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  • 1. Analyst Meeting New York, NY • December 6, 2007
  • 2. Analyst Meeting New York, NY • December 6, 2007 Welcome Ronald E. Seeholzer Vice President, Investor Relations
  • 3. Safer Harbor Statement under the Private Securities Litigation Reform Act of 1995 These Presentations 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, economic or weather conditions affecting future sales and margins, changes in markets for energy services, changing energy and commodity market prices, 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, 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 the PPUC (including 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 inability 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, the ability to access the public securities and other capital markets and the cost of such capital, the outcome, cost and other effects of present and potential legal and administrative proceedings and claims related to the August 14, 2003 regional power outage, 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. Analyst Meeting New York, NY ▪ December 6, 2007
  • 4. Today’s Agenda Corporate and Strategic Overview – Tony Alexander Regulatory Update – Dave Blank Operations Overview – Gary Leidich Energy Delivery & Customer Service – Don Schneider Generation and Commodity Operations – Chuck Jones Commodity Operations – Ali Jamshidi Financial Outlook – Rich Marsh Closing Remarks – Tony Alexander Q&A Analyst Meeting New York, NY ▪ December 6, 2007
  • 5. Analyst Meeting New York, NY • December 6, 2007 Corporate and Strategic Overview Tony Alexander President and CEO
  • 6. Our objectives for 2007 and beyond continue to be based on the fundamentals. Objectives Regulatory – Recover cost of service – Transition to market prices A strong and stable corporation Capital Management with a focus on – Build on our existing generation the fundamentals portfolio – Rebuild our T&D infrastructure – Operational excellence Financial Strength & Flexibility – Financial discipline – Achieve targeted growth – Management credibility – Deploy cash effectively – Continuous improvement People and Culture – One company culture – Continuous learning and leadership platforms Analyst Meeting Corporate and Strategic Overview New York, NY ▪ December 6, 2007 2
  • 7. FirstEnergy’s strategic focus is on making an orderly and effective transition to competitive market-based pricing. Transition 2004–2006 2007–2008 2009–2010 2011 Rebuild the core Met-Ed and OH POLR Met-Ed and Penelec to market Penelec POLR Rebuild financial to market – Cost recovery stability Distribution rate cases End of CEI Penn Power Start the transition transition cost POLR to market to market (e.g., End of OE amortization generation asset and TE transfer) transition cost amortization Analyst Meeting Corporate and Strategic Overview New York, NY ▪ December 6, 2007 3
  • 8. Legislative Update: Ohio and Pennsylvania Efforts are underway in both OH and PA on potential new energy legislation FirstEnergy actively engaged in the legislative process Multiple issues being considered…key is to assure a smooth transition to market in both states PA still working to enact legislation by end of year OH legislation likely in the first quarter of 2008 FirstEnergy is positioned in each state to successfully transition to market Analyst Meeting Corporate and Strategic Overview New York, NY ▪ December 6, 2007 4
  • 9. In 2007, we continue to build on the fundamentals and deliver strong financial results… Regulatory Successfully transitioned Penn Power to competitive generation market prices Filed distribution rate case requests and competitive generation procurement proposal for Ohio utilities Financial Narrowed EPS guidance to top-half of the original range: $4.15–$4.25* Expecting to generate $1.7B of cash from operations Increased dividend 11.1% Completed accelerated repurchase of approx. 14.4 million shares Completed $1.3B sale and leaseback transaction on 779 MW of Mansfield Unit 1 * See GAAP to Non-GAAP reconciliations in the Financial Outlook Appendix. Analyst Meeting Corporate and Strategic Overview New York, NY ▪ December 6, 2007 5
  • 10. …And strong operational results. Operational Expecting generation output in excess of 81 million MWh – 20% increase from 2003 Added over 300 MW of additional generating capacity through uprates, wind contracts and peaking enhancements – with significantly less risk than new plant construction Continued improvement in T&D reliability metrics – SAIDI down 15% Achieving top-decile safety performance – 0.89 YTD OSHA rate On schedule and budget for Air Quality Control (AQC) projects at the Sammis Plant NRC accepted Beaver Valley Units 1 & 2 license renewal applications for review Analyst Meeting Corporate and Strategic Overview New York, NY ▪ December 6, 2007 6
