FirstEnergy on Wednesday reported third-quarter earnings of $334 million (58 cents/share) on revenues of $3.5 billion, down from $463 million (85 cents/share) on revenue of $3.1 billion a year earlier.
Excluding special charges or credits, the company’s operating earnings were 79 cents/share, at the top of analysts’ guidance range. That compares to operating earnings 82 cents/share a year ago.
“Our continued solid results, together with the ongoing efforts to strengthen our culture, accelerate improvement in our balance sheet and achieve operational excellence, are creating positive momentum at FirstEnergy and positioning us to capitalize on significant opportunities for growth through long-term, customer-focused investments,” John W. Somerhalder II, board chair and interim CEO, said in a statement accompanying the results. “I’m confident our leadership team and committed employees will continue to drive these strategies to transform the company into a best-in-class utility.”
The company updated its full-year forecast for adjusted earnings to a range of $1.145 billion to $1.260 billion ($2.01- $2.21/share) based on 571 million shares outstanding.
The company reported that power deliveries for the third quarter were flat, with a 2% uptick in industrial demand offsetting a decline in residential and commercial demand.
The company’s regulated transmission business showed improved results, primarily from the company’s ongoing capital investment program, which yields guaranteed income.
In its quarterly report filed with the Securities and Exchange Commission, the company said it had recalculated transmission and distribution expenses as demanded by a FERC audit issued earlier this year.
“FirstEnergy completed an analysis during the third quarter of 2022 of these costs and how it impacted certain FERC-jurisdictional wholesale transmission customer rates for the audit period of 2015 through 2021,” the company said.
“As a result of this analysis, FirstEnergy recorded in the third quarter of 2022 approximately $45 million ($34 million after-tax) in expected customer refunds, plus interest, due to its wholesale transmission customers and reclassified approximately $195 million of certain transmission capital assets to operating expenses for the audit period, of which $90 million ($67 million after-tax) are not expected to be recoverable and impacted FirstEnergy’s earnings since they relate to costs capitalized during stated transmission rate time periods. …
“These reclassifications also resulted in a reduction to the Regulated Transmission segment’s rate base by approximately $160 million, which is not expected to materially impact FirstEnergy or the segment’s future earnings.”