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, the Pennsylvania Companies' 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. Vegetation management costs - Relates to regulatory assets associated with the recovery of certain distribution vegetation management costs in New Jersey and West Virginia as well as certain transmission vegetation management costs at MAIT, ATSI and WP/PE (amortized through 2024, 2030 and 2036, respectively). The following table provides information about the composition of net regulatory assets that do not earn a current return as of December 31, 2022 and 2021, of which approximately $511 million and $228 million, respectively, are currently being recovered through rates over varying periods, through 2068, depending on the nature of the deferral and the jurisdiction: Regulatory Assets by Source Not Earning a As of December 31, Current Return 2022 2021 Change (In millions) Deferred transmission costs $ 8 $ 13 $ (5) Deferred generation costs 262 63 199 Deferred distribution costs 27 2 25 Storm-related costs 568 549 19 Pandemic-related costs 70 65 5 Vegetation management 52 31 21 Other 10 9 1 Regulatory Assets Not Earning a Current Return $ 997 $ 732 $ 265 CAPITAL RESOURCES AND LIQUIDITY FirstEnergy’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 its pension plan. FE and its distribution and transmission subsidiaries expect their existing sources of liquidity to remain sufficient to meet their respective anticipated obligations. In addition to internal sources to fund liquidity and capital requirements for 2023 and beyond, FE and its distribution and transmission subsidiaries expect 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 FE and certain of its distribution and transmission subsidiaries 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. Investments for 2022 and forecasts for 2023, 2024, and 2025 by business segment are included below: Business Segment 2022 Actual 2023 Forecast 2024 Forecast (2) 2025 Forecast (2) (In millions) Regulated Distribution (1) $ 1,764 $ 1,650 $ 2,000 $ 2,175 Regulated Transmission 1,394 1,675 1,800 1,850 Corporate/Other 86 85 75 70 Total $ 3,244 $ 3,410 $ 3,875 $ 4,095 (1) Includes capital expenditures and capital-like investments that earn a return. (2) FirstEnergy expects to update the forecast over the period for items such as regulatory filings and approvals and other changes. In alignment with FirstEnergy’s strategy to invest in its Regulated Distribution and Regulated Transmission segments as a fully regulated company, FirstEnergy is focused on maintaining balance sheet strength and flexibility. Specifically, at the regulated 43
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