Despite 2017 losses, FirstEnergy optimistic about future

AKRON, Ohio - FirstEnergy Corp., parent company of Berks County-based Met Ed and Monmouth County, New Jersey-based JCP&L, on Wednesday reported losses for both full year and fourth-quarter 2017. Results for both periods primarily reflect the impact of non-cash asset impairment and plant exit costs related to the company's competitive generation fleet, and 2017 results also include a charge related to the Tax Cuts and Jobs Act. On the plus side, operating (non-GAAP) earnings increased for both the quarter and the year.

For full-year 2017, FirstEnergy incurred GAAP losses of $(1.7) billion, or $(3.88) per basic and diluted share of common stock on revenues of $14 billion, but non-GAAP operating earnings for 2017 were $3.07 per basic share of common stock, which was at the upper end of the company's most recent guidance. In 2016, non-GAAP operating earnings were $2.63 per basic share.

"Throughout the past year, our company has made important progress in our transition to a fully regulated utility," said Charles E. Jones, FirstEnergy's president and chief executive officer. "This strategy and the opportunities for growth in our regulated businesses earned the confidence of prominent investors. With their equity investment earlier this year, we began 2018 with stronger corporate financial metrics, and we are well positioned to accelerate growth in our transmission and distribution businesses, as we continue our exit from competitive generation."

The company also expressed disappointment that its efforts to improve the regulatory environment at the federal and state levels were not more successful.

During the fourth quarter of 2017, FirstEnergy recorded non-cash, pre-tax plant writedowns and other exit costs of $2.4 billion, or $3.38 per share, primarily to fully diminish the carrying value of its nuclear generating assets and the coal-fired Pleasants Power Station in West Virginia. In addition, the company recognized a fourth-quarter non-cash charge to income tax expense of $1.2 billion, or $2.68 per share, related to the Tax Cuts and Jobs Act.

Earnings for the full year and fourth quarter of 2017 increased in the regulated distribution business as a result of the rates that went into effect in Ohio, Pennsylvania and New Jersey in January 2017. These rates more than offset the effect of significantly milder weather in 2017 and higher depreciation expense.

Fourth quarter total distribution deliveries increased 1.6 percent compared to the same period in 2016. Residential sales increased 3.9 percent above the same period of 2016, while sales to commercial customers decreased 3.2 percent. Deliveries to industrial customers increased 3.2 percent, primarily due to higher usage in the shale gas and steel sectors.

The company issued 2018 regulated operating (non-GAAP) earnings guidance of $2.25 to $2.55 per diluted share, representing operating earnings from the regulated distribution and transmission businesses, net of the corporate segment. It expects $10 billion in regulated capital investments through 2021.

Headquartered in Akron, Ohio, FirstEnergy (NYSE: FE) includes one of the nation's largest investor-owned electric systems, more than 24,000 miles of transmission lines that connect the Midwest and Mid-Atlantic regions, and a diverse generating fleet with a total capacity of more than 16,000 megawatts.

FirstEnergy's 10 regulated distribution companies form one of the nation's largest investor-owned electric systems, based on serving six million customers in the Midwest and Mid-Atlantic regions. Stretching from the Ohio-Indiana border to the New Jersey shore, the companies operate a vast infrastructure of more than 269,000 miles of distribution lines and are dedicated to providing customers with safe, reliable and responsive service.

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