FE 2022 Annual Report

• Other operating expenses increased $437 million in 2022, as compared to 2021, primarily due to: • Higher network transmission expenses of $99 million. These costs are deferred for future recovery, resulting in no material impact on current period earnings. • Higher expenses of $65 million resulting from lower capitalization of vegetation management costs. • Higher expenses of $59 million resulting from lower capitalization of corporate support costs. • Higher vegetation management in West Virginia, energy efficiency and other state mandated program costs of $94 million, which are deferred for future recovery, resulting in no material impact on current period earnings. • Higher expenses of $19 million resulting from higher regulated generation planned outage spend. • Higher expenses of $18 million resulting from accelerated maintenance activities into 2022. • Higher other operating and maintenance expenses of $60 million, primarily associated with higher materials, contractor and labor costs. • Higher expense due to the absence of a $27 million reduction to a reserve recognized in the third quarter of 2021. • Lower uncollectible expenses of $4 million, which was deferred. • Depreciation expense increased $56 million in 2022, as compared to 2021, primarily due to a higher asset base. • Amortization (deferral) of regulatory assets, net decreased $622 million in 2022, as compared to 2021, primarily due to: • $170 million decrease due to the return of certain Tax Act savings to Pennsylvania customers, • $197 million decrease due to transmission and generation related deferrals primarily as a result of lower recovery of transmission related expenses, • $112 million decrease due to customer refunds associated with the Ohio Stipulation, • $109 million decrease due to the absence of the reduction of the New Jersey storm cost regulatory asset as a result of the Yards Creek sale, and • $34 million decrease due to lower recovery of previously deferred uncollectible expenses as a result of a return to pre-pandemic levels • General taxes increased $42 million in 2022, as compared to 2021, primarily due to higher gross receipts and kWh taxes, and Ohio property taxes, partially offset by lower West Virginia Business and Occupation taxes as a result of a state tax law change that became effective July 2021. • The absence of the gain on sale of the Yards Creek Generating Facility of $109 million, which was netted against the New Jersey storm deferral, as described above, resulting in no impact to earnings. Other Expense — Other expense increased $367 million in 2022, as compared to 2021, primarily due to a $320 million change in pension and OPEB mark-to-market adjustments, higher pension and OPEB non-service costs, higher interest from borrowings under the regulated money pool and lower capitalized interest, partially offset by lower borrowings under the revolving credit facilities. Income Taxes Regulated Distribution’s effective tax rate was 20.8% and 22.0% for 2022 and 2021, respectively. Regulated Transmission — 2022 Compared with 2021 Regulated Transmission's net income decreased $14 million in 2022, as compared to 2021, primarily due to a charge resulting from the filed settlement by MP, PE and WP with FERC in January 2023, as well as expected customer refunds associated with the FERC Audit, as further discussed below, partially offset by higher rate base and lower net financing costs. Revenues — Total revenues increased $250 million in 2022, as compared to 2021, primarily due to the recovery of higher recoverable expenses and a higher rate base, partially offset by expected customer refunds associated with the FERC Audit, as further discussed below. 40

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