 2021, MAIT issued an additional $150 million of its 4.10% senior notes due 2028 at an effective interest rate of approximately 2.55%. Proceeds from the issuance were used to repay borrowings outstanding under FirstEnergy’s regulated company money pool, to fund MAIT’s ongoing capital expenditures, to fund working capital and for other general corporate purposes.

On June 10, 2021, JCP&L issued $500 million of 2.75% senior notes due 2032. Proceeds from the issuance were used to repay $450 million of short-term debt under the FE Revolving Facility, storm recovery and restoration costs and expenses, to fund JCP&L’s ongoing capital expenditures, working capital requirements and for other general corporate purposes.

Cash used for investing activities in the first six months of ~~2020~~2021 principally represented cash used for property additions. The following table summarizes investing activities for the first six months of ~~2020~~2021 and ~~2019:~~2020:

Cash used for investing activities for the ~~first six months~~second quarter of ~~2020 increased $70~~2021 decreased $232 million, compared to the same period of ~~2019,~~2020, primarily due to ~~higher property additions. The increase in property additions was due to~~ ~~an increase~~the proceeds from the sale of ~~$52 million at Regulated Distribution for investments to improve~~Yards Creek and ~~modernize the electric system.~~lower capital expenditures.

FirstEnergy has various financial and performance guarantees and indemnifications, which are issued in the normal course of business. These contracts include performance guarantees, stand-by letters of credit, debt guarantees, surety bonds and indemnifications. FirstEnergy enters into these arrangements to facilitate commercial transactions with third parties by enhancing the value of the transaction to the third party. The maximum potential amount of future payments FirstEnergy and its subsidiaries could be required to make under these guarantees as of June 30, ~~2020,~~2021, was approximately ~~$1.7~~$1.2 billion, as summarized below:

In the normal course of business, FE and its subsidiaries may enter into physical or financially settled contracts for the sale and purchase of electric capacity, energy, fuel and emission allowances. Certain agreements contain provisions that require FE or its subsidiaries to post collateral. This collateral may be posted in the form of cash or credit support with thresholds contingent upon FE’s or its subsidiaries’ credit rating from each of the major credit rating agencies. The collateral and credit support requirements vary by contract and by counterparty.

These credit-risk-related contingent features stipulate that if the subsidiary were to be downgraded or lose its investment grade credit rating (based on its senior unsecured debt rating), it would be required to provide additional collateral. The following table discloses the potential additional credit rating contingent contractual collateral obligations as of June 30, ~~2020:~~2021:

FE is a guarantor under a $120 million syndicated senior secured term loan facility due November 12, 2024, under which Global Holding’s outstanding principal balance ~~is $114~~was $108 million as of June 30, ~~2020. In addition to FE,~~2021. Signal Peak, Global Rail, Global Mining Group,

LLC and Global Coal Sales Group, LLC, each being a direct or indirect subsidiary of Global Holding, and FE continue to provide their joint and several guaranties of the obligations of Global Holding under the facility.

In connection with the facility, 69.99% of Global Holding’s direct and indirect membership interests in Signal Peak, Global Rail and their affiliates along with FEV’s and WMB Marketing Ventures, LLC’s respective 33-1/3% membership interests in Global Holding, are pledged to the lenders under the current facility as collateral.

FirstEnergy uses various market risk sensitive instruments, including derivative contracts, primarily to manage the risk of price and interest rate fluctuations. FirstEnergy’s Risk Policy Committee, comprised of members of senior management, provides general oversight for risk management activities throughout ~~the company.~~FirstEnergy.

FirstEnergy has limited exposure to financial risks resulting from fluctuating commodity prices, ~~including~~such as prices for electricity, ~~natural gas,~~ coal and energy transmission. FirstEnergy’s Risk Management and Risk Policy Committees are responsible for promoting the effective design and implementation of sound risk management programs and oversees compliance with corporate risk management policies and established risk management practice.

