FirstEnergy Money Pools FirstEnergy’s utility operating subsidiary companies also have the ability to borrow from each other and FE to meet their shortterm working capital requirements. Similar but separate arrangements exist among FirstEnergy’s unregulated companies with AE Supply, FE, FET, FEV and certain other unregulated subsidiaries. FESC administers these money pools and tracks surplus funds of FE and the respective regulated and unregulated subsidiaries, as the case may be, as well as proceeds available from bank borrowings. Companies receiving a loan under the money pool agreements must repay the principal amount of the loan, together with accrued interest, within 364 days of borrowing the funds. The rate of interest is the same for each company receiving a loan from their respective pool and is based on the average cost of funds available through the pool. During 2022, interest rates have increased significantly, which has caused the rate and interest on borrowings and lending under the money pools to be significantly higher. The average interest rate for borrowings in 2022 was 2.27% per annum for the regulated companies’ money pool, as compared to 1.01% in 2021, and 2.14% per annum for the unregulated companies’ money pool, as compared to 0.60% in 2021. Long-Term Debt Capacity FE's and its subsidiaries' access to capital markets and costs of financing are influenced by the credit ratings of their securities. The following table displays FE’s and its subsidiaries’ credit ratings as of February 10, 2023: Corporate Credit Rating Senior Secured Senior Unsecured Outlook/CreditWatch (1) Issuer S&P Moody’s Fitch S&P Moody’s Fitch S&P Moody’s Fitch S&P Moody’s Fitch FE BBB- Ba1 BBB- — — — BB+ Ba1 BBB- P P S AGC BB+ Baa2 BBB — — — — — — P S S ATSI BBB A3 BBB — — — BBB A3 BBB+ P S S CEI BBB Baa3 BBB A- Baa1 A- BBB Baa3 BBB+ P S S FET BBB- Baa2 BBB- — — — BB+ Baa2 BBB- P S S JCP&L BBB A3 BBB — — — BBB A3 BBB+ P S S ME BBB A3 BBB — — — BBB A3 BBB+ P S S MAIT BBB A3 BBB — — — BBB A3 BBB+ P S S MP BBB Baa2 BBB A- A3 A- BBB Baa2 — S S S OE BBB A3 BBB A- A1 A- BBB A3 BBB+ P S S PN BBB Baa1 BBB — — — BBB Baa1 BBB+ P S S Penn BBB A3 BBB A- A1 — — — — P S S PE BBB Baa2 BBB A- A3 A- — — — S S S TE BBB Baa2 BBB A- A3 A- — — — P S S TrAIL BBB A3 BBB — — — BBB A3 BBB+ P S S WP BBB A3 BBB A- A1 A- — — — P S S (1) S = Stable, P = Positive On July 22, 2022, Fitch issued a one notch upgrade to all applicable ratings for FE and its subsidiaries and revised the outlook to stable. On September 13, 2022, Moody’s issued a one notch downgrade to all applicable ratings for CEI and TE and revised their outlooks to stable. On February 10, 2023, S&P revised the outlook for FE and its subsidiaries, except MP and PE, to positive from stable. The applicable undrawn and drawn margin on the 2021 Credit Facilities are subject to ratings based pricing grids. The applicable fee paid on the undrawn commitments under the 2021 Credit Facilities are based on each borrower’s senior unsecured noncredit enhanced debt ratings as determined by S&P and Moody’s. The fees paid on actual borrowings are determined based on each borrower’s senior unsecured non-credit enhanced debt ratings as determined by S&P and Moody’s. The interest rates payable on approximately $2.1 billion in FE’s senior unsecured notes are subject to adjustments from time to time if the ratings on the notes from any one or more of S&P, Moody’s and Fitch decreases to a rating set forth in the applicable governing documents. Generally, a one-notch downgrade by the applicable rating agency may result in a 25 basis point coupon rate increase beginning at BB, Ba1, and BB+ for S&P, Moody’s and Fitch, respectively, to the extent such rating is applicable to the series of outstanding senior unsecured notes, during the next interest period, subject to an aggregate cap of 2% from issuance interest rate. 47
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