  • 11. 2008 – A Challenging Year No expected rate increases Higher Ohio transition cost amortization expense Increased capital expenditures for AQC projects Continued improvements in distribution reliability Continued investments in generation fleet capacity and performance We have demonstrated our ability to deliver results and will continue to meet our objectives Analyst Meeting Corporate and Strategic Overview New York, NY ▪ December 6, 2007 7
  • 12. 2008 – Expect Modest Improvement in Earnings As we manage our transition to market, we will continue to drive performance and deliver results 2007 Non-GAAP Earnings Guidance* Original (Feb. 2007) $4.05 – $4.25 Revised (Oct. 2007) $4.15 – $4.25 Affirmed (Dec. 2007) $4.15 – $4.25 2008 Non-GAAP Earnings Guidance* $4.15 – $4.35 * See GAAP to Non-GAAP reconciliations in the Financial Outlook Appendix. On a GAAP basis, 2008 EPS is expected to be $4.23 to $4.43 reflecting an $0.08 gain on the planned sale of non-core assets. Analyst Meeting Corporate and Strategic Overview New York, NY ▪ December 6, 2007 8
  • 13. Bottom Line – FirstEnergy is an attractive risk/reward opportunity Effectively managing transition to competitive markets Realizing full potential of assets Significant Earnings Reinvesting for future growth Growth Effectively deploying strong cash flow Potential Striving for continuous improvement Maintaining strategic flexibility Well-positioned for climate legislation Analyst Meeting Corporate and Strategic Overview New York, NY ▪ December 6, 2007 9
  • 14. Analyst Meeting New York, NY • December 6, 2007 Regulatory Update Dave Blank Vice President, Rates and Regulatory Affairs
  • 15. Discussion Topics Ohio regulatory update – Distribution rate cases – Competitive generation procurement proposal – Supreme Court of Ohio remand on Rate Certainty Plan Pennsylvania regulatory update – Commonwealth Court appeal in Met-Ed/Penelec rate cases – Met-Ed/Penelec comprehensive generation procurement filing – Penn Power POLR II case New Jersey regulatory update – Energy Master Plan Analyst Meeting Regulatory Update New York, NY ▪ December 6, 2007 2
  • 16. Ohio Regulatory Update Distribution Rate Requests Ohio Edison, CEI and Toledo Edison Ohio Case detail – 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 expected early December – Hearings expected 1st quarter 2008 – 275-day timeline reached in March 2008 – Rates to be effective January 2009 (CEI in May 2009) Analyst Meeting Regulatory Update New York, NY ▪ December 6, 2007 3
  • 17. Ohio Regulatory Update Competitive Generation Procurement Proposal Ohio Edison, CEI and Toledo Edison Ohio On July 10, 2007, filed a comprehensive supply plan for competitively priced generation service to implement market provisions of S.B. 3 effective January 1, 2009 Proposal includes: – Option to phase in generation price increases for residential tariff groups that experience > 15% increase in avg. total price – Time-of-day and hourly pricing options – Renewable energy component Competitive bid process (CBP) alternatives – By Customer Class, or – Slice of System Analyst Meeting Regulatory Update New York, NY ▪ December 6, 2007 4
  • 18. Ohio Regulatory Update Competitive Generation Procurement Proposal (continued) CBP process – Descending clock bidding format Ohio – Full requirements product (energy, capacity, transmission) – Individual bidders limited to 75% of total customer load – Multiple solicitations; three-year ladder Bids secured in 2008 would be for service beginning January 1, 2009, and ending: – May 31, 2010 (17-month) – May 31, 2011 (29-month) – May 31, 2012 (41-month) Subsequent annual bids for 1/3 of load (3-year supply) Analyst Meeting Regulatory Update New York, NY ▪ December 6, 2007 5
  • 19. Ohio Regulatory Update Supreme Court of Ohio Remand on Rate Certainty Plan Ohio Edison, CEI and Toledo Edison Ohio August 29: Supreme Court of Ohio remanded recovery of deferred fuel costs in distribution rates to PUCO for further consideration The Court reaffirmed all other aspects of the Rate Certainty Plan September 10: Companies filed a Remand Application with the PUCO seeking generation-related fuel cost recovery rider – Remand remains at PUCO Analyst Meeting Regulatory Update New York, NY ▪ December 6, 2007 6
  • 20. Pennsylvania Regulatory Update Commonwealth Court Appeals & Generation Procurement Filing Met-Ed and Penelec PA Commonwealth Court appeals of rate cases – $109M net increase effective January 2007 – Pending appeals to Commonwealth Court – ME & PN - denial of generation relief and tax expense adjustment – Industrials & OCA - transmission recovery – Oral arguments expected late 4Q or early 2008 – Decision expected in 2008 Generation procurement filing plan – ME & PN transition to competitive generation market prices on January 1, 2011 – Plan to submit generation procurement proposal in 2008 Analyst Meeting Regulatory Update New York, NY ▪ December 6, 2007 7