The valuation of derivative contracts is based on observable market information. As of June 30, ~~2020,~~2021, FirstEnergy has a net ~~liability~~asset of $5$3 million in non-hedge derivative contracts that are related to FTRs at certain of the Utilities. FTRs are subject to regulatory accounting and do not impact earnings.

As of June 30, ~~2020,~~2021, the FirstEnergy pension plan assets were allocated approximately as follows: ~~29%~~34% in equity securities, ~~42%~~33% in fixed income securities, 9%8% in absolute return strategies, 9% in real estate, 4%7% in private equity, 4%2% in derivatives and 3%7% in cash and short-term securities. AAs further discussed below, due to the American Rescue Plan Act of 2021, under current assumptions, including an expected annual return on assets of 7.50%, FirstEnergy does not currently expect to have a required contribution to the pension plan. However, a decline in the value of pension plan assets could result in additional funding requirements. ~~FirstEnergy’s funding policy is based on actuarial computations using the projected unit credit method. On February 1, 2019,~~Additionally, FirstEnergy ~~made a $500 million voluntary cash contribution~~may elect to contribute to the ~~qualified~~ pension ~~plan. As a result of this contribution and pension investment performance returns to date, FirstEnergy expects no required contributions through 2021.~~plan voluntarily. As of June 30, ~~2020,~~2021, FirstEnergy’s OPEB plan assets were allocated approximately as follows: 52% in equity securities, ~~43%~~45% in fixed income securities and 5%3% in cash and short-term securities. Investment markets experienced elevated market volatility during 2020 as a result of the U.S. general election and the COVID-19 pandemic. In order to reduce the effect of market volatility on the plan’s funded status and to preserve capital gains experienced during 2020, approximately $1.4 billion of return-seeking assets were sold (including approximately $800 million of equity securities) during the third quarter of 2020. As previously disclosed, the FirstEnergy pension plan assets were expected to be reinvested in return-seeking investments during 2021 to more consistently align the pension trust portfolios to FirstEnergy’s target asset allocations. In the first half of 2021, the return-seeking investments were increased by approximately 15%, and as a result, as of June 30, 2021, the FirstEnergy pension plan return-seeking assets are now consistently aligned to the target asset allocation. See Note 5, “Pension and Other Post-Employment Benefits,” of the Notes to Consolidated Financial Statements for additional details on FirstEnergy’s pension and OPEB plans.

~~Through~~In the six months ended June 30, ~~2020,~~2021, FirstEnergy’s pension and OPEB plan assets have gained approximately ~~5.7%~~3.3% and ~~0.3%~~8.1%, respectively, as compared to an annual expected return on plan assets of 7.5%. On February 27, 2020, FirstEnergy remeasured its plan assets, and from that date through June 30, 2020, FirstEnergy’s pension and OPEB plan assets have gained approximately 2.7% and 2.2%, respectively.

FirstEnergy recognizes net actuarial gains or losses for its pension and OPEB plans in the fourth quarter of each fiscal year and whenever a plan is determined to qualify for a remeasurement. A primary factor contributing to these actuarial gains and losses are changes in the discount rates used to value pension and OPEB obligations as of the measurement date and the difference between expected and actual returns on the plans’ assets.

Credit risk is the risk that FirstEnergy would incur a loss as a result of nonperformance by counterparties of their contractual obligations. FirstEnergy maintains credit policies and procedures with respect to counterparty credit (including requirement that counterparties maintain specified credit ratings) and require other assurances in the form of credit support or collateral in certain circumstance in order to limit counterparty credit risk. In addition, in response to the COVID-19 pandemic, FirstEnergy has increased reviews of counterparties, customers and industries that have been negatively impacted, which could affect meeting contractual obligations with FirstEnergy. FirstEnergy has concentrations of suppliers and customers among electric utilities, financial institutions and energy marketing and trading companies. These concentrations may impact FirstEnergy’s overall exposure to credit risk, positively or negatively, as counterparties may be similarly affected by changes in economic, regulatory or

