Greetings and welcome to the FirstEnergy Corp’s Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Irene Prezelj, Vice President of Investor Relations for FirstEnergy Corp. Thank you, Ms. Prezelj, you may begin.

Thank you. Welcome to our fourth quarter and full year earnings call. Today, we will make various forward-looking statements regarding revenues, earnings, performance, strategies, prospects and other matters. These statements are based on current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from those indicated by these statements can be found on the Investors section of our website under the Earnings Information link and in our SEC filings. We will also discuss certain non-GAAP financial measures, reconciliations between GAAP and non-GAAP financial measures. The presentation that supports today’s discussion and other detailed information about the quarter can be found in the strategic and financial highlights documents on the FirstEnergy Investor Relations website. Participants in today’s call include our President and Acting Chief Executive Officer, Steve Strah; Senior Vice President and Chief Financial Officer, Jon Taylor; and our Executive Director and Independent Board Member, Chris Pappas. We also have several other executives available to join us for the Q&A session. Now I’ll turn the call over to Steve.

Thank you, Irene, and good morning, everyone. Before I get into our results, I wanted to kickoff the call with a few words on a critical area of focus for FirstEnergy. Taking appropriate action to address our recent challenges and fostering a strong culture of compliance, ethics and integrity. We are deeply committed to creating a culture in which compliance is endemic and second nature and where our leaders prioritize and encourage open and transparent communications with all of our stakeholders. This focus is absolutely essential for our success as an organization. Our commitment starts at the top and extends throughout the organization. We are working to ensure that every leader is actively engaged in setting the proper tone and creating an environment where not only our words, but our actions align with our core values and behaviors. We're building a world-class compliance function to underpin this effort, including bringing on Hyun Park as our new Senior Vice President and Chief Legal Officer in January. Hyun is the right person to step into this role at this time and he will be instrumental in driving this cultural shift. We will also be appointing a Chief Ethics and Compliance Officer who will manage a dedicated team of compliance professionals and enhance our efforts to improve our compliance function by shifting from a decentralized to a more centralized model. In addition, we'll be designated compliance ambassadors throughout the company to act as boots on the ground. Ensuring the entire organization understands the critical importance of compliance and what it means for each individual. We are also making significant changes in our approach to political and legislative engagement and advocacy. Our activity in this space will be much more limited than it has been in the past with closer alignment to our strategic goals and with additional oversight and significantly more robust disclosure. With this additional transparency my goal is to make it crystal clear exactly what efforts we support. These efforts together with enhanced policies and procedures will help to bring additional clarity around appropriate behaviors at FirstEnergy and through enhanced communications, training and most importantly our actions. We are dedicated to re-emphasizing that every employee at every level has the responsibility to consistently act in accordance with our core values and behaviors and to speak up if they see inappropriate behavior anywhere in the organization. At the same time we're taking decisive actions to rebuild our reputation and brand and focus on the future. This includes the decisions recently made with respect to Ohio that I'll talk about shortly. And while we don't control the timeline related to the DOJ and SEC we will continue to cooperate fully with these government investigations and remain focused on the matters that we can control. Chris will address a number of actions the Board has underway in a more detailed manner later in this call. But be assured that both management and the board will be relentless and take the steps needed to position our company for long-term success. Now turning to earnings today we reported 2020 GAAP earnings of $1.99 per share and operating earnings of $2.39 per share. On Tuesday, we announced several proactive steps we're taking to resolve a range of regulatory proceedings affecting our Ohio utilities. These include our previously announced agreement with the Ohio Attorney General along with a decision not to seek recovery of lost distribution revenues. This resulted in a charge of $0.15 per share in the fourth quarter. Absent this charge our 2020 operating earnings would have been $2.54 per share well above the midpoint of our most recent guidance range and reflective of our strong performance last year. While this was a difficult decision, we are confident it was the right decision. We believe resolving these matters in a comprehensive manner is a critical step to demonstrate our commitment to transparency and integrity in every aspect of our business while taking steps toward removing uncertainty relating to our current Ohio regulatory matters. And in the interest of providing additional transparency today's investor materials will include more information about regulatory ROEs in each of the states we serve. We remain excited about the significant investment opportunities that will continue to drive solid earnings and growth in the years ahead. When we have further clarity in Ohio and with the ongoing government investigations we intend to resume providing a long-term growth rate that should be consistent with traditional utility growth rates and similar to what we have provided in the past. For now, we are focusing on this year and we have introduced 2021 operating earnings guidance of $2.40 to $2.60 per share. We have made these disclosures early so you would have time to absorb them before this call, because we have a lot of ground to cover today including our solid operational performance last year even in the face of the pandemic. Our strategy for 2021 and beyond including our commitment to building shareholder value and the work we're doing to position the company for the future. Our fundamental performance continues to be excellent. We continued making demonstrable progress on our strategic goals and we had an exceptional year from a safety perspective. Even with about half of our employees working from home and the others adopting new health and safety protocols, the FirstEnergy team has remained laser focused on providing safe and reliable service to our 6 million customers. I am deeply proud of the team's resilience and commitment, especially in light of the turbulence that marked the year. Our results in 2020 reflect our commitment to strong operations as well as the stability provided by our diverse footprint and our wires focused platform. Last year, we also successfully executed our plan to invest $3 billion in our distribution and transmission system as we continued our reliability in grid mod program to benefit customers. We believe a robust long-term organic growth opportunities are well aligned with the focus on electrification and the critical role the grid plays in supporting the transition to a carbon neutral economy. These opportunities and our goals that support them are included in our strategic plan published last month and available on our website. I hope you have taken some time to review it. This updated plan addresses our unwavering commitment to transparency and accountability and identifies bold goals for key areas of our business. These goals are aligned with our core values and behaviors, our regulatory strategy and our commitments to our customers, communities and investors as well as the environmental stewardship. Among these objectives outlined in the plan is our pledge to achieve carbon neutrality by 2050. This ambitious goal reflects our transformation to a regulated electric utility and our responsibility to help create a sustainable energy future. The strategic plan also addresses our continued commitment to build a more diverse and inclusive workplace. We've had a D&I focused KPI for three years now and we are taking even more aggressive steps to make progress in this area. We're excited to pursue a 30% increase in our number of racially and ethnically underrepresented employees by 2025 both overall and at the supervisor and above level. We believe this will help accelerate our transformation into an innovative, diverse and sustainable company and drive an important shift in our corporate culture. We recently completed our fourth company-wide survey of all employees. Overall, I'm proud to say we scored relatively well on many fronts, but we certainly have more work to do. One area identified for improvement is listening and valuing the opinions of our employees. We want employees to feel empowered to voice their opinion on important issues and my team with guidance and support from the board of directors is addressing this head on. We view this work is central to strengthening our compliance program and a culture of ethics, integrity and accountability. I'd like to explain my approach to driving this change and perhaps we can use the company's safety culture as an analogy. Several years ago, we had concerns that our safety culture was trending in the wrong direction. Management led a significant effort with our employees to put in place new programs and training and to consistently demonstrate that safety is and will always be an unwavering core value. These efforts ultimately instituted a cultural shift in how we all understood the critical importance of safety. We want that very same cultural shift to occur as it relates to compliance and ethics and we want our employees to know that we value and welcome their opinions. As we look ahead, I feel confident in our path forward. We have a strong foundation. Our fundamentals are solid and our strategies are proven. And we are building on that with the relentless focus on making FirstEnergy a better company as we work to rebuild trust, work to achieve financial results and deliver for our customers and investors. We recognize the changes won't happen overnight. They happen over time just like the evolution in our safety culture I spoke about earlier. I'm confident we will emerge a stronger, better FirstEnergy. Now, I'll turn it over to Chris Pappas who can address the specific and significant actions that the board and management are taking to address the current challenges and set FirstEnergy on the right path for a successful future.

