FIRSTENERGY CORPFE
FIRSTENERGY CORP Leases Disclosure
LEASES
The disclosures in this note apply to both Registrants, unless indicated otherwise.
The Registrants primarily lease vehicles as well as building space, office equipment, and other property and equipment under cancellable and non-cancelable leases. The Registrants do not have any material leases in which they are the lessor.
The Registrants account for leases under, "Leases (Topic 842)". Leases with an initial term of 12 months or less are recognized as lease expense on a straight-line basis over the lease term and not recorded on the balance sheet. Most leases include one or more options to renew, with renewal terms that can extend the lease term from 1 to 40 years, and certain leases include options to terminate. The exercise of lease renewal options is at FirstEnergy’s sole discretion. Renewal options are included within the lease liability if they are reasonably certain based on various factors relative to the contract. Certain leases also include options to purchase the leased property. The depreciable life of leased assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise. The Registrants' lease agreements do not contain any material restrictive covenants. The Registrants have elected a policy to not separate lease components from non-lease components for all asset classes.
For vehicles leased under certain master lease agreements, the lessor is guaranteed a residual value up to a stated percentage of the equipment cost at the end of the lease term. If the actual fair value of the leased equipment is below the guaranteed
residual value at the end of the lease term, the Registrants are committed to pay the difference in the actual fair value and the residual value guarantee. The Registrants do not believe it is probable that it will be required to pay anything pertaining to the residual value guarantee, and the lease liabilities and right-of-use assets are measured accordingly.
Finance leases for assets used in regulated operations are recognized in the Registrants' Statements of Income and Comprehensive Income such that amortization of the right-of-use asset and interest on lease liabilities equals the expense recorded for ratemaking purposes. Finance leases for regulated and non-regulated operations are accounted for as if the assets were owned and financed, with associated expense recognized in Interest expense and Provision for depreciation on the Registrants' Statements of Income and Comprehensive Income, while all operating lease expenses are recognized in Other operating expense.
The following tables represent FirstEnergy's components of lease expense for the years ended December 31, 2025, 2024 and 2023:
For the Year Ended December 31, 2025 | ||||||||||||||||||||||||||
| (In millions) | Vehicles | Buildings | Other | Total | ||||||||||||||||||||||
Operating lease costs(1) | $ | 106 | $ | 2 | $ | 5 | $ | 113 | ||||||||||||||||||
| Finance lease costs: | ||||||||||||||||||||||||||
| Amortization of right-of-use assets | — | 1 | 2 | 3 | ||||||||||||||||||||||
| Interest on lease liabilities | — | 2 | — | 2 | ||||||||||||||||||||||
| Total finance lease cost | — | 3 | 2 | 5 | ||||||||||||||||||||||
| Total lease cost | $ | 106 | $ | 5 | $ | 7 | $ | 118 | ||||||||||||||||||
(1) Includes $45 million of short-term lease costs.
For the Year Ended December 31, 2024 | ||||||||||||||||||||||||||
| (In millions) | Vehicles | Buildings | Other | Total | ||||||||||||||||||||||
Operating lease costs(1) | $ | 82 | $ | 3 | $ | 6 | $ | 91 | ||||||||||||||||||
| Finance lease costs: | ||||||||||||||||||||||||||
| Amortization of right-of-use assets | 1 | 1 | 2 | 4 | ||||||||||||||||||||||
| Interest on lease liabilities | — | 2 | — | 2 | ||||||||||||||||||||||
| Total finance lease cost | 1 | 3 | 2 | 6 | ||||||||||||||||||||||
| Total lease cost | $ | 83 | $ | 6 | $ | 8 | $ | 97 | ||||||||||||||||||
(1) Includes $35 million of short-term lease costs.
For the Year Ended December 31, 2023 | ||||||||||||||||||||||||||
| (In millions) | Vehicles | Buildings | Other | Total | ||||||||||||||||||||||
Operating lease costs(1) | $ | 60 | $ | 5 | $ | 14 | $ | 79 | ||||||||||||||||||
| Finance lease costs: | ||||||||||||||||||||||||||
| Amortization of right-of-use assets | 4 | 2 | 2 | 8 | ||||||||||||||||||||||
| Interest on lease liabilities | — | 5 | — | 5 | ||||||||||||||||||||||
| Total finance lease cost | 4 | 7 | 2 | 13 | ||||||||||||||||||||||
| Total lease cost | $ | 64 | $ | 12 | $ | 16 | $ | 92 | ||||||||||||||||||
(1) Includes $27 million of short-term lease costs.