  • 21. Pennsylvania Regulatory Update Penn Power POLR II Case Penn Power successfully transitioned to competitive generation market prices on PA January 1, 2007 – POLR I RFPs implemented for January 2007–May 2008 – POLR II multiple RFP’s with staggered delivery June 2008 through May 2011 – Proposed full requirements product by class – Settlement Agreement filed in September 2007 – Favorable ALJ Recommended Decision received in October 2007 – Anticipate Commission Order in December 2007 RFP Tranches (50 MW) Group Term Jan 08 Mar 08 Oct 08 Jan 09 Oct 09 Jan 10 Residential 1 year 2 2 0 0 2 2 Residential 2 year 2 2 2 2 0 0 Commercial 1 year 3 4 3 4 3 4 – Industrial customers on hourly priced default service Analyst Meeting Regulatory Update New York, NY ▪ December 6, 2007 8
  • 22. Regulatory Matters Jersey Central Power & Light New Jersey Energy Master Plan NJ – State goals – Reduce total projected electricity demand by 20% by 2020 – Meet 22.5% of electricity needs with renewable energy – Reduce air pollution and energy use – Encourage and maintain economic development – Achieve a 20% reduction in CAIDI and SAIFI by 2020 – Unit prices at no more than +5% of the regional price level – Eliminate transmission congestion by 2020 – Detailed draft plan expected by year end 2007 – JCP&L focus: Peak demand management and cost recovery Analyst Meeting Regulatory Update New York, NY ▪ December 6, 2007 9
  • 23. appendix Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-1
  • 24. Retail Regulatory Structure Generation Transmission Distribution Transition Cost Ohio Edison RTC thru Stable rates Pass thru Fixed rates thru 2008 2008 – OE, TE CEI thru 20081 MISO costs “g + RSC” 2010 – CEI Toledo Edison Market in No CTC ended In Penn Power 2007 restriction Jan. 2006 Generation CTC thru 20102 Met-Ed POLR rates Pass thru No thru 2010 PJM costs restriction CTC thru 20092 Penelec No JCP&L BGS Supply MTC thru 2018 restriction CEI fixed through April 2009. 1 NUG recovery thru 2020. 2 Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-2
  • 25. Ohio Regulatory Matters Distribution Rate Requests (as filed) Proposed Changes in Revenues ($ millions) Total Current quot;Distributionquot; Revenues $1,118 Proposed Increase: Associated with RCP Fuel Expense Deferrals 34 Associated with RCP Infrastructure Expense Deferrals 40 Associated with RCP DSM Deferrals (through a rider) 4 Associated with ETP & Ohio Line Extension Deferrals 42 quot;Basequot; Revenue Requirement Increases 212 Total Proposed Increase to quot;Distributionquot; Revenues $332 Proposed quot;Distributionquot; Revenues $1,450 Offsetting RTC Decrease ($594) Net Decrease, Including Offsets * ($262) % Decrease, Including Offsets to Total Current Revenues * -5.7% * Assumes current Generation & Transmission rates Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-3
  • 26. Analyst Meeting New York, NY • December 6, 2007 Operations Overview – Strategies / Initiatives Gary Leidich Senior Vice President, Operations
  • 27. Operations Strategy Driving Performance and Delivering Results Strategic Objectives Generation Maximizing generation fleet utilization is key to driving improved generation margin Maximizing margins by mitigating Environmental risks and minimizing supply costs Mining existing assets for cost- effective capacity additions Energy Delivery Effectively implement environmental compliance strategy Continued focus on enhancing reliability and customer service Commodity Operations Implement continuous improvement initiatives Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 2
  • 28. An Unwavering Commitment to Safety “Make Safety A Way Of Life” 2.5 2.0 OSHA Incident Rate** 1.5 1.0 1.59 1.44 1.24 0.5 0.96 0.89 0.0 2003 2004 2005 2006 2007 YTD FE Performance Top Decile* Top Quartile* * Based on 2006 EEI industry benchmarks ** Per 100 employees Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 3
  • 29. Operational Performance Targets 2011 Operational Performance 2004 2005 2006 2007F 2008F Targets Total Generation (million MWh) 76.4 80.2 82.0 82.2 84.7 86.6 Fossil Reliability Capacity Factor (Baseload %) 84.6 86.9 88.5 81.0 87.2 90.7 Nuclear Reliability Capability Factor % 89.5 86.2 86.8 90.0 92.9 92.4 Energy Delivery Reliability Distribution SAIDI (minutes) 159 191 152 128 118 103 Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 4
  • 30. Business Planning Principles Playbook for each business unit Emphasis on closing gaps to top performance No ambiguity – clearly defined performance metrics Issues/challenges identified Risk management tools applied Communication Continuous Improvement initiatives and specific action plans Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 5
