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NYSE:FE
Lehman Brothers 2008 CEO Energy/Power Conference
New York City, NY • September 2-4, 2008
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 2
Safe Harbor Statement under the Private SecuritiesLitigation Reform Act of 1995This presentation includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding our, or our management’s, intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” “believe,” “estimate” and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual results may differ materially due to the speed and nature of increased competition in the electric utility industry and legislative and regulatory changes affecting how generation rates will be determined following the expiration of existing rate plans in Ohio and Pennsylvania, the impact of the PUCO’s rulemaking process on the Ohio Companies’ ESP and MRO filings, economic or weather conditions affecting future sales and margins, changes in markets for energy services, changing energy and commodity market prices and availability, replacement power costs being higher than anticipated or inadequately hedged, the continued ability of FirstEnergy’s regulated utilities to collect transition and other charges or to recover increased transmission costs, maintenance costs being higher than anticipated, other legislative and regulatory changes including revised environmental requirements and possible greenhouse gas emissions regulation, the impact of the U.S. Court of Appeals July 11, 2008 decision to vacate the CAIR rules and the scope of any laws, rules or regulations that may ultimately take their place, the uncertainty of the timing and amounts of the capital expenditures needed to, among other things, implement the Air Quality Compliance Plan (including that such amounts could be higher than anticipated) or levels of emission reductions related to the Consent Decree resolving the New Source Review litigation or other potential regulatory initiatives, adverse regulatory or legal decisions and outcomes (including, but not limited to, the revocation of necessary licenses or operating permits and oversight by the Nuclear Regulatory Commission including, but not limited to, the Demand for Information issued to FENOC on May 14, 2007) as disclosed in our SEC filings, the timing and outcome of various proceedings before the PUCO (including, but not limited to, the Distribution Rate Cases and the generation supply plan filing for the Ohio Companies and the successful resolution of the issues remanded to the PUCO by the Supreme Court of Ohio regarding the Rate Stabilization Plan and the Rate Certainty Plan, including the deferral of fuel costs) and Met-Ed’s and Penelec’s transmission service charge filings with the PPUC as well as the resolution of the Petitions for Review filed with the Commonwealth Court of Pennsylvania with respect to the transition rate plan for Met-Ed and Penelec, the continuing availability of generating units and their ability to continue to operate at or near full capacity, the ability to comply with applicable state and federal reliability standards, the ability to accomplish or realize anticipated benefits from strategic goals (including employee workforce initiatives), the ability to improve electric commodity margins and to experience growth in the distribution business, changing market conditions that could affect the value of assets held in our nuclear decommissioning trust fund, pension fund and other trust funds, the ability to access the public securities and other capital markets and the cost of such capital, the risks and other factors discussed from time to time in our SEC filings, and other similar factors. The foregoing review of factors should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for us to predict all such factors, nor can we assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. Dividends declared from time to time on FirstEnergy's common stock during any annual period may in aggregate vary from the indicated amounts due to circumstances considered by FirstEnergy's Board of Directors at the time of the actual declarations. Also, a security rating is not a recommendation to buy, sell or hold securities, and it may be subject to revision or withdrawal at any time and each such rating should be evaluated independently of any other rating. We expressly disclaim any current intention to update any forward-looking statements contained herein as a result of new information, future events, or otherwise.
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 3
Agenda
FirstEnergy Overview
Transition to Market-Based Rates
Maximize Generation Value
Hedging Commodity Exposures
Financial Flexibility
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 4
FirstEnergy Overview
7 Regulated Utilities– Fifth largest U.S. investor-owned electric
utility with 4.5 million customers in OH, PA & NJ
– Geographic and regulatory diversity
Focus on Fundamentals– Enhance reliability and customer service– Invest in infrastructure – Pursue timely cost recovery – Control expenditures through continuous
improvement culture
Regulated
Balanced Integrated Approach
Objective: Maximize margins from each business
FirstEnergy Solutions (FES), an unregulated subsidiary:
– Controls 14,000+ MW of generation capacity
– Separate SEC Registrant
Focus on Fundamentals– Transition to market-based rates– Expand generation output– Effectively hedge commodity exposures– Leverage proven skills to succeed in
competitive markets
Competitive
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 5
Transition to Market-Based Generation Rates
Our goals in this process– Offer achievable path toward a competitive generation market– Meet both financial and public policy objectives
Electric Security Plan (ESP)– Comprehensive: covering generation, distribution and transmission– Predictable rates and customer benefits– Provides Public Utilities Commission of Ohio (PUCO) with flexibility
– 3-year generation offer; PUCO option to terminate after 2 years– Commits to energy efficiency, economic development and infrastructure
improvements– More favorable in the aggregate than expected MRO outcome
Market Rate Offer (MRO) – If ESP not approved by PUCO – Competitive supply of generation
Ohio – 2009
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 6
Transition to Market-Based Generation Rates
Comprehensive Plan– Transition toward market pricing for generation
ESP Benefits
$9.5/MWh$8.5/MWh$7.5/MWhPhase-in Credit
$553M$488M$429MGeneration Price Deferrals
$85/MWh$80/MWh$75/MWhGeneration Price
5.99%4.01%5.32%Predictable Customer Price Increases
201120102009ESP Effects
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 7
Transition to Market-Based Generation Rates
Comprehensive Plan– CEI Regulatory Transition Charge write-off – $485M– Resolves pending Distribution rate case– Increased distribution revenue for system and reliability improvements– Recovers prior deferrals and establishes new deferrals– Generation supply arrangement with FirstEnergy Solutions (FES)
– Generation prices fixed with limited exceptions– FES commitment to add 1,000 MW of generation capacity– Environmental remediation and reclamation up to $45M
ESP Benefits (continued)
PUCO Order Requested ESP Rates Effective
Jan. 1, 2009Dec. 10, 2008
PUCO Order Required
Dec. 26, 2008
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 8
Transition to Market-Based Generation Rates