Thank you, Steve. First, I'd like to reiterate the board's strong support of Steve and recognize the hard work he and the rest of the team are doing. We commend their willingness to learn from the past and their absolute commitment to take this company forward on a new path all while executing the company's strategy and keeping operations and financial results on solid footing. The board and management team are focused on a critical objective to move forward from the past actions of certain former executives and to take the steps necessary to improve the tone at the top, culture of ethics and integrity and the way we do business. Steve talked about a lot of the important work that is being driven by the new management team. Likewise the board is committed to strengthening every part of FirstEnergy’s culture and taking the necessary steps to reestablish credibility. Together, we have made much progress on the issues that confronted the company several months ago. And at the same time we recognized there is more work to do. I'd like to recap some of the steps that the board has been actively engaged in to drive improvements in our culture of compliance. First the board promptly put in place an independent committee with external counsel to oversee the internal investigation and to monitor the status of the various regulatory and legal matters facing the company. The independent committee which currently is made up of the entire board meets frequently and regularly. The board acted swiftly in removal of five executives, name Steve Straw as acting CEO, establish an Executive Director role and expanded the role of the board chair. All to assist management and the board with the dynamics we faced in the first months of the investigation. The board unequivocally endorsed the principle of full cooperation with both the DOJ and the SEC on the matters related to the investigation. And through our own internal investigation led by independent counsel has supported intensive analysis. The board established a compliance oversight subcommittee of the audit committee with independent counsel and leading compliance advisors to analyze and improve the compliance policy and culture at FirstEnergy. Steve mentioned some initial output from this work earlier. In addition the board established a number of working groups to oversee and support various work streams including communications, recruiting and financial flexibility. And to that point, management has initiated a project called FirstEnergy forward a transformational effort to change the way the company does business. The objective of this project is to transform the company for the future, but it will also provide near-term financial flexibility. Jon will discuss this later on the call. We know there is particular interest in the status of the internal investigation. Hopefully, my earlier comments give you a sense of the intensity and the magnitude of the work that has occurred within the company and with the benefit of extensive external independent support. Our internal investigation continues to be thorough and robust and includes assistance from external law firms who are supported by several other consultants. The ongoing investigation has not resulted in any new material items not previously disclosed. In the course of the internal investigation, we did identify certain transactions, which in some instances extended back 10 years or more, including vendor services that were either improperly classified, misallocated to certain of utility or transmission companies or lacked proper supporting documentation. These transactions resulted in amounts collected from customers that were immaterial to FirstEnergy and our utility and transmission companies will be working with the appropriate regulatory agencies to address these amounts. Our internal investigation will also continue to address any due developments in connection with the ongoing DOJ and SEC investigations. More importantly, we are increasing our focus on another critical aspect of our work moving FirstEnergy forward. The fresh perspective of Hyun Park and a new Chief Ethics and Compliance Officer will be invaluable to creating an environment where the entire team is committed to embracing the right behaviors and embedding a strong culture of compliance. To further that effort, we also announced this morning that we have hired John Somerhalder as Vice Chairman of the Board. It is my pleasure to welcome John to the board in his new role. He will also join the executive team on a transitional basis as executive director and act in advisory capacity to support efforts to achieve the company's priorities, restore its reputation and strengthen its overall governance and compliance functions. John is a 40-year industry executive with extensive energy experience in navigating complex challenges and driving strong corporate governance. Bringing John into this full time role means that I will step back from the executive director position, I've held since October and return to my regular duties as an independent board member by April 1. And importantly, we will continue to fully support the management team as it transitions FirstEnergy to the future as a more resilient company. Despite the challenges, the company has faced, FirstEnergy’s operating fundamentals are strong and we have a great platform of assets. Together, we have put in place a robust plan to move forward and to position FirstEnergy as an industry leader; one we know it can be and one that we’ll deliver excellent value to its customers and shareholders. We look forward to working together alongside with management in this effort. Now we'll turn the call over to Jon Taylor for a financial update.

