What the changes say
- PJM’s record capacity prices and proposed data-center cost allocation make customer bills and regulatory cost recovery more prominent risks.
- Debt covenant compliance is now tied explicitly to government investigations, the DPA and potential anti-corruption violations.
- Energy-efficiency mandates now include possible penalties, while the filing drops several HB 6, coal, tax and dividend-specific risks.
What changed since the prior 10-K
New
- New
External pressures beyond our control may increase customer rates and, when combined with state and federal regulatory action to mitigate bill impacts, may impair our ability to earn a fair and equitable return on our investments and execute our strategy
PJM’s record generation-capacity prices could raise customer bills, trigger regulatory relief efforts and reduce FirstEnergy’s returns; proposed backstop costs may target new data centers.
- NewRisks Related to Our Business Operations
imposed. We are unable to determine what impact, if any, future conservation activities will have on our financial condition or results of operations
Failure to meet energy-consumption or efficiency requirements could result in regulatory or legislative penalties.
- NewRisks Related to Our Business Operations
consolidated interest coverage ratio and the Electric Companies, the Transmission Companies, and FET were each in compliance with their debt-to-total-capitalization ratio covenants
Government investigations or alleged DPA, anti-corruption or anti-bribery violations could breach credit covenants, block borrowing and accelerate repayment.
Dropped
- Dropped
The HB 6 related state regulatory investigations could have a material adverse effect on our reputation, business, financial condition, results of operations, liquidity or cash flows
- Dropped
See Note 14, "Regulatory Matters" of the Notes to Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” for additional details on the state regulatory investigations surrounding HB 6
- DroppedRisks Related to our Business Operations
In addition, the increased use of smartphones, tablets, and other wireless devices, as well as ongoing remote work-from-home arrangements, may also heighten these and other operational risks
HB 6-related state regulatory investigations could damage reputation, operations, liquidity and financial results.
- DroppedRisks Related to our Business Operations
We have coal-fired generation capacity, which exposes us to risk from regulations relating to coal, GHGs and CCRs, which could lead to increased costs or the need to spend significant resources to defend allegations of violation
HB 6 proceedings could reduce regulated rates and adversely affect shareholders.
- DroppedRisks Related to our Business Operations
We have a minority ownership stake in a coal mine that requires governmental permits and approvals to operate, and a failure of the coal mine to renew and maintain such permits and approvals may adversely affect our results of operations and cash flow
- DroppedRisks Related to our Business Operations
Our results of operations and financial condition may be adversely affected by certain risks related to our minority interest in a coal mine
- DroppedRisks Related to our Business Operations
The IRA of 2022 could change the rate of taxes imposed on us and could negatively affect our cash flows and financial condition
- DroppedRisks Related to our Business Operations
We are a holding company and rely on cash from our subsidiaries to meet our financial obligations and therefore any restrictions on the Electric Utilities and Transmission Companies’ ability to pay dividends or make cash payments to us may adversely affect our cash flows and financial condition
- DroppedRisks Related to our Business Operations
We cannot assure common shareholders that future dividend payments will be made, or if made, in what amounts they may be paid
Reworded
- 84% rewrittenRisks Related to Our Business Operations
Changes in local, state or federal tax laws applicable to us or adverse audit results or tax rulings, and any resulting increases in taxes and fees, may adversely affect our results of operations, financial condition and cash flows
No substantive change is shown; the tax-law risk text is identical between the prior year and this year.
- 82% rewrittenRisks Related to Our Business Operations
Failure to comply with debt covenants in our credit agreements or conditions could adversely affect our ability to execute future borrowings and/or require early repayment, and could restrict our ability to obtain additional or replacement financing on acceptable terms or at all
The covenant risk updates compliance through December 31, 2025 and now links defaults to government investigations, the DPA and anti-corruption allegations.
- 80% rewrittenRisks Related to Our Business Operations
Our business is affected by variations in weather and severe weather conditions
The weather risk removes the prior year’s specific heating-degree-day comparisons while retaining demand and severe-weather exposure.
- 75% rewrittenRisks Related to Our Business Operations
Financial and reputational risks associated with owning coal-fired generation may have an adverse impact on FE's business operations, financial condition and cash flows
Coal exposure changes from MP’s 3,093 MW fleet and coal-mining stake to approximately 3,160 MW controlled by FirstEnergy, with less detail on divestment policies.
Was: Financial and reputational risks associated with owning coal-fired generation and a minority-interest in a coal mine may have an adverse impact on our business operations, financial condition and cash flows
- 67% rewritten
We could be subject to higher costs and/or penalties related to mandatory reliability standards set by NERC, FERC, and RFC or changes in the rules of organized markets, which could have an adverse effect on our financial condition
The risk adds FERC, NERC and RFC audits and information requests but no longer states the $1.5 million-per-day penalty figure.
