FirstEnergy Corp. (FE) | The Buildout — AI Infrastructure
The Verdict
FirstEnergy is a regulated electric utility with transmission, distribution, and, in some states, generation assets across Ohio, Pennsylvania, West Virginia, Maryland, and New Jersey. It does not sell products into AI. It serves data-center load that lands inside its service territory: when a hyperscaler or developer signs a service agreement, the load enters PJM's planning process and triggers transmission and distribution investment, recovered through regulated rates. Its transmission system sits between the Northern Virginia and New Albany, Ohio data-center hubs, and in West Virginia it can offer both transmission and generation.
| Market Cap | — |
| Revenue (TTM) | $15.8B |
| Revenue Growth | +12.6% |
| EBITDA Margin (TTM) | 29.6% |
| Net Debt | $28.9B |
| Earnings Beats | 4 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Contracted data-center demand reached 6.4 GW as of Q2 2026, up 2.1 GW in the quarter, against roughly 25 GW of forecasted demand.
- Transmission grows at a 16% compound annual rate through 2030, with more than $5 billion in competitive projects awarded over the last four years.
- 75% of the capital program sits under a formula rate, which largely strips out regulatory lag.
- The transmission system sits between the Northern Virginia and New Albany data-center hubs; management cites a one-stop-shop advantage in West Virginia, where it can provide both transmission and generation.
- Rates average about 20% below in-state peers, with the T&D component 35% below; base O&M is down more than $200 million, or 15%, since 2022.
What We’re Watching
- The 1.5 GW of data-center contracts management expected in the next couple of weeks from the Q2 call is not yet signed.
- The Maidsville CPCN order, expected this fall, decides whether the 1.2 GW, roughly $2.5 billion West Virginia gas plant proceeds.
- The five-year plan update, due later this year or early next year, is where management says a significant component of upside will appear.
- New Jersey regulatory risk: the BPU Phase 1 report, which management called a menu; the JCP&L base rate case was filed 2026-08-07.
The thesis is strengthening on the demand side and intact on the numbers side. Data-center contracting accelerated in Q2 while guidance, the $6 billion 2026 plan, the $36 billion five-year plan, and the 6-8% CAGR were all reaffirmed rather than raised. The near-term financial contribution is small and back-end loaded. The open question is whether the five-year plan update captures the pipeline upside in a higher capital number and growth rate, or confirms the earnings impact arrives later than the narrative implies.
Earnings Beat
FirstEnergy reported Q2 FY2026 revenue of $3,678 million and a gross margin of 64.3%. Core earnings per share were $0.50, down from $0.52 a year earlier, which management described as in line with plan. The standout metric was contracted data-center demand, which reached 6.4 GW after 2.1 GW were signed in the quarter.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $3.7B | $4.2B | $3.4B | +8.8% |
| Gross margin | 64.3% | 62.2% | 66.8% | -250bps |
| EBITDA | $1.3B | $1.2B | $1.1B | +19.6% |
| EPS | $0.50 | $0.70 | $0.46 | +7.6% |
| Contracted data-center demand | 6.4 GW | n/a | n/a | — |
There's a sense of urgency on both the data centers, developers and the hyperscalers as well as the utilities to get contracted as quickly as possible so that, that load comes into the PJM planning process.— Brian Tierney, 2026-07-29
Management tone: Management's tone hardened from Q1 to Q2. On the Q1 call the data-center discussion was about a pipeline; on the Q2 call management gave conversion figures, 2.1 GW contracted in the quarter and 1.5 GW expected shortly, and took a firmer line with PJM, saying the company will not sign contracts that carry commodity risk. On both calls management affirmed guidance and the capital plans.
Management Guidance
Management reaffirmed its 2026 core earnings guidance of $2.62-$2.82 per share, its $6 billion 2026 capital investment plan, and its $36 billion five-year plan, and kept long-term core earnings growth near the top end of 6-8% through 2030. It said the Maidsville plant, if approved, would be incremental to the capital plan as new capex. Management pointed to a five-year plan update, expected later this year or early next year, as the place where a significant component of the data-center upside would be reflected.
Trajectory
Reported revenue is seasonal and uneven: Q3 FY2025 was $4,148 million, Q4 FY2025 $3,797 million, Q1 FY2026 $4,202 million, and Q2 FY2026 $3,678 million, and the computed trajectory signal reads decelerating on a sequential basis. The company says much of the reported top line is pass-through generation and purchased power with no material earnings impact. EBITDA in Q2 FY2026 was $1,269 million, 34.5% of revenue, versus $1,061 million and 31.4% a year earlier. The underlying driver is rate base, guided to about 10% compounded annual growth through 2030 and funded by the $36 billion capital plan. Rising depreciation as that capital deploys is a structural expense the rate-base return has to outrun.
The Model
The model projects FY+1 revenue of $16,350 million and EBITDA of $4,970 million, a 30.4% margin. For FY+2 it projects revenue of $17,492.5 million and EBITDA of $5,388 million, a 30.8% margin. The near-term anchor is the reaffirmed $6 billion 2026 capital plan and rate-base growth; FY+2 depends on how much data-center and West Virginia generation capital enters the five-year plan at the next update.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $15.1B | $16.4B | $17.5B |
| YoY Growth | — | +8.3% | +7.0% |
| EBITDA | $4.4B | $5.0B | $5.4B |
| EBITDA Margin | 29.1% | 30.4% | 30.8% |
Projections are the median of 4 independent model runs. The model’s revenue sits 6.0% above analyst consensus.