Thanks, Chris, and good morning, everyone. Today I’ll review our financial results and expectations and provide an update on several other financial matters. This morning we reported fourth quarter GAAP earnings of $0.45 per share with operating earnings of $0.32 per share. Our operating results include the charge at our Ohio utilities as Steve mentioned earlier absent this charge our results reflect continued rate based growth related to our transmission and distribution investment programs a favorable mix of customer usage reflecting the impact of our residential customers staying at home and higher expenses mostly associated with the pandemic. Additional fourth quarter data is available in the supporting materials on our website. So in light of our lengthy agenda for this call I'm going to focus on our results for the full year of 2020. As Steve mentioned we reported 2020 GAAP earnings of a $1.99 per share and operating earnings of $2.39 per share which compared to 2019 GAAP results of a $1.70 per share and operating earnings of $2.55 per share. In our distribution business in addition to the $0.15 charge at our Ohio utilities results for 2020 as compared to 2019 reflect the absence of rider DMR in Ohio which was in place for the first half of 2019 and higher operating costs. These were partially offset by higher revenues from increased residential usage as well as earnings from our distribution enhancement programs. Although total weather adjusted sales decreased 2% in 2020. Normal usage from our residential customers increased 5% for the year, which from an earnings perspective more than offset the 6% decrease in commercial and industrial load. While this shift has moderated as a pandemic wears on, we have seen higher weather adjusted residential usage relative to our latest forecast in the 2% to 4% range with flat to slightly higher CNI usage. In our transmission business, approximately $550 million in rate base growth drove stronger results which were partially offset by higher financing costs. The impact of transmission rate true ups in the absence of tax benefits recognized in 2019. And finally at our corporate segment full year 2020 results primarily reflect higher corporate expenses, higher interest costs and a lower consolidated tax rate. Today, we are providing 2021 operating earnings guidance of $2.40 to $2.60 per share and first quarter operating earnings guidance in the range of $0.62 to $0.72 per share. Our expectations for the year include capital investments of up to $3 billion with 100% of the $1.2 billion in transmission investment and approximately 40% of the $1.7 billion in distribution investment being recovered in a formula rate. Our transmission plan includes continue expansion of our Energizing the Future program. In New Jersey, we filed an uncontested settlement agreement with FERC on February 2 in our forward-looking formula rate case. In New Jersey, we found an uncontested settlement agreement with FERC on February 2 in our forward-looking formula rate case. In December, FERC accepted our proposed tariff revisions for the transmission assets of West Penn Power, Mon Power and Potomac Edison as well as the new Keystone Appalachian Transmission Company known as KATCO pending the outcome of this settlement and hearing process. Those entities moved to a forward looking formula rate structure effective January 1st of this year, subject to refund. Other key drivers for 2021 include the impact from the base distribution case at JCP&L, continued investment in our distribution enhancement programs and lower operating costs. We expect these drivers to be partially offset by higher interest expense, which includes close to $0.04 per share associated with the step up on $4 billion of holding company bonds and $0.05 per share associated with our revolver borrowings that I'll address in a moment. Additionally, our load forecast has a more typical usage profile for our residential customers and a slower recovery to pre-pandemic levels for our CNI customers. Equity remains a part of our overall financing plan and we are affirming our plan to issue up to $600 million in equity annually in 2022 and 2023 and we will flex these plans as needed. We remain committed to maintaining adequate liquidity for our distribution and transmission subsidiaries. At year end, our liquidity was approximately $3 billion with $1.7 billion of cash on hand and $1.3 billion of undrawn capacity under our credit facilities. We currently have $2.2 billion of short-term borrowings of which approximately $2.1 billion was incurred in November as a proactive measure to increase our cash position to preserve financial flexibility. And we have committed to our bank group that as we work through our financing plan we expect to reduce short-term borrowings with the timing and amount depending on a number of factors. Our current maturities of long-term debt remain manageable with only $74 million maturing in 2021. We remain in close contact with the rating agencies who are intensely focused on governance and the actions we are taken to strengthen our compliance environment and controls, improving our credit metrics at FirstEnergy while committed – committing to return to investment grade as quickly as possible and maintaining the strong credit ratings that our utilities are key priorities. We are targeting future FFO to debt metrics in the 12% to 13% range at the consolidated level as we work to address some of the uncertainties that Chris and Steve mentioned. We know how important the dividend continues to be for our investors. In accordance with our target payout ratio of 55% to 65% the board declared a quarterly dividend of $0.39 in December payable March 1. And as we mentioned on our third quarter call, our intent is to hold the 2021 dividend flat to the 2020 level of $1.56 per share subject to ongoing board review and approval. The board will obviously need to consider the entire landscape of the investigation process before each quarterly dividend is declared. Finally, Chris mentioned that we kicked off a project ETI4 that I see transforming FirstEnergy into a more efficient and effective industry leader delivering superior customer value and shareholder returns, in partnership with McKinsey employees across FirstEnergy our challenging organizational traditions, conventional wisdom and cultural norms. At the same time, we are focused on modernizing our management practices processes in digital and technology platforms to deliver a superior customer experience and a much more nimble organization for the future. While we view this as a transformational effort, we expect to naturally deliver efficiencies that will help us address whatever comes on our way in the future while meeting all of our regulatory commitments. Beyond these benefits we expect that this transformation will provide us the ability to reinvest in our business, our customers and our employees to become a better technology enabled leader in the industry, committed to innovation, investments in emerging technologies and to support a smarter and cleaner electric grid. While this project is not the only step in our journey, it's a critical one. The eight week information gathering phase of the project included intense and robust employee engagement to better understand how we work and how we can do it better through the use of more modern technology, digital and mobility tools and the use of data and analytics. As we enter into the next phase of this effort we will again engage employees throughout the company to review and assess each opportunity and build out the plans to transform FirstEnergy. Over the next few months, we will build out specific actions for the future which we look forward to sharing.