other conditions. In the event an energy supplier of the Ohio Companies, Pennsylvania Companies, JCP&L or PE defaults on its obligation, the affected company would be required to seek replacement power in the market. In general, subject to regulatory review or other processes, it is expected that appropriate incremental costs incurred by these entities would be recoverable from customers through applicable rate mechanisms, thereby mitigating the financial risk for these entities. FirstEnergy’s credit policies to manage credit risk include the use of an established credit approval process, daily credit mitigation provisions, such as margin, prepayment or collateral requirements, and surveys to determine negative impacts to essential vendors as a result of the COVID-19 pandemic. ~~FirstEnergy~~FE and its subsidiaries may request additional credit assurance, in certain circumstances, in the event that the counterparties’ credit ratings fall below investment grade, their tangible net worth falls below specified percentages or their exposures exceed an established credit limit.

On March ~~27, 2020, the~~11, 2021, President Biden signed into law the ~~CARES~~American Rescue Plan Act of 2021. While the Act is primarily an economic stimulus package, ~~in response to~~it also, among other changes, expanded the ~~COVID-19 pandemic. The CARES Act contains several corporate income tax provisions, including making remaining AMT credits immediately refundable; providing a 5-year carryback~~scope of NOLs generated in tax years 2018, 2019, and 2020, and removing the 80% taxable income limitation on utilization of those NOLs if carried back to prior tax years or utilized in tax years beginning before 2021; and temporarily liberalizing the interest deductibility rules under Section ~~163(j)~~162(m) of the Tax Act, by raising the adjusted taxable income limitation from 30% to 50% for tax years 2019 and 2020 and giving taxpayers the election of using 2019 adjusted taxable income for purposes of computing 2020 interest deductibility. FirstEnergy has approximately $18 million of refundable AMT creditsInternal Revenue Code that will be fully refundable through the CARES Act, however, does not expect to generate additional income tax refunds from the NOL carryback provision and expects interest to be fully deductible starting in 2020.limits deductions on certain executive officer compensation. FirstEnergy does not currently expect ~~the other provisions of the CARES Act~~these changes to have a material ~~effect on current income tax expense or the realizability of deferred income tax assets.~~

Each of the ~~Utilities’~~Utilities' retail rates, conditions of service, issuance of securities and other matters are subject to regulation in the states in which it operates - in Maryland by the MDPSC, in New Jersey by the NJBPU, in Ohio by the PUCO, in Pennsylvania by the PPUC, in West Virginia by the WVPSC and in New York by the NYPSC. The transmission operations of PE in Virginia, ATSI in Ohio, and the Transmission Companies in Pennsylvania are subject to certain regulations of the ~~VSCC.~~VSCC, PUCO and PPUC, respectively. In addition, under Ohio law, municipalities may regulate rates of a public utility, subject to appeal to the PUCO if not acceptable to the utility. Further, if any of the FirstEnergy affiliates were to engage in the construction of significant new transmission facilities, depending on the state, they may be required to obtain state regulatory authorization to site, construct and operate the new transmission facility.

PE operates under MDPSC approved base rates that were effective as of March 23, 2019. PE also provides SOS pursuant to a combination of settlement agreements, MDPSC orders and regulations, and statutory provisions. SOS supply is competitively procured in the form of rolling contracts of varying lengths through periodic auctions that are overseen by the MDPSC and a third-party monitor. Although settlements with respect to SOS supply for PE customers have expired, service continues in the same manner until changed by order of the MDPSC. PE recovers its costs plus a return for providing SOS.

