Filed Pursuant to Rule 424(b)(3)
File No. 333-297033

PROSPECTUS

 

Jersey Central Power & Light Company

Offer to exchange up to

$350,000,000 aggregate principal amount of 4.600% Senior Notes due 2030

(CUSIP No. 476556 DN2)

that have not been registered under the Securities Act

for

$350,000,000 aggregate principal amount of 4.600% Senior Notes due 2030

(CUSIP No. 476556 DP7)

registered under the Securities Act

THE EXCHANGE OFFER EXPIRES AT 5:00 P.M., NEW YORK CITY TIME,

ON AUGUST 13, 2026, UNLESS WE EXTEND IT.

Terms of the Exchange Offer

 

 

We are offering to exchange all outstanding $350,000,000 aggregate principal amount of our 4.600% Senior Notes due 2030 (the “Outstanding Notes”) that were issued in a transaction not requiring registration under the Securities Act of 1933, as amended (the “Securities Act”), for an equal amount of new $350,000,000 aggregate principal amount of our 4.600% Senior Notes due 2030 (the “New Notes”) that are registered under the Securities Act. We refer to this offer to exchange as the “exchange offer.”

 

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We are conducting the exchange offer in order to provide you with an opportunity to exchange your unregistered Outstanding Notes for freely tradable New Notes that have been registered under the Securities Act.

 

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The exchange offer expires at 5:00 p.m., New York City time, on August 13, 2026, unless extended. The exchange offer will remain open for at least 20 full business days calculated in accordance with the requirements of Regulation 14E under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (or longer if required by applicable law, including Regulation 14E), after the date notice of the exchange offer is first sent to holders of the Outstanding Notes. We do not currently intend to extend the expiration date.

 

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Upon expiration of the exchange offer, all Outstanding Notes that are validly tendered and not withdrawn will be exchanged for an equal principal amount of the New Notes.

 

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You may withdraw tendered Outstanding Notes at any time prior to the expiration or termination of the exchange offer.

 

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The exchange of Outstanding Notes for New Notes will not be a taxable event for U.S. federal income tax purposes.

 

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We will not receive any proceeds from the exchange offer.

 

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The terms of the New Notes to be issued in the exchange offer are substantially the same as the terms of the Outstanding Notes, except that the offer of the New Notes is registered under the Securities Act, and the New Notes have no transfer restrictions, rights to additional interest or registration rights. In addition, the New Notes will bear a different CUSIP number than the Outstanding Notes.

 

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The exchange offer is not subject to any minimum tender condition but is subject to customary conditions.

 

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There is no existing public market for the Outstanding Notes or the New Notes. We do not intend to list the New Notes on any securities exchange or quotation system.

 

 

Investing in the New Notes to be issued in the exchange offer involves certain risks. See “Risk  Factors” beginning on page 13.

We are not making an offer to exchange Outstanding Notes for New Notes in any jurisdiction where the offer is not permitted.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the New Notes to be distributed in the exchange offer or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

Each broker-dealer that receives New Notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. By so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. A broker dealer who acquired Outstanding Notes as a result of market making or other trading activities may use this prospectus, as supplemented or amended from time to time, in connection with any resales of the New Notes. We have agreed that, for a period of up to 180 days after the commencement of the exchange offer, we will make this prospectus available for use in connection with any such resale. See “Plan of Distribution.”

 

 

The date of this prospectus is July 16, 2026.

TABLE OF CONTENTS

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			ii
GLOSSARY OF TERMS			iv
PROSPECTUS SUMMARY			1
RISK FACTORS			13
USE OF PROCEEDS			36
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			37
OUR BUSINESS			73
MANAGEMENT			79
EXECUTIVE COMPENSATION			82
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			91
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			92
THE EXCHANGE OFFER			93
DESCRIPTION OF THE NOTES			103
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES			119
PLAN OF DISTRIBUTION			120
LEGAL MATTERS			121
EXPERTS			121
INDEX TO FINANCIAL STATEMENTS			F-1

We have not authorized anyone to provide you with any additional information or any information that is different from that contained in this prospectus. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus may be used only for the purposes for which it has been published, and no person has been authorized to give any information not contained herein. The information contained in this prospectus is accurate only as of its respective date. Our business, financial condition, results of operations and prospects may have changed since that date. We are not making an offer of these securities in any state where the offer is not permitted.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We caution you that this prospectus contains forward-looking statements based on information currently available to us. 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” 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).

The forward-looking statements contained herein are qualified in their entirety by reference to the following important factors, which are difficult to predict, contain uncertainties, are in some cases beyond our control and may cause actual results to differ materially from those contained in forward-looking statements:

 

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the potential liabilities, increased costs and unanticipated developments resulting from government investigations and agreements, including those associated with compliance with or failure to comply with the Deferred Prosecution Agreement (“DPA”) entered into on July 21, 2021 between FirstEnergy Corp. (“FE”) and the U.S. Attorney’s Office for the Southern District of Ohio (“S.D. Ohio”) and settlements with the Ohio Attorney General’s (“OAG”) office and the U.S. Securities and Exchange Commission (“SEC”);

 

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the risks and uncertainties associated with litigation, including the securities class action lawsuit brought against FE, regulatory proceedings, arbitration, mediation and similar proceedings;

 

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changes in national and regional economic conditions affecting us and/or our customers and the vendors with which we do business, including geopolitical conflicts, recession, volatile interest rates, inflationary pressure, supply chain disruptions, higher fuel costs, and workforce impacts;

 

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changes in assumptions regarding factors such as economic conditions within our territories, the reliability of our transmission and distribution system, or the availability of capital or other resources supporting identified transmission investment opportunities;

 

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variations in weather, such as mild seasonal weather variations and severe weather conditions (including events caused, or exacerbated, by climate change, such as wildfires, hurricanes, flooding, droughts, high wind events and extreme heat events) and other natural disasters, which may result in increased storm restoration expenses and negatively affect future operating results;

 

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the potential liabilities and increased costs arising from regulatory actions or outcomes in response to severe weather conditions and other natural disasters;

 

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legislative and regulatory developments, and executive orders, including, but not limited to, matters related to rates, generation resource adequacy, co-location of generation and large loads, and compliance and enforcement activity;

 

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costs being higher than anticipated and our ability to recover such costs;

 

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the ability to access the public securities and other capital and credit markets in accordance with our financial plans, the cost of such capital and overall condition of the capital and credit markets affecting us;

 

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the risks associated with physical attacks, such as acts of war, terrorism, sabotage or other acts of violence, and cyber-attacks and other disruptions to our, or our vendors’, information technology system, which may compromise our operations, and data security breaches of sensitive data, intellectual property and proprietary or personally identifiable information;

 

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the ability to accomplish or realize anticipated benefits through establishing a culture of continuous improvement and our other strategic and financial goals, including, but not limited to, executing Energize 365, the transmission and distribution investment program of FE and its consolidated subsidiaries (together, “FirstEnergy”), our transmission and distribution investment plan, executing on our rate filing strategy, controlling costs, improving credit metrics, maintaining investment grade ratings, strengthening our balance sheet and growing earnings;

 

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changing market conditions affecting the measurement of certain liabilities and the value of assets held in FirstEnergy’s pension trusts may negatively impact FE’s (including our) forecasted growth rate and results of operations and may also cause it to make contributions to its pension sooner or in amounts that are larger than currently anticipated;

 

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human capital management challenges, including among other things, attracting and retaining appropriately trained and qualified employees, and labor disruptions by our unionized workforce;

 

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changes to environmental laws and regulations, including, but not limited to, federal and state rules related to climate change, coal combustion residuals (“CCRs”), and potential changes to such laws and regulations;

 

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changes in customers’ demand for power, including, but not limited to, economic conditions, development of data centers, the impact of climate change, and emerging technology, particularly with respect to electrification, energy storage, co-location of generation and large loads, and distributed sources of generation;

 

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future actions taken by credit rating agencies that could negatively affect either our access to or terms of financing or our financial condition and liquidity;

 

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the potential of non-compliance with debt covenants in our credit facilities;

 

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the ability to comply with applicable reliability standards and energy efficiency and peak demand reduction mandates;

 

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changes to significant accounting policies;

 

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the impact of any changes in tax laws or regulations, including, but not limited to, the Inflation Reduction Act of 2022 (the “IRA of 2022”), the One Big Beautiful Bill Act (the “OBBBA”), or adverse tax audit results or rulings and potential changes to such laws and regulations;

 

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the ability to meet our publicly-disclosed goals relating to climate-related matters, opportunities, improvements, and efficiencies, including FE’s greenhouse gas (“GHG”) reduction goals; and

 

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the risks and other factors discussed from time to time in this prospectus and in our financial statements and other similar factors.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus and should be read in conjunction with the risk factors and other disclosures contained in this prospectus. 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 or assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. We expressly disclaim any obligation to update or revise, except as required by law, any forward-looking statements contained herein as a result of new information, future events or otherwise.

 

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GLOSSARY OF TERMS

The following abbreviations and acronyms may be used to identify frequently used terms in this prospectus:

 

ACE		Affordable Clean Energy
AEP		American Electric Power Company, Inc.
AFS		Available-for-sale
AFUDC		Allowance for Funds Used During Construction
AMI		Advanced Metering Infrastructure
AMT		Alternative Minimum Tax
AOCI		Accumulated Other Comprehensive Income (Loss)
ARO		Asset Retirement Obligation
ASU		Accounting Standards Update
ATSI		American Transmission Systems, Incorporated, a wholly owned transmission subsidiary of FET
BGS		Basic Generation Service
CAA		Clean Air Act
CCR		Coal Combustion Residual
CERCLA		Comprehensive Environmental Response, Compensation, and Liability Act of 1980
CFR		Code of Federal Regulations
CO2		Carbon Dioxide
CODM		Chief Operating Decision Maker
CPP		EPA’s Clean Power Plan
CSAPR		Cross-State Air Pollution Rule
CWIP		Construction Work in Progress
D.C. Circuit		U.S. Court of Appeals for the District of Columbia Circuit
DCR		Delivery Capital Recovery
DMR		Distribution Modernization Rider
DOE		U.S. Department of Energy
DominionHV		Dominion High Voltage Mid-Atlantic, Inc., an affiliate of VEPCO
DPA		Deferred Prosecution Agreement entered into on July 21, 2021, between FE and the U.S. Attorney’s Office for the S.D. Ohio
DSIC		Distribution System Improvement Charge
DSP		Default Service Plan
EDC		Electric Distribution Company
EEI		The Edison Electric Institute
EGS		Electric Generation Supplier
EGU		Electric Generation Unit
EH		Energy Harbor Corp.
ELG		Effluent Limitation Guidelines
ENEC		Expanded Net Energy Cost
Energize365		FirstEnergy’s Transmission and Distribution Infrastructure Investment Program.
EnergizeNJ		JCP&L’s second Infrastructure Investment Program
EPA		U.S. Environmental Protection Agency
EPS		Earnings per Share
ESP		Electric Security Plan
Exchange Act		Securities Exchange Act of 1934, as amended
FASB		Financial Accounting Standards Board
FE		FirstEnergy Corp.
FE Board		The Board of Directors of FE
FERC		Federal Energy Regulatory Commission

 

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FESC		FirstEnergy Service Company, a wholly owned subsidiary of FE, which provides legal, financial and other corporate support services to FirstEnergy affiliates
FET		FirstEnergy Transmission, LLC, a consolidated VIE of FE
FIP		Federal Implementation Plan
Fitch		Fitch Ratings Service
FMB		First Mortgage Bond
FTR		Financial Transmission Right
GAAP		Generally Accepted Accounting Principles in the United States
GHG		Greenhouse Gas
HB 15		House Bill 15, as passed by Ohio’s 136th General Assembly
HB 6		House Bill 6, as passed by Ohio’s 133rd General Assembly
IRA		Inflation Reduction Act of 2022
IRS		Internal Revenue Service
JCP&L Board		The Board of Directors of JCP&L
kV		Kilovolt
LOC		Letter of Credit
LTIIP		Long-Term Infrastructure Improvement Plan
MDPSC		Maryland Public Service Commission
MGP		Manufactured Gas Plants
Moody’s		Moody’s Investors Service, Inc.
MW		Megawatt
MWh		Megawatt-hour
NCI		Noncontrolling Interest
NERC		North American Electric Reliability Corporation
NJBPU		New Jersey Board of Public Utilities
NOL		Net Operating Loss
NOx		Nitrogen Oxide
NYPSC		New York State Public Service Commission
OAG		Ohio Attorney General
OBBBA		One Big Beautiful Bill Act of 2025, as signed into law on July 4, 2025
OCC		Ohio Consumers’ Counsel
ODSA		Ohio Development Service Agency
Ohio Stipulation		Stipulation and Recommendation, dated November 1, 2021, entered into by and among the Ohio Companies, the OCC, PUCO staff, and several other signatories
OPEB		Other Postemployment Benefits
OPIC		Other paid-in capital
OVEC		Ohio Valley Electric Corporation
PA Consolidation		Consolidation of the Pennsylvania Companies on January 1st, 2024
PJM		PJM Interconnection, LLC, an RTO serving the PJM Region
PJM Region		The territory that PJM coordinates the movement of electricity through, including all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia
PJM Tariff		PJM Open Access Transmission Tariff
PPA		Purchase Power Agreement
PPUC		Pennsylvania Public Utility Commission
PUCO		Public Utilities Commission of Ohio
Regulation FD		Regulation Fair Disclosure promulgated by the SEC
Registrants		FE and JCP&L
Registration Rights Agreement		Registration Rights Agreement in respect of the Outstanding Notes entered into on May 6, 2026, among JCP&L and the initial purchasers
RFC		ReliabilityFirst Corporation

 

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ROE		Return on Equity
RTEP		Regional Transmission Expansion Plan
RTO		Regional Transmission Organization
S&P		Standard & Poor’s Ratings Service
S.D. Ohio		Federal District Court, Southern District of Ohio
SEC		U.S. Securities and Exchange Commission
Securities Act		Securities Act of 1933, as amended
SEET		Significantly Excessive Earnings Test
SIP		State Implementation Plan(s) under the CAA
Sixth Circuit		U.S. Court of Appeals for the Sixth Circuit
SO2		Sulfur Dioxide
SOFR		Secured Overnight Financing Rate
SOS		Standard Offer Service
SPE		Special Purpose Entity
TCJA		Tax Cuts and Jobs Act adopted December 22, 2017
U.S.		United States
Valley Link LLCA		Amended and Restated Operating Agreement of Valley Link
VEPCO		Virginia Electric and Power Company, a subsidiary of Dominion Energy, Inc.
VIE		Variable Interest Entity
VSCC		Virginia State Corporation Commission
WVPSC		Public Service Commission of West Virginia

 

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RISK FACTORS

You should carefully consider the following risk factors and all other information contained in this prospectus before participating in the exchange offer. The risks and uncertainties described below are not the only risks facing us and your investment in the exchange notes. Additional risks and uncertainties that we are unaware of, or those we currently deem immaterial, also may become important factors that affect us. The following risks could materially and adversely affect our business, financial condition, cash flows or results of operations.