Before we open up the call to Q&A, we wanted to provide a recent update which we disclosed in our 10-K this morning. We received a letter dated February 16 2021 from Icahn Capital informing the company that Carl Icahn is making a filing under the Hart Scott Rodino Act and has an intention to acquire voting securities of FirstEnergy an amount exceeding $184 million but less than $920 million depending on various factors including market conditions. We do not know whether Carl Icahn and his affiliates have acquired shares of FirstEnergy common stock and/or derivatives and we do not know his intentions with respect to our company. The letter represents our only contact with Icon Capital and we don’t have any additional information to share. With that, we can open it up for questions.

[Operator Instructions] Thank you. And our first question is from the line of Shahriar Pourreza with Guggenheim. Please proceed with your questions.

It's actually James for Shahriar. So just on FE 4, if we could start off about that last point, can you give us any color on maybe the size of the scope and some of the potential efficiencies that you're trying to identify especially sort of kind of coming off with FE small still lot to stake?

Yes, that's correct James. And as I mentioned we view this as a as a transformational effort. And if you think about our company, we've not had a lot of investment in the technology areas. In fact I think we've kind of starved that area to a certain extent. And for instance modern investments around mobility, use of data and analytics that we see could drive a lot of value for the company. In some instance, I would tell you that we're operating on late 1990s and early 2000 vintage platforms. And so, we see a lot of opportunity for efficiency in fact, integration of systems, digital tools to drive efficiencies, use of automation and data analytics around asset health, maintenance work, whether it be repair, replace decisions vegetation management programs, procurement and so we're excited about the opportunity. We just finished phase 1 of the project and I think our employees are very excited. I think they see this as a real opportunity. And the amount of opportunity was meaningful enough to go into phase 2. And so, we'll be building out the blueprints in phase 2 and then as we make progress will continue to provide updates.

Yes, I would just add Jon I think that's a great run down. From my perspective, this project is not only looking at the ability to promote greater financial flexibility, but I think it's a real prime time opportunity for us now that we're a fully regulated electric utility to keep the customer in the middle of our focus also. And I think this project will represent opportunities just as Jon outlined to keep the customer in the middle of the mission and improve customer service ultimately.

And then I guess just turning to the 2021 guide, the flexibility in the CapEx program, can you just provide a little bit more detail on where that is? And if you wind up flexing it because what is the plan to revisit that foregone spend in future years would primarily be in 2022 that - just a function of financing it any color there?

I think we have flexibility in most all of our programs. I mean you think about it $3 billion across 13 utility and transmission companies there's obviously opportunities across the spectrum. And so, I think it's kind of a wait and see mode, but I do think there are some opportunities for us to be more efficient. And if we need to scale back we can do that, but that's something that will address down the line.