Management reaffirmed its 2026 core earnings guidance of $2.62-$2.82 per share, its $6 billion 2026 capital investment plan, and its $36 billion five-year plan, and kept long-term core earnings growth near the top end of 6-8% through 2030. It said the Maidsville plant, if approved, would be incremental to the capital plan as new capex. Management pointed to a five-year plan update, expected later this year or early next year, as the place where a significant component of the data-center upside would be reflected.
What Could Go Right — and Wrong
- The 1.5 GW of data-center contracts management expected imminently signs on time, lifting contracted demand above 6.4 GW.
- The five-year plan update raises the capital number and growth rate above the current $36 billion plan.
- Maidsville CPCN approval leads to signed EPC, OEM, and fuel-lateral contracts and keeps the 2031 in-service date.
- An affiliated Genco is chosen for West Virginia generation, giving it a faster approval path than the CPCN process.
- Rate cases in West Virginia, New Jersey, Maryland, and Ohio lift earned returns toward allowed levels.
- Data-center contracting stalls and the 6.4 GW converts to capital only slowly; only about $400 million of data-center capex sits outside the plan.
- The Maidsville cost estimate, around $2.5 billion and not refreshed on the Q2 call, proves low in a seller's market for turbines.
- A regulatory setback in New Jersey, Maryland, Ohio, or Pennsylvania slows rate-case recovery; management has flagged earned returns below allowed levels in West Virginia, New Jersey, and Maryland.
- The PJM backstop and capacity-market construct stay unresolved; management's refusal to sign commodity-risk contracts and its criticism of the capacity markets could harden into friction with PJM or FERC.
- Incremental equity of 30-40% on upside capex dilutes earnings growth more than expected.
Looking Ahead
The next twelve months are dominated by regulatory decisions and the plan update. A West Virginia rate order was expected before month-end from the July 2026 call, and the Maidsville CPCN resolution is expected this fall. The Ohio three-year rate plan runs through a staff report on November 30, 2026 and hearings on March 1, 2027, with an order expected in Q2 2027. PJM transmission awards land in Q1 2027. Management says the five-year plan update, later this year or early next year, will carry a significant component of the data-center upside.
- July 2026West Virginia rate order — Expected before month-end; $76M cumulative increase.
- Aug 20261.5 GW data-center contracts — Expected in the next couple of weeks from July 29.
- Fall 2026Maidsville CPCN order — Decision on 1.2 GW, ~$2.5B West Virginia gas plant.
- Late 2026Next-plant timing detail — More insight on the next West Virginia plant.
- Late 2026 / early 2027Five-year plan update — Where management says material upside will land.
- Q1 2027PJM transmission awards — PJM Board awards for the 2026 open window.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $13.5B | $15.1B | $15.8B | +12.0% |
| Gross Margin | 67.5% | 55.0% | 53.4% | 1,258bps |
| EBITDA | $4.0B | $4.4B | $4.7B | +10.4% |
| EBITDA Margin | 29.5% | 29.1% | 29.6% | 43bps |
| Net Income | $978M | $1.0B | $1.1B | +4.3% |
| Free Cash Flow | −$1.1B | $2.5B | $1.6B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)53.4%
- EBITDA Margin (TTM)29.6%
- Net Margin (TTM)6.9%
- ROIC5.5%
- FCF Conversion33.7%
- SBC / Revenue-0.4%
The Company
FirstEnergy is a regulated electric utility. Through its operating companies it transmits, distributes, and in some jurisdictions generates electricity, serving over six million customers in the Midwest and Mid-Atlantic. It owns more than 24,000 miles of transmission lines and two regional transmission operation centers. Its three reportable segments are Distribution (Ohio Companies and FE PA, with an $11.1 billion rate base as of December 31, 2025), Integrated (JCP&L, MP, PE, plus MP's regulated generation, $10.2 billion), and Stand-Alone Transmission (FE's ownership in FET and KATCo, $5.4 billion).
The company operates in Ohio, Pennsylvania, West Virginia, Maryland, and New Jersey. It grows by investing in regulated transmission and distribution assets and recovering that capital through rates; 75% of the capital program sits under a formula rate, which largely strips out regulatory lag. In deregulated Ohio, a state law bars utilities from owning generation, so the company concentrates its generation ambitions in vertically integrated West Virginia. Its regulated fleet includes the coal-fired Harrison (1,984 MW) and Fort Martin (1,098 MW) stations, the 487 MW Bath County pumped-storage station, and small solar sites.
Business Segments
Competitive Landscape
FirstEnergy operates as a regulated monopoly in each service territory, so its competitive position is defined less by rivalry for customers than by competition among states and utilities for data-center load. Management points to a one-stop-shop advantage in West Virginia, where the company can provide both transmission and generation, and to its position between the Northern Virginia and New Albany data-center hubs. It also competes for transmission projects through PJM's open-window solicitations.
- Named as a competitor for PJM data-center load and transmission; also a partner in the Valley Link transmission agreement. Its Mount Storm, West Virginia gas project is described as direct West Virginia generation competition.
- Named in the source's competitor set; not discussed.
- Named in the source's competitor set; not discussed.
- Named in the source's competitor set; not discussed.
Supply Chain
FirstEnergy sits at the delivery end of the chain: it buys turbines, equipment, and construction services to build regulated assets, and sells regulated electric service to homes, businesses, and data centers across five states.
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