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FirstEnergy Corp. (NYSE: FE ) Q1 2016 Earnings Call April 27, 2016 9:00 am ET Executives Meghan Geiger Beringer – Director-Investor Relations Charles E. Jones – President, Chief Executive Officer & Director James F. Pearson – Executive Vice President & Chief Financial Officer Leila L. Vespoli – Executive Vice President, Markets & Chief Legal Officer Donald R. Schneider – President, FirstEnergy Solutions (NASDAQ: FES ), FirstEnergy Solutions Corp. Analysts Jonathan Philip Arnold – Deutsche Bank Securities, Inc. Paul Patterson – Glenrock Associates LLC Shahriar Pourreza – Guggenheim Securities LLC Neel Mitra – Tudor, Pickering, Holt & Co. Securities, Inc. Brian J. Chin – Merrill Lynch, Pierce, Fenner & Smith, Inc. Julien Dumoulin-Smith – UBS Securities LLC Kevin Prior – Evercore Group LLC Christopher J. Turnure – JPMorgan Securities LLC Stephen Calder Byrd – Morgan Stanley & Co. LLC Ashar Hasan Khan – Visium Asset Management LP Angie Storozynski – Macquarie Capital (NYSE: USA ), Inc. Anthony C. Crowdell – Jefferies LLC Michael Lapides – Goldman Sachs & Co. Praful Mehta – Citigroup Global Markets, Inc. (Broker) Operator Greetings, and welcome to the FirstEnergy Corp.’s First Quarter 2016 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Meghan Beringer, Director, Investor Relations for FirstEnergy Corp. Thank you. You may begin. Meghan Geiger Beringer – Director-Investor Relations Thank you, Donna, and good morning. Welcome to FirstEnergy’s first quarter earnings call. Today, we will make various forward-looking statements regarding revenues, earnings, performance, strategies and prospects. These statements are based on current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from those indicated by such statements can be found on the Investors section of our website under the Earnings Information link and in our SEC filings. We will also discuss certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP financial measures are also available on the website. Please note that we have also provided a slide presentation that will follow this morning’s discussions. If you are currently on the Investor page of our website or plan to visit at a later time, you’ll notice that we have redesigned the site to provide a more user-friendly experience, particularly on mobile devices. Also based on your feedback, we created an Investor Materials section located on the Investor menu for easier access to information that you must frequently use. As for today’s call, those who are participating include Chuck Jones, President and Chief Executive Officer; Jim Pearson, Executive Vice President and Chief Financial Officer; Leila Vespoli, Executive Vice President, Markets and Chief Legal Officer; Donny Schneider, President of FirstEnergy Solutions; Jon Taylor, Vice President, Controller and Chief Accounting Officer; Steve Staub, Vice President and Treasurer; and Irene Prezelj, Vice President, Investor Relations. Now I’d like to turn the call over to Chuck Jones. Charles E. Jones – President, Chief Executive Officer & Director Thanks, Meghan. Good morning everyone. Thanks for joining us. We’re off to a strong start in 2016 and I’m pleased to share this update with you today. Yesterday afternoon, we reported solid operating earnings of $0.80 per share, which is at the midpoint of our first quarter guidance. On a GAAP basis, earnings were $0.78 per share. While Jim will review our financial results in more detail, I want to quickly mention that we produced quality results and met our operating earnings guidance, despite the impact of an unseasonably mild winter and low power prices. The successful implementation of our economic dispatch strategy was key to that outcome because the fuel savings that resulted from idling some units when market prices did not support them, helped to offset the other impacts of mild temperatures across the company, particularly in our Distribution business. In addition to meeting our financial commitments to you, we continue to implement our regulated growth strategies. We have several positive developments on that front, and we will provide more detail today on our next steps to ensure continued service reliability for our customers with appropriate recovery of our investments. Let’s start in Ohio, where the Public Utilities Commission completed a comprehensive nearly two-year review of our Powering Ohio’s Progress Electric Security Plan and unanimously approved the plan with certain modifications. The PUCO concluded that the approved plan promotes rate stability and retail competition and adds value for Ohio customers, communities and the environment. I would both like to compliment and thank our Public Utilities Commissioners and staff for their leadership and handling a very complex regulatory matter. I am proud of this ESP and of the entire team that worked on it. The plan helped to safeguard customers against rising energy prices in future years while preserving key power plants that serve Ohio customers ensuring fuel diversity and maintaining Ohio jobs. In addition, it outlined steps to support low income customers, reinstate energy efficiency programs, evaluate smart grid technologies, and includes a goal to reduce carbon dioxide emissions. It truly fulfills the principles that the Ohio legislature outlined for the Electric Security Plans when they moved the state toward retail competition. Currently, it’s been a long and conscientious process to get to this point and while PUCO approval is a critical milestone, there are still challenges at FERC. Our opponents have also expressed their intent to bring court challenges. I will quickly review our position on these issues and Leila can address your additional questions during the Q&A. First, we believe FERC should affirm the waiver that is already in place. You’ll recall that FES was granted authorization from FERC to conduct certain transactions with our Ohio utilities in 2008. Our Purchase Power Agreement is one of those transactions. It was carefully constructed from the beginning to comply with existing FERC rules that promote customer shopping for retail energy supply and it will not hinder the PJM markets ability to function and foster competition. A separate complaint asked FERC to impose a price for on the PPA units for the May 2016 PJM, RPM capacity auction. We don’t believe there’s any reason for our PPA units to be treated differently than any of the other regulated generation in PJM. It’s no secret that a significant amount of generation, both regulated and merchant has been offered into prior PJM options with price taking behavior. Some of these complaints are likely in that group of suppliers. What they are asking FERC to do is essentially have FirstEnergy protect them from themselves. We have filed a strong answer demonstrating that a price floor is not needed and challenging the economic theory behind the opposition’s price floor methodology. And we do not expect that FERC will impose a price floor on the PPA units for the upcoming auction. With regards to the other potential challenges, we believe that the PUCOs decision is well within the Commission’s authority and we expect it will withstand subsequent challenges. Furthermore, the notion of non-bypassable charges on Ohio utility bills is not new, as charges for programs such as energy efficiency, economic development and low income support, as well as cost to support the bulk Transmission System have been in place for years. Given that FERC could make an announcement on the issues before them very soon, we are holding off on providing a second quarter operating earnings guidance. Once we do have additional clarity from FERC, we expect to have a better picture of our full-year 2016 outlook, and we will offer you further details and guidance. I know this