The EmPOWER Maryland program requires each electric utility to file a plan to reduce electric consumption and demand 0.2% per year, up to the ultimate goal of 2% annual savings, for the duration of the 2018-2020 and 2021-2023 EmPOWER Maryland program cycles, to the extent the MDPSC determines that cost-effective programs and services are available. ~~PE’s~~PE's approved 2018-2020 EmPOWER Maryland plan continues and expands upon prior ~~years’~~years' programs, and adds new programs, for a projected total cost of $116 million over the three-year period. PE recovers program costs through an annually reconciled surcharge, with most costs subject to a five-year amortization.

On ~~January 19,~~March 22, 2019, MDPSC issued an order approving PE’s 2018 PE filed a joint petition along with other utility companies, work group stakeholders and the MDPSC electric vehicle work group leader to implement a statewide electric vehicle portfolio in connection with a 2016 MDPSC proceeding to consider an array of issues relating to electric distribution system design, including matters relating to electric vehicles, distributed energy resources, advanced metering infrastructure, energy storage, system planning, rate design, and impacts on low-income customers. PE proposed an electric vehicle charging infrastructure program at a projected total cost of $12 million, to be recovered over a five-year amortization. On January 14, 2019, the MDPSC approved the petition subject to certain reductions in the scope of the program. The MDPSC approved PE’s compliance filing, which implements the pilot program, with minor modifications, on July 3, 2019.

Maryland’s Governor issued an order on March 16, 2020, forbidding utilities from terminating residential service or charging late fees for non-payment for the duration of the COVID-19 pandemic. On April 9, 2020, the MDPSC issued an order allowing utilities to track and create a regulatory asset for future recovery of all ~~prudently-incurred~~prudently incurred incremental costs arising from the COVID-19 pandemic, including incremental uncollectible ~~expenses. On~~expense, incurred from the date of the Governor’s order (or earlier if the utility could show that the expenses related to suspension of service terminations). In July 8, 2020, the MDPSC subsequently issued ~~a notice opening a public conference~~

orders allowing Maryland electric and gas utilities to ~~collect information from~~resume residential service terminations for non-payment on November 15, 2020, subject to various restrictions, and clarifying that utilities ~~and other stakeholders about~~could resume charging late fees on October 1, 2020. On June 16, 2021, the ~~impacts~~MDPSC assigned $4 million to PE of COVID-19 relief that was allocated by the ~~COVID-19 pandemic on the utilities and their customers, and indicated that it would hold a hearing~~Maryland General Assembly to ~~discuss that information in late August 2020.~~retire residential customer utility arrearages.

JCP&L operates under NJBPU approved rates that were effective as of January 1, 2017. JCP&L provides BGS for retail customers who do not choose a third-party EGS and for customers of third-party EGSs that fail to provide the contracted service. All New Jersey EDCs participate in this competitive BGS procurement process and recover BGS costs directly from customers as a charge separate from base rates.

On April 18, 2019, pursuant to the May 2018 New Jersey enacted legislation establishing a ZEC program to provide ratepayer funded subsidies of New Jersey nuclear energy supply, the NJBPU approved the implementation of a non-bypassable, irrevocable ZEC charge for all New Jersey electric utility customers, including JCP&L’s customers. Once collected from customers by JCP&L, these funds will be remitted to eligible nuclear energy generators.

On February 18, 2020, JCP&L submitted a filing with the NJBPU requesting a distribution base rate increase. On October 28, 2020, the NJBPU approved a stipulated settlement between JCP&L and various parties, providing for, among other things, a $94 million annual base distribution revenues increase ~~of $186.9 million~~for JCP&L based on an ~~annual basis,~~ROE of 9.6%, which ~~represents~~will become effective for customers on November 1, 2021. Until the rates become effective, and starting on January 1, 2021, JCP&L began to amortize an ~~overall average increase in JCP&L rates of 7.8%. The filing seeks~~existing regulatory liability totaling approximately $86 million to recover certain costs associated with providing safe and reliable electric service to JCP&L customers, along with recovery of previously incurred storm costs. JCP&L proposed a rate effective date of March 19, 2020. On March 9, 2020,offset the Board issued an order suspending JCP&L’s proposed rates for four months. Based on the historical procedures of the NJBPU Board a second suspension order is expected with revised base rates becoming effective in late November 2020. JCP&L filed updates to the requested distribution base rate in both June and July 2020, resulting in JCP&L seeking a total annual distribution base rate increase that otherwise would have occurred in this period. The parties also agreed that the actual net gain from the sale of JCP&L’s interest in the Yards Creek pumped-storage hydro generation facility in New Jersey (210 MWs), as further discussed below, be applied to reduce JCP&L’s existing regulatory asset for previously deferred storm costs. Lastly, the parties agreed that approximately