Risks Associated with Damage to FirstEnergy’s Reputation and Securities Class-Action Litigation

Securities class-action litigation against FirstEnergy could have a material adverse effect on our reputation, business, financial condition, results of operations, our ability to access capital, liquidity or cash flows.

On July 21, 2021, FE entered into a three-year DPA with the USAO that, subject to court proceedings, resolves the previously disclosed USAO investigation into FE relating to its lobbying and governmental affairs activities concerning House Bill 6, as passed by Ohio’s 133rd General Assembly (“HB 6”). Under the DPA, FE paid a $230 million monetary penalty in 2021 and agreed to the filing of a criminal information charging FirstEnergy with one count of conspiracy to commit honest services wire fraud.

As of July 22, 2024, FirstEnergy successfully completed the obligations required within the three-year term of the DPA. Under the DPA, and until the conclusion of any related investigation, criminal prosecution and civil proceeding brought by the USAO, FirstEnergy has an obligation to continue (i) publishing quarterly a list of all payments to 501(c)(4) entities and all payments to entities known by FirstEnergy to be operating for the benefit of a public official, either directly or indirectly; (ii) not making any statements that contradict the DPA; (iii) notifying the USAO for the S.D. Ohio of any changes in FirstEnergy’s corporate form; and (iv) cooperating with the USAO for the S.D. Ohio. In accordance with the DPA, these obligations will continue until the completion of any related investigation, criminal prosecution, and civil proceeding brought by the USAO related to the conduct set forth in the DPA’s statement of facts, including the January 17, 2025 indictment against two former FirstEnergy senior officers. Within 30 days of those matters concluding, and FirstEnergy’s successful completion of its remaining obligations, the USAO will dismiss the criminal information. On February 26, 2025, the USAO filed a status report confirming these commitments.

If FE is found to have breached the terms of the DPA, the USAO may elect to prosecute, or bring a civil action against, us for conduct alleged in the DPA or known to the government, which could result in fines or penalties and could have a material adverse impact on FE’s reputation or relationships with regulatory and legislative authorities, customers and other stakeholders. Failure to comply with the DPA, including alleged failures to comply with anti-corruption and anti-bribery laws, may also result in a breach of certain covenants contained in FE’s credit agreements and could result in an event of default under such agreements, and FE would not be able to access its credit facilities for additional borrowings and letters of credit during the existence of any such default.

Following the announcement by the USAO for the S.D. Ohio of the investigation surrounding HB 6 in July 2020, certain of FE’s stockholders and customers filed several lawsuits against FirstEnergy and certain current and former directors, officers and other employees, including the federal securities class action litigation In re FirstEnergy Corp. Securities Litigation (Federal District Court, S.D. Ohio). We believe it is probable that FE will incur a loss in connection with the resolution of In re FirstEnergy Corp. Securities Litigation. Given the ongoing nature and complexity of such litigation, we cannot yet reasonably estimate a loss or range of loss that may arise from its resolution. However, if it is resolved against FirstEnergy, substantial monetary damages could result and our reputation, business, financial condition, results of operations, liquidity or cash flows may be materially adversely affected.

 

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This securities class-action litigation could divert management’s focus and have resulted in, and could continue to result in, substantial expenses, and the commitment of substantial corporate resources. The outcome, duration, scope, result or related costs of the securities class action litigation In re FirstEnergy Corp. Securities Litigation discussed above, are inherently uncertain. Therefore, any of these risks could impact us significantly beyond expectations. A damaged reputation could further result in FERC, the NJBPU and other regulatory and legislative authorities being less likely to view us in a favorable light and could negatively impact the rates we charge customers or otherwise cause us to be susceptible to unfavorable legislative and regulatory outcomes, as well as increased regulatory oversight and more stringent legislative or regulatory requirements.

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.

Our reputation is important towards maintaining new and ongoing positive relationships with customers, regulators, investors, and other stakeholders. Damage to FirstEnergy’s reputation could materially adversely affect our business, results of operations and financial condition. Such damage may arise from numerous sources further discussed generally within these risk factors. Any damage to FirstEnergy’s reputation, either generally or as a result of, among other things, changes in our service reliability, our rate affordability or negative outcomes in the ongoing matters relating to HB 6, may lead to negative customer perception, which may make it difficult for us to compete successfully for new opportunities, or could adversely impact our ability to launch new sophisticated technology-driven solutions to meet our customer expectations. A damaged reputation could further result in FERC, the NJBPU, and other regulatory and legislative authorities being less likely to view us in a favorable light and could negatively impact the rates we charge customers or otherwise cause us to be susceptible to unfavorable legislative and regulatory outcomes, as well as increased regulatory oversight and more stringent legislative or regulatory requirements.

Risks Associated with the Execution of Our Strategic Initiatives and the Regulation of Our Business

If FirstEnergy’s cost-saving initiatives do not achieve the expected benefits, there could be negative impacts to FirstEnergy’s business, results of operations and financial condition.

FirstEnergy is engaged in an ongoing effort to create a culture of continuous improvement to strategically reduce our operating expenditures and continually reinvest in a more diverse capital program in support of our long-term strategy. FirstEnergy leverages opportunities to reduce costs—such as filling only critical positions, implementing our facility optimization plans, and exploring other additional, sustainable opportunities, such as reducing contractor spend. Additionally, we intend to deploy advanced technology, included but not limited to artificial intelligence, to reduce operating expenses. There can be no assurance that implementation of our continuous improvement culture will allow us to realize the anticipated benefits to our business, results of operations and financial condition in a timely manner, if at all.

Our ability to achieve the continued benefits from our cost-saving initiatives is subject to many estimates and assumptions as well as our ability to hire, recruit and retain an appropriately qualified workforce and implement a culture of continuous improvement. FirstEnergy could experience unexpected delays and business disruptions resulting from supporting these initiatives, decreased productivity, and higher than anticipated costs, any of which may impair our ability to reduce operating expenditures and to achieve anticipated results or otherwise harm FirstEnergy’s business, results of operations and financial condition.

Our ability to grow our business is subject to numerous risks and events, many of which are outside of our control.

The success of our growth strategy will depend, in part, on the successful growth of revenue resulting from our transmission investments in line with our expectations. Factors that may affect our revenue growth may

 

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include: (1) FERC’s timely approval of rates to recover such investments; (2) whether investments are included in PJM’s RTEP; (3) FERC’s evolving policies with respect to incentive rates for transmission investment assets, the calculation of the base return on equity (“ROE”) component of transmission rates, and the interconnection of AI data centers and transmission network upgrades supporting such large loads; (4) FERC’s potentially-evolving policies regarding whether certain classes of network transmission upgrade costs can be capitalized as part of transmission rates and whether such costs will be directly charged to the connecting customer; (5) consideration and potential impact of the objections of those who oppose such investments and their recovery; and (6) timely development, construction, and operation of the new facilities.

Our ability to capitalize on investment opportunities available to our business depends, in part, on any future distribution rate cases or other filings seeking cost recovery for distribution system enhancements in New Jersey and transmission rate filings at FERC, including maintaining the affordability of the rates charged to customers. Any denial of, or delay in, the approval of any future distribution or transmission rate requests could restrict us from fully recovering our cost of service, may impose risks on the distribution and transmission operations, and could have a material adverse effect on our regulatory strategy, results of operations and financial condition.

State 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.

Our retail rates are set by the NJBPU through traditional, cost-of-service-based regulated utility ratemaking. As a result, we may not be permitted to recover our costs and, even if we are able to do so, there may be a significant delay between the time we incur such costs and the time we are allowed to recover them. Factors that may affect outcomes in the distribution rate cases include, but are not limited to: (i) the value of plant in service; (ii) authorized rate of return; (iii) capital structure (including hypothetical capital structures); (iv) depreciation rates; (v) the allocation of shared costs, including consolidated deferred income taxes and income taxes payable; (vi) regulatory approval of rate recovery mechanisms for capital investment spending programs; and (vii) the accuracy of forecasts used for ratemaking purposes in “future test year” cases. Evolving legislation and executive actions related to our rates, such as Executive Order No. 1 of 2026 issued by the New Jersey governor on January 20, 2026, may also affect outcomes in distribution rate cases or could create uncertainty around our rate strategy.

We can provide no assurance that any base rate request filed will be granted in whole or in part. Any denial of, or delay in, any base rate request could restrict us from fully recovering our costs of service, may impose risks on our operations, and may negatively impact our results of operations, cash flows and financial condition. In addition, to the extent that we seek an increase in rates, third-party pressure may be exerted on the applicable legislators and regulators to take steps to control rate increases, including through some form of rate increase moderation, reduction or freeze. Any related public discourse and debate, including with respect to the HB 6 litigation, can increase uncertainty associated with the regulatory process, the level of rates and revenues that are ultimately obtained, and the ability of us to recover costs. Such uncertainty may restrict operational flexibility and resources, reduce liquidity and increase financing costs.

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.

FERC policy currently permits recovery of prudently incurred costs associated with cost-of-service-based wholesale power rates and the expansion and updating of transmission infrastructure within its jurisdiction. FERC’s policies on recovery of transmission costs continue to evolve, evidenced by ongoing proceedings to determine an appropriate ROE methodology to determine transmission ROEs, to determine whether FERC’s existing policies on transmission rate incentives should be revised, and to determine whether certain classes of network transmission upgrade costs can be recovered in transmission rates and whether such costs will be

 

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directly charged to the connecting customer. If FERC were to adopt a different policy regarding recovery of transmission costs or if there is any resulting delay in cost recovery, our strategy of investing in transmission could be adversely affected. If FERC were to lower the rate of return it has authorized for JCP&L’s cost-based wholesale power rates or transmission investments and facilities, our future earnings and cash flows may be reduced, and our financial condition may be adversely impacted.

FERC, at the instruction of the U.S. Secretary of Energy, is also considering whether to develop regulations intended to speed interconnection of AI data centers and “hybrid” data center/electric generation facilities (collectively, “large loads”) to the transmission system. Final regulations, if any, from FERC are expected in the second quarter of 2026. To the extent the new regulations promulgated by FERC do not permit transmission utilities to fully recover costs associated with transmission network upgrades required to serve new large loads, our strategy of investing in transmission could be adversely affected.

External pressures beyond our control may increase customer rates and impair our ability to earn a fair and equitable return on our investments and execute our strategy.

PJM’s recent capacity auctions have been subject to a “price collar” that has resulted from all-time high generation capacity prices in recent auction outcomes. These all-time high capacity prices ultimately are passed through in retail rates and can result in material increases in retail customers’ monthly electric utility bills. On April 28, 2026, FERC accepted a price collar extension proposed by PJM to extend the price collar through the 2030 delivery year.

In addition, PJM has proposed a “backstop” auction to procure additional generation capacity, with the costs to be allocated first to “new” data centers and second to existing PJM loads. If the PJM capacity auctions continue to clear at the auction cap, and if PJM conducts a “backstop” capacity auction that clears at a high price point, customer resistance to the resulting market driven increases on the generation portion of their bills could lead to increased pressure for state and federal utility regulators to limit the needed capital investment in transmission and distribution systems required for safe, reliable and resilient service to customers, which may impair our ability to earn a fair and equitable return on our investments and execute our strategy.

Complex and changing federal, state or 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.

We are subject to comprehensive regulation by various federal, state and local regulatory agencies that significantly influence our operating environment. Changes in, or reinterpretations of, existing laws or regulations, or the imposition of new laws or regulations, by federal executive orders or otherwise, have in the past and could in the future require us to incur additional costs, which could be substantial, or change the way we conduct our business, and therefore could have a material adverse impact on our results of operations and financial condition.

Particularly, we provide service at rates approved by one or more regulatory commissions. Thus, the rates that we are allowed to charge may be decreased as a result of actions taken by FERC or by the NJBPU. Also, these rates may not be set to recover our expenses at any given time. Additionally, there may also be a delay between the timing of when costs are incurred and when costs are recovered, if at all. While rate regulation is premised on providing an opportunity to earn a reasonable return on investments and recovery of operating expenses, there can be no assurance that the applicable regulatory commission will determine that all of our costs have been prudently incurred or that the regulatory process in which rates are determined will always result in rates that will produce full recovery of our costs in a timely manner.

 

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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.

Our operations are subjected to audit by FERC, NERC (which is the Electric Reliability Organization (the “ERO”) designated by FERC under Section 215 of the Federal Power Act (the “FPA”)) and approved by FERC and ReliabilityFirst Corporation (“RFC”), which is one of the regional reliability entities responsible for the PJM region. FERC, NERC, and RFC may conduct routine or special audits and issue requests designed to ensure compliance with applicable rules, regulations, policies and procedures. Among other rules, regulations, policies and procedures, owners, operators, and users of the bulk electric system are subject to mandatory reliability standards promulgated by NERC and approved by FERC. Additionally, we are subject to mandatory reliability standards imposed by the State of New Jersey. The standards are based on the functions that need to be performed to ensure that the bulk electric system operates reliably. NERC, RFC, FERC and the NJBPU continue to refine existing reliability standards, as well as develop and adopt new reliability standards. The reliability standards address operation, planning and security of the bulk electric system, including requirements with respect to real-time transmission operations, emergency operations, vegetation management, critical infrastructure protection and personnel training. Compliance with modified or new reliability standards may subject us to higher operating costs and/or increased capital expenditures. If we were found not to be in compliance with one or more of the mandatory reliability standards, we could become subject to sanctions, including substantial monetary penalties. For example, FERC has the authority under the FPA to impose penalties up to and including approximately $1.5 million per day per violation, subject thereafter to annual adjustments for inflation, for failure to comply with these mandatory electric reliability standards. Potential non-monetary sanctions include imposing limitations on the violator’s activities or operations.

In addition to direct regulation by FERC and the State of New Jersey, PJM may direct us to build new transmission facilities to meet PJM’s reliability requirements or to provide new or expanded transmission service under the PJM Tariff.

We are also subject to certain requirements under Sections 203, 204 and 205 of the FPA, including the requirement to obtain prior FERC approval of certain transactions and authorization of the issuance of certain securities and assumptions of liabilities, the obligation to file rate tariffs and contracts related to the provision of services subject to FERC jurisdiction and certain reporting, recordkeeping and accounting requirements. Under FERC policy, failure to file a jurisdictional tariff or agreement on a timely basis may result in an entity having to refund the time value of revenues collected under the relevant tariff or agreement, but not to the point where a loss would be incurred. The failure to obtain timely approval of transactions subject to Section 203 of the FPA or of issuances of securities or assumptions of liabilities under Section 204 of the FPA, or to comply with applicable filing, reporting, recordkeeping or accounting requirements under Section 205 of the FPA could subject us to penalties. FERC has authority under the FPA to impose penalties up to and including approximately $1.5 million per day per violation, adjusted for inflation, for violations of the FPA or rules or orders issued pursuant thereto.