Alternative to ESP to secure competitively priced power supply– Competitive Bidding Process (CBP)– Slice-of-system approach– Independent manager to ensure transparency of bidding process– Affiliates (FirstEnergy Solutions) may bid
Power supply is a pass through for utilities
Mitigates wholesale market volatility– Initial supply periods staggered – Subsequent to initial bid, 1/3 of total load bid annually via two solicitations
MRO Overview
PUCO MRO Order Required MRO Rates Effective
Jan. 1, 2009Oct. 29, 2008
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 9
Transition to Market-Based Generation Rates
Transition periods– Transition to market-based pricing partially implemented
– Penn Power transitioned to market-based pricing in Jan. 2007
– Met-Ed (ME) and Penelec (PN) maintain POLR obligations at fixed rates through year-end 2010
– ME and PN scheduled to transition to market-based pricing in Jan. 2011
Pennsylvania legislation– Alternative Energy Investment Act enacted – $650M alternative energy fund– Other pending legislation addresses
– Generation procurement – Expiration of rate caps– Conservation and renewable energy
Pennsylvania
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 10
Expand Generation Output
“Mining our Assets” Initiatives*– No new planned baseload additions– Low-cost, internally funded– Proven technology, quick to market– 2005-2007: 447 MW additions– 2008-2011: 322 MW forecast
Fremont Natural Gas Plant– 544 MW load-following capacity; 163 MW peaking capacity– Expected to be in-service late 2009
Renewable Opportunities– Wind energy
– 145 MW currently on-line– Additional 70 MW scheduled to be completed 4Q 2008
*includes efficiency and capacity factor improvements (see slide 9 in the Appendix)
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 11
Maximize Generation Value
Appropriate hedging – Coal, coal transportation, nuclear fuel, and emission allowance positions
significantly closed for 2008-2010 forecasted generation– Rising total fuel costs of approx. $200M in 2008
– Primarily coal transportation and surcharges
– Similar increase projected in 2009 – Eastern coal, other non-coal fossil, nuclear fuel
“Fuel Flex” expands margins and fuel choices– Blend coal to match market conditions on near real-time basis
– Maximize revenues when power prices are high– Minimize fuel costs when power prices are low
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 12
Effectively Hedge Commodity Exposures
Strategic investment in Bull Mountain mine operation located in eastern Montana
Estimated annual output of 12 million to 14 million tons and reserves of approximately 440 million tons
Equity investment of $125M; 45% interest in joint venture
15-year coal agreement
Concurrent rail agreements
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 13
Effectively Hedge Commodity Exposures
FES secures long-term coal supply– Delivery of up to 10M tons annually at
competitive prices (starting in late 2009)– Closes FirstEnergy coal position through 2013 – Increased fuel optionality
Higher heat content vs. Powder River Basin– 10,300 BTU vs. 8,800 BTU, resulting in higher
production at FirstEnergy generating facilities– Avoided derates of approximately 170 to 200 MW
Environmental advantages– 50% lower sulfur and ash content than eastern coal– Lower mercury content – Lower CO2 emissions per MW
Opportunity to resell tonnage not used at FirstEnergy facilitiesTotal FirstEnergy annual coal requirement = 22-25 million tons
Bull Mountain Strategic Advantages
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 14
FirstEnergy is an Attractive Risk/Reward Opportunity
Managing transition to competitive markets (OH & PA)
Maximizing generation value
Earnings and cash flow growth from competitive business
Rigorous focus on fundamentals, execution and operational excellence
Strong and stable utilities
Financial flexibility for the future
Bottom Line: Maximize benefits to shareholders
2009 20112010
NYSE:FE
Appendix
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 16
Corporate Profile
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 17
FirstEnergy Corporate Profile
Diversified energy company headquartered in Akron, Ohio
Involved in generation, transmission and distribution of electricity, as well as other energy-related services
Fifth largest investor-owned electric utility in U.S.– 4.5 million customers in Ohio, Pennsylvania and New Jersey
Controls over 14,000 MW of generating capacity – 37% nuclear; 63% fossil/other (2007 output MWh)
Approx. $13B in annual revenues and more than $33B in assets
Approx. $22B market capitalization
Investment grade credit ratingsOH
PA
NJ
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 18
FirstEnergy Service Areas
Toledo Edison 313,000 2,300
Ohio Edison 1,040,000 7,000
The Illuminating Company 756,000 1,600
Penelec 589,000 17,600
Penn Power 159,000 1,100
Met-Ed 546,000 3,300
Jersey Central Power & Light 1,087,000 3,200
Total 4,490,000 36,100
Customers* Square Miles*
* Per 2007 10-K
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 19
Generation
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 20
Akron
Toledo
Reading
Beaver Valley1,779 MW
Davis-Besse893 MW
Perry1,273 MW
R. E. Burger413 MW
W. H. Sammis2,233 MW
Bruce Mansfield2,490 MW
Eastlake1,262 MW
Ashtabula244 MW
Seneca451 MW
Edgewater48 MW
Richland432 MW
Stryker18 MW Yards Creek
200 MW
Mad River60 MW
West Lorain545 MW
Lake Shore249 MW
Sumpter340 MW
Erie
Ohio
Pennsylvania
NewJersey
Harrisburg
MorristownNewark
Allenhurst
Trenton
Bay Shore648 MW
Columbus
New Castle
Cleveland
Johnstown
Michigan
Baseload Load Following Peaking Units
Unit Mission Strategy
Towanda
MW MWMW
FirstEnergy Generation – Diversity & Scale
West Lorain 545Seneca 451Richland 432Sumpter 340Yards Creek 200Burger 3 & EMDs 101Mad River 60Edgewater 48Stryker 18Other 63
Total Peaking Units 2,258
Mansfield 1-3 2,490Beaver Valley 1,2 1,779Perry 1,273Sammis 6,7 1,200Davis-Besse 893Eastlake 5 597Bay Shore 1 136
Total Baseload 8,368
Sammis 1-5 1,020Eastlake 1-4 636Bay Shore 2-4 495Burger 4 -5 312Lake Shore 245Ashtabula 244
Total Load Following 2,952
OVEC 463Wind 145
Total 608
Other MW
FirstEnergy Power Sources*
C Coal 7,469 MWN Nuclear 3,945H Hydro 651 G Gas & O Oil 1,599
Other 522Total 14,186 MW
* As of April 18, 2008. Does not reflect the Fremont plant
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 21
FES Generation Fleet OverviewDiversified and cost-effective generating fleet
– Balanced fuel mix – Participates in both MISO and PJM markets
Mission-driven strategy– Each unit plays a specific role in fleet: baseload, load-following, or peaking– Strategy optimizes performance and reliability
Well-positioned for environmental regulations– CO2 control over 35% of generation output is non-emitting
2007 Output Mix (MWh)
Fossil and Other
63%
Fossil and Other
63%
Nuclear37%
Nuclear37%
Generation Capacity (MW)*
Baseload 61%
Baseload 61%
Load-Following
22%
Load-Following
22%
Peaking17%
Peaking17%
* Based on May 2008 NDC
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 22
Generation Output*
0
20
40
60
80
100
(mill
ion
MW
h)
Nuclear 29.9 28.7 29.0 30.3 32.0 31.0 32.2 32.0Fossil 46.5 51.5 53.0 50.7 52.7 52.4 53.7 54.6
2004 2005 2006 2007 2008F 2009F 2010F 2011F
Realizing Full Potential of Generating Fleet
Significant scale: FirstEnergy Solutions (FES) controls over 14,000 MW
Fleet strategy optimizes performance and reliability– Each unit has a specific mission (baseload, load-following or peaking) – Increases efficiency and reduces wear and tear on baseload units
Nuclear fleet produced a record 30.3 million MWh in 2007
Fleet Characteristics and Mission-Driven Strategy
* Does not reflect the Fremont plant.