decision may seem inconsistent with our stated objective to improve transparency and disclosures. We remain committed to giving you the information you need to evaluate our company when we know it. DSP is simply too significant to speculate on its outcome. While we do anticipate filing for a rehearing on the ESP IV by May 2, to address a few items of clarification, we’re moving forward to implement the PPA that was entered into on April 1. As you know, our Regulated Generation Group has experienced selling the output for Mon Powers regulated units at Fort Martin and Harrison into PJM. They’re using that experience and have retained a leading industry consultant to help prepare strategies and offer formation for the Davis-Besse and Sammis Plants in advance of the May, PJM capacity auction. The regulated team plans to sell the output from Davis-Besse and Sammis into PJM as of June 1. We’re also laying the groundwork to meet the provisions outlined in the terms of the ESP IV. In late February, we submitted our grid modernization business plan, which outlined the menu of options for the PUCO. We also filed our Energy Efficiency Plan with the Commission earlier this month and by November 1, we will file a carbon reduction report that outlines our fuel diversification and carbon reduction strategies. In the ESP, we proposed a CO2 reduction goal of at least 90% below 2005 levels by 2045, building on the 25% reduction in CO2 emissions already achieved across our footprint. This goal represents a potential reduction of more than 80 million tons of CO2 emissions and is among the most aggressive targets in the utility industry. In support of our commitment to a cleaner energy future, we launched a branding campaign in February called The Switch is On. This campaign highlights our environmental achievements, transition to a cleaner energy sources, and our Green electricity options. Earlier this month, we entered into a unique Green energy pact with the Cleveland Indians to provide Progressive Field with 100% Green-e certified wind energy from FirstEnergy Solutions. We also introduced an Earth Day promotion inviting Ohio and Pennsylvania residents to sign up for 100% wind energy at the same price as the standard energy offer. Turning to other regulatory matters, our proposed Mid-Atlantic Interstate Transmission subsidiary known as MAIT, received FERC approval in late February. As we have discussed, this subsidiary would hold the transmission assets of Met-Ed, Penelec and JCP&L, and facilitate new investments that can improve service reliability for these customers. Earlier this month, the Pennsylvania ALJs issued an initial decision approving a settlement filed by the parties resolving all issues in this case. We anticipate final approval from the Pennsylvania PUC by mid-year. And last week, we made a supplemental filing in New Jersey seeking to transfer certain JCP&L distribution assets into MAIT, which we believe should satisfy the concerns regarding public utility status that were addressed by the BPU in February. We will continue to work with the BPU because we believe transferring these assets to MAIT is the right thing to do for our New Jersey customers. As we mentioned in February, we have passed the halfway point of the first phase of our Energizing the Future transmission investment program with $2.4 billion invested through 2015 on projects designed to make our system more robust, secure, and resistant to extreme weather events. This program remains on track, and we continue to view the Transmission business as our primary growth platform for many years to come. Over the past two years, we have been focused on removing regulatory uncertainty and positioning our regulated businesses for growth. Tomorrow, we plan to file rate cases for JCP&L and our four Pennsylvania utilities that are consistent with our goals of enhancing customer service and reliability, strengthening the distribution system, improving security, and adding resiliency and operating flexibility to our infrastructure, while providing stability and growth for the company. In Pennsylvania, our four utilities will file rate plans with the Public Utilities Commission aimed at extending the service reliability improvement efforts that have yielded significant results for more than 2 million customers. Since 2011, the number of power outage impacting our Pennsylvania customers has decreased by an average of about 27%, while restoration times have improved by an average of about 14% in that same period. In total, our request would result in an expected revenue increase totaling $430 million across four Pennsylvania utilities, and we’ve broken down the impact by operating company in the Appendix of our slide presentation. These changes would bring the average monthly bills in line with the typical residential bills for the other three major electric utilities in the state, while benefiting customers by modernizing the grid with smart technologies, increased vegetation management activities and continuing customer service enhancements. Pending PUC approval, we anticipate that the new rates will take effect in January of 2017. The new base rates at the Pennsylvania utilities would also include recovery of costs associated with our long term infrastructure improvement plans, which include a projected increase in capital investments of $245 million over five years to help strengthen, upgrade and modernize our Pennsylvania distribution systems. We expect to begin recovering the cost of those programs in July through the distribution system improvement charges that are currently pending Pennsylvania PUC approval. We also plan to file a rate plan with the New Jersey BPU that supports and builds on the significant service reliability improvements made by JCP&L in recent years. The planned $142-million rate request seeks to improve service and benefit customers by supporting equipment maintenance, vegetation management and inspections of lines, poles and substations, while also compensating for other business and operating expenses. The JCP&L plan is designed to extend the service reliability improvements and helped the utility achieve its best service reliability record in more than a decade last year. While JCP&L’s rates have remained stable and even declined over the past decade, our operating expenses have continued to increase. Since July 2012, JCP&L has invested $612 million in service-related enhancement projects. And even with the proposed 6% overall rate increase for the average residential customer, JCP&L would continue to offer the lowest residential electric rates among the four regulated electric distribution companies in New Jersey. You will remember that our last rate case in New Jersey, which was based on a 2011 test year, was complicated due to storm recovery expense issues and other items. In the upcoming proceeding, which satisfies the BPU requirement that we file a new rate case by April of 2017, we hope for a reasonable timeline in recognition of the significant investments we have made. Allowing for a thorough review of our filing, we will request the new rates to go into effect in January of 2017. We remain focused on continuing to position our company for growth and success to best serve our customers, communities, investors and employees. Now, I would turn the call over to Jim for his review of the quarter. And as always, we will have plenty of time for your questions at the end of his remarks. James F. Pearson – Executive Vice President & Chief Financial Officer Thanks, Chuck, and good morning, everyone. I will remind you that detailed information about the quarter can be found in the consolidated report that was posted to our website yesterday evening. And as always, we welcome your questions during the Q&A or following the call. I’m sure you have also noticed that