Was: We could be subject to higher costs and/or penalties related to mandatory reliability standards set by NERC/FERC or changes in the rules of organized markets, which could have an adverse effect on our financial condition
- 61% rewrittenRisks Related to Our Business Operations
Our aspirations and disclosures related to climate matters expose us to risks that could adversely affect our reputation and performance
The risk now expressly covers FirstEnergy’s subsidiaries and changes the wording around its Scope 1 carbon-neutrality aspiration.
- 56% rewrittenRisks Related to Our Business Operations
We are subject to financial performance risks from regional and general economic cycles as well as data centers and heavy industries such as shale gas, automotive, chemical and steel
The risk adds that weak service-territory economies may increase delinquent customer accounts and reduce collections.
- 54% rewrittenRisks Related to Our Business Operations
Transition risks associated with climate change, including those related to regulatory mandates could negatively impact our financial results
The risk specifically names New Jersey regulators and legislators, adds penalties, and emphasizes whether costs and lost revenues are recoverable.
- 51% rewritten
Federal rate regulation may delay or deny full recovery of costs and impose risks on our operations. Any denial or reduction of, or delay in cost recovery could have an adverse effect on our business, results of operations, cash flows and financial condition
- 51% rewrittenRisks Related to Our Business Operations
Concerns about GHG emissions and the potential risks associated with climate change have led to increased regulation and other actions that could impact our businesses
- 50% rewritten
Our ability to grow our distribution and transmission businesses is subject to numerous risks and events, many of which are outside of our control
- 45% rewrittenRisks Related to Our Business Operations
The EPA may conduct NSR investigations at FirstEnergy’s electric generation facilities, which could result in the imposition of fines
Was: The EPA may conduct NSR investigations at our generating plants, which could result in the imposition of fines
- 37% rewrittenRisks Related to Our Business Operations
Supply chain disruptions could have an adverse effect on our results of operations, cash flow and financial condition
Was: Continued supply chain disruptions could have an adverse effect on our results of operations, cash flow and financial condition
- 30% rewritten
Damage to our reputation may arise from numerous sources making us vulnerable to negative customer perception, adverse regulatory outcomes, or other consequences, which could materially adversely affect our business, results of operations and financial condition
- 24% rewrittenRisks Related to Our Business Operations
We could be exposed to private rights of action relating to environmental matters seeking damages under various state and federal law theories which could have an adverse impact on our results of operations, financial condition, cash flows and business operations
- 23% rewrittenRisks Related to Our Business Operations
Failure to provide safe and reliable service and equipment could result in serious injury or loss of life that may harm our business reputation and adversely affect our operating results
- 23% rewrittenRisks Related to Our Business Operations
The outcome of litigation, arbitration, mediation, and similar proceedings involving our business, or that of one or more of our operating subsidiaries, is unpredictable. An adverse decision in any material proceeding could have a material adverse effect on our financial condition and results of operations
All 42 risk factors
Headings as the filing states them, in filing order.
Other
- 01Risks Associated with Damage to Our Reputation and Securities Class-Action Litigation
- 02Securities class-action litigation against us could have a material adverse effect on our reputation, business, financial condition, results of operations, our ability to access capital, liquidity or cash flows
- 03Damage to our reputation may arise from numerous sources making us vulnerable to negative customer perception, adverse regulatory outcomes, or other consequences, which could materially adversely affect our business, results of operations and financial condition30% rewritten
- 04If our cost saving initiatives do not achieve the expected benefits, there could be negative impacts to FirstEnergy's business, results of operations and financial condition
- 05Our ability to grow our distribution and transmission businesses is subject to numerous risks and events, many of which are outside of our control50% rewritten
- 06State rate regulation may delay or deny full recovery of costs and impose risks on our operations. Any denial of or delay in cost recovery could have an adverse effect on our business, results of operations, liquidity, cash flows and financial condition
- 07Federal rate regulation may delay or deny full recovery of costs and impose risks on our operations. Any denial or reduction of, or delay in cost recovery could have an adverse effect on our business, results of operations, cash flows and financial condition51% rewritten
- 08External pressures beyond our control may increase customer rates and, when combined with state and federal regulatory action to mitigate bill impacts, may impair our ability to earn a fair and equitable return on our investments and execute our strategyNew
- 09Complex and changing federal, state and local government regulations and actions, including those associated with rates, could have a negative impact on our business, financial condition, results of operations and cash flows
- 10We could be subject to higher costs and/or penalties related to mandatory reliability standards set by NERC, FERC, and RFC or changes in the rules of organized markets, which could have an adverse effect on our financial condition67% rewritten
- 11In addition, PJM may direct our transmission-owning affiliates to build new transmission facilities to meet PJM's reliability requirements or to provide new or expanded transmission service under the PJM Tariff
Risks Related to Our Business Operations
- 12Demand for electricity within our service territory could exceed supply capacity, resulting in negative impacts to FirstEnergy’s reputation, results and financial condition, particularly if our systems are not performing as anticipated