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 23
Realizing Full Potential of Generating Fleet
Mining Our Assets benefits:– ~$700/kW average capital cost is competitive vs. current market price of new capacity– Lower risk than large, long lead-time projects– Quicker to market
Factors impacting future generation asset decisions:– Capacity and ancillary services market structure– Technological advances– Environmental regulations
*Reflects elimination of seasonal reductions in output due to summer temperatures on peaking units** Reflects 45 MW baseload unit and 84 MW load-following unit efficiency and capacity factor improvements
16016Peaking unit uprates
769322447Total MW additions
278129**149* Efficiency and capacity factor improvements
24593152Nuclear baseload uprates
230100130Fossil baseload uprates
Cumulative MW2008F–2011F2005–2007Type of MW Addition
Mining Our Assets – incremental, low-risk investment approach to fleet expansion
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 24
564 GWh215 MWTotal:
180 GWh70 MWForecastedIn-service 2008
384 GWh145 MWIn-service 2007
RECs/YearCapacityStatus
FES Wind Energy Portfolio
Represents small portion of total renewable requirements
Will impact renewable strategy
Drives renewable strategy today
Overview
22.5% by 2020NJ
12.5% by 2025OH
18% by 2020PA
Renewable MandateState
Leading the Way in Procuring Renewable Energy to Meet Growing Demand
Leading wind energy supplier in PA
Evaluating expansion of current wind portfolio
Considering other renewable technologies:– Solar– Compressed air– Biomass– Land fill gas– Anaerobic digestion
Realizing Full Potential of Generating Fleet
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 25
Reinvesting in the Business
FirstEnergy Generation Corp. acquired partially complete 707-MW natural gas, combined-cycle generating plant in Fremont, Ohio
– Includes two combined-cycle combustion turbines and a steam turbine– 544 MW of load-following capacity and 163 MW of peaking capacity
– Purchased in bankruptcy auction from Calpine Corporation for $253.6M– Calpine construction costs exceeded $300M– FirstEnergy estimated cost to complete is approximately $208M
Key benefits to FirstEnergy:– Plant is connected to two RTOs – MISO & PJM – Expands fleet capacity and further diversifies generation mix– Low-emitting characteristics will further reduce our average CO2
emission rate
Enhancing Our Generation Portfolio for the Future
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 26
90.787.280.4Capacity Factor (Baseload %)
54.652.750.7Total Generation (million MWh)
0.801.121.04OSHA Incident Rate (per 100 employees)
2011 Target*2008F2007Fossil
Fossil Operating Performance2007 Highlights
– Top-quartile safety performance – New monthly all time generation record
set Aug. 2007 (4.6 million MWh)– Environmental projects (AQC) on track– Outage performance improving– Implemented Fossil Excellence at
Bay Shore and Sammis (continuous improvement)
– On track for workforce replenishment– Improved performance accountability– Mansfield Unit 3 uprate (30 MW)
2008 Highlights and Look Ahead– Achieve top-decile safety performance – Drive continuous improvement through
fleet standardization of best practices, benchmarking and Fossil Excellence annual diagnostics
– Continue to focus on transitioning workforce knowledge and skills to a new generation of employees
– Execute Mining Our Assets strategies– Develop and implement a full start-up
testing, training and operation strategy for AQC
* Does not reflect the Fremont plant.
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 27
Nuclear Operating Performance2007 Highlights
– Top-quartile safety performance– DB worked > 7.6 million hours without
a Lost Time Accident– Record Fleet Generation (30.3 million MWh) – BV1 uprate (43 MW); BV2 uprate (24 MW)– No forced losses at BV1; BV2 top quartile
(0.05%)– NRC accepted BV license renewal application– Successful NRC Security drills at PY and BV– Lowest BV dose during fall outage
2008 Highlights and Look Ahead– Maintain top-quartile safety performance– Targeting record generation
(32.0 million MWh) – Two outages – DB (Completed 2/14/08)
and BV2 (Completed 5/22/08)– 15 MW uprate at PY effective 1/1/08– Additional 12 MW from DB Caldon
modification– Additional 45 MW from BV power uprate– NRC Emergency Preparedness
Evaluated Exercises at BV and PY – Dry Cask Fuel Storage underway at PY
92.492.988.8Capacity Factor (%)
32.032.030.3Total Generation (million MWh)
0.250.250.29OSHA Incident Rate (per 100 employees)
2011 Target2008F2007Nuclear
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 28
Top-Tier Operational Capability
Garnered significant nuclear reliability improvements during 2006–2007 outages
Fossil fleet expected to return to top-quartile performance in 2008 – AQC-related outages will lower capacity factors in 2009 and 2010– Expect to reach top-decile performance levels by 2011
Baseload Capability/Capacity Factors
75%
80%
85%
90%
95%
100%
Fact
ors
(%)
Fossil baseload 84.6% 86.9% 88.5% 80.4% 87.2% 90.7%
Nuclear 89.5% 86.2% 86.8% 88.8% 92.9% 92.4%
2004 2005 2006 2007 2008F 2011 Target
Continued Improvement of Asset Utilization
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 29
Operational Performance Targets
92.492.988.886.886.289.5Capability Factor %
Nuclear Reliability
90.787.280.488.586.984.6Capacity Factor (Baseload %)
Fossil Reliability
86.684.781.082.080.276.4Total Generation (million MWh)
2011 Targets*2008F2007200620052004Operational Performance
* Does not reflect the Fremont plant.
