FirstEnergy Q3 2026: EPS up 26% to $0.96, but smaller charges, tax and weather did much of the work

FirstEnergy, the Ohio-based utility that delivers electricity to more than 6 million customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York, reported third-quarter 2026 GAAP earnings of $557 million, or $0.96 per share, up from $441 million, or $0.76, a year earlier. Revenue rose 9.9% to $4.56 billion. Core EPS, the company's own adjusted measure that strips out what it calls "special items", rose 18% to $0.98 from $0.83. The headline growth is real but smaller than it looks: last year's special charges shrank, a hotter summer added about 2 cents, and net tax benefits added about 3 more. This analysis is based on the October 27 earnings release and its Strategic & Financial Highlights exhibit; the full 10-Q, with cash flows and management's discussion, had not been filed yet.

The quarter in numbers

Operating margin is the share of revenue left after running the business, before interest and tax. For a utility, revenue growth is a weaker signal than for most companies: part of it is the cost of fuel and power bought on customers' behalf, which is passed straight through. Fuel and purchased power rose $156 million to $1,660 million, so about 38% of the $409 million revenue increase was pass-through cost rather than extra profit.

For the first nine months, GAAP EPS was $2.16 (vs $1.85) on revenue of $12.4 billion (vs $11.3 billion), and Core EPS was $2.20, up 9% from $2.02.

Where the profit came from

FirstEnergy reports four segments. Core EPS by segment, from the company's reconciliation:

• Distribution (+7 cents) was the strongest: 1 cent from rates and investment, 2 cents from customer demand, 3 cents from lower operating costs and 1 cent from financing. Operating income rose 15.8% to $404 million.
• Integrated (+4 cents): 1 cent from rates, 2 cents from demand, 1 cent from costs.
• Stand-Alone Transmission (-6 cents) looks like a setback but is a tax comparison. The segment's pre-tax profit was roughly flat ($187 million vs $192 million) while its income tax went from a $21 million benefit last year to a $44 million charge; the company's bridge puts the hit at 7 cents, "primarily from absence of 3Q25 income tax benefits". Its operating income still rose to $254 million from $247 million.
• Corporate (+10 cents) is the mirror image: the bridge attributes the gain "primarily" to "3Q26 income tax benefits". Corporate's tax line was an $80 million benefit, against $9 million a year ago.

What the headline numbers hide

• One-offs flatter the GAAP comparison. Special items cut EPS by $0.07 in Q3 2025 (government-investigation legal costs of $0.05, a strategic-transaction charge, regulatory charges) but only $0.02 this year (investigation costs of $0.03 and reorganization costs of $0.01, partly offset by a $0.02 pension credit). That is why GAAP EPS grew 26% and Core EPS 18%. Note that FirstEnergy excludes legal and advisory costs tied to the government investigations (it signed a Deferred Prosecution Agreement in 2021) every quarter: $64 million after tax so far this year, so "special" does not mean rare.
• Tax and weather did about a third of the Core EPS gain. Of the 15-cent rise, the tax swing between the Corporate and Transmission segments nets to about 3 cents and weather versus last summer adds 2 cents (the company's weather table: cooling degree days up 5% on Q3 2025). That leaves roughly 10 cents, or about 12% growth, from rates, underlying demand and cost control. Consolidated income tax fell to $69 million from $78 million even though pre-tax income rose 12% to $684 million; the effective rate was about 10% against 13%.
• Costs deferred to the balance sheet. In the Integrated segment, other operating expenses jumped $263 million to $600 million, but a $146 million net deferral of costs into regulatory assets (spending the utility expects to recover from customers in future bills) replaced last year's $42 million amortization. Year to date, net deferrals reached $785 million. Deferrals keep this year's profit whole but are cash spent now and recovered later, and the release does not explain what was deferred. Management cites "elevated storm activity" among the reasons capital spending rose; the 10-Q should show the detail.
• Interest costs are climbing with the debt. Interest expense grew 10.6% to $345 million. The capital plan is funded partly with debt, and management plans to fund "up to 35%" of new investment with equity or equity-like securities, which means more shares over time.
• No buybacks, and no cash-flow data yet. Average shares rose 0.3% to 579 million, so share count did not help EPS. The release has no cash flow statement, so operating cash flow and dividends paid for the quarter will only be visible in the 10-Q.

