Brian Tierney: David, no, this will be a more traditional base rate case. I mean, obviously, we have the DCR in place, which really covers most of all of the capital in the Ohio companies, specifically targeting distribution reliability enhancements. So we’ll have the Grid Mod program as well. So no new capital programs in this particular proceeding.
Jon Taylor: Grid Mod, which we do have a settlement in is a little over $400 million and that will allow us to get on parity with our in-state peers in that we’re doing just the noncontroversial AMI implementation, which we hope to get. I just bought a house here in Akron. I’ve got 40 year old analog meter on my house. It would be nice to be able to have that AMI technology in place, and that’s not controversial. The other component of Grid Mod II where we hope to be able to put more capital to work is in the distribution automation. And we’ve asked in that case to be able to demonstrate the benefits that customers got in Grid Mod I from the distribution automation and then come back at a later date and ask to be able to advance that program further.
David Arcaro: And then back on the topic of data centers, I was wondering how do you see the transmission opportunity growing over time in PJM? It sounds like you could be seeing greater load growth whether it’s in Ohio, in Pennsylvania. Just what’s the transmission CapEx upside opportunity that you’re seeing, is that growing rapidly potentially as we see data centers move to that region?
Brian Tierney: I’ll just say this, it’s a little lumpy. So as these things are coming about, we’re seeing things like the PJM Open Window 3, right? That was somewhat of an unanticipated opportunity that we don’t have opportunities like that in our $26 billion plan. But as they come about, they’ll be incremental to that plan. And so we’ve seen that process play out last year. I anticipate that we’ll see more processes through future open windows from PJM as they’re looking to build capacity on the grid to enable the type of load growth that data centers represent. So you’ve seen it concentrated, like I said before, in that Northern Virginia, Central Ohio area and now it’s branching out into other areas. And we anticipated — we know it’s moving into our service territories in Maryland, Pennsylvania and Ohio.
David Arcaro: And I guess on that, just a quick follow-up. In your conversations with these data center customers, do you have a sense of the timing of when these are coming in and trying to connect to the grid when we could see a bigger increase in the load in interconnections coming?
Brian Tierney: So I’d say it’s in the year’s time frame but they’re frequently getting more aggressive about wanting sooner service, and that’s all coming into things like their supply chain. Do they have the equipment necessary to put the equipment in, the cooling that they need, the generation that they need, all those things. And so we have time to see it coming but I think they’re getting increasingly aggressive about wanting service sooner and quicker than what they had previously.
Operator: Your next question today is coming from Gregg Orrill from UBS.
Gregg Orrill: Just another follow-up regarding the DCR and how you see that getting rolled into — getting recovery around that. Is it going to be sort of along the time line of the new ESP V or will it be tied to the base rate case, and how does that impact your guidance?
Brian Tierney: So our anticipation is that the accounts that we’re recovering in the DCR should be fully recovered in either ESP V or the base rates, and there’s been some discussion about that in the staff’s filing and our responses. The accounts have been fully recovered for the last 12 or so years in the ESP V and they’ve been audited and deemed appropriate and approved on an annual basis. So whether they’re — all the accounts are in ESP V or in the base rate case, we’re sort of indifferent to that but fully believe that what’s been approved and recovered and invested in for the last 12 years will continue to be in either one of those venues.
Operator: Your next question is coming from Anthony Crowdell from Mizuho.
Anthony Crowdell: Just hopefully two quick ones. One on the deferred prosecution agreement. Is there a date in June where it expires or will there be an announcement, or is an office issue a notice out?
Jon Taylor: I think that’s late July. It’s not June, so it’s late July. I think it’s like the 20th or 22nd.
Brian Tierney: And if we could make a filing prior to that, we’d like to be able to do that as well. Anthony, just meaning not waiting until the absolute terminal date. If we’ve done everything we need to, to allow us to file sooner than that, we will.
Anthony Crowdell: And if I take that with Shar’s question earlier, you mentioned to clear that potential suit out — suit up. Are those the last two items of deferred prosecution agreement and that potential loss that Shar had brought up earlier?
Brian Tierney: No, there’s what we talked about earlier, there’s the DPA, there’s the securities case and then there are the audit cases in front of the Ohio Commission, which we asked if they could proceed currently and hopefully get those behind us as well.
Anthony Crowdell: And then just lastly, the move to investment grade, was there any existing debt that maybe was triggered to a higher interest rate because you were sub-investment grade? And is there — will those rates maybe trigger lower and is there any significant interest savings going forward because of that?