Despite our best efforts to comply and FirstEnergy’s implementation of a compliance program intended to ensure reliability and compliance with the FPA, and rules and orders issued by FERC, there can be no assurance that violations that could result in material penalties or sanctions will not occur. In addition, failure to attain NJBPU’s minimum reliability levels may subject JCP&L to penalties and fines. On August 13, 2025, the NJBPU issued an Order relating to alleged failures by JCP&L to comply with certain minimum reliability levels. The Order alleges JCP&L has failed to achieve minimum reliability levels for calendar years 2022, 2023, and 2024, and directed JCP&L to file an answer demonstrating why the NJBPU should not impose certain penalties upon JCP&L for such failure, which JCP&L filed on October 10, 2025. It is not possible to determine or reasonably estimate at this time whether any such penalties or fines may be imposed by the NJPBU as a result of the Order. If we were to violate mandatory reliability standards or other NERC or FERC requirements, even unintentionally, in any material way, any penalties or sanctions imposed against us could have a material adverse effect on our business, financial condition, results of operations and cash flows, and our ability to pay interest on, and the principal of, the New Notes.

 

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Any failure by us to comply with any applicable regulations or any limitations on our ability to raise capital and/or pursue acquisitions, development opportunities or other transactions imposed by any such regulations could have a material adverse effect on our business, financial condition, results of operations and cash flows, and our ability to pay interest on, and the principal of, the New Notes.

Regulatory changes in the electric industry, including potential changes in federal and state renewable energy initiatives, could affect our competitive position and result in unrecoverable costs adversely affecting our business and results of operations.

As a result of regulatory initiatives, changes in the electric utility business have occurred and are continuing to take place throughout the United States, including the states in which we do business. These changes have resulted, and are expected to continue to result, in fundamental alterations in the way utilities and competitive energy providers conduct their business. FERC and the U.S. Congress propose changes from time to time in the structure and conduct of the electric utility industry. In addition, potential changes in federal and state renewable energy initiatives may result in the cancellation or reduction in projects that we have invested in or commenced.

If any regulatory efforts result in costs, decreased margins and/or unrecoverable costs (including as a result of the cancellation or reduction in certain renewable energy projects), our business and results of operations would be adversely affected. We cannot predict the extent or timing of further regulatory efforts to modify our business or the industry.

Risks Related to Our Business Operations

Demand 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.

Recent industry projections reflect the potential for significant growth in energy demand over the next decade. This could be exacerbated if additional generation resources are not available to meet increased demand in the future. For example, data centers have substantially larger load requirements than typical residential or commercial users. New data centers or increase in demand for existing data centers located in our service territory could increase load requirements substantially over the next several years. A need to serve the load obligations of these data centers, which could be up to 1,190 MWs through 2035, has the potential to adversely impact our business, results of operations, financial condition or cash flows. At the same time, our planning could be adversely affected if electricity usage by data centers is ultimately lower than projected, which could reduce anticipated load growth.

We continue to evaluate the potential impacts of the development, construction, and operation of new data centers in our service territory and will continue to evaluate potential mitigants to these risks. FirstEnergy cannot predict whether the data centers under consideration will ever commence operations or the size of the load obligations of those that do become operational.

Competitive market forces or adverse regulatory actions may require FirstEnergy to purchase capacity and energy from the market or build additional resources to meet customers’ energy needs in an expedited manner. If that occurs, we may see opposition to recovery of these additional costs and could experience a lag between when costs are incurred and when regulators permit recovery in rates. These situations could have negative impacts on results of operations and cash flows.

Furthermore, in the event of electricity shortages, our ability to maintain service reliability may be compromised, which could adversely affect our financial performance, customer satisfaction, and compliance with regulatory requirements.

 

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The hazardous activities associated with the operation of transmission and distribution facilities could adversely impact our results of operations and financial condition.

Operation of transmission and distribution facilities involves risk, including the risk of potential breakdown or failure of equipment or processes due to aging infrastructure, accidents, labor disputes or work stoppages by employees, acts of terrorism or sabotage, construction delays or cost overruns, shortages of or delays in obtaining equipment, material and labor, operational restrictions resulting from environmental requirements and governmental interventions, and performance below expected levels. In addition to naturally occurring risks, such as earthquakes, floods, lightning, wildfire, hurricanes and wind, other hazards, such as fire, explosion, electrocution, collapse and machinery failure, are inherent risks in our operations which may occur as a result of inadequate internal processes, technological flaws, human error or actions of third parties or other external events. The identification, control and management of these risks depend upon adequate development and training of personnel and on operational procedures, preventative maintenance plans, and specific programs supported by quality control systems, which may not prevent the occurrence and impact of these risks.

The hazards described above, along with other safety hazards associated with our operations, can cause significant personal injury or loss of life, severe damage to and destruction of property, plant and equipment, contamination of, or damage to, the environment and suspension of operations. The occurrence of any one of these events may result in our being named as a defendant in lawsuits asserting claims for substantial damages, environmental cleanup costs, personal injury and fines and/or penalties.

Our business is affected by variations in weather and severe weather conditions.

Weather conditions directly influence the demand for electric power. Demand for power generally peaks during the summer and winter months, with market prices also typically peaking at that time. Overall operating results may fluctuate based on weather conditions. In addition, we have historically sold less power, and consequently received less revenue, when seasonal weather conditions are milder.

In addition, severe weather, such as tornadoes, hurricanes, ice or snowstorms, droughts, high winds or other natural disasters, may cause outages and property damage that may require us to incur additional costs that are generally not insured and that may not be recoverable from customers. The effect of the failure of our facilities to operate as planned under these conditions would be particularly burdensome during a peak demand period and could have an adverse effect on our financial condition and results of operations, which adverse effects could be further exacerbated by an increased frequency of such severe weather events.

Cyber-attacks, electronic or physical data security breaches and other disruptions to our information technology systems, or those of third parties we are connected to or do business with, could compromise our business operations, critical and proprietary information and employee and customer data, which could have a material adverse effect on our business, results of operations, financial condition and reputation.

We rely on complex information technology systems to operate our transmission and distribution networks and to store sensitive business, employee and customer data. Increasingly sophisticated cyber-attacks, ransomware, and other security breaches—whether targeting us or third parties with whom we do business—could disrupt operations, compromise confidential information, and result in significant financial, legal, and reputational harm. Cybersecurity threats, including those that exploit advances in technologies such as artificial intelligence, continue to grow in frequency and sophistication, and the security controls we implement may not fully prevent or detect all such threats or incidents. Emerging artificial intelligence technologies may be used to develop new hacking tools, obscure malicious activities, exploit vulnerabilities, and increase the difficulty of detecting threats. Despite ongoing investments in cybersecurity, we cannot guarantee prevention or timely detection of all threats, which continue to evolve and may be amplified by interconnected systems. A successful attack or breach could lead to service interruptions, regulatory penalties, litigation, remediation costs, and loss of customer trust. Any such cyber incident could result in significant lost revenue, the inability to

 

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conduct critical business functions and serve customers for a significant period of time, the loss of confidential, sensitive and proprietary information, including but not limited to personal information of our customers, employees, suppliers, vendors and other third parties, the use of significant management resources, legal claims or proceedings, regulatory penalties, significant remediation costs, increased regulation, increased capital costs, increased insurance costs, increased protection costs for enhanced cybersecurity systems or personnel, and/or damage to our reputation, all of which could materially adversely affect our business, results of operations, financial condition and reputation.

Over the last several years, there has been an increase in the frequency of cyber-attacks by terrorists, hackers, international activist organizations, foreign governments and individuals. These and other unauthorized parties may attempt to gain access to our network systems or facilities, or those of third parties with whom we do business, including directly through our network infrastructure or through fraud, trickery, or other forms of deception against our employees, contractors and temporary staff. Additionally, our information and information technology systems and those of our vendors and service providers may be increasingly vulnerable to data security breaches, damage and/or interruption due to viruses, ransomware, unauthorized physical access, theft of access devices, human error, malfeasance, faulty password management or other malfunctions and disruptions. Further, hardware, software, or applications we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information and/or security.

As a source of critical infrastructure, the energy industry is at heightened threat of cyber-attacks, which are becoming increasingly more difficult to anticipate and prevent due to their rapidly evolving nature. We cannot anticipate, detect, or implement fully preventive measures against all cyber security threats because the techniques used are increasingly sophisticated and constantly evolving. For example, as artificial intelligence continues to evolve, cyber-attackers could use artificial intelligence to develop malicious code, denial-of-service attacks, sophisticated phishing attempts and other attacks leading to data loss, loss of operational control, or exploitation of inherent vulnerabilities.

In addition, the increased use of smartphones, tablets, and other wireless devices, as well as ongoing remote work-from-home arrangements for a substantial portion of our corporate employees, may also heighten these and other operational risks. Furthermore, economic sanctions issued by one country against another, such as those issued by the U.S. and other countries against Russia in response to its war with Ukraine, or other increasing global geopolitical tensions, such as the war between Israel and Hamas, could increase the risk of state-sponsored cyber-attacks.

Despite security measures and safeguards we have employed, including certain measures implemented pursuant to mandatory NERC Critical Infrastructure Protection standards, our infrastructure, as well as the transmission facilities of third parties with whom we are interconnected, may be increasingly vulnerable to such attacks as a result of the rapidly evolving and increasingly sophisticated means by which attempts to defeat security measures and gain access to our information technology systems may be made. Because our transmission facilities are interconnected with those of third parties, the operation of our facilities could be adversely affected by cyber-attacks or other unexpected or uncontrollable events occurring on the systems of such third parties. Given the rapidly evolving nature, sophistication and complexity of cyber-attacks, despite our reasonable efforts to mitigate and prevent such attacks, it is possible that we may not be able to anticipate, prevent, detect, or implement effective preventive measures to protect against all cyber-attack incidents.

Any actual or perceived cyber-attack, data security breach, damage, interruption and/or defect could: (i) disable our transmission and/or distribution services for a significant period of time; (ii) delay development and construction of new facilities or capital improvement projects; (iii) adversely affect our customer operations; (iv) expose us to increased risk of lawsuits; (v) expose us to increased risk of regulatory penalties; (vi) expose us to increased risk of loss of potential or existing customers; (vii) expose us to increased risk of damage relating to loss of proprietary information; (viii) corrupt data; and/or (ix) result in unauthorized access to the information stored in our data centers and on our networks and those of our vendors and service providers, including,

 

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company proprietary information, supplier information, employee data, and personal customer data, causing the information to be publicly disclosed, lost or stolen or result in incidents that could result in economic loss and liability and harmful effects on the environment and human health, including loss of life. Additionally, because our services are part of an interconnected system, disruption caused by a cyber security incident at another utility, electric generator, regional transmission organization (“RTO”), or commodity supplier could also adversely affect our operations.

Although we maintain cyber insurance and property and casualty insurance, there can be no assurance that liabilities or losses we may incur, including as a result of cyber security-related litigation, will be covered under such policies or that the amount of insurance will be adequate. Further, as cyber threats continually evolve and become more difficult to detect and successfully defend against, there can be no assurance that we can implement or maintain adequate preventive measures, accurately assess the likelihood of a cyber-incident or quantify potential liabilities or losses. Also, we may not discover any data security breach and loss of information for a significant period of time after the data security breach occurs particularly those of our vendors and service providers.

For all of these reasons, any such cyber incident could result in significant lost revenue, the inability to conduct critical business functions and serve customers for a significant period of time, the loss of confidential, sensitive, and proprietary information, including but not limited to personal information of our customers, employees, suppliers, vendors and other third parties, the use of significant management resources, legal claims or proceedings, regulatory penalties, significant remediation costs, increased regulation, increased capital costs, increased insurance costs, increased protection costs for enhanced cyber security systems or personnel, damage to our reputation and/or the rendering of our internal controls ineffective, all of which could materially adversely affect our business, results of operations, financial condition and reputation.

Our insurance coverage may not provide protection against all significant losses and our ability to obtain insurance coverage, as well as the terms of any available insurance coverage could be materially adversely affected by international, national, state or local events and company-specific events, as well as the financial condition of insurers.

If we cannot or do not obtain adequate insurance coverage, we may be required to pay costs associated with future adverse events. Through a combination of third-party and self-insurance, we have a comprehensive insurance program in place to provide coverage for various types of risks, including severe weather or other natural disasters, war, terrorism, cyber incidents, liability claims against us, or a combination of other significant unforeseen events that could impact our operations. However, insurance coverage may not continue to be available or may not be available at rates or on terms similar to those presently available to us. Our ability to obtain insurance and the terms of any available insurance coverage could be materially adversely affected by the financial condition of insurers, the impacts of actual or perceived climate-related events, as well as international, national, state, local or company-specific events.

There may be some instances in which we are not fully insured against all significant losses. A loss for which we are not fully insured could have a material adverse effect on our business, financial condition, results of operations and prospects.

Macroeconomic 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.

Economic conditions, including those that may arise from government fiscal policy, tariffs, recessions, inflationary and interest rate pressures, may impact the demand for electricity and, therefore, any decline in economic conditions could lead to declines in the demand for electricity, which would reduce our revenues.

 

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Prices for equipment, materials, supplies, employee labor contractor services, together with the cost of variable-rate debt, have increased in recent years and could continue to increase in 2026 and beyond. Inflation and broader economic conditions have continued to drive up the price of the cost of essential components used in the construction of transmission infrastructure, such as electrical equipment, steel and aluminum, and we may experience supply chain disruptions and long lead times for critical equipment. Long-term inflationary pressures may result in such prices continuing to increase more quickly than expected. Inflation increases costs for labor, materials and services, and we may be unable to secure these resources on economically acceptable terms or offset such costs with increased revenues, operating efficiencies, or cost savings, which may adversely impact our financial condition, results of operations, liquidity, and cash flows.

We have near-term exposure to interest rates from outstanding short-term indebtedness indexed to variable interest rates, and we have exposure to future interest rates to the extent we seek to raise long-term debt in the capital markets to meet maturing debt obligations and fund construction or other investment opportunities. Past disruptions in capital and credit markets, as well as the U.S. Federal Reserve Board’s interest rate policies, have resulted in volatile interest rates on new publicly issued debt securities and increased costs for variable interest rate debt securities. Disruptions in capital and credit markets, or the Federal Reserve Board’s interest rate policies, could result in volatile interest rates on new publicly issued debt securities and increase our financing costs and adversely affect our results of operations, cash flows and liquidity. Also, interest rates could change as a result of economic or other events that are beyond the control of our risk management processes. As a result, we cannot always predict the impact that our risk management decisions may have if actual events lead to greater losses or costs than our risk management positions were intended to hedge. Significant and sustained increases in market interest rates could materially increase our financing costs and negatively impact our reported results of operations, cash flows and liquidity.

Supply chain disruptions could have an adverse effect on our results of operations, cash flow and financial condition.

We have in the past and may in the future experience supply chain challenges due to economic conditions that developed during the Coronavirus disease (“COVID-19”) pandemic and have continued in the years since, with order lead times increasing across numerous material categories. The situation is fluid and a prolonged continuation or further increase in supply chain disruptions could have an adverse effect on FirstEnergy’s results of operations, cash flow and financial condition. Our operations and corporate strategy may also be adversely affected by supply chain disruptions and inflation, including shortages and delays in key materials, equipment and contractor services. Such disruptions could be exacerbated by unstable or uncertain macroeconomic conditions, including inflationary pressures. Any significant disruption or increased costs arising from these pressures on our suppliers may inhibit our access to, or require us to spend more money to source, certain products or that we use in our operations.