Got it. And I guess where should, we expect to start standing up new projects in KATCo?

I think as early as this year. I mean we're spending some money this year in KATCo or excuse me, not KATCo, but the territory West Penn, Mon Power and Potomac Edison that's where we're spending the money. But I think KATCo would probably be a little bit further down the line.

Our next question is from the line of Steve Fleishman with Wolfe Research. Please proceed with your questions.

So first of all, could you just repeat the comments that you just made regarding this Icahn letter that you received?

Oh yes. We received the letter from Icahn. It was dated February 16. It expressed his intentions to buy securities of FirstEnergy and that's pretty much all we know at this point time.

Yes, Steve, we thought it was noteworthy and that's why we're just being open and transparent about it, can't really comment as Jon said, we just don't know enough at this point. But look we just reviewed many very good actions that the Board and management have taken together. As we work as a team completely through our current challenges and we're just going to continue to do the right thing in open and transparent way and that's going to be to the benefit of all shareholders.

Okay. Second question is the things that you found about these transactions that were improperly classified but were immaterial. Was there certain kind of - types of transactions here that were improperly classified? So are these like a lot related to let's say like lobbying or government affairs or is it a whole bunch of different things?

Hi, Steve hi, it's Chris Pappas. So we found as noted in the comments a relatively small amount of variety of transactions, over a long period of time, we mentioned up to 10 years and in some cases beyond. So the context for this that I think is important is we have taken an extensive deep analysis of all kinds of transactions in the company that includes the zones you're describing, it could be lobbying political, it could be contracts with vendors a whole variety of things. And in that process we identified some transactions that were improperly characterized, allocated, not supported, small amounts, not material and those amounts will now be in discussion with the jurisdictions where they occurred through a regulatory group. And they will be managed going forward through that process. So I want to leave you with one impression a lot of work an extensive amount of deep analysis and a limited amount of findings as a result of that essentially in the arenas that I described.

Okay. But you can't characterize kind of the type of whether these were all kind of similar type things?

No - well, they range from what I described. They could be a vendor payment that was inappropriately allocated. They could be - a lobbying effort that was inappropriately allocated. There are a whole variety of small items like that. It's not focused in one area or otherwise. And these are small items over a long period of time that will need to be corrected.

Okay. And then lastly just the - release you put out two days ago there was besides some offering to not charge for the energy efficiency recovery. You also basically kind of gave an olive branch so to speak to all parties to try to have discussions on all the various regulatory issues in Ohio that are pending. Do you have any sense of reaction to that and/or any sense that other parties are interested in negotiating with you right now?

Yes, Steve I would just say in general we're taking a new and fresh approach to Ohio. It's one of collaboration in creating a more constructive environment. And it's really around listening and learning in terms of not only the regulators views but all of our stakeholders. And the first step was to forego the lost distribution revenue issue. It was consistent with the partial settlement that we arrived at with the Ohio Attorney General and we felt as though it was the right thing to do. And this idea of taking the known items that are on our collective agenda in Ohio and bundling them together in a collaborative process is really what we're aiming at here. And I'm going to turn it over to Eileen Mikkelsen to give us a sense of a dialogue that we have heard at a very high level and then any other color commentary if you will you'd like to lend.

Thanks Steve, good morning, everyone. It's Eileen Mikkelsen and I'm Vice President of Rates and Regulatory Affairs. As Steve mentioned, we have begun the process of outreach to various regulatory stakeholders in the state of Ohio trying to express to them our interest in moving forward in a clear transparent cohesive fashion, but also taking time to listen, listen to what is important to the various regulatory stakeholders and using that listening exercise to collectively craft a solution that will move us forward for our customers and for the state of Ohio as well as the company. In terms of early returns, I think folks are very interested in moving forward with this process. As you might expect their enthusiasm is tempered a bit by let's wait and see. We have to put our money where our mouth is in terms of our ability to listen and work collectively with these people. And we're willing to run the gates to do that in order to gain the trust and support of the stakeholders in order to move us forward in the regulatory process here in Ohio.

Our next question comes from the line of Julien Dumoulin-Smith with Bank of America. Please proceed with your questions. Julien Dumoulin-Smith: So perhaps let me try and clarity couple of points from the last couple questions here. So first, can you try to summarize what's reflecting your 2021 guidance with respect to the cost cutting efforts that you just alluded to? And I know that transitory, but I just want to understand in 2021 and what that means for 2022 because obviously there is cost cutting, there is potentially paying down the revolver here. And then also more holistically how do you think about balance sheet improvement here when you talk about flexibility et cetera? What can we expect to overall latitude in the form of the balance sheet for whatever we may have?

So Julien this is Jon. So I would tell you that we don't have anything in the current plan related to FE forward. We view this more as a transformational effort that's going to take some time. It could take two to three years. There could be some opportunities for some quick wins. But we don't have anything currently baked into our 2021 plan. There could be a little bit of upside. I'm not going to commit to that right now. But as we work through the next phase of this project we will see if there is opportunity to accelerate some of the opportunities or we just let it flow naturally through the course of the program. But again I don't view this as a cost cutting exercise. I view this more of a transformational effort that's really focused on creating efficiencies for the long-term. Julien Dumoulin-Smith: Right. And then on the balance sheet, how would you describe the - your creating padding if you will through this and other efforts?