The following table represents JCP&L's components of lease expense for the years ended December 31, 2025, 2024 and 2023:
| For the Year Ended December 31, | ||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | |||||||||||||||||
Operating lease costs(1) | $ | 13 | $ | 11 | $ | 11 | ||||||||||||||
| Finance lease costs: | ||||||||||||||||||||
| Amortization of right-of-use assets | 1 | 1 | 1 | |||||||||||||||||
| Interest on lease liabilities | 1 | 1 | 1 | |||||||||||||||||
| Total finance lease cost | 2 | 2 | 2 | |||||||||||||||||
| Total lease cost | $ | 15 | $ | 13 | $ | 13 | ||||||||||||||
(1) Includes short-term lease costs of $1 million for the year ended December 31, 2025 and $2 million for the years ended December 31, 2024 and 2023.
Supplemental cash flow information related to FirstEnergy's leases was as follows:
| For the Years Ended December 31, | ||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||||||
| Operating cash flows from operating leases | $ | 71 | $ | 60 | $ | 54 | ||||||||||||||
| Operating cash flows from finance leases | 2 | 2 | 3 | |||||||||||||||||
| Finance cash flows from finance leases | 2 | 2 | 8 | |||||||||||||||||
| Right-of-use assets obtained in exchange for lease obligations: | ||||||||||||||||||||
| Operating leases | $ | 104 | $ | 69 | $ | 13 | ||||||||||||||
| Finance leases | — | — | — | |||||||||||||||||
Supplemental cash flow information related to JCP&L's leases was as follows:
| For the Years Ended December 31, | ||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||||||
| Operating cash flows from operating leases | $ | 13 | $ | 12 | $ | 11 | ||||||||||||||
| Operating cash flows from finance leases | 1 | 1 | 1 | |||||||||||||||||
| Finance cash flows from finance leases | 2 | 1 | 1 | |||||||||||||||||
| Right-of-use assets obtained in exchange for lease obligations: | ||||||||||||||||||||
| Operating leases | $ | 24 | $ | 10 | $ | 3 | ||||||||||||||
| Finance leases | — | — | — | |||||||||||||||||
Lease terms and discount rates for FirstEnergy were as follows:
| As of December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Weighted-average remaining lease terms (years) | ||||||||||||||||||||
| Operating leases | 6.40 | 5.62 | 5.93 | |||||||||||||||||
| Finance leases | 12.79 | 12.38 | 12.26 | |||||||||||||||||
Weighted-average discount rate(1) | ||||||||||||||||||||
| Operating leases | 5.16 | % | 5.00 | % | 4.51 | % | ||||||||||||||
| Finance leases | 16.24 | % | 15.39 | % | 14.73 | % | ||||||||||||||
(1) When an implicit rate is not readily determinable, an incremental borrowing rate is utilized, determining the present value of lease payments. The rate is determined based on expected term and information available at the commencement date.
Lease terms and discount rates for JCP&L were as follows:
| As of December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Weighted-average remaining lease terms (years) | ||||||||||||||||||||
| Operating leases | 9.39 | 6.00 | 6.60 | |||||||||||||||||
| Finance leases | 12.15 | 9.60 | 10.30 | |||||||||||||||||
Weighted-average discount rate(1) | ||||||||||||||||||||
| Operating leases | 5.83 | % | 5.76 | % | 5.68 | % | ||||||||||||||
| Finance leases | 15.94 | % | 16.07 | % | 16.15 | % | ||||||||||||||
(1) When an implicit rate is not readily determinable, an incremental borrowing rate is utilized, determining the present value of lease payments. The rate is determined based on expected term and information available at the commencement date.
Supplemental balance sheet information related to FirstEnergy's leases was as follows:
| As of December 31, | ||||||||||||||||||||
| (In millions) | Financial Statement Line Item | 2025 | 2024 | |||||||||||||||||
| Assets | ||||||||||||||||||||
Operating lease(1) | $ | 276 | $ | 228 | ||||||||||||||||
Finance lease(2) | 31 | 32 | ||||||||||||||||||
| Total leased assets | $ | 307 | $ | 260 | ||||||||||||||||
| Liabilities | ||||||||||||||||||||
| Current: | ||||||||||||||||||||
| Operating | $ | 60 | $ | 51 | ||||||||||||||||
| Finance | 3 | 3 | ||||||||||||||||||
| Noncurrent: | ||||||||||||||||||||
| Operating | 227 | 192 | ||||||||||||||||||
| Finance | 7 | 9 | ||||||||||||||||||
| Total leased liabilities | $ | 297 | $ | 255 | ||||||||||||||||
(1) Operating lease assets are recorded net of accumulated amortization of $217 million and $174 million as of December 31, 2025 and 2024, respectively.