we did not publish a full FactBook this quarter. We hope to have greater clarity to regarding the PPA shortly, which would hopefully allow us to have an analyst meeting and provide full guidance for 2016. In place of the FactBook, we have included an Appendix to the slides for today’s call with certain regulatory and financial updates we would normally publish each quarter. Our first-quarter operating earnings of $0.80 per share compares to $0.62 per share in the first quarter of 2015. On a GAAP basis, we recorded earnings of $0.78 per share for the first quarter of 2016, compared to $0.53 per basic share during the same period last year. 2016 first quarter GAAP results include special items totaling $0.02 per share, which includes regulatory charges primarily related to economic development and energy efficiency programs associated with the Ohio ESP commitments, offset by mark-to-market gains on commodity contracts. A full listing of the special items can be found on page two of the consolidated report. In our Distribution business, results were impacted primarily by mild temperatures on distribution deliveries and lower rates in New Jersey that went into effect in 2015, partially offset by the benefit of Pennsylvania rates that were also implemented last year. Total distribution deliveries decreased 7.8% compared to the first quarter of 2015 with a 13.4% decrease in residential sales and a 5.1% decrease in commercial sales, reflecting heating degree days that were 25% below last year and 11% below normal. On a weather adjusted basis, residential deliveries were essentially flat while commercial deliveries decreased 1.6%. Sales to industrial customers decreased 2.8%. We do continue to see growth in shale gas sector but the rate has slowed dramatically in the past two years and is not enough to offset lower usage from steel and coal mining activity. First-quarter Industrial load was off nearly 110 gigawatt hours as a result of reduced operations at Republic Steel, which then announced an indefinite shutdown on April 1 and a permanent closure of Warren Steel. Overall, our sales are following the national trend that was noted by the Energy Information Association earlier this year. Whether-adjusted residential and commercial sales are each down more than 1% over the past four quarters while industrial load is down 3% in that timeframe. Drivers include the impact of more efficient lighting, appliances and equipment and slowing and shifting economic growth. In our Transmission business, operating earnings increased as a result of the higher rate base at ATSI, partially offset by the lower return on equity that was part of ATSI’s comprehensive settlement approved by FERC last fall. In our Competitive business, strong first quarter earnings reflect an increase in commodity margin, which primarily benefited from higher capacity revenues driven by increased capacity prices, as well as lower purchased power expense, higher wholesale sales and lower fossil fuel expense. These factors offset lower contract sales volume, which decreased in line with our hedging strategy. The decrease in fossil fuel expense relates to lower fuel rigs, and as Chuck indicated earlier, it also reflects the benefits for our economic dispatch strategy, which kept the Bruce Mansfield Plant offline for part of February and March. This strategy is the right approach at this time and we will continue to deploy it if markets don’t support plant operations. Clearly, this remains a very challenging business environment for our competitive units as prices continue to drop. Although we’re not updating our CES adjusted EBITDA guidance at this time. We know that a reduction of about $3 per megawatt-hour in the round-the-clock prices since the beginning of this year translates into a reduction of more than $50 million in wholesale revenue. Our committed sales are about 62 million megawatt-hours for 2016 with an additional 12 million megawatt-hours as part of the Ohio PPA. In 2017, we have 42 million megawatt-hours committed with an additional 20 million megawatt-hours for the Ohio PPA. We are reaffirming our expectations that the Competitive business will be cash flow positive each year through at least 2018. And finally, in Corporate, a higher consolidated income tax rate and other expenses reduced operating earnings by $0.02 per share compared to the first quarter of 2015. As Chuck said, we’re off to a very solid start in 2016, and we’re encouraged by the developments in Ohio and remain committed to providing customer-focused growth and creating long-term value for our shareholders. Now, I’d like to open the call up for your questions. Question-and-Answer Session Operator Thank you. The floor is now open for questions. Our first question is coming from Jonathan Arnold of Deutsche Bank. Please proceed with your question. Jonathan Philip Arnold – Deutsche Bank Securities, Inc. Good morning guys. Charles E. Jones – President, Chief Executive Officer & Director Good morning. James F. Pearson – Executive Vice President & Chief Financial Officer Good morning. Leila L. Vespoli – Executive Vice President, Markets & Chief Legal Officer Good morning. Jonathan Philip Arnold – Deutsche Bank Securities, Inc. Could you give us a sense of what the drivers for the rate increase – the rate request in Pennsylvania and New Jersey are? I hear the comment that your rates are going to be – and it’ll bring rates up to the average. But just what the big drivers are? And then maybe a sense of where the ROEs are tracking in the – to its various jurisdictions as you make these filings? James F. Pearson – Executive Vice President & Chief Financial Officer Jonathan, this is Jim. Let me take a shot at it and then I’ll let Leila get into more detail if we need. First off, we’re going to have an increase in our rate base. So, that will be part of it. We also have increased depreciation expense associated with our investments. We’re also rolling in the DISC rider as part of this increase. We have smart meters and also there has been a decrease in sales, so that’s going to be part of the driver there. So, those are primarily the major drivers. As I would say that there was not a defined ROE last year in the Pennsylvania case. So, it’s hard to say if we’re tracking to that. But, overall, I’d say our earnings in Pennsylvania are doing well, but because of these significant investments as well as the decrease in sales and the DISC rider, that is leading to the increase. And Leila, I don’t know if you have anything to add to that? Leila L. Vespoli – Executive Vice President, Markets & Chief Legal Officer Just one further point of clarification with respect to the – on the depreciation comment, and we’re actually proposing a changed methodology in depreciation that’s just driving some of that change. Jonathan Philip Arnold – Deutsche Bank Securities, Inc. Is that just in Pennsylvania or in both? Leila L. Vespoli – Executive Vice President, Markets & Chief Legal Officer Correct. Correct. Jonathan Philip Arnold – Deutsche Bank Securities, Inc. Okay. Is that a meaningful piece of it or just one of many? Leila L. Vespoli – Executive Vice President, Markets & Chief Legal Officer With regard to depreciation, it’s roughly $31 million of the change. Jonathan Philip Arnold – Deutsche Bank Securities, Inc. Okay. All right. Thanks. So it sounds like, in general, this is not about returns. It’s more about investments and the other things you listed. James F. Pearson – Executive Vice President & Chief Financial Officer That’s correct, Jonathan. Okay. Charles E. Jones – President, Chief Executive Officer & Director And Jonathan I have said all along that as we continue to move this company more towards a regulated model and we prepare for growth in our T&D operations, you’re going to see more and more rate increases or rate cases in