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 30
Nuclear Generation
Refueling *In-vessel visual inspection (IVVI)Rewind Main GeneratorReinforce welds on plant equipment
CompleteDavis-Besse1R15
2008
Refueling*25Beaver Valley 2R14
Replace Low Pressure Turbines (2)*Reactor Coolant System Loop Stop Valves (2)Reactor Vessel Head Inspection
30Beaver Valley 1R19
Refueling*10-year IVVI / Bioshield In-service InspectionRecirc Pump Motor Replacement
35Perry 1R12
2009F
Split Pins*Low Pressre-2 Turbine Inspection*Reactor Vessel Head InspectionMain Cond Tube Replacement, Expansion Joints*Replace High Pressure Turbine*Type A Containment Pressurization Test
Complete Beaver Valley 2R13
Scope Driving Duration(Items with asterisk* denote duration drivers)
ExpectedOutage Duration
(days)PlantYear
Future Refueling Outages Focus on Reliability
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 31
Generation – Implementing Plans for the Future
Nuclear license renewal
Nuclear steam generator replacements– Davis-Besse in 2014– Beaver Valley Unit 2 in 2017
20472009Submitted 2007*2027Beaver Valley Unit 2
2037201220102017Davis-Besse
2046
2036
New Expiration
201520132026Perry
Submitted 2007*
Submit Request (NRC Docket)
20092016Beaver Valley Unit 1
Approval Expected
Current Expiration
* The NRC accepted the application for review.
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 32
Generation – Implementing Plans for the Future
Nuclear spent fuel storage– At the federal level, Yucca Mountain has been proposed as a site for
long-term storage and may be available as early as 2017 to receive used fuel, but this is not likely. If Yucca Mountain is available in 2017, FirstEnergy will be eligible to ship fuel starting in 2021.
Current ongoing criticality analysis will increase storage spaceRe-rack before 2011 to provide capacity through 2025 Dry storage could then be implemented
Beaver ValleyUnit 2
Continue with wet storage until 2021Switch back to dry storage in 2022
Davis-Besse
Implement dry storage before 2011Perry
Implement dry storage by the end of 2014Beaver ValleyUnit 1
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 33
Environmental Strategy
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 34
Longer-term environmental considerations:CO2 control – Over 35% of annual fleet output (MWh) is non-emitting
– Involved in CO2 capture and sequestration R&D
Mercury control – Excellent reduction through “co-benefits”– Participating in future mercury regulatory developments
Reinvesting in the Business
2010FAugust 2008
81%62%13%9%
36%19%
32%34%
Fleet %Fleet %
Fleet Emission Control Status
11,8508,4191,9041,197Natural Gas
5,2932,626Coal Controlled(SO2/NOx – full control)
4,6534,596Non-Emitting
Capacity (MW)Capacity (MW)
Our Generation Fleet is Well-Positioned for the Future
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 35
AQC Construction OverviewReinvesting in the Business
Sammis Plant (2,233 MW) – $1.65B– SO2 control (scrubbers) all units– NOx control (SCRs) Units 6 & 7 (1,200 MW)
NOx control (SNCR) Units 1–5 (1,033 MW) completed
Mansfield Plant (2,490 MW) – $50MSO2 control (scrubber) upgrades completed
Burger Plant – $180M– NOx control (SNCR) and SO2 control
Electro-Catalytic Oxidation (ECO) Units 4 & 5 (312 MW)
Eastlake Plant – $6MNOx control (SNCR) Unit 5 (597 MW) completed
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 36
Sammis Plant with computer overlay of Wet Flue Gas Desulphurization (WFGD) equipment
AQC Upgrades – Sammis Plant
Flue Duct Work – 9,000 tons (9,000 ft.)
Electrical Cable – 9,120 circuits (530 miles)
Foundation Piles – 5,600 piles (445,000 LF)
Concrete – 51,000 cubic yards
Tons of Steel – 17,200 tons
DCS I/O Points – 8,200
Large Bore Pipe – 88,300 ft. (17 miles)
Small Bore Pipe – 13,000 ft. (2.5 miles)
Overland “Pipe” Conveyor – 3.0 miles long
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 37
Participating in Global Climate Change Policy• Global Roundtable on Climate Change• EPRI Global Climate Policy Costs & Benefits Research• EEI Climate Change Policy Subcommittee• NEI Climate Change Policy Subcommittee
GHG Reduction Technologies & Voluntary Actions• Asia-Pacific Partnership• EPA SF6 Reduction Partnership• EPRI GHG Reduction and Electric Transportation Research• Climate Vision• DOE 1605(b) Voluntary Reporting of GHGs Program• Powertree Carbon Company
Generation Initiatives• Fossil plant efficiencies • Nuclear plant uprates
CO2 Capture and Storage Technologies• MRCSP – R.E. Burger Plant Sequestration test well• ECO2 Carbon Capture – Powerspan• EPRI research• Power Partners• Oxy Fuel – B&W
End-user Energy Management• NJ Clean Energy Program• PA Sustainable Energy Fund• Ohio Energy-efficiency Programs
Renewables• 650 MWs Hydro• >200 MWs Wind Purchase Agreements
Renewal of Nuclear and Hydro Plant Operating Licenses
• Continued operation of non-emitting generation
Environmental StrategyFirstEnergy’s Climate Activities
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 38
FirstEnergy’s Position on Global Climate Change
Climate change is a global issue ultimately requiring a global solution
Technology development is key – Energy efficiency and demand-side management– Clean coal technologies– Carbon capture and sequestration
Significant future impact on price of electricity whether states are regulated or deregulated
– Be consistent over broad geographic region– Include reasonable compliance timeframes – Encourage new cost-effective technologies
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 39
Commodity Operations
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 40
Coal Commodity Position
Continue working to secure long-term fuel supply contracts
Actively testing alternate fuel blends at various plants to optimize plant economics and flexibility
Engaged in fuel flexibility initiative to expand margins and fuel choices
FirstEnergy is well positioned with respect to its total coal supply
Securing Open Coal Commodity Positions
0 5,000 10,000 15,000 20,000 25,000
2010
2009
2008
Total Needed Tons Total Covered Tons
98%
100%
100%
As of June 30, 2008
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 41
Coal Transportation Position
All transportation positions including both rail and barge are closed thru 2010 year end
Continuing to evaluate additional delivery options to increase both capabilities and flexibility
Enhanced rail unloading capabilities in process at Ashtabula, Bay Shore and Lake Shore