Furthermore, change or uncertainty in U.S. policies or the policies of other countries and regions in which our suppliers do business, including any changes or uncertainty with respect to U.S. or international trade policies or tariffs, could also disrupt our key suppliers’ operations. The presidential administration took action in 2025 to impose substantial new or increased tariffs. Any widespread imposition of new or increased tariffs could have an adverse effect on our results of operations, cash flow and financial condition. New or increased tariffs could also negatively affect U.S. national or regional economies, which also could negatively impact our business and results of operations. The supply chain of goods and services we rely on could be impacted by sanctions, tariffs, manufacturing labor shortages and domestic and international shipping constraints, which could increase our costs and delay delivery of critical materials.

We are subject to financial performance risks from regional and general economic cycles as well as data centers and heavy industries such as chemical and steel manufacturing.

Our business follows economic cycles. The regional economy in which we operate is influenced by conditions impacting industries in our service territory—e.g., data centers, the steel industry—and as these

 

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conditions and resultant demand of those industries for electricity generation change, our revenues will be impacted.

Additionally, our operations are affected by the economic conditions in our service territory and those conditions could negatively impact the rate of delinquent customer accounts and our collections of accounts receivable, which could adversely impact our financial condition, results of operations and cash flows, and our ability to pay interest on, and the principal of, the New Notes.

We are subject to risks arising from the operation of our 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.

Operation of our transmission and distribution facilities involves risk, including the risk of potential breakdown or failure of equipment or processes due to aging infrastructure, fuel supply or transportation disruptions, accidents, labor disputes or work stoppages by employees, human error in operations or maintenance, acts of terrorism or sabotage, cyber-attacks, construction delays or cost overruns, shortages of or delays in obtaining equipment, material and labor, operational restrictions resulting from environmental requirements and governmental interventions, and operational performance below expected levels. In addition, weather-related incidents and other natural disasters can disrupt delivery systems. Because our transmission facilities are interconnected with those of third parties, the operation of our facilities could be adversely affected by unexpected or uncontrollable events occurring on the systems of such third parties.

Capital 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.

Our business plan calls for the execution of extensive capital investments in electric transmission and distribution. We may be exposed to the risk of substantial price increases in, or the adequacy or availability of, the costs of labor and materials used in construction, nonperformance of equipment and increased costs due to inflation, interest rates or other macroeconomic forces, delays, including delays related to the procurement of permits or approvals, adverse weather or environmental matters. We and our affiliates engage numerous contractors and enter into a large number of construction agreements to acquire the necessary materials and/or obtain the required construction-related services. As a result, we and our affiliates are also exposed to the risk that these contractors and other counterparties could breach their obligations to us. Such risk could include our contractors’ inabilities to procure sufficient skilled labor, as well as potential work stoppages by that labor force. Should the counterparties to these arrangements fail to perform, we and our affiliates may be forced to enter into alternative arrangements at then-current market prices that may exceed our contractual prices, with resulting delays in those and other projects. Although our agreements are designed to mitigate the consequences of a potential default by the counterparty, our actual exposure may be greater than these mitigation provisions. Also, because we and our affiliates enter into construction agreements for the necessary materials and to obtain the required construction-related services, any cancellation by us or our affiliates of a construction agreement could result in significant termination payments or penalties. Any delays, increased costs or losses or cancellation of a construction project could adversely affect our business and results of operations, particularly if we are not permitted to recover any such costs through rates.

Physical 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.

As a result of the continued threat of physical acts of war, terrorism, sabotage or other attacks in the United States, our electric transmission and distribution facilities and other infrastructure, or the facilities or other infrastructure of an interconnected company, could be direct targets of, or indirect casualties of, an act of war, terrorism, sabotage or other acts of war, terrorism, sabotage, or other attack, which could result in disruption of our ability to transmit or distribute electricity for a significant period of time, otherwise disrupt our customer

 

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operations and/or result in incidents that could result in harmful effects on the environment and human health, including loss of life. Any such disruption or incident could result in a significant decrease in revenue, significant additional capital and operating costs, including costs to implement additional security systems or personnel to purchase electricity and to replace or repair our assets over and above any available insurance reimbursement, higher insurance deductibles, higher premiums and more restrictive insurance policies, legal claims or proceedings, greater regulation with higher attendant costs, generally, and significant damage to our reputation, which could have a material adverse effect on our business, results of operations, cash flows and financial condition.

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.

Our employees, contractors and the general public may be exposed to dangerous environments due to the nature of our operations. Failure to provide safe and reliable service and equipment due to various factors, including cyber or physical attacks, equipment failure, accidents, human error, weather or natural disasters, could result in serious injury or loss of life that may harm our business reputation and adversely affect our operating results through reduced revenues, increased capital and operating costs, litigation or the imposition of penalties/fines or other adverse regulatory outcomes.

The outcome of litigation, arbitration, mediation, and similar proceedings involving our business is unpredictable. An adverse decision in any material proceeding could have a material adverse effect on our financial condition and results of operations.

We are involved in a number of litigation, arbitration, mediation, and similar proceedings, including with respect to asbestos claims. These and other matters may divert financial and management resources that would otherwise be used to benefit our operations. Further, no assurances can be given that the resolution of these matters will be favorable to us. If certain matters were ultimately resolved unfavorably to us, our results of operations and financial condition could be materially adversely impacted.

In addition, we are sometimes subject to investigations and inquiries by various state and federal regulators due to the heavily regulated nature of our industry. Any material inquiry or investigation could potentially result in an adverse ruling against us, which could have a material adverse impact on our financial condition and operating results.

We 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.

We are continually challenged to find ways to balance the retention of our aging skilled workforce while recruiting new talent to mitigate losses in critical knowledge and skills due to retirements. Workforce demographic issues challenge employers nationwide and are of particular concern to the electric utility industry. Our costs, including costs for contractors to replace employees and productivity costs, may rise. Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to the new employees, may adversely affect our ability to manage and operate our business. If we are unable to successfully recruit and retain an appropriately qualified workforce, our results of operations could be negatively affected.

Additionally, a significant number of our physical workforce is represented by unions. We cannot provide assurance that we will be completely free of labor disruptions such as work stoppages, work slowdowns, union organizing campaigns, strikes, lockouts or that any labor disruption will be favorably resolved. Mitigating these risks could require additional financial commitments and the failure to prevent labor disruptions and retain and/or attract trained and qualified labor could have a material adverse effect on our business, financial condition, results of operations and cash flows, and our ability to pay interest on, and the principal of, the New Notes.

 

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Significant increases in our operation and maintenance expenses, including our health care and pension costs, could adversely affect our future earnings and liquidity.

We continually focus on limiting and reducing where possible, our operation and maintenance expenses. However, we expect to continue to face increased cost pressures related to operation and maintenance expenses, including in the areas of health care and pension costs. We have experienced health care cost inflation in recent years, and we expect our cash outlay for health care costs, including prescription drug coverage, to continue to increase despite measures that we have taken requiring employees and retirees to bear a higher portion of the costs of their health care benefits. The measurement of our expected future health care and pension obligations and costs is highly dependent on a variety of assumptions, many of which relate to factors beyond our control. These assumptions include investment returns, interest rates, discount rates, health care cost trends, benefit design changes, salary increases, the demographics of plan participants and regulatory requirements. While we anticipate that our operation and maintenance expenses will continue to increase, if actual results differ materially from our assumptions, our costs could be significantly higher than expected which could adversely affect our results of operations, financial condition and liquidity.

Advances in and widespread adoption of distributed generation and regulatory policies may make our facilities significantly less competitive and adversely affect our results of operations.

Traditionally, electricity is generated at large, central station generation facilities distributed by our systems. This method results in economies of scale and lower unit costs than newer generation technologies such as fuel cells, microturbines, windmills and photovoltaic solar cells. It is possible that advances in newer generation technologies will make newer generation technologies more cost-effective, or that legislation addressing climate change at the federal or state level together with changes in regulatory policy will create incentives or benefits that otherwise make these newer generation technologies even more competitive with central station electricity production. To the extent that newer generation technologies are connected directly to load, bypassing the transmission and distribution systems, potential impacts could include decreased transmission and distribution revenues, stranded assets and increased uncertainty in load forecasting and integrated resource planning and could adversely affect our business and results of operations.

Energy 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.

Energy companies, including us, have been the subject of criticism on matters including the affordability and reliability of their distribution or transmission services and systems and the speed with which they are able to respond to power outages, such as those caused by storm damage. Adverse publicity of this nature, as well as negative publicity associated with the operation of coal-fired generation or proceedings seeking regulatory recoveries may cause less favorable legislative and regulatory outcomes and damage our reputation, which could have an adverse impact on our business and financial condition.

Our 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.

Our operations, or those of our vendors or suppliers, could be negatively impacted by various events beyond our control, including, but not limited to: natural disasters, such as hurricanes, tornadoes, floods, earthquakes, wildfires, extreme cold weather events and other adverse weather conditions; public health crises, such as pandemics and epidemics; prolonged government or regulator furloughs or shutdowns; trade wars; recessions; political crises, such as terrorist attacks, war, labor unrest, and other political instability; negative global climate patterns, especially in water stressed regions; surface subsidence from underground mining impacting our facilities; or other catastrophic events, such as fires or other disasters occurring at our distribution facilities or our service providers’ facilities, whether occurring in the United States or internationally. These events could disrupt

 

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the operations of our corporate offices and our supply chain and those of our vendors and service providers, as well as disrupting our infrastructure and that of third parties with whom we are connected. To the extent any of these events occur, our operations and financial results could be adversely affected.

We are a wholly owned subsidiary of FE. FE may exercise, within certain regulatory, corporate law and other limitations, substantial control over our dividend policy, business and operations and may exercise that control in a manner that may be inconsistent with the interests of the holders of the New Notes.

We are a wholly owned subsidiary of FE and certain of our officers and directors are also officers of FE. Our board of directors makes determinations with respect to a number of significant corporate events, including payment of our dividends. We have historically paid dividends to FE. From January 1, 2026 through March 31, 2026, we have not paid dividends to FE. If FE’s cash requirements increase, our board of directors may determine that we should pay increased dividends to help support FE’s cash needs, which could materially and adversely affect our liquidity.

Risks Associated with Climate Change, GHG Emissions and Other Environmental Matters

Our aspirations and disclosures related to climate matters expose us to risks that could adversely affect our reputation and performance.

FirstEnergy published statements concerning its climate-related goals and aspirations. FirstEnergy is targeting Scope 1 carbon neutrality by 2050, which includes emissions, sulfur hexafluoride leaks from transmission and distribution equipment, and its mobile fleet (i.e., vehicles). These statements reflect FirstEnergy’s aspirations and are not guarantees that FirstEnergy will be able to achieve them. FirstEnergy’s failure to adequately update, accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect its and its subsidiaries’, including our, reputation, financial performance and growth, and expose us to increased scrutiny from the investment community, special interest groups and enforcement authorities, including at the state and local levels. Conversely, certain “anti-environmental, social and governance” sentiment among some individuals and government institutions pose the risk that we may face increasing scrutiny, reputational risk, or lawsuits from these parties.

FirstEnergy’s ability to achieve its GHG reduction objective is subject to its ability to make operational changes and is conditioned upon numerous risks, many of which are outside of its control. Examples of such risks include the evolving regulatory requirements in the jurisdictions in which it and its subsidiaries, including us, operate, including the interpretation of such regulations, potential changes to such laws and regulations, the prevalence of certain standards or disclosures, the evolving laws applicable to climate-related and other environmental matters, and the availability of funds to invest in initiatives in times where FirstEnergy is seeking to reduce costs.

Standards for tracking and reporting of climate and other environmental matters continue to evolve. FirstEnergy’s selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or differ from those of others. Methodologies for reporting this data may be updated and previously reported data may be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations and other changes in circumstances. FirstEnergy’s processes and controls for reporting these matters across its operations and supply chain are evolving along with multiple disparate standards for identifying, measuring, and reporting these metrics, including climate-related disclosures that are or may be required by the SEC, state legislatures, or other regulators, and such standards may change over time, which could result in significant revisions to FirstEnergy’s current goals, reported progress in achieving such goals, or ability to achieve such goals in the future. If FirstEnergy’s practices do not meet evolving investor or other stakeholder expectations and standards, then its and its subsidiaries’, including our, reputations or attractiveness as an investment, or status as a business partner, acquiror, service provider or employer could be negatively impacted.

 

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We are or may be subject to environmental liabilities, including costs of remediation of environmental contamination at current or formerly owned, leased or operated facilities, which could have a material adverse effect on our results of operations and financial condition.

We may be subject to liability under environmental laws for the costs of remediating environmental contamination of property now or formerly owned or operated by us and of property contaminated by hazardous substances regardless of whether the liabilities arose before, during or after the time we owned or operated the facilities. FirstEnergy is currently involved in a number of proceedings relating to sites where hazardous substances have been released and we may be subject to additional proceedings in the future. We also have current or previous ownership interests in sites associated with the production of gas and the production and delivery of electricity for which we may be liable for additional costs related to investigation, remediation and monitoring of these sites. Citizen groups or others may bring litigation over environmental issues including claims of various types, such as property damage, personal injury, and citizen challenges to compliance decisions on the enforcement of environmental requirements, such as opacity and other air quality standards, which could subject us to penalties, injunctive relief and the cost of litigation. We cannot predict the amount and timing of all future expenditures (including the potential or magnitude of fines or penalties) related to such environmental matters, although we expect that they could be material. In addition, there can be no assurance that any liabilities, losses or expenditures we may incur related to such environmental liabilities or contamination will be covered under any applicable insurance policies or that the amount of insurance will be adequate.

In some cases, a third party who has acquired assets, including, but not limited to, operating and deactivated nuclear power stations from us has assumed the liability we may otherwise have for environmental matters related to the transferred property. If the transferee fails to discharge the assumed liability or disputes its responsibility, a regulatory authority or injured person could attempt to hold us responsible, and our remedies against the transferee may be limited by the financial resources of the transferee.

Concerns about GHG emissions and the potential risks associated with climate change have led to increased regulation and other actions that could impact our business.

Federal and various regional and state authorities regulate GHG emissions, including CO₂ emissions and have created financial incentives to reduce them. In 2024, FirstEnergy operated businesses that had total Scope 1 GHG emissions of approximately 14 million metric tons. For existing electric generation plants, CO₂ emissions data are either obtained directly from facility continuous emission monitoring systems or calculated from actual fuel heat inputs and fuel type CO₂ emission factors. This estimate is based on a number of projections and assumptions that may prove to be incorrect, such as the forecasted dispatch, anticipated facility efficiency, fuel type, CO₂ emissions rates and FirstEnergy’s subsidiaries, including us, achieving completion of such construction and development projects. While actual emissions may vary substantially, the projects under construction or development when completed will increase emissions of FirstEnergy’s portfolio and therefore could increase the risks associated with regulation of GHG emissions.

In 2010, the EPA adopted regulations pertaining to GHG emissions that require new and existing sources of GHG emissions to potentially obtain new source review permits from the EPA prior to construction or modification. In 2016, the Supreme Court of the U.S. ruled that such permitting would only be required if such sources also must obtain a new source review permit for increases in other regulated pollutants.