Well I mean I think as you know if we are able to create efficiencies through the P&L obviously that's credit positive. So, we can look for those types of opportunities. It might scale back some of the CapEx in terms of being more efficient in the work we do, but at the end of the day, the plan is going to be to reinvest some of those dollars into our customers, our employees and for emerging technology type of investments and to support kind of a renewable type of grid. And so, it's not going to be dollar for dollar efficiencies. It's going to be efficiencies used to reinvest in our business whether that be employees or customers. Julien Dumoulin-Smith: Understood Excellent. If I can just jump in and clarify the last response [technical difficulty] out there right now. How do you think about bringing stakeholders together to get some resolution. I mean obviously you've got to deal with each one of these, but could there be something more comprehensive and if so what would that look like. Again, I'm not presuming that there is.

It's Irene and thanks for the question. I think what we intend to do is you're right there are a number of open proceedings in Ohio, but as I mentioned earlier, what we intend to do is the first step in this process is really listen, listen to the various stakeholders to understand what their interest is, what their concerns if any are with respect to the regulatory construct. And I would say that includes open proceedings, but it includes whatever is of interest to the regulatory stakeholders. We want to sweep all of that into one big process. I will say it is not our intention to step away from or interrupt any of the work that's currently going on from the commission proceedings whether it's the show cause proceeding or the corporate separation proceeding or the audit of DMR. We expect that work to continue. We will fully participate and cooperate in that work. But on a parallel path, we want to be working with all these parties to understand what's important to them and what we can do collectively to move this issue forward in the state of Ohio.

Our next question comes from the line of Durgesh Chopra with Evercore ISI. Please proceed with your questions.

Jon, first one for you, just going back to the balance sheet, just can you quantify your FFO to debt as of 2020 this past year and what does it look like in 2021 under your current plan?

So I think we were around 10% at the end of 2020 if I got credit for the cash that we had on the balance sheet. I think we're going to be a little bit north of that this year. But that's going to improve over time as we issue the equity as we look to implement FE forward and so we're targeting sometime once we get through some of these uncertainties in the 12% to 13% range. That is our target for our go forward plan.

Got it. Okay. So 2020 plus is when you expect to be in that 12% to 13% range, understood. Okay. And maybe just anything you may not be able to comment on this, but just can you give us any more color on that under federal investigation process. Where does that stand? Are you exchanging information or answering that question? Just any other color would be appreciated? Thank you.

Well, this is Steve. Oh I'm sorry. Go ahead, Chris.

Okay. Steve, you need to follow-up.

Sure.

So the short answer is we're still cooperating. Look we have taken the approach from the beginning that cooperating with both the DOJ and the SEC and in full cooperation is the right approach. We have done a number of things to support that and we'll continue to do that. Otherwise we really can't comment any further. I would however say that the cooperation is just one of the cornerstones of the shift and change in this company that Steve and others are driving. And I hope you're getting that impression more broadly not just around the cooperation, but more broadly around the dynamics of compliance improvement, the activities of the board, the bringing on of a new executive director and vice chair with extensive experience in the energy and utility space. John Somerhalder who will be a great add, the bringing on of Hume Park, the eventual onboarding of a new compliance and ethics officer, the changes that the company is making and its compliance and ethics program as part of the work of the subcommittee of the audit committee. All of these things in concert are moving the company forward in a way that FirstEnergy is going to emerge from this as we think stronger and different and better company. So I'd like you to keep all that in mind as you guys think about the dynamics going on there. Steve go ahead.

Chris, I think really you summarized it very well there. So, I can speak in particularly for the management team, we’re very excited to bring Jon on with his deep and long experience and we’re just really very excited to get started.

Understood. And certainly we do appreciate and thanks for the added disclosure in the appendix. Thank you.

Our next question is from the line of Jeremy Tonet with JPMorgan. Please proceed with your questions.

Just want to pick up with the discovered deficiencies, and could you provide which states these materialized in if they're outside Ohio as well as and do you expect these findings to represent the full extent of important deficiencies here or could there still be more?

Hi, Jeremy, Chris. So look as we said extensive deep long work long time frame work small amounts, the majority of it is in Ohio but there are small amounts in other states. All of those will be addressed by Eileen and her team. We believe in a constructive manner with those jurisdictions. They're very small amounts. We don't expect them to have an impact on the company.

And I was just wondering if you might be able to provide any more kind of early feedback you've gotten on some of the recent steps you've taken here. It seems like quite comprehensive overall. Do you think these are enough to mitigate concerns over internal practices while we wait for the resolution of the investigations here and have the agencies giving you any feedback on these recent measures?

Well, all I can say is we're in touch with the agencies regularly and Agency regularly and we are continuing our work. We have done a lot of work and we'll continue our work. I'm not going to predict timing or outcome of either our internal continued work or the course of federal work. But yes, to your question are we working with them closely on these activities, of course.