In 2008, FES is managing PRB rail logistics previously outsourced
Securing Open Coal Transportation Positions
0 5,000 10,000 15,000 20,000 25,000
2010
2009
2008
Total Needed Tons Total Covered Tons
100%
100%
100%
As of June 30, 2008
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 42
Fuel Flexibility Creates Margin & Fuel Choices
Enhanced systems, tools and processes providing the ability to react and adjust blends quickly to match power prices
“Fuel Flex” creates value by continuously increasing fuel blend choices– Maximize revenues when real-time power prices are favorable– Minimize costs when power prices are low
The Right Fuel at the
Right Time
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 43
Energy Delivery
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 44
FirstEnergy Utilities
Large and balanced sales mix – Approximately 1/3 residential, 1/3 commercial, 1/3 industrial
T&D infrastructure being upgraded to enhance system reliability and customer service
Distribution outage duration reduced by 31% over past two years
Constructive regulatory environments– Achieve timely and full recovery of costs– Distribution rate case pending for all three Ohio utilities
– Ohio utilities requested resolution of distribution rates in ESP
Strong and Stable Cash Flows
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 45
Financial Performance
$277$272$273Total Cost Per CustomerAchieve top-quartile total spend per customer
0.630.690.72 TOF (per circuit) *
107 128 131 Distribution SAIDI (minutes)Top-quartile performance SAIDI and TOF
Reliability
2011 Target2008F2007Key MetricsFocus Area
* TOF has been revised to include all circuits 69KV and above (previously 230KV and above)
Reinvesting in the Business
Total Direct Cost per Customer
$150$180$210$240$270$300
2005 2006 2007 2008 2009 2010 2011 2012
Tota
l Dire
ct C
PC
ED&CS Top Quartile
Energy Delivery – Striving to Achieve Top-Quartile Performance
SAIDI Performance
104070
100130160190220
2005 2006 2007 2008 2009 2010 2011 2012
SAID
I (M
inut
es)
ED&CS Top Quartile
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 46
Capital Planning Enhancements
Benchmarked leading performers in the area of capital allocation
Selected Navigant to help develop capital allocation tool based on fundamental engineering economics (quantified benefits)
E-CAT provides the granularity which drives our ability to prioritize thousands of projects based on predicted benefits
Energy Delivery Capital Allocation Tool (E-CAT)
Game Plan:
Target spend with an emphasis on improving reliability
Continued focus on operational improvements
Capital planning has undergone a fundamental change to enhance our financial discipline
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 47
Workforce Management
Power Systems Institute (PSI)– Started in 2000; partnered with two colleges in Ohio to offer
lineworker training– Currently, partnerships with 11 local community colleges
and universities across OH, PA and NJ
296323386Total
8287110Substation Electricians
214236276Line Workers
HiredGraduatedStarted Program
Enrollment/Hires 2000–2007
237154
6031
177123
2009F2008F
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 49
Regulatory / Legislative Matters
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 50
Retail Regulatory Structure
1 CEI fixed through April 2009.2 Proposed waiver of CEI’s RTC beginning Jan. 1, 2009 as part of ESP.3 NUG recovery thru 2020.
CEI
MTC thru 2018No restrictionBGS SupplyJCP&L
CTC thru 20093
Pass thruPJM costsPenelec
CTC thru 20103
No restrictionPOLR ratesthru 2010
Met-Ed
CTC endedJan. 2006No restrictionIn
GenerationMarket in
2007Penn Power
Toledo Edison
RTC thru:2008 – OE, TE
2010 – CEI2Fixed ratesthru 20081
Pass thru MISO costs
Stable rates thru 2008 “g + RSC”
Ohio Edison
Transition CostsDistributionTransmissionGeneration
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 51
Transitioning Generation to Market Prices
New Jersey– Competitive generation service with market-based pricing in effect
(Basic Generation Service auction process began in 2002)
Pennsylvania– Transition to market-based pricing partially implemented
– Penn Power transitioned to market-based pricing in Jan. 2007– Met-Ed (ME) and Penelec (PN) maintain POLR obligations at fixed rates
through year-end 2010– ME and PN scheduled to transition to market-based pricing in Jan. 2011
Ohio– Utilities transferred generation assets to competitive affiliate FES in 2005– Utilities maintain POLR obligations at fixed rates through year-end 2008– Utilities filed ESP and MRO with the PUCO for generation pricing effective
Jan. 2009
Restructuring Status
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 52
Transitioning Generation to Market Prices
Existing S.B. 3 – Enacted 1999– Generation rates to be market-based on Jan. 1, 2009
Amended Sub. S.B. 221 – Signed by Governor on May 1, 2008; effective July 31, 2008
– Requires all utilities to file an electric security plan (ESP)– Could also file a market rate offer (MRO) with the following criteria:
– Belongs to a FERC-approved RTO – RTO has a market-monitor function and the ability to mitigate market power– A published source exists that identifies information for traded electricity and energy
products scheduled for delivery two years into the future– The Commission may only approve the ESP if it finds it is more favorable in the
aggregate as compared to the expected results from an MRO.– Bill also contains advanced and renewable energy standards and energy efficiency
– Requires annual progress toward 2025 goal for renewable energy resources– Requires energy efficiency programs to achieve annual progress toward 2025 goal of
cumulative energy usage reduction of 22%– On July 31, 2008 the Ohio utilities simultaneously filed an ESP and MRO with
the PUCO
Ohio Legislative Update
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 53
Ohio Regulatory Update
Year Generation Charge Phase In Credit Deferral*2009 $75.00/MWh ($7.50)/MWh $429M2010 $80.00/MWh ($8.50)/MWh $488M2011 $85.00/MWh ($9.50)/MWh $553M
ESP Components (as filed)
Component AmountDeferred Fuel Cost Rider $0.34/MWh Not to exceed 25 yrs, eff. 1/1/09
Non-Distribution Uncollectible Rider $0.40/MWh Effective 1/1/09
FES Commitment/Capacity Additions 1,000 MW Between 1/1/07 and 12/31/11
Environmental Remediation/Reclamation $15M/yr $15M per yr. for 3 yrs.