Furthermore, certain states have begun to pass their own laws related to GHG emissions and the disclosure of such emissions. The impact of GHG regulation on our operations will depend on a number of factors, including the degree and timing of GHG emissions reductions required under any such legislation or regulation, the cost of emissions reduction equipment and the price and availability of offsets, the extent to which market based compliance options are available, the extent to which our subsidiaries would be entitled to receive GHG emissions allowances without having to purchase them in an auction or on the open market and the impact of such legislation or regulation on the ability of our subsidiaries to recover costs incurred through rate increases or otherwise. The costs of compliance could be substantial.

 

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Costs 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.

Our operations are subject to extensive federal, state and local environmental statutes, rules and regulations, which are continuously evolving. Compliance with these legal requirements requires us to incur costs for, among other things, installation and operation of pollution control equipment, emissions monitoring and fees, remediation and permitting at our facilities. These expenditures have been significant in the past and may increase in the future. We may be forced to shut down other facilities or change their operating status, either temporarily or permanently, if we are unable to comply with these or other existing or new environmental requirements, or if the expenditures required to comply with such requirements are not unreasonable.

Moreover, new federal, state or local environmental laws or regulations including, but not limited to GHG emissions, Clean Water Act effluent limitations imposing more stringent water discharge regulations, or other changes to existing environmental laws or regulations, or the interpretation of such regulations, may materially increase our costs of compliance or accelerate the timing of capital expenditures or other capital-like investments. Our compliance strategy, including, but not limited to, our assumptions regarding estimated compliance costs, although reasonably based on available information, may not successfully address future relevant standards and interpretations, including with respect to evolving federal policies that may be adopted or new regulated adopted by the states in which we operate. If we fail to comply with environmental laws and regulations or new interpretations of longstanding requirements, even if caused by factors beyond our control, that failure could result in the assessment of civil or criminal liability and fines. In addition, any alleged violation of environmental laws and regulations may require us to expend significant resources to defend against any such alleged violations. Due to the uncertainty of control technologies available to reduce GHG emissions, any legal obligation that requires substantial reductions of GHG emissions could result in substantial additional costs, adversely affecting cash flows and profitability, and raise uncertainty about the future viability of fossil fuels, particularly coal, as an energy source for new and existing electric generation facilities.

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.

Private individuals may seek to enforce environmental laws and regulations against us and could allege personal injury, property damages or other relief. For example, claims have been made against certain energy companies alleging that CO₂ emissions from electric generation facilities constitute a public nuisance under federal and/or state common law. While JCP&L is not a party to this litigation, it could be named in other actions making similar allegations. An unfavorable ruling in any such case could result in the need to reduce emissions, suspend operations or pay money damages or penalties. Adverse rulings in these or other types of actions could have an adverse impact on our results of operations, cash flows and financial condition and could significantly impact our business operations.

Transition risks associated with climate change, including those related to regulatory mandates could negatively impact our financial results.

A number of regulatory and legislative bodies, including the NJBPU and the New Jersey General Assembly, have introduced requirements and/or incentives, as well as penalties, to reduce peak demand and energy consumption. Such conservation programs have previously resulted in and could result in further load reduction and could adversely impact our financial results in different ways. We currently have energy efficiency riders in place in certain of our states to recover the cost of these programs either at or near a current recovery time frame in the states where we operate.

In our regulated operations, energy conservation could negatively impact us depending on the regulatory treatment of the associated impacts and, in particular, whether we would be permitted to recover some or all of

 

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the resulting additional costs and/or lost revenues. Should we be required to invest in, or fund, conservation measures that result in reduced sales from effective conservation, regulatory lag in adjusting rates for the impact of these measures could have a negative financial impact. In the past, we have been adversely impacted by reduced electric usage due in part to energy conservation efforts such as the use of efficient lighting products such as compact fluorescent lights, halogens and light emitting diodes. We could also be adversely impacted if any future increases to energy prices result in a decrease in customer usage. Our financial results could be adversely affected if we are unable to meet participation and/or energy reduction targets, as they may be established by the State of New Jersey, and penalties are imposed. We are unable to determine what impact, if any, future conservation activities will have on our financial condition or results of operations. Additionally, failure to meet regulatory or legislative requirements to reduce energy consumption or otherwise increase energy efficiency could result in penalties that could adversely affect our financial results.

The physical risks associated with climate change may have an adverse impact on our business operations, financial condition and cash flows.

Physical risks of climate change such as flooding, wildfires, rising sea levels, and other related phenomena, resulting from more frequent or more extreme weather events and changes in temperature and precipitation patterns associated with climate change, could affect some, or all, of our operations. Frequent or extreme weather events could disrupt our operations and/or be destructive, which could result in increased costs, including supply chain costs. An extreme weather event within the New Jersey area can also directly affect our capital assets, such as downed wires and poles or damage to other operating equipment, resulting in service disruptions to customers and possibly creating hazardous conditions. Further, as extreme weather conditions increase system stress, we may incur costs relating to additional system backup or service interruptions and, in some instances, we may be unable to recover such costs. For all of these reasons, these physical risks could have an adverse financial impact on our business operations, financial condition and cash flows.

Climate change poses other financial risks as well. To the extent weather conditions are affected by climate change, customers’ energy use could increase or decrease depending on the duration and magnitude of the changes. Increased energy use due to weather changes may require us to invest in additional system assets and purchase additional power. Additionally, decreased energy use due to weather changes may affect our financial condition through decreased revenues, margins or earnings.

Risks Associated with Markets and Financial Matters

Our 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.

FirstEnergy recognizes in income the change in the fair value of plan assets and net actuarial gains and losses for its pension and OPEB plans. This adjustment to income associated with the change in fair value is recognized in the fourth quarter of each year and whenever a plan is determined to qualify for a remeasurement, which could result in greater volatility in pension and OPEB expenses and may materially impact our results of operations.

Our financial statements reflect the values of the assets held in trust to satisfy our obligations under pension and OPEB plans. Certain of the plan assets held in these trusts do not have readily determinable market values. Changes in the estimates and assumptions inherent in the value of these assets could affect the value of the trusts. If the value of the assets held by the trusts declines by a material amount, our funding obligation to the trusts could materially increase. These assets are subject to market fluctuations and will yield uncertain returns, which may fall below our projected return rates. Forecasting investment earnings and costs to pay future pension and other obligations requires significant judgment and actual results may differ significantly from current estimates. Capital market conditions that generate investment losses or that negatively impact the discount rate and increase the present value of liabilities may increase our future pension and OPEB expenses and further may have

 

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significant impacts on the value of the pension and other trust funds, which could require significant additional funding and negatively impact our results of operations and financial position.

Failure to comply with debt covenants in our credit agreement 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.

Our credit agreement contains certain negative and affirmative covenants. Our ability to comply with the covenants and restrictions contained in our credit agreement has been and may, in the future, be affected by events related to the ongoing government investigations or otherwise, including a failure to comply with the terms of the DPA.

A breach of any of the covenants contained in our credit agreement, including any breach related to alleged failures to comply with anti-corruption and anti-bribery laws, could result in an event of default under such agreements, and we would not be able to access our credit facility for additional borrowings and letters of credit (each, a “LOC”) while any default exists. Upon the occurrence of such an event of default, any amounts outstanding under our credit agreement could be declared to be immediately due and payable and all applicable commitments to extend further credit could be terminated. If indebtedness under our credit agreement is accelerated, there can be no assurance that we will have sufficient assets to repay the indebtedness. In addition, certain events, including, but not limited to any covenant breach related to alleged failures to comply with anti-corruption and anti-bribery laws, an event of default under our credit agreement, and the acceleration of applicable commitments under such facility could restrict our ability to obtain additional or replacement financing on acceptable terms or at all. The operating and financial restrictions and covenants in our credit agreement and any future financing agreements may adversely affect our ability to finance future operations or capital needs or to engage in other business activities which in turn could have a material adverse impact on our business, cash flow, liquidity and results of operations.

A credit rating downgrade could negatively affect our financing costs, ability to access capital and requirement to post collateral.

We rely on access to bank and capital markets as sources of liquidity for cash requirements not satisfied by cash from operations. Any future downgrades in our credit ratings from the nationally recognized credit rating agencies, particularly to levels below investment grade, could negatively affect our ability to access the bank and capital markets, especially in a time of uncertainty in either of those markets, and may require us to post cash collateral to support outstanding commodity positions in the wholesale market, as well as available LOCs and other guarantees. Furthermore, additional downgrades could increase the cost of such capital by causing us to incur higher interest rates and fees associated with such capital. Additional rating downgrades would further increase our interest expense on certain of our long-term debt obligations and would also further increase the fees we pay on our credit agreement, thus increasing the cost of our working capital. Such additional rating downgrades could also negatively impact our ability to grow our business or execute our business strategies by substantially increasing the cost of, or limiting access to, capital.

In addition, events related to the ongoing government investigations may expose us to higher interest rates for additional indebtedness, whether as a result of ratings downgrades or otherwise, and could restrict our ability to obtain additional or replacement financing on acceptable terms or at all. See “Failure to comply with debt covenants in our credit agreement 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.”

 

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In the event of volatility or unfavorable conditions in the capital and credit markets, our business, including the immediate availability and cost of short-term funds for liquidity requirements, our ability to meet long-term commitments and the competitiveness and liquidity of energy markets, may be adversely affected, which could negatively impact our results of operations, cash flows and financial condition.

We rely on the bank and capital markets to meet both our financial commitments and short-term liquidity needs if internal funds are not available from our operations. We also use LOCs provided by various financial institutions to support our collateral operations. Our access to funds under our credit agreement is dependent on the ability of the financial institutions that are parties to our credit agreement to meet their funding commitments. Those institutions may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time. Any delay in our ability to access those funds, even for a short period of time, could have an adverse effect on our results of operations and financial condition.

Should there be fluctuations in the bank and capital markets as a result of uncertainty, changing or increased regulation, reduced alternatives or failures of significant foreign or domestic financial institutions or foreign governments, our access to liquidity needed for our business could be adversely affected. Unfavorable conditions could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged. Such measures could include deferring capital expenditures or other capital-like investments, and reducing or eliminating future dividend payments or other discretionary uses of cash. Energy markets depend heavily on active participation by multiple counterparties, which could be adversely affected should there be disruptions in the bank and capital markets. Reduced capital and liquidity and failures of significant institutions that participate in the energy markets could diminish the liquidity and competitiveness of energy markets that are important to our business. Perceived weaknesses in the competitive strength of the energy markets could lead to pressures for greater regulation of those markets or attempts to replace those market structures with other mechanisms for the sale of power, including the requirement of long-term contracts, which could have a material adverse effect on our results of operations and cash flows.

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.

We are subject to various local, state and federal taxes, including income, franchise, real estate, sales and use, and employment-related taxes. We exercise significant judgment in calculating such tax obligations, booking reserves as necessary to reflect potential adverse outcomes regarding tax positions we have taken and utilizing tax benefits, such as carryforwards and credits. Additionally, various tax rate and fee increases may be proposed or considered in connection with such changes in local, state or federal tax law. We cannot predict whether legislation or regulation will be introduced, the form of any legislation or regulation, or whether any such legislation or regulation will be passed by legislatures or regulatory bodies. Any such changes, or any adverse tax audit results or adverse tax rulings on positions taken by us or our affiliates could have a negative impact on our results of operations, financial condition and cash flows.

Specifically, the IRA of 2022 imposes a corporate alternative minimum tax (“AMT”) and, if applicable, corporations must pay the greater of the regular corporate income tax or the AMT. We are party to an intercompany income tax allocation agreement with FE and its subsidiaries and, accordingly, may be allocated a share of any corporate AMT paid by the FE consolidated tax group. On February 18, 2026, the U.S. Treasury and IRS issued guidance that allows certain tax repair deductions in computing corporate AMT. As a result of this guidance, the FE consolidated tax group reversed corporate AMT carryforwards in the first quarter of 2026 related to corporate AMT incurred and paid in prior tax years, including approximately $1.4 million for JCP&L, none of which had any impact on the effective tax rate. While the FE consolidated tax group remains subject to the corporate AMT, we and FE expect that this allowance for certain tax repair deductions will reduce future

 

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corporate AMT liability. The regulatory treatment of the IRA of 2022 may also be subject to regulation by FERC and/or applicable state regulatory authorities. Any adverse development in the IRA of 2022, including additional guidance from the U.S. Treasury and/or the IRS or unfavorable regulatory treatment, could negatively impact our cash flows, results of operations and financial condition.

We may recognize impairments of recorded goodwill, which would result in write-offs of the impaired amounts and could have an adverse effect on our results of operations.

We had approximately $1.8 billion of goodwill on our balance sheet as of March 31, 2026. Goodwill is tested for impairment annually, as of July 31, or whenever events or circumstances indicate impairment may have occurred. We are unable to predict the actual timing and amounts of any impairments in future years, which would depend on many factors, including interest rates, sector market performance, our capital structure, results of future rate proceedings, operating and capital expenditure requirements, the value of comparable acquisitions, environmental regulations and other factors.

Risks Associated with the New Notes

There are limited covenants and protections in the Indenture; consequently, we and our subsidiaries may be able to incur substantially more indebtedness, a portion of which could be secured indebtedness.

While the Indenture (as defined under “Description of the Notes”) contains, and the New Notes will contain, terms intended to provide protection to holders upon the occurrence of certain events, those terms are and will be limited and may not be sufficient to protect your investment in the New Notes. For example, the Indenture does not limit the amount of unsecured indebtedness we may incur; however, the limitation on liens provision of the Indenture does limit the amount of secured indebtedness that we may incur without ratably securing the New Notes. Such secured indebtedness would be senior to the New Notes. The liens that are expressly permitted under that provision of the Indenture are summarized herein under the heading “Description of the Notes—Certain Covenants—Limitation on Liens.”

The New Notes are not secured by any liens on our assets; consequently, any future secured creditors will be entitled to remedies that would give them priority over the holders of the New Notes to collect amounts due to them.

The New Notes will not be secured by any liens on our assets. Because the New Notes are our unsecured obligations, the right of repayment of the holders of the New Notes will be effectively subordinated to any future secured creditors to the extent of the value of the collateral securing such secured debt if we enter into bankruptcy, liquidation, reorganization or other winding up proceedings or if an event of default occurs under any such future secured indebtedness.

We have a significant amount of indebtedness, which could negatively impact our business and our ability to make payments on the New Notes.

We have, and will continue to have, a significant amount of indebtedness. As of March 31, 2026 we had approximately $3.389 billion of total indebtedness, including short-term borrowings and currently payable long-term debt, outstanding.

Our indebtedness places significant demands on our cash resources, which could:

 

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make it difficult to satisfy our financial obligations, including our obligation to make payments on the New Notes;

 

•

require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, including the New Notes, reducing the amount of our cash flow available for working capital, capital expenditures and other general corporate purposes;

 

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•

limit our ability to obtain additional financing to operate our business;

 

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limit our financial flexibility in planning for and reacting to business and industry changes;

 

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impact the evaluation of our creditworthiness by counterparties to agreements; and

 

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increase our vulnerability to general adverse economic and industry conditions, including changes in interest rates and volatility in commodity prices.

Furthermore, we may incur or assume additional debt in the future. If new debt is added to our current debt levels, the related risks that we may face could increase significantly.

Our ability to service our debt and meet our cash requirements depends on many factors, some of which are beyond our control.