order to accommodate that growth. Jonathan Philip Arnold – Deutsche Bank Securities, Inc. So fair enough. I think I had a 6% number mentioned for New Jersey. Did you provide a percentage on the Pennsylvania jurisdictions? James F. Pearson – Executive Vice President & Chief Financial Officer It’s – I think that’s included in the Appendix Jonathan and when we break down all four of the Pennsylvania companies you have that rate increase. Jonathan Philip Arnold – Deutsche Bank Securities, Inc. Right, we’ll see that, and thank you. And then one final thing, you commented that you’re going to wait until you have clarity from FERC on giving Q2 guidance. But more broadly if, let’s say, FERC doesn’t act ahead of the upcoming auction and maybe there’s a longer delay there, how should we think about this in the context of when you might have an Analyst Day and a broader update to the outlook? Charles E. Jones – President, Chief Executive Officer & Director Well, I think that our game plan is to wait and see what FERC does. If it drags on too long, then my expectation is we’ll give you a guidance for 2016 without the ESP baked into it. That would be our plan. I don’t expect that this is going to drag on a long time. There’s a lot of speculation out there that they’ll make a decision before the May RPM. That doesn’t bother me so much if they don’t because a lot of the opponent’s cases suggesting that we’re going to do something inappropriate in how we bid these units. And once they see how we bid these units, then I think that would diffuse a lot of that argument. So if it waits until after the RPM, that wouldn’t bother me too much. But beyond that, I think if it continues to go on and we are going to give you guidance for 2016 without the ESP. Jonathan Philip Arnold – Deutsche Bank Securities, Inc. So we should probably anticipate by early summer, you’ll be doing that then in any event? Charles E. Jones – President, Chief Executive Officer & Director Yes. Jonathan Philip Arnold – Deutsche Bank Securities, Inc. Okay, great. Thank you, guys. Operator Thank you. Our next question is coming from Paul Patterson of Glenrock Associates. Please proceed with your question. Paul Patterson – Glenrock Associates LLC Good morning, guys. Charles E. Jones – President, Chief Executive Officer & Director Hi, Paul. James F. Pearson – Executive Vice President & Chief Financial Officer Good morning. Paul Patterson – Glenrock Associates LLC Just a sort of follow-up on Jonathan’s question and your answer, should we – it seems to suggest that perhaps your bidding behavior would be the same with or without the PPA. Is that an accurate or that there wouldn’t be that big of a difference, how should we think about that? Charles E. Jones – President, Chief Executive Officer & Director Well, we’re not going to talk about our bidding behavior. But I think it is something that FERC can look at. If they just look at how we bid our West Virginia plants in the last RFP or actually in – since capacity performance, they could see a very good indication of how we bid units on the regulated side. We haven’t disclosed that bidding behavior and we don’t plan to. But my point is this. I don’t think that – I think there’s a lot of rhetoric going on about how these PPAs might affect the capacity market. It’s nothing, but rhetoric. This PPA has no impact on the PJM market whatsoever. Paul Patterson – Glenrock Associates LLC Okay. And then, in terms of your expectation that they will probably take action before the auction, which is coming right up, is that with respect to all three cases or – excuse me – to the both cases for you, or one in particular? Leila L. Vespoli – Executive Vice President, Markets & Chief Legal Officer Hi, Paul, this is Leila. Given the high profile, I guess my view on this would be that they would be looking at both these cases before the Base Residual Auction. Just to give clarity, from the way I view the world, if you think about the affiliate waiver case, if I’m the chairman, he looks at things from a legalistic standpoint. I kind of view things that same way. And so I have a case in front of me where there’s strong precedence not to look behind the screen if you were to what the states are doing. He has – in the initial 2008 waiver, there was a claim by Nopak that non-bypassable charges should be looked at and should cause him to say that there’re not – not all the customers – that there are captive customers. They chose not to make that finding. So to go against this and grant the complaint, he would have to go against legal precedent. I don’t see him doing that and I think he would want to get that out of the way and that’s tied to Mon Power complaint because fundamentally they’re kind of looking to address, call it the same issue. And if you look at the Mon Power complaint, there are a lot of parties with – that wait in with a lot of different potential remedies. And I don’t think they’re going to fall prey to the hyperbole, especially out there by Dynegy that there is a burning platform that there is imminent danger. If they’re going to want to act and give clarity and take their time and look at this. So from my standpoint, I think they’re going to want to act on the waiver, I think they are going to deny the complaint because I think it’s – to do otherwise would be inconsistent with past precedent. They can take care of the issues supposedly involved in that complaint, in the Mon Power complaint, but they can do so in a very thoughtful way by addressing it through the stakeholder process what they are used to dealing with it and taking care of it in the next – for the next BRA auction in 2017. Paul Patterson – Glenrock Associates LLC Okay. Great. Leila L. Vespoli – Executive Vice President, Markets & Chief Legal Officer I just wanted to give clarity to the market in that regard. Paul Patterson – Glenrock Associates LLC That makes sense. And then just finally, I apologize if I missed this. The $0.09 charge – regarding the regulatory charge, what was that associated with? James F. Pearson – Executive Vice President & Chief Financial Officer The regulatory charge, that was primarily the commitment we made under the ESP, and that’s associated with some energy efficiency commitments, as well as some low income and some economic development. Paul Patterson – Glenrock Associates LLC And it’s a one-timer? James F. Pearson – Executive Vice President & Chief Financial Officer It’s a one-timer. Since we committed to make those payments, so we’re required to recognize that at the time of the commitment. It is a liability to us. Paul Patterson – Glenrock Associates LLC Thanks so much. Thank you. Operator Thank you. Our next question is coming from Shahriar Pourreza of Guggenheim Partners. Please proceed with your question Shahriar Pourreza – Guggenheim Securities LLC Good morning. Charles E. Jones – President, Chief Executive Officer & Director Hi, Shahriar. Shahriar Pourreza – Guggenheim Securities LLC Could we just write-off just a couple of policy questions, here? Can we touch on what we’re hearing a little bit on Chairman Porter’s potential resignation? The timing is a little bit suspect and it’s a crucial period. Could we get some clarity there? Charles E. Jones – President, Chief Executive Officer & Director Well, I will give you my comments. I think that Chairman Porter showed outstanding leadership during the time he was at the Commission. You know, he got a very important docket moved forward. Hate to see him go, but as you know how it goes. When job opportunities present themselves, you don’t get to pick the timing of them. So he called me the other day and we had a good conversation, and I don’t think you should read anything into it other than what was said. Shahriar Pourreza – Guggenheim Securities LLC Got it. Okay, that’s helpful. And then maybe a question