On April 6, 2020, JCP&L signed an asset purchase agreement with Yards Creek Energy, LLC, a subsidiary of LS Power to sell its 50% interest in the Yards Creek pumped-storage hydro generation ~~facility in NJ (210 MWs).~~facility. Subject to terms and conditions of the agreement, the base purchase price is $155 million. ~~Completion~~As of ~~the transaction is subject to several closing conditions, including approval by the NJBPU and FERC. On July~~December 31, 2020, FERC approved transfer of JCP&L’s interest in the hydroelectric operating license; however, JCP&L’s application for authorization to transfer its ownership interest in the Yards Creek facility remains pending at FERC. There can be no assurance that all regulatory approvals will be obtained and/or all closing conditions will be satisfied or that the transaction will be consummated. JCP&L currently anticipates closing of the transaction to occur in the first half of 2021. Assetsassets held for sale on ~~the FirstEnergy~~FirstEnergy’s Consolidated Balance ~~Sheet~~Sheets associated with the transaction consist of property, plant and equipment of ~~$44~~$45 million, which is included in the regulated distribution segment. ~~Treatment~~On July 31, 2020, FERC approved the transfer of JCP&L’s interest in the hydroelectric operating license. On October 8, 2020, FERC issued an order authorizing the transfer of JCP&L’s ownership interest in the hydroelectric facilities. On October 28, 2020, the NJBPU approved the sale of Yards Creek. With the receipt of all required regulatory approvals, the transaction was consummated on March 5, 2021 and resulted in a $109 million gain within the regulated distribution segment. As further discussed above, the gain from the transaction was applied against and reduced JCP&L’s existing regulatory asset for previously deferred storm costs and, as a result, was offset by expense in the “Amortization of regulatory assets, net”, line on the Consolidated Statements of Income, resulting in no earnings impact to FirstEnergy or JCP&L.

On August 27, 2020, JCP&L filed an AMI Program with the NJBPU, which proposes the deployment of approximately 1.2 million advanced meters over a three-year period beginning on January 1, 2023, at a total cost of approximately $418 million, including the pre-deployment phase. The 3-year deployment is part of the ~~gain~~20-year AMI Program that is ~~subject~~expected to ~~NJBPU approval.~~cost a total of approximately $732 million and proposes a cost recovery mechanism through a separate AMI tariff rider. On February 26, 2021, JCP&L filed a letter requesting a suspension of the procedural schedule to allow for settlement discussions, which was granted on March 5, 2021.

On June 10, 2020, the NJBPU issued an order establishing a framework for the filing of utility-run energy efficiency and peak demand reduction programs in accordance with the New Jersey Clean Energy Act. Under the established framework, JCP&L will recover its program investments over a ~~ten year~~ten-year amortization period and its operations and maintenance expenses on an annual basis, be eligible to receive lost revenues on energy savings that resulted from its programs and be eligible for incentives or subject to penalties based on its annual program performance, beginning in the fifth year of its program offerings. On September 25, 2020, JCP~~&L’s~~&L filed its energy efficiency and peak demand reduction program. JCP&L’s program ~~plan is required~~consists of 11 energy efficiency and peak demand reduction programs and subprograms to be ~~filed no later than September 25, 2020, and is anticipated to be implemented~~run from July 1, ~~2021.~~2021 through June 30, 2024. The program also seeks approval of cost recovery totaling approximately $230 million as well as lost revenues associated with the

energy savings resulting from the programs. On April 23, 2021, JCP&L filed a Stipulation of Settlement with the NJBPU for approval of a three-year plan including $203 million in total cost, as well as recovery of lost revenues resulting from the programs. On April 27, 2021, the NJBPU issued an Order approving the Stipulation of Settlement.

