FE · 10-Q · 2026Q1 · Full report

Transmission ROE Incentive

FIRSTENERGY CORP · 2026-04-28 · Importance 53 · Surprise 60

A complaint filed by the OCC led to litigation over FERC’s 50 basis point ROE adder for RTO membership; the Sixth Circuit held that the adder applies only where RTO membership is voluntary. As a result, ATSI recorded a $46 million pre‑tax charge (with interest) in 2024 to reflect expected refunds to transmission customers back to February 24, 2022. Petitions for Supreme Court review were denied and, on November 13, 2025, the Sixth Circuit issued a mandate sending the case back to FERC for further proceedings. The ultimate outcome could affect transmission formula rates and result in refunds or adjustments to transmission revenues for FirstEnergy’s transmission affiliates.

Key facts

• During 2024, as a result of the Sixth Circuit ruling regarding the ROE adder, ATSI recognized a $46 million pre-tax charge with interest, of which $42 million is reported in Transmission Revenues and $4 million is reported in Miscellaneous income, net on the FirstEnergy Consolidated Statements of Income and Comprehensive Income at the Stand-Alone Transmission segment to reflect the expected refund owed to transmission customers back to February 24, 2022.
• On June 20, 2025 and June 24, 2025, ATSI and AEP’s Ohio affiliate, respectively, applied to the Supreme Court of the U.S. for review of the Sixth Circuit’s decision in the Transmission ROE Incentive matter, and on November 10, 2025 the Supreme Court denied ATSI’s petition while the Sixth Circuit issued a mandate on November 13, 2025 sending the case back to FERC for further proceedings.
• A proposed FERC rulemaking proceeding initiated in March 2020 concerning transmission rate incentives is pending and FirstEnergy’s transmission subsidiaries could be affected by the rulemaking; ATSI is collecting the RTO membership ROE incentive adder subject to refund due to the Sixth Circuit ruling.