- 13The hazardous activities associated with generation and distribution of electricity could adversely impact our results of operations and financial condition
- 14Our business is affected by variations in weather and severe weather conditions80% rewritten
- 15Macroeconomic conditions that are beyond our control, such as government fiscal policy, tariffs, recessions, inflation and interest rate pressures, may negatively impact our financial condition, results of operations, liquidity, and cash flows
- 16Supply chain disruptions could have an adverse effect on our results of operations, cash flow and financial condition37% rewritten
- 17We are subject to financial performance risks from regional and general economic cycles as well as data centers and heavy industries such as shale gas, automotive, chemical and steel56% rewritten
- 18FirstEnergy is subject to risks arising from the operation of its electric generation facilities and transmission and distribution equipment which could reduce revenues, increase expenses and have a material adverse effect on our business, financial condition and results of operations
- 19Capital investments and construction projects may not be completed within forecasted budget, schedule or scope parameters or could be canceled which could adversely affect our business and results of operations
- 20Physical acts of war, terrorism, sabotage or other attacks on any of our facilities or other infrastructure could have an adverse effect on our business, results of operations, cash flows and financial condition
- 21Failure to provide safe and reliable service and equipment could result in serious injury or loss of life that may harm our business reputation and adversely affect our operating results23% rewritten
- 22The outcome of litigation, arbitration, mediation, and similar proceedings involving our business, or that of one or more of our operating subsidiaries, is unpredictable. An adverse decision in any material proceeding could have a material adverse effect on our financial condition and results of operations23% rewritten
- 23We face certain human resource risks associated with potential labor disruptions and/or with the availability of trained and qualified labor to meet our future staffing requirements
- 24Significant increases in our operation and maintenance expenses, including our health care and pension costs, could adversely affect our future earnings and liquidity
- 25Advances in and widespread adoption of distributed generation and regulatory policies may make our facilities significantly less competitive and adversely affect our results of operations
- 26Energy companies are subject to adverse publicity that makes them vulnerable to negative regulatory and legislative outcomes, which could have an adverse impact on our business
- 27Our results of operations could be adversely affected by events beyond our control, such as natural disasters, public health crises, government shutdowns, trade wars, recessions, political crises, negative global climate patterns, mine subsidence, or other catastrophic events
- 28Our aspirations and disclosures related to climate matters expose us to risks that could adversely affect our reputation and performance61% rewritten
- 29We are or may be subject to environmental liabilities, including costs of remediation of environmental contamination at current or formerly owned facilities, which could have a material adverse effect on our results of operations and financial condition
- 30Concerns about GHG emissions and the potential risks associated with climate change have led to increased regulation and other actions that could impact our businesses51% rewritten
- 31Costs of compliance with environmental laws are significant, and the cost of compliance with new environmental laws, including limitations on GHG emissions related to climate change, could adversely affect our cash flows and financial condition
- 32The EPA may conduct NSR investigations at FirstEnergy’s electric generation facilities, which could result in the imposition of fines45% rewritten
- 33We could be exposed to private rights of action relating to environmental matters seeking damages under various state and federal law theories which could have an adverse impact on our results of operations, financial condition, cash flows and business operations24% rewritten
- 34Transition risks associated with climate change, including those related to regulatory mandates could negatively impact our financial results54% rewritten
- 35imposed. We are unable to determine what impact, if any, future conservation activities will have on our financial condition or results of operationsNew
- 36Financial and reputational risks associated with owning coal-fired generation may have an adverse impact on FE's business operations, financial condition and cash flows75% rewritten
- 37The physical risks associated with climate change may have an adverse impact on our business operations, financial condition and cash flows
- 38Our results of operations and financial condition may be adversely affected by the volatility in pension and OPEB investments and obligations due to capital market performance and other changes
- 39Failure to comply with debt covenants in our credit agreements or conditions could adversely affect our ability to execute future borrowings and/or require early repayment, and could restrict our ability to obtain additional or replacement financing on acceptable terms or at all82% rewritten
- 40consolidated interest coverage ratio and the Electric Companies, the Transmission Companies, and FET were each in compliance with their debt-to-total-capitalization ratio covenantsNew
- 41A credit rating downgrade could negatively affect our or our subsidiaries’ financing costs, ability to access capital and requirement to post collateral
- 42Changes in local, state or federal tax laws applicable to us or adverse audit results or tax rulings, and any resulting increases in taxes and fees, may adversely affect our results of operations, financial condition and cash flows84% rewritten
Other Firstenergy 10-Ks
- FY2024 10-K risk factors48 risks
FirstEnergy's primary risks involve HB 6 investigations, $28 billion in capital investments through 2029 under Energize365, and environmental compliance for coal-fired generation.
Filed Feb 27, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.