  • 31. Improved Linkage of Operational Execution and Financial Results Common template for metrics, assumptions, and initiatives improves communications “Sharpened” financials: more efficient and timely – <2% targeted O&M growth annually Improved capital portfolio management – Stabilized Energy Delivery costs – Sequence Air Quality Control (AQC) costs with other major projects – Cross-functional peer reviews/challenges Process for capturing Continuous Improvement initiatives Operational Financial Improved Linkage Decisions Results Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 6
  • 32. Reinvesting in the Business Capital Expenditures ($ millions) Business Project Areas 2009F-2011F Unit 2004 2005 2006 2007F 2008F Average - Aged infrastructure rebuild Energy $455 $724 $650 $746 $730 $730 - Pockets of load growth Delivery - Reliability improvements - Improve managing operating risk $106 $148 $116 $104 $96 $155 Fossil - Upgrade aged equipment - Environmental / fuel enhancements - Availability improvements $141 $173 $229 $149 $131 $260 Nuclear - Dry fuel storage / license renewal - Materials issues $29 $45 $39 $88 $86 $75 Corporate - Information Technology, etc Sub-Total $731 $1,090 $1,034 $1,087 $1,043 $1,220 - Compliance strategy totals - Sammis, $0 $54 $136 $387 $650 $222 * AQC Burger Units, Mansfield and Eastlake Unit 5 Total $731 $1,144 $1,170 $1,474 $1,693 $1,442 * AQC annual expenditures include $500M (2009), $156M (2010), and $11M (2011) Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 7
  • 33. Environmental Strategies Tactical – Managed compliance with environmental operating standards to achieve 100% compliance Strategic – Comprehensive environmental compliance and economic analysis for fossil fleet ready for implementation – Clean Air Interstate Rule and Clean Air Mercury Rule – effective March 2005 – New Source Review – effective July 1, 2005 – Clean Water Act, Section 316(b) Phase II – effective July 9, 2004 – AQC Group focused to address environmental compliance implementation plans across the fleet with $1.9B investment through 2011 Long Term – Actively partner with government agencies, EPRI and equipment manufacturers to R&D new control technologies and system efficiency improvements to address potential future emissions regulations Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 8
  • 34. Environmental Strategies AQC Construction Overview 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) – $50M SO2 control (scrubber) upgrades completed Burger Plant – $180M – NOx control (SNCR) and SO2 control Electro-Catalytic Oxidation (ECO) Units 4 & 5 (312 MW) Eastlake Plant – $6M NOx control (SNCR) Unit 5 (597 MW) completed Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 9
  • 35. 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 Sammis Plant with computer overlay of Wet Flue Gas Desulphurization (WFGD) equipment Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 10
  • 36. Chimney Shell and Overall Site Construction Chimney Shell Completion Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 11
  • 37. Fiberglass Flue – Spinning Facility Flue Spinning Mandrill Fiberglass Strands for Spinning Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 12
  • 38. “A&B” Absorber Foundations – Formwork and Underground in Building Areas Absorber “C” Building Steel Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 13
  • 39. Unit 6 SCR Inlet Flues Unit 6 SCR Inlet Flues Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 14
  • 40. Ammonia Tank Farm Railroad Unloading Slab Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 15
  • 41. Environmental Status Our generation fleet is well-positioned for the future Fleet Emission Control Status 2007 2010 Capacity Fleet Capacity Fleet (MW) % (MW) % Non-Emitting 4,581 34% 4,638 34% Coal Controlled 2,626 19% 5,237 38% (SO2/NOx – full control) Natural Gas Peaking 1,283 9% 1,283 9% 8,490 62% 11,158 81% Longer-term environmental considerations CO2 control – Over 35% of annual fleet output is non-emitting – Involved in CO2 capture and sequestration R&D Mercury control – Excellent reduction through “co-benefits” – Based on current rules and plans, additional equipment not required before 2018 Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 16