directed to Leila. So the Supreme Court ruling in Maryland obviously net-net most saw it as a negative, but obviously some of the Justices gave some guidance around what would be from a legal standpoint possible. They clearly drew some distinctions between Maryland and New Jersey versus what you’re proposing in Ohio. So I’d like to get maybe your opinion here on what you thought of the Supreme Court ruling. Leila L. Vespoli – Executive Vice President, Markets & Chief Legal Officer So net-net, I actually think it’s quite positive. So you may recall the Maryland case was out there when we first constructed the PPA. So we knew we were kind of threading the needle with regard to that, and I think that the Supreme Court’s decision confirms that we did a good job of that. The decision in and of itself does not negatively impact it. In fact, if you look at one of the footnotes, they go into a long detailed description of the traditional bilateral contract, which mirrors directly our PPA. So from a structure standpoint, if you think about it, through that footnote, they signaled that the structure of the PPA is something that is out there in the market and that they feel comfortable with. So structurally, I think it meets the test. And then if you go back to the EPSA case, albeit (33:57) they made a statement that insulating retail customers from price fluctuations is something that fell under state authority. So if what the Commission’s purpose was was appropriate per EPSA and the structure is appropriate per the Hughes decision, I think again those two together present us a very strong case with regard to any Federal District Court case that might be brought our way. Shahriar Pourreza – Guggenheim Securities LLC Got it. So it’s just fair to say that if something if you get a negative outcome at FERC and this does gets taken up by the Supreme Court, it’s a pretty good standing. Leila L. Vespoli – Executive Vice President, Markets & Chief Legal Officer I think it’s an excellent standing. Thank you. Shahriar Pourreza – Guggenheim Securities LLC Excellent. Okay good. And just one last question, Chuck, on, sort of, having had an update on the equity. But if FERC decides to take up this case, and this, sort of, gets drawn out a little bit, how should we, sort of, think about your equity needs? Charles E. Jones – President, Chief Executive Officer & Director I think you should think about it the way I have been answering it for the last year-and-a-half. And that is we can’t make a determination until we have all of these answers, and I don’t expect that it’s going to be a lengthy FERC process. So – and my position from the beginning has been – it’s our obligation to structure this company and operate it in a way where we could get our credit issues behind us without having to use equity to do that. We’re talking to you about a lot of growth opportunities on the regulated distribution and transmission side. Assuming we get successfully done with MAIT, that opens up more transmission investment. And I’m not going to be embarrassed to tell you we want to use equity to help grow this company going forward. But the amount and the timing – I’m not ready to discuss. Shahriar Pourreza – Guggenheim Securities LLC Excellent. Thanks so much. Operator Thank you. Our next question is coming from Neel Mitra of Tudor, Pickering. Please proceed with your question. Neel Mitra – Tudor, Pickering, Holt & Co. Securities, Inc. Hi. Good morning. Charles E. Jones – President, Chief Executive Officer & Director Good morning. Neel Mitra – Tudor, Pickering, Holt & Co. Securities, Inc. I had a general question on the distribution strategy going forward. With lower sales growth, is the strategy to continue to file regular rate cases to compensate you for the increased spend or, in some jurisdictions are you looking to implement some sort of formula rate plans like you are with the DISC mechanism in Pennsylvania? Charles E. Jones – President, Chief Executive Officer & Director Well, I would answer that we have five different distribution strategies. We serve in five states. They all have different regulatory treatments. Under the Ohio ESP, we have an extension of the DCR through the term. We also have a new treatment for smart grid and smart meter type investments. So there is a different regulatory strategy in Ohio than in Pennsylvania. In Pennsylvania, we’ve got the LTIP and the DISC. And, obviously, we’re filing for rate cases there and in New Jersey. In West Virginia, we had a case last year where, if we get to a position where we need another case, we’ll file it. And in Maryland, quite frankly, the growth in load has been commensurate with our investments. And there has been no need to file a case there. So I think it’s five different strategies. Overall, though, I would tell you the strategy is to start making the investments needed to improve the service to our customers beyond where we’re at, to provide more security to the distribution network, and, basically, make investments to serve our customers better, and then do them in a way where we can communicate to you how we’re going to get the returns. Neel Mitra – Tudor, Pickering, Holt & Co. Securities, Inc. Got it. And then my second question was on the competitive generation side and the sensitivity to the open position. Can you remind us roughly how many terawatt hours or what percentage of your expected generation that you plan to keep open in any given year? Donald R. Schneider – President, FirstEnergy Solutions ( FES ), FirstEnergy Solutions Corp. Yeah. This is Donny, Neel. Without the PPA, we have – our FactBook would show we have about 17 terawatt-hours open for 2016. I think Jim talked about the fact that a $3 move on that 17 terawatt-hours would be about a $50-million impact. With the PPA, if the PPA goes forward, we actually chew up some of that open position, as we look through the end of 2016. Neel Mitra – Tudor, Pickering, Holt & Co. Securities, Inc. Okay. Okay. Got it. And then just last point of clarification on Pennsylvania. You say you’re going to implement the DISC structure with this rate case. Would that help basically lengthen out the period between rate cases? Or is that just for a small portion of the distribution spend going forward? Charles E. Jones – President, Chief Executive Officer & Director Actually the DISC – we have filed for the DISC effective July 1 to start treating the first investments in our Long Term Infrastructure Plan. And under this rate case, any DISC expenditures after that point would be rolled into the base rates, and then we have the option going forward to then use the DISC in real-time to recover investments in the Long Term Infrastructure Plan in the outyears. So, we file to invest $245 million over the next five years. So, we’re going to use both. Neel Mitra – Tudor, Pickering, Holt & Co. Securities, Inc. Got it. Thank you. Operator Thank you. Our next question is coming from Brian Chin of Merrill Lynch. Please proceed with your question. Brian J. Chin – Merrill Lynch, Pierce, Fenner & Smith, Inc. Good morning. Charles E. Jones – President, Chief Executive Officer & Director Good morning. Leila L. Vespoli – Executive Vice President, Markets & Chief Legal Officer Hey, Brian. Good morning. Charles E. Jones – President, Chief Executive Officer & Director Good morning. Brian how are you doing? Brian J. Chin – Merrill Lynch, Pierce, Fenner & Smith, Inc. Very good. Very good. I just wanted to follow-up on the early equity issuance question just in a little bit more specific way. Can you provide your latest thoughts on timing or amount with regards to equity issuance just for Transmission purposes? And particularly if FERC is going to be delaying its response to the PPA question, does it make sense to potentially separate your equity issuance for transmission and not make