*Estimate; not including carrying chargesTwo options for financing of deferral amounts and carrying charges:
• Company financing• Securitization transactions
Recovery may not exceed 10 years
Note: ESP Filing in Case No. 08-935-EL-SSO and docketed with the PUCO
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 54
Ohio Regulatory Update
Generation charge will be fixed, with limited exceptions, including:
– Fuel transportation cost surcharges in excess of $30M in 2009, $20M in 2010, $10M in 2011
– 2011 increase in fuel costs (vs. 2010), excluding certain fuel components including emission allowances, fuel handling, disposal, lime, urea and ammonia
– Planning reserve margin costs incurred annually between May 1 and Sept. 30
– Costs incurred for purchase of capacity by FES if owned generation is insufficient
– New renewable requirements, taxes, or new environmental laws or interpretations of existing laws in excess of $50M during the plan period
ESP Components (as filed)
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 55
Ohio Regulatory UpdateESP Components (as filed)
Component Amount Distribution Rate Increase $150M1 OE/TE effective 1/1/09; CEI 5/1/09
Allowed Rate of Return on Equity 10.50%
CEI Distribution Deferral $25M Costs 1/1/09 through 5/1/09
Delivery Service Improvement Rider $2.00/MWh2 1/1/09 through 12/31/11
CEI RTC Write-Off $485M 2008 GAAP earnings ($1.01/share)Deferred Transmission Rider $43.9M Effective 1/1/09 for 2 yrs.Energy Delivery Capital Investment $1B 1/1/09 through 12/31/13Energy Efficiency/DSM Commitment Up to$5M/yr 1/1/09 through 12/31/13Economic Development Commitment Up to $5M/yr 1/1/09 through 12/31/13AMI Pilot Commitment Up to $1M During Plan
1$75M OE; $34.5M CEI; $40.5M TE, rates stable until Jan. 1, 2014 2May be adjusted annually (+/- 15%) based on SAIDI performance
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 56
Ohio Regulatory Update
Transmission Rider– Recovery of all MISO, ancillary and congestion costs; reconcilable
Deferred Distribution Cost Recovery Rider– Includes Jan.-April 2009 CEI deferral, post-date certain distribution costs,
and deferred transition taxes and unrecovered balances of line extension deferrals
Storm Damage and Distribution Enhancement Rider– Storm damage expenses in excess of $13.9M annually– Line extension cost recovery– Depreciation, tax and carrying charges on capital investments to
improve reliability
Other ESP Provisions (as filed)
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 57
Economic Development Rider– Promotes gradualism, recognizes efficiency, mitigates overall bill impact to
customers through credits and charges
Reasonable Arrangements Rider– Mechanism to administer certain tariff discounts pursuant to PUCO
proposed rules for customers committing to energy efficiency improvements
Demand Side Management (DSM)/Energy Efficiency Rider– Recovers costs associated with energy efficiency, peak load reduction and
DSM programs
Delta Revenue Recovery Rider– Recovers the difference in revenues from applicable rate schedule
resulting from reasonable arrangements and special discounts
Ohio Regulatory UpdateOther ESP Provisions (as filed)
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 58
Ohio Regulatory Update
Suppliers bid to provide energy, capacity, transmission service,transmission ancillaries
Competitive Bid Process (CBP) with descending clock bidding format
Slice of system approach/100 MW tranches– Supply procured on a total basis– Voltage and seasonal factors used to convert winning bid price to
retail rates
PUCO selects least cost bid winner(s)
Required renewable resources met through an RFP separate from the CBP under the MRO
MRO Procurement Process (as filed)
Note: MRO Filing in Case No. 08-936-EL-SSO and docketed with the PUCO
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 59
Ohio Regulatory UpdateMRO Procurement Process (as filed)
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 60
Transition to Market-Based Generation Rates
Option provides flexibility and benefits– Customers obtain early price certainty for Jan. 1, 2009
– Base generation rate of 7.75 cents/kWh, with 1.0 cent/kWh phase-in credit
– PUCO gains additional time to consider longer-term ESP– Provides for more orderly CBP if the MRO is selected
Severable by the PUCO – Acceptance of the longer-term ESP or MRO– PUCO inaction on ESP by Mar. 5, 2009
Short-Term ESP Overview (as filed)
PUCO Approval Required Short-Term ESP Window
Jan. 1, 2009 – May 1, 2009Nov. 14, 2008
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 61
Ohio Regulatory Update
10/29/08 – PUCO MRO Order Required 11/14/08 – Short-Term ESP Decision12/10/08 – PUCO ESP Order Requested 12/26/08 – PUCO ESP Order Required 1/1/09 – ESP or MRO rates effective
OR1/1/09 – 5/1/09 – Short-Term ESP in effect, if implemented
ESP/MRO
8/18/08 – Technical Conference9/4/08 – Motions to Intervene9/15/08 – Intervenor Testimony9/19/08 – Discovery Due9/22/08 – PUCO Staff Testimony10/2/08 – Evidentiary Hearing(s)
PUCO ESP Procedural Schedule
Detailed Timeline
New generation prices under the ESP, MRO or Short-Term ESP effective January 1, 2009
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 62
Ohio Regulatory Update
Ohio Edison, CEI and Toledo Edison– Case detail (as filed)
– Request: $332M increase (7% on overall rates)– Distribution revenue requirements: $212M– Deferral recovery: $120M
– Case schedule– Filed June 2007, with 2008 test period and date certain of May 31, 2007– PUCO Staff report issued Dec. 4, 2007– Evidentiary hearings held Jan. 29, 2008 – Feb. 25, 2008– Public hearings held Mar. 5 – Mar. 24– Main briefs filed Mar. 28; reply briefs filed Apr. 18– Rates to be effective Jan. 2009 (CEI in May 2009)– Ohio Companies requested resolution of distribution rates in ESP
Distribution Rate Requests
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 63
Ohio Regulatory Update
* Assumes current Generation & Transmission rates
Proposed Changes in Revenues ($ millions) TotalCurrent "Distribution" Revenues $1,118Requested Increase:
Associated with RCP Fuel Expense Deferrals 34Associated with RCP Infrastructure Expense Deferrals 40Associated with RCP DSM Deferrals (through a rider) 4Associated with ETP & Ohio Line Extension Deferrals 42"Base" Revenue Requirement Increases 212
Total Requested Increase to "Distribution" Revenues $332Proposed "Distribution" Revenues $1,450Offsetting RTC Decrease ($594)Net Decrease, Including Offsets * ($262)% Decrease, Including Offsets to Total Current Revenues * -5.7%
Distribution Rate Requests (as filed)
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 64
$117 – $135$332Total requested increase to "distribution" revenues46120Recovery of costs deferred under prior rate plans
$71 – $89$212Traditional distribution costs
PUCO BriefCompany Filing
Requested Increase in Revenues ($ Millions)To be effective 1/09 for OE & TE 1/09; 5/09 for CEI