Our ability to satisfy our obligations, including the Senior Notes, will depend on our future results of operations, cash flows and financial condition, which will be subject, in part, to factors beyond our control, including interest rates, commodity prices, general economic conditions, environmental regulations, financial and business conditions and regulatory actions. If we are unable to generate sufficient operating cash flows to service our debt, we may be required to:

 

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refinance all or a portion of our debt;

 

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obtain additional financing;

 

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sell all of our assets or operations;

 

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reduce or delay capital expenditures and acquisitions;

 

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curtail or eliminate certain activities; or

 

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revise or delay our strategic plans.

If we are required to take any of these actions, it could have a material adverse effect on us. In addition, we cannot assure you that we would be able to take any of these actions, that these actions would enable us to continue to satisfy our capital requirements and financial and other contractual obligations or that these actions will be permitted under the terms of our various debt instruments.

Our credit ratings may not reflect all risks of your investment in the Notes.

A credit rating is not a recommendation to buy, sell or hold any security. Each rating agency’s credit rating should be evaluated independently of any other rating agency’s credit rating. Actual or anticipated changes in, or downgrades, suspensions or withdrawals of, our credit ratings, including any announcement that our credit ratings are under further review for a downgrade, could increase our borrowing costs.

Your ability to resell the New Notes may be limited by a number of factors; prices for the New Notes may be volatile.

There currently is no established market, and no active or liquid trading market may develop for the New Notes. We do not intend to apply for listing of the New Notes on any securities exchange or on any automated dealer quotation system. If a market for the New Notes were to develop, the New Notes could trade at prices that may be higher or lower than reflected by their initial offering price, depending on many factors, including among other things:

 

•

changes in the overall market for debt securities;

 

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changes in our financial performance or prospects;

 

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•

the prospects for companies in our industry generally;

 

•

the number of holders of the New Notes;

 

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the interest of securities dealers in making a market for the New Notes; and

 

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prevailing interest rates.

Risks Associated with the Exchange Offer

If you fail to exchange your Outstanding Notes, the existing transfer restrictions will remain in effect and the market value of your Outstanding Notes may be adversely affected because they may be more difficult to sell.

If you fail to exchange your Outstanding Notes for New Notes under the exchange offer, then you will continue to be subject to the existing transfer restrictions on the Outstanding Notes. In general, the Outstanding Notes may not be offered or sold unless they are registered or exempt from registration under the Securities Act and applicable state securities laws. Except in connection with this exchange offer or as required by the Registration Rights Agreement, we do not intend to register resales of the Outstanding Notes.

If you do not exchange your Outstanding Notes for New Notes in the exchange offer, you will continue to be subject to the restrictions on transfer of your Outstanding Notes described in the legend on the certificates for your Outstanding Notes. In general, you may only offer or sell the Outstanding Notes if they are registered under the Securities Act and applicable state securities laws, or offered and sold under an exemption from these requirements. Except in connection with this exchange offer or as required by the Registration Rights Agreement, we do not intend to register resales of the Outstanding Notes under the Securities Act. For further information regarding the consequences of not tendering your Outstanding Notes in the exchange offer, please read “The Exchange Offer—Consequences of Failure to Exchange.”

The exchange offer may not be completed.

We are not obligated to complete the exchange offer under certain circumstances. See “The Exchange Offer—Conditions to the Exchange Offer.” Even if the exchange offer is completed, it may not be completed on the schedule described in this prospectus. Accordingly, holders participating in the exchange offer may have to wait longer than expected to receive their New Notes, during which time those holders of Outstanding Notes will not be able to effect transfers of their Outstanding Notes tendered in the exchange offer.

If you do not properly tender your Outstanding Notes, you will continue to hold unregistered notes and your ability to transfer your Outstanding Notes will be adversely affected.

We will only issue New Notes in exchange for Outstanding Notes that you timely and properly tender. Therefore, you should allow sufficient time to ensure timely delivery of the Outstanding Notes, and you should carefully follow the instructions on how to tender your Outstanding Notes. Neither we nor the exchange agent is required to tell you of any defects or irregularities with respect to your tender of Outstanding Notes. See “The Exchange Offer—Procedures for Tendering Outstanding Notes through Brokers and Banks” and “Description of the Notes.”

If you do not exchange your Outstanding Notes for New Notes in the exchange offer, you will continue to be subject to the restrictions on transfer of your Outstanding Notes described in the legend on the certificates for your Outstanding Notes. In general, you may only offer or sell the Outstanding Notes if they are registered under the Securities Act and applicable state securities laws, or offered and sold under an exemption from these requirements. Except in connection with this exchange offer or as required by the Registration Rights Agreement, we do not intend to register resales of the Outstanding Notes under the Securities Act. For further information regarding the consequences of not tendering your Outstanding Notes in the exchange offer, see “The Exchange Offer—Consequences of Failure to Exchange.”

 

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You may be required to deliver prospectuses and comply with other requirements in connection with any resale of the New Notes.

If you tender your Outstanding Notes for the purpose of participating in a distribution of the New Notes, you will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the New Notes. In addition, if you are a broker-dealer that receives New Notes for your own account in exchange for Outstanding Notes that you acquired as a result of market-making activities or any other trading activities, you will be required to acknowledge that you will deliver a prospectus in connection with any resale of such New Notes.

 

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USE OF PROCEEDS

The exchange offer is intended to satisfy our obligations under the Registration Rights Agreement that we entered into in connection with the private offerings of the Outstanding Notes. We will not receive any cash proceeds from the issuance of New Notes in the exchange offer. In consideration for issuing the New Notes, we will receive Outstanding Notes in like principal amount. The Outstanding Notes surrendered in exchange for the New Notes will be retired and cancelled.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the financial statements and related notes included elsewhere in this prospectus. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” “our,” and “the Company” are intended to mean the business and operations of Jersey Central Power & Light Company.

JCP&L is a wholly owned subsidiary of FE. JCP&L conducts business in New Jersey by providing regulated electric transmission and distribution services in northern, western and east central New Jersey, representing $5.1 billion in rate base as of December 31, 2025. JCP&L is subject to regulation by the NJBPU and FERC.

JCP&L distributes electricity to approximately 1.2 million customers in New Jersey across its distribution footprint. JCP&L owns and operates transmission infrastructure that is used to transmit electricity, with revenues derived from forward-looking formula rates, pursuant to which the revenue requirement is updated annually based on a projected rate base and projected costs, which are subject to an annual true-up based on actual rate base and costs. JCP&L procures electric supply to serve its BGS customers through a statewide auction process approved by the NJBPU. JCP&L’s results reflect the costs of securing and delivering electric generation to customers and net transmission expenses related to the delivery of electricity on JCP&L’s transmission facilities, including the deferral and amortization of certain costs.

As discussed, in Note 1., “Organization and Basis of Presentation,” of the Combined Notes to the Audited Financial Statements of the Registrants and the Combined Notes to the Unaudited Interim Financial Statements of the Registrants, during the fourth quarter of 2025, JCP&L identified an error in the recording of certain expenses for smart meter cost of removal associated with the deployment of its AMI program, resulting in an understatement of expense on the Statements of Income and Comprehensive Income and Regulatory assets/liabilities on the Balance Sheets since 2023. JCP&L evaluated the error, and the specific impact on each affected prior period was not material, however, as a result of the cumulative impact, JCP&L determined it should revise previously issued financial statements to correct the error and in doing so also corrected other immaterial errors. As such, JCP&L has revised the previously issued interim Results of Operations for the three months ended March 31, 2025.

As of January 1, 2026, JCP&L made changes in how management evaluates operating performance and allocates resources. As a result of these changes, JCP&L reassessed its operating segments and determined that its operations are now managed as a single integrated business. Historically, JCP&L reported two operating segments, Distribution and Transmission. Accordingly, JCP&L changed its external segment reporting to present its results, including comparative periods, as a single reportable segment and reclassified prior periods for comparability. There are no changes to JCP&L’s significant expenses, measure of profit or loss, or other segment items. Similarly, JCP&L’s goodwill reporting units were also changed to a single reporting unit as of January 1, 2026. Prior period segment information has been recast, where applicable, to conform to the current presentation. See Note 18., “Subsequent Events (Unaudited)” of the Audited Financial Statements of the Registrants, for disclosures representing subsequent events since the original issuance of JCP&L’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 18, 2026.

 

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Summary of Results of Operations — First Three Months of 2026 Compared with First Three Months of 2025

JCP&L financial results for the three months ended March 31, 2026 and 2025, were as follows:

 

		For the Three Months Ended March 31,
(In millions)		2026				2025(1)				Change
Revenues		$	666			$	566			$	100
Operating Expenses:
Purchased power			378				298				80
Other operating expenses			224				145				79
Provision for depreciation			61				65				(4	)
Deferral of regulatory assets, net			(106	)			(20	)			(86	)
General taxes			7				6				1
Total operating expenses			564				494				70
Other Income (Expense):
Miscellaneous income, net			15				12				3
Interest expense - other			(39	)			(29	)			(10	)
Interest expense - affiliates			(2	)			(1	)			(1	)
Capitalized financing costs			12				9				3
Total other expense			(14	)			(9	)			(5	)
Income taxes			22				16				6
Net Income		$	66			$	47			$	19

 

(1)	Previously issued 2025 JCP&L amounts have been revised due to the correction of immaterial errors as discussed in Note 1., “Organization and Basis of Presentation,” of the Combined Notes to Unaudited Interim Financial Statements of the Registrants.

Distribution services by customer class are summarized in the following table:

 

		For the Three Months Ended March 31,
(In thousands)		Actual												Weather-Adjusted
Electric Distribution MWh Deliveries		2026				2025				Increase				2026				2025				Increase
Residential			2,437				2,307				5.6	%			2,340				2,323				0.7	%
Commercial(1)			2,123				2,019				5.2	%			2,112				2,038				3.6	%
Industrial			435				434				0.2	%			435				434				0.2	%
Total Electric Distribution MWh Deliveries			4,995				4,760				4.9	%			4,887				4,795				1.9	%

 

(1)	Includes street lighting.

Distribution deliveries for each customer class were impacted by higher customer usage and demand. Heating degree days in the first three months of 2026 were 7% above the same period of 2025 and 6% above normal.

JCP&L Results of Operations

Net income increased $19 million in the first three months of 2026, as compared to the same period of 2025, primarily due to the absence of severance and related costs in the first quarter of 2025, lower other operating expenses, higher transmission revenues from regulated capital investments that increased rate base, higher revenues associated with certain investment programs, and increased customer demand.

 

38

Revenues

The $100 million increase in total revenues resulted from the following sources:

 

		For the Three Months Ended March 31,
Revenues by Type of Service		2026				2025				Increase
		(In millions)
Distribution services		$	229			$	223			$	6
Generation sales:
Retail			360				277				83
Wholesale			2				1				1
Total generation sales			362				278				84
Transmission			71				61				10
Other			4				4				—
Total Revenues		$	666			$	566			$	100

Distribution services revenue increased $6 million during the first three months of 2026, as compared to the same period of 2025, primarily due to colder weather temperatures that increased customer usage and demand, and higher rider revenues associated with certain regulated investment programs.

Generation sales revenues increased $84 million during the first three months of 2026, as compared to the same period of 2025, primarily due to higher non-shopping generation auction rates and higher sales volumes.

Transmission revenues increased $10 million during the first three months of 2026, as compared to the same period of 2025, primarily due to higher recovery of transmission operating expenses and higher rate base from regulated investment programs.

Operating Expenses

Total operating expenses increased by $70 million primarily due to:

 

•

Purchased power costs, which have no material impact to earnings, increased by $80 million during the first three months of 2026, as compared to the same period of 2025, primarily due to higher sales volumes and unit costs.

 

•

Other operating expenses increased $79 million in the first three months of 2026, as compared to the same period of 2025, primarily due to:

 

•

Higher storm restoration expenses of $81 million, of which $74 were deferred for future recovery;

 

•

Higher energy efficiency and other state mandated program costs of $10 million, which were deferred for future recovery, resulting in no material impact to earnings; and

 

•

Higher formula rate transmission operating and maintenance expenses of $4 million, which have no material impact to earnings.

The increase was partially offset by:

 

•

The absence of $4 million of severance and related costs associated with FirstEnergy’s organizational changes announced in the first quarter of 2025; and

 

•

Lower other operating expenses of $11 million, primarily due to lower other employee benefits and increased construction support and lower maintenance work.

 

39

•

Depreciation expense decreased $4 million in the first three months of 2026, as compared to the same period of 2025, primarily due to the accelerated amortization of legacy smart meters in New Jersey, which concluded in December 2025, partially offset by a higher asset base.

 

•

Deferral of regulatory assets, net increased $86 million in the first three months of 2026, as compared to the same period of 2025, primarily due to a $74 million increase from higher deferral of storm restoration costs, and $12 million related to net increases in other deferrals.

Other Expenses

Total other expenses increased $5 million in the first three months of 2026, as compared to the same period of 2025, primarily due to higher interest expense as a result of new debt issued since the first quarter of 2025, partially offset by higher capitalized interest and higher pension & OPEB non-service credits.

Income Taxes

The effective tax rate for the three months ended March 31, 2026 and 2025, was 25.0% and 25.4%, respectively.

JCP&L Summary of Results of Operations — 2025 Compared with 2024

Financial results for JCP&L for the years ended December 31, 2025 and 2024, were as follows:

 

		For the Years Ended December 31,
(In millions)		2025				2024(1)				Change
Revenues		$	2,638			$	2,315			$	323
Operating Expenses:
Purchased power			1,402				1,155				247
Other operating expenses			680				654				26
Provision for depreciation			263				249				14
Deferral of regulatory assets, net			(134	)			(124	)			(10	)
General taxes			23				21				2
Total operating expenses			2,234				1,955				279
Other Income (Expense):
Miscellaneous income, net			49				34				15
Pension and OPEB mark-to-market adjustment			55				24				31
Interest expense - non-affiliates			(132	)			(97	)			(35	)
Interest expense - affiliates			(6	)			(20	)			14
Capitalized financing costs			43				28				15
Total other income (expense)			9				(31	)			40
Income taxes			107				87				20
Net Income		$	306			$	242			$	64

 

(1)	Previously issued 2024 JCP&L amounts have been revised due to the correction of immaterial errors as discussed in Note 1., “Organization and Basis of Presentation,” of the Combined Notes to Audited Financial Statements of the Registrants.

JCP&L’s Summary of Results of Operations - 2025 compared with 2024

Net income increased $64 million in 2025, as compared to 2024, primarily due to higher revenues from the implementation of the base rate case in February 2024, the absence of a $53 million charge in connection with the base rate case settlement agreement, as further discussed below, higher customer usage and demand, higher

 

40

pension and OPEB mark-to-market adjustments, higher rider revenues associated with regulated investment programs, higher revenues from regulated transmission investments that increased rate base, and the absence of a non-recoverable charge related to an abandoned transmission project in the second quarter of 2024, partially offset by higher operating expenses.