that contingent on timing for FERC? Charles E. Jones – President, Chief Executive Officer & Director Well, so I’ve talked about in my comments the fact that we’re halfway through energizing the future; we’ve invested $2.4 billion in our Transmission over the last two years with no equity. And during a time that we were working to kind of strengthen our cash flows in order to improve our credit metrics. We’ve got two more years of that program at about $1 billion a year. I don’t see any equity needed to fund that Transmission growth. Going forward, if we plan to expand our Transmission investment program or expand significantly what we’re doing in the distribution, then any equity needs would be associated with increased investment in T&D. So, I answered the same way we’re not prepared to say what that amount is, but I don’t think you need to be worried about energizing the future being taken off-track in any case. Brian J. Chin – Merrill Lynch, Pierce, Fenner & Smith, Inc. Very good. Thanks. That’s all I’ve got. Operator Thank you. Our next question is coming from Julien Dumoulin-Smith of UBS. Please proceed with your question. Julien Dumoulin-Smith – UBS Securities LLC Hi. Good morning. Charles E. Jones – President, Chief Executive Officer & Director Hey, Julien. Leila L. Vespoli – Executive Vice President, Markets & Chief Legal Officer Good morning. Julien Dumoulin-Smith – UBS Securities LLC Hey. So, following up perhaps where we started on the rate cases, can you remind us where we stand on earned ROEs in kind of a trailing basis for 2015? Just I suppose speaking to the rate case filing itself for whatever you have out there, both New Jersey and Pennsylvania. And perhaps on a prospective basis, the purpose for the case, at least New Jersey, seems to be recovering O&M, and then separately Pennsylvania seems principally driven by the implementation of the DISC and spending investments there, is that kind of good (42:21) them respectively? James F. Pearson – Executive Vice President & Chief Financial Officer Julien, this is Jim. I would say that in Pennsylvania, it’s primarily driven by somewhat the decrease in the load. It’s part of the DISC filing that we have. There’s also additional investments that we’ve made there. We’ve got a very large smart meter implementation program going on over there. So that’s primarily what’s driving that in Pennsylvania. You’re also able to file on the forward-looking test year. When I look at New Jersey, it’s primarily driven by a significant amount of investment that we’ve made since the last test year in New Jersey, and that was 2011. And as we said in our remarks since July of 2012, we’ve had a significant amount of capital investment. And why we say partway through 2012, because in the test year New Jersey you’re allowed to claim in-service amounts for six months after the in-service date. So we’ve had a significant amount of investment in New Jersey, so that’s what’s driving that. Again, as far as our overall return on equity within each of the states, I would say that we’re probably tracking right around where we should, based on the last rate proceedings. However, as you know, in Pennsylvania, they did not publish what the ROE was in the settlement. Leila L. Vespoli – Executive Vice President, Markets & Chief Legal Officer Julien, this is Leila. The only thing that I would add when you’re thinking about Pennsylvania, think about aggressive energy efficiency measures and no lost distribution recovery. So when Jim was talking about the lower revenue, those factors play into that. Julien Dumoulin-Smith – UBS Securities LLC Got it. And then, turning to the equity piece of the equation, just to be clear on setting expectations, we shouldn’t expect to hear from you on equity until you get a definitive decision to either reject or accept the waiver – well, not the waiver, but the decision outright from FERC, and no action from the credit rating agencies correspondingly until that’s well (44:46). Charles E. Jones – President, Chief Executive Officer & Director Correct. I would say, yes. Julien Dumoulin-Smith – UBS Securities LLC Okay, great. Thank you, guys. Operator Thank you. Our next question is coming from Greg Gordon of Evercore ISI. Please proceed with your question. Kevin Prior – Evercore Group LLC Hi. This is actually Kevin. Other than the PPA, are there any other uncertainties or hurdles that would prevent you from giving guidance in the early summer? Charles E. Jones – President, Chief Executive Officer & Director No. Kevin Prior – Evercore Group LLC Okay. And if the FERC was to uphold the contracts, but it ended up going to the Ohio Supreme Court, would you still plan to implement the contracts on June 1, or would it then be delayed? Charles E. Jones – President, Chief Executive Officer & Director We plan to implement them on June 1. Kevin Prior – Evercore Group LLC No matter what challenges there. Okay. That’s all I have. Thanks. Operator Thank you. Our next question is coming from the Chris Turnure of JPMorgan. Please proceed with your question. Christopher J. Turnure – JPMorgan Securities LLC Good morning. I was wondering if we could talk a little bit about the supply side of the business. And ex the PPA, if you just look at the performance over the past couple of quarters, I think specifically, excluding the change in capacity prices and excluding the change in the volume. You’ve had a pretty noticeable improvement there, despite decline in commodity prices. Maybe you could just flush that out a little bit more and give us a color there. Charles E. Jones – President, Chief Executive Officer & Director So, I’ll start and then I’ll let Donny add to it. During 2015, we talked with you about our cash flow improvement program. Much of that was focused on the Competitive business. And much of that was focused on getting our Competitive business to the point where it continues to be cash flow positive and it has no need for any cash from the parent through 2018 at current energy prices as we know them. So part of that was also targeted at the FFO from the Generation business. So we reduced O&M expenditures, which contributed to some of what you’re seeing there. So that’s kind of from an operational perspective, the thing that Jim Lash and his Generation team have done to improve the competitiveness of that business. I will let Donny talk a little bit about the Commodity side. Donald R. Schneider – President, FirstEnergy Solutions ( FES ), FirstEnergy Solutions Corp. Yes, I’d just add, obviously we have taken a position starting after the polar vortex in 2014 to derisk the business and to move away from weather sensitive load. You’ll recall in the first quarter of 2015 we had what’s been referred to as the Siberian Express and while it was not nearly as significant of an impact to FES as the polar vortex, it’s still have some impact. I’m happy to report this past quarter, although we had very mild weather, the fact that we have much less weather sensitive load, are results were pretty much in line with our expectations from a sales perspective. Charles E. Jones – President, Chief Executive Officer & Director Donny and his team are doing a fantastic job running the business too. Back in February when we had Mansfield off for two weeks, the entire plant off, there were several seller side notes that suggested that, meant that load was down and we’re going to have a bad quarter. In reality, that’s part of how we’re dispatching is those units differently. So we don’t run them when we can’t make money with them. So I talked in my remarks about that save this fuel. So Donny is doing a great job at looking at every day, every hour, how do we maximize that business under some very difficult economic times. Christopher J. Turnure – JPMorgan Securities LLC Okay. I mean, to that point is there anything that