(2) Finance lease assets are recorded net of accumulated amortization of $17 million and $14 million as of December 31, 2025 and 2024, respectively.
Supplemental balance sheet information related to JCP&L's leases was as follows:
| As of December 31, | ||||||||||||||||||||
| (In millions) | Financial Statement Line Item | 2025 | 2024 | |||||||||||||||||
| Assets | ||||||||||||||||||||
Operating lease(1) | $ | 58 | $ | 43 | ||||||||||||||||
Finance lease(2) | 6 | 6 | ||||||||||||||||||
| Total leased assets | $ | 64 | $ | 49 | ||||||||||||||||
| Liabilities | ||||||||||||||||||||
| Current: | ||||||||||||||||||||
| Operating | $ | 11 | $ | 11 | ||||||||||||||||
| Finance | 2 | 1 | ||||||||||||||||||
| Noncurrent: | ||||||||||||||||||||
| Operating | 56 | 43 | ||||||||||||||||||
| Finance | 2 | 4 | ||||||||||||||||||
| Total leased liabilities | $ | 71 | $ | 59 | ||||||||||||||||
(1) Operating lease assets are recorded net of accumulated amortization of $36 million and $30 million as of December 31, 2025 and 2024, respectively.
(2) Finance lease assets are recorded net of accumulated amortization of $6 million and $5 million as of December 31, 2025 and 2024, respectively.
Maturities of FirstEnergy's lease liabilities as of December 31, 2025, were as follows:
| (In millions) | Operating Leases | Finance Leases | Total | |||||||||||||||||
| 2026 | $ | 72 | $ | 4 | $ | 76 | ||||||||||||||
| 2027 | 61 | 3 | 64 | |||||||||||||||||
| 2028 | 58 | 4 | 62 | |||||||||||||||||
| 2029 | 43 | — | 43 | |||||||||||||||||
| 2030 | 29 | — | 29 | |||||||||||||||||
| Thereafter | 85 | — | 85 | |||||||||||||||||
Total lease payments(1) | 348 | 11 | 359 | |||||||||||||||||
| Less imputed interest | 61 | 1 | 62 | |||||||||||||||||
| Total net present value | $ | 287 | $ | 10 | $ | 297 | ||||||||||||||
(1) Operating lease payments for certain leases are offset by sublease receipts of $6 million over 7 years.
Maturities of JCP&L's lease liabilities as of December 31, 2025, were as follows:
| (In millions) | Operating Leases | Finance Leases | Total | |||||||||||||||||
| 2026 | $ | 13 | $ | 2 | $ | 15 | ||||||||||||||
| 2027 | 11 | 2 | 13 | |||||||||||||||||
| 2028 | 13 | — | 13 | |||||||||||||||||
| 2029 | 9 | — | 9 | |||||||||||||||||
| 2030 | 7 | — | 7 | |||||||||||||||||
| Thereafter | 42 | — | 42 | |||||||||||||||||
Total lease payments(1) | 95 | 4 | 99 | |||||||||||||||||
| Less imputed interest | 28 | — | 28 | |||||||||||||||||
| Total net present value | $ | 67 | $ | 4 | $ | 71 | ||||||||||||||
(1) Operating lease payments for certain leases are offset by sublease receipts of $5 million over 7 years.
As of December 31, 2025, lease agreements for vehicles and fiber lines that have not yet commenced for FirstEnergy are $14 million, which are expected to commence from 2026-2045 with lease terms of 5 to 20 years, and lease agreements for vehicles and fiber lines that have not yet commenced for JCP&L are $2 million, which are expected to commence in the next 18 months with lease terms of 5 to 20 years. In November 2024, JCP&L entered into a 22 year lease agreement for a new office located in Morris Plains, New Jersey. The lease commenced on November 25, 2025, and JCP&L took possession of the space to begin tenant improvements. The lease is classified as an operating lease, and a right-of-use asset of $16 million and a lease liability of $17 million were recognized by the Registrants on the commencement date, which amounts are reflected in the tables above.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 13, 2024 | |
| 2022 | Feb 13, 2023 | |
| 2021 | Feb 16, 2022 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 10, 2020 | |
| 2016 | Feb 21, 2017 | |
| 2015 | Feb 16, 2016 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.