On July 2, 2020, the NJBPU issued an order allowing New Jersey utilities to track and create a regulatory asset for future recovery of all ~~prudently-incurred~~prudently incurred incremental costs arising from the COVID-19 pandemic beginning March 9, 2020 through September 30, 2021, or until the Governor issues an order stating that the COVID-19 pandemic is no longer in effect. New Jersey utilities can request recovery of such regulatory asset in a stand-alone COVID-19 regulatory asset filing or future base rate case. On October 28, 2020, the NJBPU issued an order expanding the scope of the proceeding to examine all pandemic issues, including recovery of the COVID-19 regulatory assets, by way of a generic proceeding. Through various Executive Orders issued by Governor Murphy, the moratorium period is extended to December 31, 2021.

The recent credit rating actions taken on October 28, 2020, by S&P and Fitch triggered a requirement from various NJBPU orders that JCP&L file a mitigation plan, which was filed on November 5, 2020, to demonstrate that JCP&L has sufficient liquidity to meet its BGS obligations. On December 11, 2020, the NJBPU held a public hearing on the mitigation plan. Written comments on JCP&L’s mitigation plan were submitted on January 8, 2021.

On September 23, 2020, the NJBPU issued an Order requiring all New Jersey electric distribution companies to file electric vehicle programs. JCP&L filed its electric vehicle program on March 1, 2021, which consists of six sub-programs, including a consumer education and outreach initiative that would begin on January 1, 2022, and continue over a four-year period. The total proposed budget for the electric vehicle program is approximately $50 million, of which $16 million is capital expenditures and $34 million is for operations and maintenance expenses. JCP&L is proposing to recover the electric vehicle program costs via a non-bypassable rate clause applicable to all distribution customer rate classes, which would become effective on January 1, 2022. On May 26, 2021, a procedural schedule was set to include evidentiary hearings the week of October 18, 2021. On July 16, 2021, the procedural schedule was extended by thirty days as requested by JCP&L to continue settlement discussions.

On October 28, 2020, the NJBPU approved a settlement in JCP&L’s distribution rate, and voted that JCP&L will be subject to an upcoming management audit. The management audit began at the end of May 2021 and is currently ongoing.

ESP IV further provided for the Ohio Companies to collect ~~through~~DMR revenues, but the DMR $132.5 million annually for three years beginning in 2017, grossed up for federal income taxes, resulting in an approved amount of approximately $168 million annually in 2018 and 2019. On appeal, the SCOH ~~on June 19, 2019,~~ reversed the PUCO’s ~~determination that~~decision to include DMR in ESP IV and subsequently the ~~DMR is lawful, and remanded the matter to the PUCO with instructions to remove the DMR from ESP IV. On August 20, 2019, the SCOH denied the Ohio Companies’ motion for reconsideration. The~~ PUCO entered an ~~Order~~order directing the Ohio Companies to cease further collection through the DMR and credit back to customers a refund of the DMR funds collected since July 2, ~~2019, and remove the DMR from ESP IV.~~2019. On July 15, 2019, the OCC filed ~~a Notice of Appeal~~an appeal with the SCOH, challenging the PUCO’s exclusion of DMR revenues from the determination of the existence of significantly excessive earnings under ESP IV for OE for calendar year 2017, and claiming a $42 million refund is due to OE customers. On December 1, 2020, the SCOH reversed the PUCO’s exclusion of the DMR revenues from the determination of the existence of significantly excessive earnings under ESP IV for OE for calendar year 2017, and ~~claiming a $42 million refund~~remanded the case to the PUCO with instructions to conduct new proceedings which include the DMR revenues in the analysis, determine the threshold against which the earned return is ~~due to OE customers. The Ohio Companies are contesting this appeal but are~~measured, and make other necessary determinations. FirstEnergy is unable to predict the outcome of ~~this matter. The SCOH heard the argument on this matter on May 12, 2020.~~these proceedings but has not deemed a liability probable as of June 30, 2021.