we should think about historically that’s forced you to run units that were uneconomic, such as mandatory take-or-pay coal contracts or something of that nature that would be rolling off this year or in the future, to kind of provided a tailwind for your numbers all else equal or I might barking up the wrong tree there? Charles E. Jones – President, Chief Executive Officer & Director Go ahead Donny. Donald R. Schneider – President, FirstEnergy Solutions ( FES ), FirstEnergy Solutions Corp. Yeah. I mean, we’ve had coal contracts in place for a lot of years. It gives us significant flexibility. This isn’t really something new for us. I think the degree is much greater now, but you’ll recall back in – I believe it was 2012 – around August 2012, we took the entire Sammis Plant down and kept it offline through December. So it’s not really new. I think the difference is with the weak – incredibly weak forward day ahead market that we are seeing, it calls in more economic dispatch than perhaps what we had seen in the past. Christopher J. Turnure – JPMorgan Securities LLC Okay, great. And then shifting gears to transmission again, the rejection by New Jersey of your utility status for that MAIT request would seem on the surface to be a significant setback. But your comments have indicated that you’re going to continue to push forward, and you think it’s very important. Could you maybe characterize how important the New Jersey part of MAIT program is to the overall transmission spend kind of levels going forward and growth going forward, and the timing now that you have had this setback, if it’s been adjusted at all in New Jersey (50:18)? Charles E. Jones – President, Chief Executive Officer & Director Yes. So, first I would say, I think MAIT is very important to our customers in New Jersey. And we have to do a better job of helping the BPU understand why it is important. We’ve done that in our latest filing and will continue to work with them to get it across the finish line. If we don’t, then we’ll look at options to implement MAIT in Pennsylvania potentially. But as far as your real question in terms of how does it affect or transmission investment strategy, we’ve got two more years of energizing the future. We’ve got projects beyond that inside ATSI and TrAILCo that we can continue to move forward with. I don’t see MAIT been crucial at all to our transmission investment strategy. I see it as a way to implement that transmission investment strategy in a way where we can lower the cost of capital and do it in a way that’s better for customers and create more transparency for our investors. That’s how I see it. Christopher J. Turnure – JPMorgan Securities LLC Great. Thanks, Chuck. Operator Thank you. Our next question is coming from Stephen Byrd of Morgan Stanley. Please proceed with your question. Stephen Calder Byrd – Morgan Stanley & Co. LLC Hi. Good morning. Charles E. Jones – President, Chief Executive Officer & Director Good morning, Stephen. Stephen Calder Byrd – Morgan Stanley & Co. LLC Most of my questions have been addressed. I just wanted to focus on the Pennsylvania revenue request. When I look at the Appendix, it looks like the customer bill impacts can be relatively significant. I think one of the jurisdictions, it’s about 18%, if I’m reading the page correctly. Is there a way to phase that out in order to otherwise lessen the overall bill impact, and are there other precedents we can look to in Pennsylvania in terms of just how to think about that, that it looks like a fairly sizeable rate impact? James F. Pearson – Executive Vice President & Chief Financial Officer Stephen, this is Jim. I would say that, as we said earlier in our comments and Chuck said, it is that this will bring the average residential bill in Pennsylvania up to – about what’s average within the state. You’ll recall we went a number of years without increasing our rates in the State of Pennsylvania. It’s also being offset by a – from a customer perspective, it’s being offset by a reduction in their overall energy component of the bill. So, I don’t view this as something it’s going to be what would be described as a rate shock issue. As far as your earlier request, no I don’t – we don’t see any mechanism out there where we would phase this in. This is just a normal type of request that we would have. And again as Leila pointed out earlier, there is very stringent energy efficiency requirements in the State of Pennsylvania, which is decreasing the usage. So we’re required to go in and file for these rates. So that’s the way we’re looking at it. Stephen Calder Byrd – Morgan Stanley & Co. LLC Understood. And in terms of the magnitude of the benefit from lower energy costs, is there a way for us to get a sense for the magnitude of that benefit? Charles E. Jones – President, Chief Executive Officer & Director I think you could probably look at where wholesale power prices have gone over the last few years. And as Donny mentioned, wholesale power prices have fallen $3.00 already this year. So I think there was a period of time when around-the-clock power prices were in the $50-plus range, and if you look at the forwards out there right now, over the next three years, they’re probably closer to the $30 range. Stephen Calder Byrd – Morgan Stanley & Co. LLC Understood. Great, thank you very much. Operator Thank you. Our next question is coming from Ashar Khan of Visium. Please proceed with your question. Ashar Hasan Khan – Visium Asset Management LP Good morning, and congrats. One thing I was just wanted to help in terms of trying to measure these rate cases in terms of earnings potential. Is there some way you could give us what the increase in kind of rate base would be from kind of like what you have in your numbers this year versus – because it’s a forward test year next year, could you signify the increase in rate base for the two jurisdictions? Charles E. Jones – President, Chief Executive Officer & Director I will answer it at a high level, and if you want details, then I’ll let Leila and Jim fill in. But as filed, in effect January of next year, the JCP&L case is about $0.20 a share and the Pennsylvania cases combined are about $0.40 a share. Ashar Hasan Khan – Visium Asset Management LP Okay. That’s very helpful. And that was my question. Thank you so much. Charles E. Jones – President, Chief Executive Officer & Director Okay. Thanks Ashar. Operator Thank you. Our next question is coming from Angie Storozynski of Macquarie. Please proceed with your questions. Angie Storozynski – Macquarie Capital ( USA ), Inc. Thank you. I have only one question. So when I look at the plans covered by the PPA, say, in 2016, can you tell us if the assets the plans have a positive EPS contribution without the PPA? Donald R. Schneider – President, FirstEnergy Solutions ( FES ), FirstEnergy Solutions Corp. Angie, this is Donny. Let me make sure I understand your question. So you’re asking if Sammis and Davis-Besse have a positive earnings contribution without the PPA? Angie Storozynski – Macquarie Capital ( USA ), Inc. Yeah. So basically, when you showed us the EBITDA and then a bridge to net income or EPS, for SES – or CES without the PPAs, can you tell us the assets of those three plans or two plans that are covered by PPAs, so without the PPA would they have a positive EPS impact? Donald R. Schneider – President, FirstEnergy Solutions ( FES ), FirstEnergy Solutions Corp. Yes. For 2016, Sammis and Davis-Besse would definitely both have positive earnings per share impact. Angie Storozynski – Macquarie Capital ( USA ), Inc. How about 2017 or 2018 based on the current forwards on capacity payments? Donald R. Schneider – President, FirstEnergy Solutions ( FES ), FirstEnergy Solutions Corp. I don’t think we’re giving any guidance on forward years, Angie. Angie Storozynski – Macquarie