On balance the quarter is flattered: GAAP EPS rose 26%, but smaller special charges, a net tax benefit and a hotter summer explain much of it, and the underlying gain is closer to 12%.

Regulatory calendar: where the next growth comes from

A regulated utility can only earn on new investment once regulators approve rates that include it. The filings in motion:

• New Jersey (JCP&L): base rate case filed August 6, 2026, covering about $1 billion of rate base added since February 2024. Rate base is the value of the network on which regulators let the utility earn a return. Rates are expected to take effect in Q2 2027, but bill increases are deferred to 2028 under the governor's Executive Order 1.
• Maryland (Potomac Edison): base rate case filed September 4, 2026 (about $200 million of added rate base), hearings January 11–13, 2027, order due by April 2, 2027.
• West Virginia: the Public Service Commission approved a $76 million cumulative increase on July 31, 2026, as filed, in two steps (August 1, 2026 and June 1, 2027), with no new rate request until April 2028. The decision on the Maidsville gas plant is expected in Q4 2026; FirstEnergy has reserved Siemens turbines for 2030 delivery and is negotiating with a data center to buy the plant's output.
• Ohio: the three-year rate plan filed May 22 has a staff report due by November 30, 2026 and hearings from March 1, 2027.
• Pennsylvania: the default service plan settlement was partly approved October 22, 2026, effective June 2027.

Rate base grew 9.9% year on year, and transmission rate base 14.0%. The trailing-twelve-month return on equity was 9.5%, at the bottom of the company's 9.5–10% target.

Did last time's read hold up?

Our Q2 report said hitting the 2026 range "depends on normal weather and a seasonally strong third quarter", and listed the West Virginia rate order, the Maidsville decision, the JCP&L filing in August and Maryland's new law as things to watch. The third quarter delivered: Core EPS of $0.98 brings the year to $2.20, 81% of the $2.72 midpoint, and management now says "at or slightly above the midpoint". West Virginia came in as filed ($76 million, phased), the JCP&L case was filed on August 6, and Maidsville is still pending. The release says nothing about how Maryland's Utility RELIEF Act affects the Potomac Edison case, so that question stays open. Our Q2 note that transmission was the growth engine looks weaker this quarter on the surface, but that is the tax comparison: transmission operating income still rose.

Takeaway: FirstEnergy's 26% EPS jump overstates the quarter. Strip out smaller special charges, a net tax benefit and a hot summer, and the underlying gain is about 12%, with rate increases contributing just 3 cents. The bigger news is forward-looking: contracted data-center load of 7.9 GW and a transmission plan expected to grow at least 25%, which is what would support growth near the top of the 6–8% range.

Outlook

Management reaffirmed 2026 Core EPS of $2.62–$2.82 and expects to land "at or slightly above the midpoint". With $2.20 earned through September, the $2.72 midpoint implies about $0.52 in the fourth quarter. It also reaffirmed Core EPS growth "near the top end of the 6% to 8% range through 2030", supported by the $36 billion 2026–2030 Energize365 investment plan, of which $4.9 billion was spent in the first nine months (up 23% year on year). The plan will be updated after the Maidsville order and rolled forward in February 2027, with transmission spending expected to rise at least 25% from the current $19 billion.

Our read: the earnings base is solid, and weather-adjusted industrial sales up 3.3% show real demand growth, not only data-center promises. But this quarter's growth leaned on items that will not repeat on schedule, and the large new investments come with equity funding that dilutes per-share growth. Watch three things: the Maidsville order and its funding mix in Q4, whether the 10-Q explains the $785 million of year-to-date cost deferrals, and whether the New Jersey and Maryland cases are decided on the stated 2027 timetable.