Risks Associated with the Execution of Recently Announced Strategic Initiatives The Inability to Close the FET Minority Equity Interest Sale to Brookfield Announced in February 2023 May Have Material Adverse Effects on Our Cash Flows, Liquidity and Financial Condition As previously disclosed, on November 6, 2021, FirstEnergy, along with FET, entered into the FET P&SA I, with Brookfield and Brookfield Guarantors pursuant to which FET agreed to issue and sell to Brookfield at the closing, and Brookfield agreed to purchase from FET, certain newly issued membership interests of FET, such that Brookfield would own 19.9% of the issued and outstanding membership interests of FET, for a purchase price of $2.375 billion. The transaction closed on May 31, 2022. On February 2, 2023, FE, along with FET, entered into the FET P&SA II with Brookfield and the Brookfield Guarantors, pursuant to which FE agreed to sell to Brookfield at the closing, and Brookfield agreed to purchase from FE, an incremental 30% equity interest in FET for a purchase price of $3.5 billion. The purchase price will be payable in part by the issuance of a promissory note expected to be in the principal amount of $1.75 billion. The remaining $1.75 billion of the purchase price will be payable in cash at the closing. As a result of the consummation of the transaction, Brookfield’s interest in FET will increase from 19.9% to 49.9%, while FE will retain the remaining 50.1% ownership interests of FET. The transaction is subject to customary closing conditions, including approval from the FERC and certain state utility commissions, and completion of review by the CFIUS. In addition, pursuant to the FET P&SA II, FirstEnergy has agreed to make the necessary filings with the applicable regulatory authorities for the PA Consolidation. The FET Minority Equity Interest Sale is expected to close by early 2024. Upon closing, FET will continue to be consolidated in FirstEnergy’s GAAP financial statements. This transaction involves various inherent risks, such as our ability to obtain the necessary regulatory and third-party approvals; the timing of and conditions imposed upon us by regulators in connection with such approvals; and our ability to realize the benefits expected from the transaction. In addition, various factors, including prevailing market conditions, could negatively impact the benefits we receive from this transaction. Our failure to consummate this transaction in a timely manner, including satisfying all closing conditions, could have material adverse effects on our cash flows, liquidity and financial condition. The Consolidation of our Pennsylvania Companies May Not be Completed in a Timely Manner or at All, We May Not Be Able to Obtain the Approvals Required to Complete the PA Consolidation or Such Approvals May Contain Material Restrictions or Conditions Which May Make It Undesirable to Complete the PA Consolidation, and We Could Face Litigation Concerning the PA Consolidation, Whether or Not the PA Consolidation is Consummated The PA Consolidation, including applicable asset sales is subject to numerous conditions, including the approval of NYPSC, PPUC and FERC, which may not approve one or more of the contemplated steps in the PA Consolidation, or such approvals may impose conditions on the completion, or require changes to the terms of the PA Consolidation, including restrictions on the business, operations or financial performance of the resulting operating company, which could be adverse to FirstEnergy’s interests. These conditions or changes could also delay or increase the cost of the PA Consolidation or limit the net income or financial prospects of the resulting operating company. Our inability to complete the PA Consolidation in a timely manner, or at all, including applicable asset sales, could hinder our ability to close the FET Minority Equity Interest Sale to Brookfield and could negatively affect our share price, as well as our future business and financial results. In addition, the work required to complete the PA Consolidation may place a significant burden on management and internal resources. Management's attention and other company resources may be focused on the PA Consolidation instead of on day-to-day management activities, including pursuing other opportunities beneficial to FirstEnergy. Risks Associated with Regulation of Our Distribution and Transmission Segments We are Focusing on Growing Our Regulated Distribution and Regulated Transmission Segments. Whether This Investment Strategy Will Deliver the Desired Result Is Subject to Certain Risks Which Could Adversely Affect Our Results of Operations and Financial Condition We focus on capitalizing on investment opportunities available to our Regulated Transmission and Regulated Distribution segments as we focus on delivering enhanced customer service and reliability. The success of these efforts will depend, in part, on successful recovery of our transmission investments. Factors that may affect rate recovery of our transmission investments include: (1) FERC’s timely approval of rates to recover such investments; (2) whether the investments are included in PJM's Regional Transmission Expansion Plan; (3) FERC's evolving policies with respect to incentive rates for transmission assets; (4) FERC's evolving policies with respect to the calculation of the base ROE component of transmission rates; (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. The success of these efforts will also depend, in part, on any future distribution rate cases or other filings seeking cost recovery for distribution system enhancements in the states where our Utilities operate and transmission rate filings at FERC. 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 Regulated Distribution and Regulated Transmission operations, and could have a material adverse effect on our regulatory strategy, results of operations and financial condition. 11
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