Revenues

The $323 million increase in total revenues resulted from the following sources:

 

		For the Years Ended December 31,
Revenues by Type of Service		2025				2024				Increase / (Decrease)
		(In millions)
Distribution services		$	975			$	953			$	22
Generation sales:
Retail			1,380				1,092				288
Wholesale			6				6				—
Total generation sales			1,386				1,098				288
Transmission			259				242				17
Other			18				22				(4	)
Total Revenues		$	2,638			$	2,315			$	323

Distribution services revenue increased $22 million in 2025, as compared to 2024, primarily due to higher revenues from the implementation of the base rate case in February 2024, higher customer usage and demand, and higher rider revenues associated with certain regulated investment programs, partially offset by lower network transmission revenues, which have no material impact to earnings.

Generation sales revenues increased $288 million in 2025, as compared to 2024, primarily due to higher non-shopping generation auction rates. Retail generation sales have no material impact to earnings.

Transmission revenue increased $17 million in 2025, as compared to 2024, primarily due to higher revenues from regulated transmission investments that increased rate base and higher recovery of transmission operating expenses.

Operating Expenses

Total operating expenses increased $279 million primarily due to:

 

•

Purchased power costs, which have no material impact to earnings, increased $247 million in 2025, as compared to 2024, primarily due to higher unit costs.

 

•

Other operating expenses increased $26 million in 2025, as compared to 2024, primarily due to:

 

•

Higher uncollectible expenses of $4 million, which were deferred for future recovery;

 

•

Higher storm restoration expenses of $14 million, which were mostly deferred for future recovery.

 

•

Higher energy efficiency and other state mandated program costs of $39 million, which were deferred for future recovery, resulting in no material impact to earnings;

 

•

Higher formula rate transmission operating and maintenance expenses of $3 million; which have no material impact to earnings; and

 

41

•

Higher other operating expenses of $51 million, primarily due to severance and related costs associated with FirstEnergy’s organizational changes announced in the first quarter of 2025, higher employee benefit costs, and higher material and contractor spend, partially offset by increased construction support and lower maintenance work.

The increase was partially offset by:

 

•

The absence of a $53 million pre-tax charge at JCP&L in the first quarter 2024 associated with certain corporate support costs recorded to capital accounts from the FERC Audit that were determined, as a result of the base rate case settlement agreement, to be disallowed from future recovery;

 

•

Lower network transmission expenses of $23 million, which have no material impact to earnings, and

 

•

The absence of a $9 million impairment related to the Akron general office in the third quarter of 2024.

 

•

Depreciation expense increased $14 million in 2025, as compared to 2024, primarily due to a higher asset base.

 

•

Deferral of regulatory assets, net increased $10 million in 2025, as compared to 2024, primarily due to a $27 million increase from higher deferral of storm related expenses, including the absence of the approval in the first quarter of 2024 to recover $11 million in previously incurred storm costs and a $6 million net increase in other deferrals, partially offset by a $20 million decrease due to the absence of the amortization of a regulatory liability related to customer refunds in 2024 and a $3 million net decrease from lower generation and transmission deferrals.

Other Expenses

Total other expenses decreased $40 million in 2025, as compared to 2024, primarily due to higher pension and OPEB mark-to-market adjustments, the absence of a non-recoverable charge related to an abandoned transmission project in the second quarter of 2024, lower interest on short-term borrowings and higher capitalized interest, partially offset by long-term debt issuances since 2024.

Income Taxes

JCP&L’s effective tax rate was 25.9% and 26.4% for 2025 and 2024, respectively. The decrease in the effective tax rate was primarily due to an increase in the tax benefit from AFUDC equity flow-through.

Summary of Results of Operations — 2024 Compared with 2023

Financial results for JCP&L for the years ended December 31, 2024 and 2023, were as follows:

 

		For the Years Ended December 31,
(In millions)		2024(1)				2023(1)				Change
Revenues:		$	2,315			$	2,027			$	288
Operating Expenses:
Purchased power			1,155				1,037				118
Other operating expenses			654				555				99
Provision for depreciation			249				231				18
Deferral of regulatory assets, net			(124	)			(67	)			(57	)
General taxes			21				21				—
Total operating expenses			1,955				1,777				178

 

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		For the Years Ended December 31,
(In millions)		2024(1)				2023(1)				Change
Other Income (Expense):
Miscellaneous income, net			34				42				(8	)
Pension and OPEB mark-to-market adjustment			24				(29	)			53
Interest expense - other			(97	)			(110	)			13
Interest expense - affiliates			(20	)			(14	)			(6	)
Capitalized financing costs			28				19				9
Total other expense			(31	)			(92	)			61
Income taxes			87				33				54
Net Income		$	242			$	125			$	117

 

(1)	Previously issued 2024 and 2023 JCP&L amounts have been revised due to the correction of immaterial errors as discussed in Note 1., “Organization and Basis of Presentation,” of the Combined Notes to Audited Financial Statements of the Registrants.

JCP&L’s Summary of Results of Operations - 2024 compared with 2023

Net income increased $117 million in 2024, as compared to 2023, as described below.

Revenues

The $288 million increase in total revenues resulted from the following sources:

 

		For the Years Ended December 31,
Revenues by Type of Service		2024				2023				Increase
		(In millions)
Distribution services		$	953			$	872			$	81
Generation sales:
Retail			1,092				925				167
Wholesale			6				5				1
Total generation sales			1,098				930				168
Transmission			242				204				38
Other			22				21				1
Total Revenues		$	2,315			$	2,027			$	288

Distribution services revenues increased $81 million in 2024, as compared to 2023, primarily due to higher revenues from the implementation of the base rate case in February 2024, higher customer usage as a result of the weather, and higher weather-adjusted customer usage and demand and higher rider revenues associated with certain regulated investment programs, partially offset by lower network transmission revenues, which have no material impact to earnings.

Generation sales revenues increased $168 million in 2024, as compared to 2023, primarily due to higher retail sales volumes and non-shopping generation auction rates. Retail generation sales have no material impact to earnings.

Transmission revenue increased $38 million, primarily due to a higher rate base from regulated investments and recovery of higher transmission operating expenses.

 

43

Operating Expenses

Total operating expenses increased $178 million primarily due to:

 

•

Purchased power costs, which have no material impact to earnings, increased $118 million in 2024, as compared to 2023, primarily due to higher unit costs and sales volumes.

 

•

Other operating expenses increased $99 million in 2024, as compared to 2023, primarily due to:

 

•

A $53 million pre-tax charge at JCP&L in the first quarter 2024 associated with certain corporate support costs recorded to capital accounts from the FERC Audit that were determined, as a result of the base rate case settlement agreement, to be disallowed from future recovery;

 

•

Higher storm restoration expenses of $72 million, of which $59 million was deferred for future recovery;

 

•

A $9 million charge from FESC in connection with its exit from the Akron general office building;

 

•

Higher planned vegetation management costs of $8 million;

 

•

Higher energy efficiency and other state mandated program costs of $8 million, which are deferred for future recovery; and

 

•

Higher uncollectible expenses of $5 million, which were deferred for future recovery, resulting in no impact to earnings.

The increase was partially offset by:

 

•

Lower formula rate transmission operating and maintenance expenses of $4 million; which have no material impact to earnings;

 

•

Lower network transmission expenses of $41 million, which have no material impact to earnings, and

 

•

Lower other operating and maintenance expenses of $11 million, primarily due to lower labor and benefit expenses, including those associated with FirstEnergy’s PEER, as announced in 2023 and separation-related costs.

 

•

Depreciation expense increased $18 million in 2024, as compared to 2023, primarily due to a higher asset base.

 

•

Deferral of regulatory assets, net increased $57 million in 2024, as compared to 2023, primarily due to higher deferral of storm related expenses and net increases in other deferrals, partially offset by lower generation and transmission related deferrals.

Other Expenses

Total other expenses decreased $61 million in 2024, as compared to 2023, primarily due to $49 million in lower pension and OPEB mark-to-market adjustment charges.

Income Taxes

JCP&L’s effective tax rate was 26.6% and 21.2% for 2024 and 2023, respectively. The increase in the effective tax rate was primarily due to the absence of a net discrete tax benefit resulting from the effective settlement of an uncertain tax position in 2023.

 

44

REGULATORY ASSETS AND LIABILITIES

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. JCP&L nets its regulatory assets and liabilities based on federal and state jurisdictions.

Management assesses the probability of recovery of regulatory assets, and settlement of regulatory liabilities, at each balance sheet date and whenever new events occur. Factors that may affect probability relate to changes in the regulatory environment, issuance of a regulatory commission order or passage of new legislation. Upon material changes to these factors, where applicable, JCP&L will record new regulatory assets and liabilities and will assess whether it is probable that currently recorded regulatory assets and liabilities will be recovered or settled in future rates.

The following table provides information about the composition of JCP&L’s net regulatory assets and liabilities as of March 31, 2026 and December 31, 2025, and the changes during the three months ended March 31, 2026:

 

Net Regulatory Assets (Liabilities) by Source - JCP&L		March 31, 2026				December 31, 2025				Change
		(In millions)
Customer payables for future income taxes		$	(390	)		$	(393	)		$	3
Spent nuclear fuel disposal costs			(72	)			(76	)			4
Asset removal costs			(71	)			(87	)			16
Deferred transmission costs			(33	)			(25	)			(8	)
Deferred distribution costs			309				318				(9	)
Storm-related costs			437				367				70
Energy efficiency program costs			374				316				58
New Jersey societal benefit costs			66				80				(14	)
Other			45				15				30
Net Regulatory Assets included on JCP&L’s Balance Sheets		$	665			$	515			$	150

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

Customer payables for future income taxes - Reflects amounts to be recovered or refunded through future rates to pay income taxes that become payable when rate revenue is provided to recover items such as AFUDC equity and depreciation of property, plant and equipment for which deferred income taxes were not recognized for ratemaking purposes, including amounts attributable to federal and state tax rate changes such as the TCJA and Pennsylvania House Bill 1342. These amounts are being amortized over the period in which the related deferred tax assets reverse, which is generally over the expected life of the underlying asset.

Spent nuclear fuel disposal costs - Reflects amounts collected from customers, and the investment income, losses and changes in fair value of the trusts for spent nuclear fuel disposal costs related to former nuclear generation facilities, Oyster Creek and Three Mile Island Unit 1.

Asset removal costs - Primarily represents the rates charged to customers that include a provision for the cost of future activities to remove assets, including obligations for which an ARO has been recognized, that are expected to be incurred at the time of retirement.

Deferred transmission costs - Reflects differences between revenues earned based on actual costs for the formula-rate Transmission Companies and the amounts billed. Also included is the recovery of non-market based costs or fees charged to certain of the Electric Companies by various regulatory bodies including FERC and RTOs, which can include PJM charges and credits for service including, but not limited to, procuring transmission services and transmission enhancement.

 

45

Deferred distribution costs - Primarily relates to the Ohio Companies’ deferral of certain distribution-related expenses, including interest (amortized through 2034) and JCP&L’s AMI program costs.

Storm-related costs - Relates to the deferral of storm costs, which vary by jurisdiction. Approximately $659 million and $80 million for FirstEnergy and JCP&L, respectively, are currently being recovered through rates as of March 31, 2026. Approximately $335 million and $73 million for FirstEnergy and JCP&L, respectively, and were currently being recovered through rates as of December 31, 2025.

Energy efficiency program costs - Relates to the recovery of costs in excess of revenues associated with energy efficiency programs including New Jersey energy efficiency and renewable energy programs, FE PA’s Energy Efficiency and Conservation programs, the Ohio Companies’ Demand Side Management and Energy Efficiency Rider, and PE’s EmPOWER Maryland Surcharge. Investments in certain of these energy efficiency programs earn a long-term return.

New Jersey societal benefit costs - Primarily relates to regulatory assets associated with MGP remediation, universal service and lifeline funds, and the New Jersey Clean Energy Program.

The following table provides information about the composition of JCP&L’s net regulatory assets that do not earn a current return as of March 31, 2026 and December 31, 2025, of which approximately $83 million and $76 million, respectively, are currently being recovered through rates over varying periods, through 2068, depending on the nature of the deferral:

 

Regulatory Assets by Source Not Earning a Current Return - JCP&L		March 31, 2026				December 31, 2025				Change
		(In millions)
Deferred distribution costs		$	130			$	147			$	(17	)
Storm-related costs			437				367				70
Other			24				24				—
JCP&L Regulatory Assets Not Earning a Current Return		$	591			$	538			$	53

The following table provides information about the composition of JCP&L’s net regulatory assets and liabilities as of December 31, 2025 and 2024, and the changes during the year 2025:

 

		As of December 31,
Net Regulatory Assets (Liabilities) by Source - JCP&L		2025				2024				Change
		(In millions)
Customer payables for future income taxes		$	(393	)		$	(410	)		$	17
Spent nuclear fuel disposal costs			(76	)			(72	)			(4	)
Asset removal costs(1)			(87	)			(101	)			14
Deferred transmission costs			(25	)			(3	)			(22	)
Deferred distribution costs			318				206				112
Storm-related costs			367				310				57
Energy efficiency program costs			316				208				108
New Jersey societal benefit costs			80				87				(7	)
Other			15				22				(7	)
Net Regulatory Assets included on JCP&L’s Balance Sheets		$	515			$	247			$	268

 

(1)	Previously issued 2024 JCP&L amounts have been revised due to the correction of immaterial errors as discussed in Note 1., “Organization and Basis of Presentation,” of the Combined Notes to Financial Statements of the Registrants.

 

46

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

Customer payables for future income taxes - Reflects amounts to be recovered or refunded through future rates to pay income taxes that become payable when rate revenue is provided to recover items such as AFUDC equity and depreciation of PP&E for which deferred income taxes were not recognized for ratemaking purposes, including amounts attributable to federal and state tax rate changes such as the TCJA and Pennsylvania House Bill 1342. These amounts are being amortized over the period in which the related deferred tax assets reverse, which is generally over the expected life of the underlying asset.

Spent nuclear fuel disposal costs - Reflects amounts collected from customers, and the investment income, losses and changes in fair value of the trusts for spent nuclear fuel disposal costs related to former nuclear generation facilities, Oyster Creek and Three Mile Island Unit 1.

Asset removal costs - Primarily represents the rates charged to customers that include a provision for the cost of future activities to remove assets, including obligations for which an ARO has been recognized, that are expected to be incurred at the time of retirement.

Deferred transmission costs - Reflects differences between revenues earned based on actual costs for the formula-rate Transmission Companies and the amounts billed. Also included is the recovery of non-market based costs or fees charged to certain of the Electric Companies by various regulatory bodies including FERC and RTOs, which can include PJM charges and credits for service including, but not limited to, procuring transmission services and transmission enhancement.

Deferred distribution costs - Primarily relates to New Jersey temporary residential bill credits (amortized through February 2026), the Ohio Companies’ deferral of certain distribution-related expenses, including interest (amortized through 2034) and JCP&L’s AMI program costs.

Storm-related costs - Relates to the deferral of storm costs, which vary by jurisdiction. Approximately $335 million and $73 million for FE and JCP&L, respectively, are currently being recovered through rates as of December 31, 2025. Approximately $402 million and $41 million for FE and JCP&L, respectively, are currently being recovered through rates as of December 31, 2024.

Energy efficiency program costs - Relates to the recovery of costs in excess of revenues associated with energy efficiency programs including New Jersey energy efficiency and renewable energy programs, FE PA’s Energy Efficiency and Conservation programs, the Ohio Companies’ Demand Side Management and Energy Efficiency Rider, and PE’s EmPOWER Maryland Surcharge. Investments in certain of these energy efficiency programs earn a long-term return.