So Jeremy this is Jon. I had a little bit of color there. So, we've been meeting with the agencies every month for the past and I'm talking about the rating agencies for the past several months. I think the meetings have been very productive. We’ve had Chris on the call a couple of different times, their focus is on governance compliance and we've been providing them updates as we make progress. I think the meetings have been very constructive and I feel although they're positive meetings, but I think they're still in kind of a wait and see mode. And I think they want to see the changes in action before they consider any type of ratings change or outlook change and I think they also want to see how this investigation plays out. So, we're going to continue to meet with them on a regular basis and update them on our progress. But I think so far the meetings have been very constructive, have been very open and very transparent.

And any other early feedback from other stakeholders in response to actions you’re taking here.

I think in general if you would look at the regulators that we have approached there is a thankfulness by them relative to us reaching out in a very transparent manner on issues of interest. So, once again, we as a company are going to continue to take what I would call a no surprises approach and I think that's being received very, very well. I think as Chris had talked through in his prepared remarks, the board has taken comprehensive and decisive action in a number of different ways. And I think from the various stakeholders that we've been in touch with the feedback certainly has been very good. There is a difference however between talking about creating change and then being that change. And that's exactly what we're in the process converting words into action and there will be more.

Our next question is from the line of Paul Fremont with Mizuho. Please proceed with your questions.

I wanted to focus on a change in language between the current 10-K and the last 10-Q on the $4 million termination payment. You basically say you believe that the payments under the consulting agreement now may have been for the purposes other than those represented within the consulting agreement. Can you maybe elaborate a little bit on that? And is this $4 million payment included in the accounting classifications that you mentioned earlier?

So Paul, this is Hyun Park, the company's new COO. What I would say is that as these investigations proceed, we learn more and we understand more. And as we do so we update our disclosure and the language that's in the Form 10-K is it reflects our current understanding of that situation. So, I'll just refer you to the Form 10-K and the rest of the disclosure in there.

And does this fall within sort of the accounting payments that are under review or that are being reclassified?

Yes. Paul, this is Jon. The $4 million was part of the analysis that Chris spoke of earlier.

But I would just say for sake of clarity that if we talk about a nominal payment amount that doesn't necessarily equate to the amount that would have been included in customer rates. There's a whole rate making process and timing around that that really translates the nominal dollar amount that we're talking about relative to the payment into what would actually landed in customer rates.

Our next question is from the line of Stephen Byrd with Morgan Stanley. Please proceed with your questions.

I wanted to start just as you think about your equity needs over time in terms of just your overall approach. I guess if you were to sell just common stock at the current level, it's obviously very dilutive given the very low multiple. We've seen other utilities approach raising capital and in pretty interesting ways in much more accretive ways for example, selling the minority stake and in some divisions. Looks like there is tremendous amount of appetite among sort of infrastructure investors to own pieces of utilities. As you think about, I know you don’t about eminent needs, but as you think conceptually about your approach to raising equity, or do you sort of open to different approaches, are you sort of open to different approaches, what are your thoughts in terms of what might be the range of options and what might look more or less attractive to you?

Yes. Stephen, this is Jon. I think we’re open to different approaches and in fact we look at that quite regularly. I would tell you – I think you’re referring to the duke asset sale…

That’s right.

I would say that first of all we like our platform of companies and we believe each of our companies is uniquely situated to provide investment opportunities to better serve customers and provide growth in earnings and operating cash flow. I think there is going to be a significant investment opportunities at each of these companies that are going to be important to our success but yes we’ve looked at that transaction that appears to be successful transaction for Duke and it's a very interesting transaction. So we've looked at those types of things in the past and for us it just hasn't worked primarily due to tax leakage. But I understand the minority interest piece. But in our normal assessment of our strategy, we look at those types of - we look at those types of things.

Understood. And tax leakage might not be as much of an issue in the minority stakes situation Jon, is that right?

That's right.

One last one just for me, just on the lobbying side, I appreciate the approach that you are all taking - my understanding is more limited activity, more disclosure. It's been a challenge for us to follow lobbying activity not just for FirstEnergy, but for others around the 501(c)(4) structure, there is virtually no visibility. Could you just talk to sort of what you said more disclosure, what could we expect in terms of money given the 501(c)(4) is how do we sort of get confidence as to what money is going where?

Well, good question. Just so we're clear on our current approach. Under my leadership, we made some significant changes immediately. So we’ve seized all political contributions and we’re evaluating what our path forward will be when playing in that space I would say. And then also includes 501c(4)s. You can count on us not contributing to any 501c(4) that is politically focused and that’s going to form the basis of our activity going forward. So what we’re doing we’re working internally, and we’re working with our Board of Directors to get clarity around what our internal expectations are, what our philosophy and pathway will be moving ahead. And the way I look at it we're going to get involved in items of this kind in which we could look at every employee directly in the eye and explain the why behind the what - of what we're doing in this arena. So what we're working on at least from our standpoint is that great reduction in 501c(4) giving anyway. So it's going to be a nonfactor for us. And then secondly we're going to be working with the subcommittee of our audit committee from a compliance standpoint to make sure that we have the reporting that we need internally that will satisfy us and then we'll work to form something that we will publish in our FactBook and - and in other areas. That's our current thinking.