On July 23, 2019, Ohio enacted ~~legislation establishing support for nuclear energy supply in Ohio. In addition to the~~HB 6, which included provisions supporting nuclear energy, ~~the legislation included a provision implementing~~as well as a decoupling mechanism for Ohio electric utilities and ending current energy efficiency program mandates. Under HB 6 the energy efficiency program mandates would end on December 31, 2020, provided that statewide energy efficiency mandates are achieved as determined by the PUCO. On February ~~26, 2020,~~24, 2021, the PUCO found that statewide energy efficiency mandates had been achieved, and ordered that ~~a wind-down of statutorily required~~Ohio electric utilities’ energy efficiency ~~programs shall commence on September 30, 2020,~~ and ~~the programs shall terminate on December 31, 2020, and that the Ohio Companies’ existing portfolio plans are extended through 2020 without changes.~~peak demand reduction cost recovery riders terminate.

On ~~November 21, 2019, the Ohio Companies applied to the PUCO for approval of a decoupling mechanism,~~March 31, 2021, Governor DeWine signed HB 128, which, would set residential and commercial base distribution related revenues at the levels collected in 2018. As such, those base distribution revenues would no longer be based on electric consumption, which allows continued support of energy efficiency initiatives while

As further discussed below, in connection with a partial settlement with the OAG and other parties, the Ohio Companies filed an application with the PUCO on February 1, 2021, to set the respective decoupling riders (CSR) to zero. On February 2, 2021, the PUCO approved the application. While the partial settlement with the OAG focused specifically on decoupling, the Ohio Companies will of their own accord not seek to recover lost distribution revenue. FirstEnergy is committed to pursuing an open dialogue with stakeholders in an appropriate manner with respect to the numerous regulatory proceedings currently underway as further discussed herein. As a result of the partial settlement, and the decision to not seek lost distribution revenue, FirstEnergy recognized a $108 million pre-tax charge ($84 million after-tax) in the fourth quarter of 2020, and $77 million (pre-tax) of which is associated with forgoing collection of lost distribution revenue. On March 31, 2021, FirstEnergy announced that the Ohio Companies will proactively refund to customers amounts previously collected under decoupling, with interest, which total approximately $27 million. On April 22, 2021, in anticipation of the effective date of HB 128 and in accordance with HB 128’s provisions regarding the prompt refund of decoupling funds, the Ohio Companies filed an application with the PUCO to modify CSR to return such amount over twelve months commencing June 1, 2021. On June 17, 2021, the Ohio Companies agreed to modify their proposal to return such amount in a single lump sum to customers, beginning on July 1, 2021, or promptly upon obtaining PUCO approval. On July 7, 2021, the PUCO issued an order approving the Ohio Companies’ modified application and directed that all funds collected through CSR be refunded to customers over a single billing cycle beginning August 1, 2021.

On July 17, 2019, the PUCO approved, with no material modifications, a settlement agreement that provides for the implementation of the Ohio Companies’ first phase of grid modernization plans, including the investment of $516 million over three years to modernize the Ohio Companies’ electric distribution system, and for all tax savings associated with the Tax Act to flow back to customers. The settlement had broad support, including PUCO ~~Staff,~~staff, the OCC, representatives of industrial and commercial customers, a low-income advocate, environmental advocates, hospitals, competitive generation suppliers and other parties.