New Jersey societal benefit costs - Primarily relates to regulatory assets associated with MGP remediation, universal service and lifeline funds, and the New Jersey Clean Energy program.

The following table provides information about the composition of JCP&L’s net regulatory assets that do not earn a current return as of December 31, 2025 and 2024, of which approximately $76 million and $45 million, respectively, are currently being recovered through rates over varying periods, through 2068, depending on the nature of the deferral:

 

		As of December 31,
Regulatory Assets by Source Not Earning a Current Return - JCP&L		2025				2024				Change
						(In millions)
Deferred distribution costs		$	147			$	101			$	46
Storm-related costs			367				310				57
Other			24				28				(4	)
JCP&L’s Regulatory Assets Not Earning a Current Return		$	538			$	439			$	99

 

47

CAPITAL RESOURCES AND LIQUIDITY

JCP&L’s business is capital intensive, requiring significant resources to fund operating expenses, construction and other investment expenditures, scheduled debt maturities and interest payments, dividend payments and potential contributions to the pension plan.

JCP&L expects its existing sources of liquidity to remain sufficient to meet its respective anticipated obligations. In addition to internal sources to fund liquidity and capital requirements for the remainder of 2026 and beyond, JCP&L expects 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 JCP&L, to, among other things, fund capital expenditures and other capital-like investments, and refinance short-term and maturing long-term debt, subject to market conditions and other factors.

JCP&L’s capital investments in 2023, 2024, and 2025 are included below:

 

In millions		2023 Actual				2024 Actual				2025 Actual
Capital Investments(1)		$	699			$	958			$	1,246

 

(1)	Includes capital expenditures and capital-like investments that earn a return.

Capital investment forecasts for the years ended 2026, 2027, 2028, 2029, and 2030 for JCP&L are included below:

 

In millions		2026 Forecast				2027 Forecast				2028 Forecast				2029 Forecast				2030 Forecast
Capital Investments Forecast(1)		$	1,325			$	1,295			$	1,375			$	1,385			$	1,490

 

(1)	Includes capital expenditures and capital-like investments that earn a return.

In alignment with FirstEnergy’s strategy to invest in its segments as a fully regulated company, FirstEnergy is focused on maintaining balance sheet strength and flexibility. Specifically, at the regulated businesses, regulatory authority has been obtained for various regulated subsidiaries to issue and/or refinance debt.

Any financing plans by JCP&L, 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 JCP&L to utilize short-term borrowing capacity, which could impact available liquidity. In addition, JCP&L expects to continually evaluate any planned financings, which may result in changes from time to time.

FirstEnergy continues to monitor supply lead times in light of demand increases across the industry, including due to data center usage, and the imposition of tariffs and retaliatory tariffs that have been, and may be, imposed by the U.S. government in response. In addition, ongoing geopolitical conflicts have contributed to volatility in global energy markets and fuel and transportation costs, which may further impact supply availability or pricing. FirstEnergy continues to implement mitigation strategies to address volatility in interest rates, inflation and supply constraints and does not expect any corresponding service disruptions or any material impact on its capital investment plan. However, a prolonged continuation or further increase in demand, sustained or escalating geopolitical tensions, rising fuel costs or the continuation of uncertain or adverse macroeconomic conditions, including inflationary pressures and new or increased existing tariffs, could lead to an increase in supply chain disruptions that could, in turn, have an adverse effect on JCP&L’s results of operations, cash flow and financial condition.

 

48

As of March 31, 2026, JCP&L’s net deficit in working capital (current assets less current liabilities) was approximately $372 million, primarily due to accounts payable, short-term borrowings, accrued interest, and compensation and benefits. JCP&L believes its cash from operations and available liquidity will be sufficient to meet its current working capital needs. See further discussion on cash from operations below.

Short-Term Borrowings / Revolving Credit Facilities

On October 27, 2025, JCP&L entered into an amendment to its $750 million credit facility (as amended on October 27, 2025, the “Amended Credit Facility”) to, among other things: (i) remove the 10 basis point credit spread adjustment from the interest rate calculation; (ii) permit a one-week interest period for any Term Benchmark Advance (as defined under Amended Credit Facility) based upon daily simple SOFR; and (iii) extend the maturity date of the Amended Credit Facility for an additional one-year period from October 18, 2028 to October 18, 2029.

Borrowings under the Amended Credit Facility may be used for working capital and other general corporate purposes. Generally, borrowings under each of the Amended Credit Facility mature on the earlier of 364 days from the date of borrowing or the commitment termination date, as the same may be extended. The Amended Credit Facility contains financial covenants requiring JCP&L to maintain a consolidated debt-to-total-capitalization ratio (as defined under the Amended Credit Facility) of no more than 65%, measured at the end of each fiscal quarter.

The Amended Credit Facility bears interest at fluctuating interest rates, primarily based on SOFR, including term SOFR and daily simple SOFR. JCP&L has not hedged its interest rate exposure with respect to its floating rate debt. Accordingly, JCP&L’s interest expense for any particular period will fluctuate based on SOFR and other variable interest rates. Restricted access to capital markets and/or increased borrowing costs could have an adverse effect on JCP&L’s results of operations, cash flows, financial condition and liquidity.

JCP&L had $76 million and $93 million, $22 million and $462 million of outstanding affiliated and non-affiliated short-term borrowings as of March 31, 2026, December 31, 2025, December 31, 2024 and December 31, 2023, respectively. JCP&L’s available liquidity from external sources as of April 27, 2026, was as follows:

 

Revolving Credit Facilities

Maturity

Commitment

Available Liquidity

(In millions)

JCP&L

October 2029

$

750

$

600

The following table summarizes the limitations on short-term indebtedness applicable to JCP&L under current regulatory approvals and applicable statutory and/or charter limitations as of March 31, 2026:

 

Individual Borrower		Regulatory Debt Limitations				Credit Facility Commitment				Debt-to-Total- Capitalization Ratio
		(In millions)
JCP&L(1)		$	1,500			$	750				39.5	%

 

(1)	Regulatory debt limitations include amounts which may be borrowed under the regulated companies’ money pool.

 

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Subject to JCP&L’s sublimit, the amounts noted below are available for the issuance of LOCs (subject to borrowings drawn under the Amended Credit Facility) expiring up to one year from the date of issuance. The stated amount of outstanding LOCs will count against total commitments available under the Amended Credit Facility and against JCP&L’s borrowing sublimit.

 

Revolving Credit Facility		LOC Availability as of March 31, 2026				LOC Utilized as of March 31, 2026
		(In millions)
JCP&L		$	100			$	—

The Amended Credit Facility does not contain provisions that restrict the ability to borrow or accelerate payment of outstanding advances in the event of any change in credit ratings. Pricing is defined in “pricing grids,” whereby the cost of funds borrowed under the Amended Credit Facility are related to its credit ratings. Additionally, borrowings under the Amended Credit Facility 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 March 31, 2026, JCP&L was in compliance with its debt-to-total-capitalization ratio covenants under the Amended Credit Facility.

FirstEnergy Money Pools

As a regulated money pool participant, JCP&L has the ability to borrow from regulated affiliates and FE to meet its short-term working capital requirements. 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.

 

Average Interest Rates		Regulated Companies’ Money Pool
		2026				2025
For the Three Months Ended March 31,			4.22	%			4.93	%

Long-Term Debt Capacity

JCP&L’s access to capital markets and costs of financing are influenced by the credit ratings of their securities. The following table displays JCP&L’s credit ratings as of April 27, 2026:

 

Corporate Credit Rating

Senior Secured

Senior Unsecured

Outlook/Credit/Watch(1)

S&P

Moody’s

Fitch

S&P

Moody’s

Fitch

S&P

Moody’s

Fitch

S&P

Moody’s

Fitch

BBB+

A3

A-

—

—

—

BBB+

A3

A

S

S

S

 

(1)	S = Stable, P = Positive

The applicable undrawn and drawn margin on the credit facilities are subject to ratings-based pricing grids. The fee paid on the undrawn commitments and on actual borrowings under the Amended Credit Facility is based on JCP&L’s senior unsecured non-credit enhanced debt ratings as determined by S&P and Moody’s.

As of March 31, 2026, JCP&L could incur approximately $6.3 billion of additional debt or incur an approximate $3.4 billion reduction to equity, as defined under the debt to capital covenant, and JCP&L would remain within the limitations of the financial covenant requirements of the Amended Credit Facility.

 

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Cash Requirements and Commitments

JCP&L has certain obligations and commitments to make future payments under contracts.

 

As of December 31, 2025 (Undiscounted):		Total				2026				2027-2028				2029-2030				Thereafter
		(In millions)
Long-term debt(1)		$	3,050			$	—			$	—			$	350			$	2,700
Short-term borrowings			93				93				—				—				—
Interest on long-term debt			1,165				143				286				258				478
Operating leases(2)			95				13				24				16				42
Finance leases(2)			4				2				2				—				—
Committed investments(3)			2,144				518				1,018				608				—
Total		$	6,551			$	769			$	1,330			$	1,232			$	3,220

 

(1)	Excludes unamortized discounts and premiums.

(2)	See Note 7., “Leases,” of the Combined Notes to the Audited Financial Statements of the Registrants.

(3)	Amounts represent committed capital expenditures and other capital-like investments that earn a return.

Excluded from the table above are estimates for the cash outlays from power purchase contracts entered into by JCP&L and under which it procures the power supply necessary to provide generation service to its customers who do not choose an alternative supplier. Although actual amounts will be determined by future customer behavior, consumption levels and power prices, management currently estimates these cash outlays will be approximately $4.8 billion ($1.5 billion at JCP&L) in 2026.

The table above also excludes AROs, reserves for litigation, injuries and damages and environmental remediation since the amount and timing of the cash payments are uncertain. The tables also exclude accumulated deferred income taxes since cash payments for income taxes are determined based primarily on taxable income for each applicable fiscal year and/or the application of the corporate AMT which, as further discussed below, is uncertain and subject to the issuance of future U.S. Treasury regulations.

FirstEnergy’s pension funding policy is based on actuarial computations using the projected unit credit method. FirstEnergy does not currently expect to have a required contribution to the pension plan until 2027, which based on various assumptions, including an expected rate of return on assets of 8.0% for 2026, is expected to be approximately $250 million. However, FirstEnergy may elect to contribute to the pension plan voluntarily. JCP&L is not expected to make a contribution.

Changes in Cash Position

As of March 31, 2026, December 31, 2025, 2024, and 2023, JCP&L had no cash and cash equivalents or restricted cash on the Balance Sheets.

The following table summarizes the major classes of cash flow items for the three months ended March 31, 2026 and 2025:

 

		For the Three Months Ended March 31,
(In millions)		2026				2025				Change
Net cash provided from operating activities		$	57			$	205			$	(148	)
Net cash used for investing activities			(327	)			(226	)			(101	)
Net cash provided from financing activities			270				21				249
Net change in cash and cash equivalents			—				—				—
Cash and cash equivalents at beginning of period			—				—				—
Cash and cash equivalents at end of period		$	—			$	—			$	—

 

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Cash Flows From Operating Activities

Net cash provided from operating activities during the three months ended March 31, 2026 and 2025 were $57 million and $205 million, respectively.

The decrease in cash provided from operating activities in 2026, compared to the same period of 2025, is primarily due to:

 

•

Higher storm restoration costs; and

 

•

Decreased working capital due to the timing of account receivable receipts and accrued payables.

The decrease in cash provided from operating activities was partially offset by:

 

•

Higher return on rate base from regulated transmission investments; and

 

•

Temporary rate credits that were provided to JCP&L residential customers during the third quarter of 2025 that were recovered in the first quarter of 2026.

The following table summarizes the major classes of cash flow items for the years ended December 31, 2025, 2024, and 2023:

 

		For the Years Ended December 31,
(In millions)		2025				2024				2023
Net cash provided from operating activities		$	571			$	609			$	264
Net cash used for investing activities			(1,204	)			(949	)			(690	)
Net cash provided from financing activities			633				340				426
Net change in cash and cash equivalents			—				—				—
Cash and cash equivalents at beginning of period			—				—				—
Cash and cash equivalents at end of period		$	—			$	—			$	—

Net cash provided from operating activities during the years ended December 31, 2025, 2024, and 2023 were $571 million, $609 million, and $264 million, respectively.

The decrease in cash provided from operating activities in 2025 compared to 2024 is primarily due to:

 

•

Temporary rate credits that were provided to JCP&L residential customers during the third quarter of 2025; and

 

•

Higher operating expenses related to severance and related costs associated with FirstEnergy’s organizational changes.

The decrease in cash provided from operating activities in 2025 compared to 2024 was partially offset by:

 

•

Higher revenues from the implementation of the base rate case in New Jersey;

 

•

Increased customer usage and demand; and

 

•

Higher return on rate base from regulated transmission investments.

The increase in cash provided from operating activities in 2024 compared to 2023 is primarily due to:

 

•

Higher revenues from the implementation of the base rate case in New Jersey;

 

•

Higher return on rate base from regulated transmission investments;

 

•

Increased customer usage and demand;

 

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•

The return of cash collateral in 2024 that was previously posted with PJM, which was replaced with issuances of letters of credit;

 

•

The absence of cash collateral returned to certain generation suppliers that serve shopping customers during 2023 that was previously received as a result of changes in power prices; and

 

•

An increase in cash receipts from the utilization of federal net operating loss (“NOL”) carryforwards by other affiliates under the intercompany income tax sharing agreement, as well as the deferral of income taxes related to activity of book regulatory assets and liabilities.

Cash Flows From Investing Activities

Net cash used for investing activities in the first three months of 2026 principally represented cash used for capital investments. The following table summarizes investing activities for the first three months of 2026 and 2025:

 

		For the Three Months Ended March 31,
Cash From Investing Activities		2026				2025				Change
		(In millions)
Capital investments		$	(304	)		$	(206	)		$	(98	)
Sales of investment securities held in trusts			20				27				(7	)
Purchases of investment securities held in trusts			(23	)			(30	)			7
Asset removal costs			(19	)			(17	)			(2	)
Other			(1	)			—				(1	)
Net cash used for investing activities		$	(327	)		$	(226	)		$	(101	)

Net cash used for investing activities for the first three months of 2026 increased $101 million, compared to the same period of 2025, primarily due to capital investments.

Net cash used for investing activities in 2025 principally represented cash used for capital investments. The following table summarizes investing activities for the years ended December 31, 2025, 2024, and 2023:

 

		For the Years Ended December 31,
Cash From Investing Activities		2025				2024				2023
		(In millions)
Capital investments		$	(1,105	)		$	(879	)		$	(633	)
Sales of investment securities held in trusts			102				121				38
Purchases of investment securities held in trusts			(114	)			(134	)			(50	)
Asset removal costs			(84	)			(57	)			(45	)
Other			(3	)			—				—
Net cash used for investing activities		$	(1,204	)		$	(949	)		$	(690	)

Net cash used for investing activities during 2025 increased $255 million, as compared to 2024, primarily due to higher capital investments.

Net cash used for investing activities during 2024 increased $259 million, as compared to 2023, primarily due to higher capital investments.

 

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