FirstEnergy UtilitiesOhio Distribution Rate Cases
($65)Other issues (net)($35) – ($16)ROE @ 10 to 11% (vs. Co. @ 11.75%)
($115)*Matters to be considered in other cases
Key PUCO Brief Differences
Ohio Companies requested resolution of distribution rates in ESP
ESP also requested 10.5% ROE
* $52M related to expenses in distribution case amount, $63M related to recovery of costs deferred for fuel and post date certain
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 65
Ohio Regulatory Update
Rate Certainty Plan provided for the deferral of 2006 – 2008 incremental fuel costs
– Recovery was planned to occur in distribution rates over 25 years, but Supreme Court of Ohio remanded the recovery mechanism to PUCO
– On Jan. 9, 2008, the PUCO:– Authorized concurrent recovery of actual 2008 fuel costs via a fuel generation
rider commencing Jan. 1, 2008 (currently projected at approx. $189M)– Directed the Companies to file an alternative recovery mechanism to collect the
2006-2007 deferred fuel costs ($220M) and carrying charges ($6M)
– On Feb. 8, 2008, the Companies filed a separate fuel cost recovery rider for the 2006-2007 fuel and carrying charge deferrals
– Proposed recovery periods ranging from 5 and 25 years– Evidentiary hearing scheduled for Sept. 29, 2008
– Ohio Companies requested resolution of 2006-2007 fuel deferral issue in ESP
Supreme Court of Ohio Remand on Deferred Fuel Recovery
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 66
Pennsylvania Regulatory Update
Met-Ed (ME) and Penelec (PN)Commonwealth Court appeals of rate cases-
– $109M net increase effective Jan. 2007– Pending appeals to Commonwealth Court
– ME & PN – denial of generation relief and tax expense adjustment– Industrials & OCA – transmission recovery– Oral arguments before panel of judges scheduled for September 2008
Transmission service charge (TSC)– The Pennsylvania Public Utility Commission (PPUC) approved the annual
updates to the TSC rider for the period June 1, 2008, through May 31, 2009– PPUC investigating reasonableness of Met-Ed’s TSC; hearings scheduled in
Jan. 2009
Generation procurement filing plan– ME and PN transition to competitive generation market prices on
Jan. 1, 2011– Plan to submit generation procurement proposal in 2008
Commonwealth Court Appeals & Generation Procurement Filing
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 67
Penn Power POLR II CasePennsylvania Regulatory Update
Penn Power successfully transitioned to competitive generation market prices on Jan. 1, 2007
POLR I RFPs implemented for Jan. 2007 – May 2008
POLR II (June 2008 – May 2011)– Multiple RFPs for residential and small commercial customers– Hourly pricing for large commercial and industrial customers
0
2
2
May 08
0
2
2
Apr 08
4343431 yearSmall Commercial
0022002 yearResidential
2200001 yearResidential
Jan 10Oct 09Jan 09Oct 08Mar 08Feb 08
RFP Tranches (50 MW)TermGroup
Small Commercial■ RFPs held on Feb. 20 and Mar. 18 for June 2008 – May 2009 ■ Average price of winning bids was $80.49/ MWH (before line
losses, administration fees, and gross receipt taxes)
Residential■ RFPs held on Apr. 14 and May 14 for June 2008 – May 2010 ■ Average price of winning bids was $80.48/ MWH (before line
losses, administration fees, and gross receipt taxes)
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 68
New Jersey Regulatory Matters
Draft New Jersey Energy Master Plan (Apr. 17, 2008)– Plan goals
– Maximize energy conservation and energy efficiency– Reduce peak electricity demand– Meet 22.5% of the State’s electricity needs from renewable resources– Develop new low carbon emitting, efficient power plants to help close the gap
between supply and demand of electricity– Invest in innovative clean energy technologies and businesses to stimulate the
industry’s growth in New Jersey– Public meetings held Apr. 28 and May 1– Public roundtable discussions with state and national energy experts
held in late June– Public hearings and comment period held through July– Expect final plan in 3rd or 4th quarter of 2008
JCP&L focus: Peak demand management and cost recovery
Jersey Central Power & Light
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 69
Financial Matters
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 70
$1,265$1,430Subtotal without AQC66
210259
$730
2009F – 2012F Average
173Corporate/ Other
$2,079
395132
$730
2008F
Fossil
Total with AQC
NuclearEnergy Delivery
($ millions)
($145)$11
2011F
($7)$4
2012F
$263$649
2008F
($149)$500
2009F
($344)$156
2010F
Change from Prior YearAir Quality Control (AQC)($ millions)
Reinvesting in the BusinessProjected 2008 – 2012 Capital Expenditures*
* Per 2007 10-K plus Fremont construction expenditures
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 71
$1,433$2,079$1,496$1,170$1,144$731Total
$168**$649$386$136$54$0Compliance strategy totals - Sammis, Burger Units, Mansfield and Eastlake Unit 5
AQC
$1,265$1,430$1,110$1,034$1,090$731Sub-Total
$66$173$108$39$45$29– Information Technology, etc.Corporate
$259$132$150$229$173$141– Availability improvements– Dry fuel storage / license renewal– Materials issues
Nuclear
$210*$395*$106$116$148$106– Improve managing operating risk– Upgrade aged equipment– Environmental / fuel enhancements
Fossil
$730$730$746$650$724$445– Aged infrastructure rebuild– Pockets of load growth– Reliability improvements
Energy Delivery
2009F-2012F Average*2008F*2007200620052004
Capital Expenditures ($ millions)Project AreaBusiness
Unit
Reinvesting in the BusinessCapital Expenditure Forecast*
* Per 2007 10-K plus Fremont construction expenditures** AQC annual expenditures include $500M (2009), $156M (2010), $11M (2011), $4M (2012)
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 72
Acquired Additional Equity Interest in Beaver Valley 2 and Perry
On May 30, 2008 Nuclear Generation Corp. (NGC) purchased 56.8 MW of lessor equity interests in the Perry Plant
Between June 2, 2008, and June 9, 2008 NGC acquired ownership of an additional 202 MW of lessor equity interest in Beaver Valley Unit 2 (BV2)
NGC exercised early purchase options under certain existing leases originally entered into in 1987
The previous lessors continue to lease these MWs under the respective sale and leaseback arrangements and the related lease debt remains outstanding
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 73
2008 Non-GAAP Earnings Per Share GuidanceReconciliation of GAAP to Non-GAAP
As of Aug. 1, 2008
2008 EPS
Basic EPS (GAAP basis) $4.27 – $4.37Excluding Special Items*:Gain on Sale of Non-Core Assets (0.06)Litigation Settlement (0.03)Trust Securities Impairment 0.07
Basic EPS (Non-GAAP basis) $4.25 – $4.35
* Excludes possible write-off of $485 million of CEI’s estimated unrecoverable transition costs under the proposed ESP, which if recognized, would be categorized as a Special Item ($1.01 per share).