In March 2020, the PUCO issued entries directing utilities to review their service disconnection and restoration policies and suspend, for the duration of the COVID-19 pandemic, otherwise applicable requirements that may impose a service continuity hardship or service restoration hardship on customers. The Ohio Companies are utilizing their existing approved cost recovery mechanisms where applicable to address the financial impacts of these directives. On July 31, 2020, the Ohio Companies filed with the PUCO their transition plan and requests for waivers to allow for the safe resumption of normal business operations, including service disconnections for non-payment. On September 23, 2020, the PUCO approved the Ohio Companies’ transition plan, including approval of the resumption of service disconnections for non-payment, which the Ohio Companies began on ~~or after September 15,~~October 5, 2020.

On July 29, 2020, the PUCO consolidated the Ohio Companies’ ~~Applications~~applications for determination of the existence of significantly excessive earnings, or SEET, under ESP IV for calendar years 2018 and 2019, which had been previously filed on July 15, 2019, and May 15, 2020, respectively, and set a procedural schedule with evidentiary ~~hearings scheduled~~hearings. On September 4, 2020, the PUCO opened its quadrennial review of ESP IV, consolidated it with the Ohio Companies’ 2018 and 2019 SEET Applications, and set a procedural schedule for the consolidated matters. On October 29, ~~2020.~~2020, the PUCO issued an entry extending the deadline for the Ohio Companies to file quadrennial review of ESP IV testimony and supplemental SEET testimony to March 1, 2021, with the evidentiary hearings to commence no sooner than May 3, 2021. On January 12, 2021, the PUCO consolidated these matters with the determination of the existence of significantly excessive earnings under ESP IV for calendar year 2017, which the SCOH had remanded to the PUCO. On March 1, 2021, the Ohio Companies filed testimony in the quadrennial review and supplemental testimony in the SEET cases for calendar years 2017 through 2019. The calculations included in the quadrennial review for 2020 through 2024 demonstrate that the prospective effect of ESP IV is not substantially likely to provide the Ohio Companies with significantly excessive earnings during the balance of ESP IV. In addition, the Ohio Companies’ quadrennial review testimony demonstrated that ESP IV continues to be more favorable in the aggregate and during the remaining term of ESP IV as compared to the expected results of a market rate offer. Further, the revised calculations included in the Ohio Companies’ supplemental SEET ~~filings~~testimony for calendar years ~~2018 and~~2017 through 2019 ~~demonstrate~~demonstrated that the Ohio Companies did not have significantly excessive earnings, ~~however, FirstEnergy and the Ohio Companies are unable to predict the PUCO’s ultimate determination of the applications.~~on an individual company basis or on a consolidated basis. On August 3, 2020, the OCC filed an interlocutory appeal asking the PUCO to stay the SEET proceeding until the SCOH determines whether DMR should be excluded from the SEET, as further discussed above. Further, on July 29, 2020, OhioMarch 31, 2021, Governor DeWine signed House Bill ~~740 was introduced,~~128, which ~~would repeal~~repeals legislation passed ~~last year~~in 2019 that permitted the Ohio Companies to file their SEET results on a consolidated basis instead of on an individual company basis. HB 128 was effective June 30, 2021. Further, the OCC and another party filed testimony on April 5, 2021, recommending refunds for one or more of the Ohio Companies for calendar years 2017 through 2019. On April 20, 2021, the Ohio Companies filed supplemental testimony in the quadrennial review providing prospective SEET values on an individual company basis, which demonstrate that the Ohio Companies are not projected to have significantly excessive earnings, on an individual company basis, during the balance of ESP IV. On May 28, 2021, the attorney examiner issued a procedural schedule setting hearings for August 30, 2021. No contingency has been reflected in FirstEnergy’s consolidated financial statements with respect to these matters as a loss is neither probable, nor is a loss or range of a loss reasonably estimable.