Our next question comes from the line of Angie Storozynski with Seaport Global. Please proceed with your questions.

Thank you. So I have two questions. One about the FFO to their expectations, your equity needs are unchanged, your earnings in Ohio are down, so how can you maintain the same FFO to that?

Well, I think as we invest in our transmission business and these distribution enhancement programs, it naturally generates FFO. And so, even in our plant not every Ford and our current equity plan, we continue to trend upwards from the 10% we’re at now. So, as we continue to invest in these programs, we manage our cost internally, that should naturally provide for higher FFO to debt.

Okay. And separately on electric transmission, it seems like FERC will be making some changes to competitive transmission. You guys have a very sizeable electric transmission network, do you think that any changes order 1,000 or actually basically accelerate growth prospects for this business and also with regards to potential asset sales I understand the tax leakage, but would the sale of the transmission business a parts of it also have this issue with the tax basis given that this business seems newer and so I would assume that the tax basis is much higher. Thank you.

Angie from our view point, any work that FERC is doing on FERC 1000 we’re staying plugged into and collaborating where we need to. But right now our operating posture going forward will be to continue to maximize investments and improve reliability in our transmission system on our own native footprint. And as we’ve explained in prior calls, we literally have multiple decades of investment opportunities there for us. We will have our complete transmission system overtime and formulate our grades. And we view it as a an excellent growth platform for our company, but I would also want to emphasize that we have clearly improved reliability for those areas are energizing the future transmission program is focused on, in particular in terms of reducing customer outages and in some cases by 50%. So, we’ll let FERC continue their work. But currently, our current business plan is solid once again we have a great and diverse footprint to move investments around. And that's what you can count on us for moving ahead.

And Angie to your second question, if you look at FET the tax basis is probably lower than you think because of bonus depreciation and dividends and that type of thing. So, the transaction that Stephen was mentioning wouldn't even trigger a tax consequence just because you're selling a minority share. But if you were to sell a bigger share, it would have some tax consequences.

Our final question this morning is from the line of Michael Lapides with Goldman Sachs. Please proceed with your questions.

Thank you for taking my questions and it sounds like you're making a lot of progress on a lot of change over a short period of time. I have a few. First of all, in your 2021 guidance, are you incorporating a step up in kind of G&A costs I mean obviously the various law firms, external advisors like McKinsey, I would assume they aren’t free, so I assume that’s a little bit of headwind if it’s possible to quantify it. That’s the first question. The second question is a little bit on pension funding requirements. There’s detail in the back of the slide deck. I just want to sanity check. Are you commenting am I reading this right that the cash pension funding requirement as of now is actually a little bit less than some of your maybe your disclosure at this time last year?

Michael, this is Jon. So you're correct. It's about $100 million lower in 2022 and 2023. I think it went from $500 million to $400 million. And that's primarily attributable to the asset performance this year. We had tremendous asset performance in our pension portfolio close to 15% and so that reduced the funding obligation for those years. With respect to your question around costs, I actually think we're going to see costs decline. Operating costs decline year-over-year because we're not anticipating as much what I'll call pandemic costs that we incurred in 2020. If you think about all the personal protective equipment all the contractors and bad debt expense for our receivables that we incurred in 2020, although we expect that to continue at summary, but not to the rate that we saw in 2020. So I actually think you'll see a stop a step down in our G&A costs.

Got it. So G&A down year-over-year when I think about the 2020 to 2021 bridge?

That's correct.

Got it. And then one last thing, it hadn't really come up on this call. Can you talk about the process Steve for the seat docket and what you're hearing if anything as you kind of prep up for that process to ramp again starting this spring?

Yes. So Michael I would just say that is an open docketed item and just as we had mentioned earlier we're going to take a very open and collaborative approach on that. And for a further view I'd like to just turn it to Irene.

Thanks, Steve. I would say that currently were scheduled to file testimony in that proceeding March 1st. But I would add that the consumer advocate in Ohio has asked for a procedural stay on that process pending legislative outcome. So we're waiting to see how the commission acts on that. But as Steve said, this is one of the many proceedings that we want to address in a collaborative transparent fashion with our stakeholders and intend to do so.

Got it. And it’s there history and prior seat dockets have coming to a settlement like agreement with the various parties including PUCO staff?

Yes. We have reached settlement in prior seat cases.

Thank you. At this time I would like to turn the floor back over to Mr. Strah for closing comments.

Thank you very much. I wanted to thank everybody for joining today and your continued support. Thanks for your questions and your insights. Our performance in 2020 was solid. This year we're committed to continuing that very strong focus in performance and operations while we're hard at work transforming FirstEnergy for the future and continuing to deliver value for our customers and shareholders. So thank you very much for joining us today. I wish all of you to be healthy and safe during this pandemic period and all the best to you.

This concludes today's teleconference you may disconnect your lines at this time. Thank you for your participation.