commissions could attempt to impose restrictions on the ability of the Utilities and Transmission Companies to pay dividends or otherwise restrict cash payments to us. We Cannot Assure Common Shareholders that Future Dividend Payments Will be Made, or if Made, in What Amounts They May be Paid The FE Board will continue to regularly evaluate our common stock dividend and determine whether to declare a dividend, and an appropriate amount thereof, each quarter taking into account such factors as, among other things, our earnings, financial condition and cash flows from subsidiaries, as well as general economic and competitive conditions. We cannot assure common shareholders that dividends will be paid in the future, or that, if paid, dividends will be at the same amount or with the same frequency as in the past. The Tax Characterization of Our Distributions to Shareholders Will Fluctuate When we make distributions to shareholders, we are required to subsequently determine and report the tax characterization of those distributions for purposes of shareholders’ income taxes. Whether a distribution is characterized as a dividend or a return of capital (and possible capital gain) depends upon an internal tax calculation to determine earnings and profits for income tax purposes (E&P). E&P should not be confused with earnings or net income under GAAP. Further, after we report the expected tax characterization of distributions we have paid, the actual characterization could vary from our expectation with the result that holders of our common stock could incur different income tax liabilities than expected. In general, distributions are characterized as dividends to the extent the amount of such distributions do not exceed our calculation of current or accumulated E&P. Distributions in excess of current and accumulated E&P may be treated as a nontaxable return of capital. Generally, a non-taxable return of capital will reduce an investor’s basis in our stock for federal tax purposes, which will impact the calculation of gain or loss when the stock is sold. Our internal calculation of E&P can be impacted by a variety of factors. FirstEnergy exhausted its accumulated E&P in the second half of the 2019 tax year. This elimination of accumulated E&P will make it more likely that at least a portion of our current or future distributions will be characterized for shareholders’ tax purposes as a return of capital. Upon such characterization, shareholders are urged to consult their own tax advisors regarding the income tax treatment of our distributions to them. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES The first mortgage indentures for the Ohio Companies, Penn, MP, PE and WP constitute direct first liens on substantially all of the respective physical property, subject only to excepted encumbrances, as defined in the first mortgage indentures. See Note 10, "Capitalization," of the Notes to Consolidated Financial Statements for information concerning financing encumbrances affecting certain of the Utilities’ properties. FirstEnergy controls the following generation sources as of December 31, 2022, shown in the table below, and operates in PJM. Except for the OVEC participation referenced in the footnotes to the table, the Regulated Distribution segment generating units are owned by MP. Plant (Location) Unit Total Corp/Other Regulated Distribution Net Demonstrated Capacity (MW) Super-critical Coal-fired: Harrison (Haywood, WV) 1-3 1,984 — 1,984 Fort Martin (Maidsville, WV) 1-2 1,098 — 1,098 3,082 — 3,082 Sub-critical and Other Coal-fired: OVEC (Cheshire, OH) (Madison, IN) 1-11 78 (1) 67 11 Pumped-storage Hydro: Bath County (Warm Springs, VA) 1-6 487 (2) — 487 Total 3,647 67 3,580 (1) Represents AE Supply's 3.01% and MP's 0.49% entitlement based on their participation in OVEC. (2) Represents AGC's 16.25% undivided interest in Bath County. The station is operated by VEPCO. 23
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