Capital ( USA ), Inc. Because I mean, we are all struggling I think with the impact of your PPAs on your bottom line because we just don’t know what’s the offset from the current earnings power of these assets. That’s why I am asking? Charles E. Jones – President, Chief Executive Officer & Director I understand you are struggling with it, and I understand that the estimates are all over the board for what this ESP means. And believe me, as soon as we can give you clarification, we plan to do that. Once we have an answer from FERC, we will tell you what the value of this company is going forward with the ESP. If we don’t have an answer, then we’re going to give you 2016 guidance without the ESP. And I apologize that we’re leaving you hanging out there, but it’s just too big a moving part for us to speculate on the outcome. Angie Storozynski – Macquarie Capital ( USA ), Inc. Okay. I understand. Thank you. Operator Thank you. Our next question is coming from Anthony Crowdell of Jefferies. Please proceed with your question. Anthony C. Crowdell – Jefferies LLC Hey, good morning. Just – most of my questions have been answered. Just want to follow-up as the company is looking to transition more to a regulated utility, thoughts on maybe rate basing or getting some type of cost of severance return on Pleasants, on other power plants, particularly Pleasants or Mansfield? Charles E. Jones – President, Chief Executive Officer & Director Well, first of all, we are a regulated utility. 90%-plus of our earnings today come from our regulated operations. What we’re talking about is growth and investment inside that regulated utility. We filed our integrated resource plan with West Virginia. I think later this year, they’ll start taking a look at it seriously, and it’s up to the West Virginia Commission to decide would Pleasants be the appropriate solution. Obviously, we have a model in place already with Harrison, and we think that is something they ought to look at. Anthony C. Crowdell – Jefferies LLC In Pennsylvania, is there a similar filing or similar thought process, or just West Virginia? Charles E. Jones – President, Chief Executive Officer & Director Just West Virginia. Anthony C. Crowdell – Jefferies LLC Great. Thank you. Operator Thank you. Our next question is coming from Michael Lapides of Goldman Sachs. Please proceed with your question. Michael Lapides – Goldman Sachs & Co. Hey, guys. Real quick, do you ever put or can you discuss what you think the scale of the MAIT investment could be over a multi-year time? I mean, should we think about it similar to the size and scale of what ATSI and TrAIL have been? Now, I know lots of TrAIL was just one big project, but ATSI was a series of projects. Is it something that could be significantly smaller or significantly bigger? Just trying to get arms around how you’re – I don’t know how you are thinking about the size, scale and scope of MAIT could be? Charles E. Jones – President, Chief Executive Officer & Director So, first of all, let me clarify again. We’ve told you we have over $15 billion of Transmission projects that our teams already identified on our existing 24,000 miles of Transmission System. Those projects can be executed with or without MAIT. MAIT is a vehicle to improve the recovery mechanism from a transparency perspective for investors and lower the cost of capital to make those investments more efficient for customers. That’s all MAIT is. It doesn’t stop us from moving forward with the transmission investment program. As far as the scale of the program, we’ll talk to you about that once we know the base of the company that we’re operating on after we get a resolution on this ESP, because it’s more driven by our capability of raising the cash and likely some equity to fund it. So we’ll tell you about that once we know those answers. Michael Lapides – Goldman Sachs & Co. Got it. Okay. I was just trying to get my arms around MAIT. The transmission in the Eastern part of your service territories seems like a huge opportunity in terms of the rate base growth there. And just trying to get my arms around kind of the magnitude of the impact over time. One other question for you. O&M, where do you see the greatest opportunities across your businesses to manage O&M further down and you’ve done a really good job over the last year or so in doing so. Where do you see the incremental opportunities and where potentially are their headwinds? Charles E. Jones – President, Chief Executive Officer & Director Well, I don’t think of it necessarily as managing O&M down. I think about it as spending the appropriate amount of O&M to serve our customers the right way. And as we invest in new equipment, O&M is going to trend down. In the Transmission System, we’re replacing 60-year and 70-year old equipment with brand new equipment, that as I’ve shared before we’re basically buying with 30-year warranties from the manufacturer – full warranties where we don’t have to do any O&M on them. So we’re going to spend the appropriate O&M as long as we’re having rate cases and we’re having timely recovery of our expenses, I think the shareholders are immune to how much O&M is involved. And so when you think about it, it’s more about where do we spend it, how is it being recovered and is this the right amount for customers. Michael Lapides – Goldman Sachs & Co. Got it. Thanks Chuck. Much appreciated. Charles E. Jones – President, Chief Executive Officer & Director Okay. Take care Michael. Operator Thank you. We’re showing time for one additional question today. Our last question will be coming from Praful Mehta of Citigroup. Please proceed with your questions. Praful Mehta – Citigroup Global Markets, Inc. (Broker) Hi, Thank you. Most of… Charles E. Jones – President, Chief Executive Officer & Director Good morning. Praful Mehta – Citigroup Global Markets, Inc. (Broker) …my questions have been answered. Just quickly on strategic direction in M&A, I guess if the Ohio PPA goes one way or the other, does that change your view around how you think about M&A in general? There’s clearly a lot of M&A that happened last year, it continues to be top of M&A this year. So, if you could just broadly – now that you’re going more towards the regulated platform and clearly as you said, you are a regulated utility, how are you thinking about strategic direction in M&A in that context? Charles E. Jones – President, Chief Executive Officer & Director Of all the things I’ve been thinking about a CEO the last 16 months, M&A is not high on that priority. That’s how I would answer that. We’re trying to strengthen the company that we know. We’re a big company; we have 6 million customers to serve. We’re going to do that the right way. Praful Mehta – Citigroup Global Markets, Inc. (Broker) Fair enough. Thank you. Charles E. Jones – President, Chief Executive Officer & Director Okay. Before we leave, I have one final announcement that I’d like to make. Many of you know Rey Jimenez, Rey has been part of our IR team at FirstEnergy since 1997, and he has decided that he would rather spend his time in retirement than talking to all of you in the future. So, he is going to be retiring after 39 years with the company. He will be in the office until early June and I’d encourage you – I know many of you have worked with him, to get a chance to wish him the best as we will for a healthy and happy retirement. So, just wanted to make that announcement. Thank you all again for your support and confidence, and we’ll be talking to you again as soon as we have an answer from FERC. Operator Ladies and gentlemen, thank you for your participation. This concludes today’s teleconference. You may disconnect your lines at this time. And have a wonderful day. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. 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