Brian Tierney: So not meaningful interest savings. But with the Moody’s upgrade, we had an interest rate step-up because we were sub-investment grade. Now that’s been eliminated effective with the upgrade, although, it will start with the next interest payment later this year. I think on an annual basis, that’s less than $10 million. But nonetheless, I mean, it’s meaningful. And then I think we also got some better pricing on the revolving credit facility by about 25 basis points. So I mean, all those things help, they may not be material in the grand scheme of things but it is important to us.
Jon Taylor: Anthony, there’s one more that I forgot to put on the list. There’s the SEC investigation that we’d like to get settled as well.
Operator: Next question today is coming from Paul Patterson from Glenrock Associates.
Paul Patterson: Just a follow-up, I think it might have been Jeremy’s question on Signal Peak. There’s discussion about maybe being forced to shut down in 2025. Any thoughts there about how we should think about that? And if that happens, is it just a $0.12 maybe not being there or is there a potential for a negative EPS impact or something like that?
Jon Taylor: As we’ve kind of outlined in the plan, Signal Peak was $0.12 this year, but we really had them going to a very de minimis level of earnings contribution beginning in ’25 and beyond. So not significant to the plan in the grand scheme of things. And I don’t think it would ever go to where we’re incurring losses, but just kind of a breakeven proposition if it were to have to shut down.
Paul Patterson: And then with respect to the Grid Mod settlement, is there any potential for having additional parties sign on to that or are we just going to go through what, I guess, has been outlined in the procedural — the hearing examiners, are we pretty much just going to go down that road, do you think?
Jon Taylor: I think we’re just going to go down that road, Paul. It’s June 25th is when I think we’re expecting to have the hearing on it. And we have a majority of the interveners signed on to the settlement. And there’s like there’s really nothing controversial about it. We’re just trying to deploy the AMI that all the other in-state peers are either at or close to 100% of we’re trying to round out and finish the remaining two thirds of our customers on.
Paul Patterson: And then this has been a topic that’s been coming up a lot in policy circles about trying to get more grid enhancing technologies to be deployed as opposed to the substantial build out and all the issues that are being seen with that in terms of cost and timing and stuff. I’m just wondering how do you think about grid enhancing technologies, and do you have any thoughts about how they might be deployed at FirstEnergy or industry wide?
Brian Tierney: So there are responses to the GRIP, I think, are grid enhancing technologies, grid resilient, smart grid storage, DERMS and the like. And so with the Department of Energy, we’re looking to take that money that they’re looking to help jump start some of those initiatives and get our fair share of those for investment for the benefit of our customers. That’s about $500 million of investment that we’re looking to. And the Department of Energy is looking to put those dollars to work and make these pilots a reality, and we’re looking to take advantage of that for the benefit of our customers. So it’s happening. The dollars are being put to work and we’re trying to get our share of those dollars.
Paul Patterson: But you don’t expect any — do you expect any widespread adoption of those in the near term or beyond just the pilots and the DOE funding and what have you? Is there any sense — I know it’s kind of a big question, so I apologize. But maybe I guess — I mean, do you see this as — what the potential opportunity or threat might be associated with these technologies being deployed?
Brian Tierney: I don’t see it as being strategically disruptive for our industry. These new technologies, I think it’s best to take a crawl-walk-run approach. And you’ve seen that in other places in the industry, Paul, not as big of a deal for us but things like carbon capture and sequestration, right? To do it at a plant level, I don’t think has been done on a commercial scale in this country with a coal fired power plant. So you look at the new EPA rules, which would either call for that or retirement of the plants, I think if that rule were to go into effect, I think it would cause a lot of plants to retire, because the economic technology just isn’t there. Some of the things that we’re proposing doing on a pilot basis, I think, are best done on a pilot basis. But I don’t see any of these technologies at this point strategically disrupting our industry.
Operator: Next question is coming from Angie Storozynski from Seaport Global.
Angie Storozynski: So I’m just wondering, so all these additions of data centers, especially those that are reliant on renewable power assume that there’s a well functioning grid with de minimis congestion issues. That doesn’t seem right to me at least. And I was starting to hear from other PJM wires on the utilities that they might be forced to building generation assets, again, and granted not maybe the next year or two, but in the foreseeable future. I mean I understand that, that’s a major change to a competitive power market, but those utilities think that, that might be needed for reliability reasons. Is this something you see as well? Again, it seems like we’re trying to manage a 24/7 load growth with intermittent resources. And I know transmission upgrades are an answer, but just wondering how you see it going forward.