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 74
Distribution rate case in OH effective 2009
Increased generation prices in OH in 2009
Market generation prices in PA in 2011
Asset mining / realizing full potential of generation assets
Further operational enhancements
Achieving Targeted GrowthMajor Earnings Drivers 2009 – 2011
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 75
Declining margin from OH transition plans
Impact of expiring Met-Ed/Penelec third-party power contract in 2009
Increasing fuel and purchased power costs
Increasing O&M costs
Higher depreciation expenses (non-cash)
Achieving Targeted Growth (continued)Major Earnings Drivers 2009 – 2011
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 76
Annualized Total Shareholder Returns(Periods Ending December 31, 2007)
23.6%26.4%
21.3%
16.6% 17.8%19.9%
0%
5%
10%
15%
20%
25%
30%
1 year 3 years 5 years
FE EEI Index
Financial Performance
Positioned for continued earnings growth
Strong operations with financial discipline
Integrated strategy that diversifies risks
Annualized Dividend Per Share
$2.00$1.80
$1.72
$1.50
$2.20
$1.00
$1.25
$1.50
$1.75
$2.00
$2.25
$2.50
YE 2004 YE 2005 YE 2006 YE 2007 Jun. 08
47% IncreaseSince End of 2004
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 77
FirstEnergy Credit Ratings
On Aug. 1, 2008, S&P revised the outlook of FE and its subsidiaries to stable from negative
On Nov. 2, 2007, Moody’s revised the outlook of FE and its subsidiaries to stable from positive
Corporate Credit Rating (S&P) / Issuer Rating
(Moody's)
Senior Secured Senior Unsecured
S&P Moodys S&P Moodys S&P MoodysFirstEnergy Corp. BBB Baa3 - - BBB- Baa3
FirstEnergy Solutions BBB Baa2 - - BBB Baa2
Ohio Edison BBB Baa2 BBB+ Baa1 BBB- Baa2
Cleveland Electric Illuminating BBB Baa3 BBB+ Baa2 BBB- Baa3
Toledo Edison BBB Baa3 BBB Baa2 BBB- Baa3
Pennsylvania Power BBB Baa2 A- Baa1 BBB- Baa2
Jersey Central Power & Light BBB Baa2 BBB+ Baa1 BBB Baa2
Metropolitan Edison BBB Baa2 BBB+ Baa1 BBB Baa2
Pennsylvania Electric BBB Baa2 BBB+ Baa1 BBB Baa2
As of December 6, 2007As of Aug. 1, 2008
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 78
Strong Liquidity Position
$ 3,720***
550
420
$ 2,750
Amount ($M)
Total
Various
Various
Aug. 2012
Maturity
1-yearA/R Fin.OH & PA Utilities
VariousBank LinesFirstEnergy Corp.**
5-yearRCA*FirstEnergy Corp.
TermTypeCompany
* Revolving Credit Agreement
** Includes $300 of Bank Lines with FirstEnergy Solutions Corp.
*** As of June 30, 2008
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 79
Deploying Cash Effectively
Potential uses of free cash following completion of AQC projects– Dividend growth– Invest for future growth– Potential for share repurchases– Ability to take advantage of strategic opportunities
Available Cash Forecast
$50
(171)***
(2,079)**
$2,300*
2008F
($53)
(76)
(583)
$606
Change
$103
(95)
(1,496)
$1,694
2007
Capital Expenditures
Nuclear Fuel Fabrication
Available Cash before Dividends
Net Cash from Operating Activities
($ millions)
* Per 2007 10-K
** Per 2007 10-K plus Fremont expenditures
*** Per June 30, 2008 10-Q
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 80
Deploying Cash Effectively
At its Dec. 18, 2007, meeting, the Board of Directors declared aquarterly dividend of $0.55 per share, payable Mar. 1, 2008
Dividend Increases:
$2.2010.00%55.00¢1Q 2008
$1.50
$1.65
$1.72
$1.80
$2.00
AnnualizedRate
–37.50¢4Q 2004
10.00%41.25¢1Q 2005
4.24%43.00¢4Q 2005
4.65%45.00¢1Q 2006
11.10%50.00¢1Q 2007
Change fromPrior Period
QuarterlyRate
PaymentDate
Common Dividend
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 81
Share Repurchase Summary
$0.35$0.22$0.13Annual EPS Benefit
$62.68$65.54$58.99Avg. Price per Share
$1,567$942$627Cost ($ millions)
7.7%4.5%3.2%% Reduction
304.8304.8319.2Ending Shares
25.014.410.6Shares Repurchased
329.8319.2329.8Beginning Shares
Cumulative20072006(Shares in millions)
September 2-4, 2008Lehman Brothers 2008 CEO Energy/Power Conference 82
Finance Plans: 2008 and Beyond
Maintain financial flexibility– Investment grade credit metrics at all entities
– Metrics maintained over near-term – Metrics improved as AQC capital spend winds down post-2009
– Maintain substantial liquidity– $3.7B total capacity
Reduce holding company debt while appropriately capitalizing operating companies and FirstEnergy Solutions
– Utility debt maturities of only $685M over 2008 – 2011 period– Opportunistically transfer remaining $263M of utility tax-exempt debt to Generating
Companies with 1.9B already transferred– $1.5B, 6.45% Series B FE Notes due Nov. 2011
Efficient funding of capital program – Capital expenditures financed largely through internal cash flow, even during peak
AQC spend– New tax-exempt financings of approximately $200M planned to support
Sammis AQC project