  • 42. Environmental Strategy FirstEnergy’s climate activities CO2 Capture and Storage Technologies Participating in Global Climate Change Policy • MRCSP – R.E. Burger Plant Sequestration test well • Global Roundtable on Climate Change • ECO2 Carbon Capture – Powerspan • EPRI Global Climate Policy Costs & Benefits Research • EPRI research • EEI Climate Change Policy Subcommittee • Power Partners • NEI Climate Change Policy Subcommittee • Oxy Fuel – B&W GHG Reduction Technologies & Voluntary Actions End-user Energy Management • Asia-Pacific Partnership • NJ Clean Energy Program • EPA SF6 Reduction Partnership • PA Sustainable Energy Fund • EPRI GHG Reduction and Electric Transportation Research • Ohio Energy-efficiency Programs • Climate Vision Renewables • DOE 1605(b) Voluntary Reporting of GHGs Program • 650 MWs Hydro • Powertree Carbon Company • >200 MWs Wind Purchase Agreements Generation Initiatives Renewal of Nuclear and Hydro Plant • Fossil plant efficiencies Operating Licenses • Nuclear plant uprates • Continued operation of non-emitting generation Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 17
  • 43. Fossil Operating Performance 2007 Highlights 2008 Look Ahead – – Top-quartile safety performance Achieve top-decile safety performance – – New monthly all time generation Drive continuous improvement record set August 2007 through fleet standardization of best (4.6 million MWh) practices, benchmarking and Fossil Excellence annual diagnostics – Environmental projects (AQC) on track – Continue to focus on transitioning – Outage performance improving workforce knowledge and skills to a – Implemented Fossil Excellence at new generation of employees Bay Shore and Sammis (continuous – Execute Mining Our Assets strategies improvement) – Develop and implement a full start-up – On track for workforce replenishment testing, training and operation – Improved performance accountability strategy for AQC – Mansfield Unit 3 uprate (30 MW) 2011 Fossil 2007F 2008F Target OSHA Incident Rate (per 100 employees) 1.12 1.12 0.80 Total Generation (million MWh) 51.5 52.7 54.6 Capacity Factor (Baseload %) 81.0 87.2 90.7 Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 18
  • 44. Nuclear Operating Performance 2007 Highlights 2008 Look Ahead – – Top-quartile safety performance Maintain top-quartile safety performance – – DB worked > 7.5 million hours Targeting record generation without a Lost Time Accident (32.0 million MWh) – Record Fleet Generation projected – Two outages – DB and BV2 (30.7 million MWh) – Additional 12 MW from DB Caldon – BV1 uprate (43 MW); BV2 uprate (24 MW) modification – No forced losses at BV1; BV2 top – Additional 45 MW from BV power uprate quartile (0.24%) – NRC Emergency Preparedness Evaluated – PY returned to Standard Reactor Exercises at BV and PY Oversight Process – Dry Cask Fuel Storage underway at PY – NRC accepted BV license renewal application – Successful NRC Security drills at PY and BV – Lowest BV dose during fall outage 2011 Nuclear 2007F 2008F Target OSHA Incident Rate (per 100 employees) 0.25 0.25 0.25 Total Generation (million MWh) 30.7 32.0 32.0 Capability Factor (%) 90.0 92.9 92.4 Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 19
  • 45. Transitioning to our Future Maximize utilization Generation Reinvest to manage reliability (including Mining of assets Commodity Operations) Maximize margins Tactical fuel management Environmental AQC implementation Climate change Reliability improvements Energy Delivery Reinvest in infrastructure Well-positioned to Succeed in Competitive Generation Markets Analyst Meeting Operations Overview – Strategies / Initiatives New York, NY ▪ December 6, 2007 20
  • 46. appendix Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-1
  • 47. 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 Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-2
  • 48. Additional Key Technologies FirstEnergy is Actively Co-Funding Plug-in hybrid electric vehicles (PHEV) – Considerably cleaner than internal combustion engine vehicle, including battery charging – 30% less GHG – 15% less SO2 and NOx – Provides largely off-peak demand, an opportunity for growth – Advanced meters are an enabling technology Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-3
  • 49. Generation – Implementing Plans for the Future Nuclear license renewal Current Submit Request Approval New Expiration (NRC Docket) Expected Expiration Beaver Valley Unit 1 2016 Submitted 2007* 2009 2036 Beaver Valley Unit 2 2027 Submitted 2007* 2009 2047 Davis-Besse 2017 2010 2012 2037 Perry 2026 2013 2015 2046 * The NRC accepted the application for review Nuclear steam generator replacements – Davis-Besse in 2014 – Beaver Valley Unit 2 in 2017 Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-4
  • 50. Generation – Implementing Plans for the Future Nuclear spent fuel storage – Since 1983, FirstEnergy has collected $494M from the rate-payers for the long-term storage of used nuclear fuel. At the federal level, Yucca Mountain has been proposed as a site for long-term storage and may be available as early as 2017 to receive used fuel, but this is not likely. If Yucca Mountain is available in 2017, FirstEnergy will be eligible to ship fuel starting in 2021. Beaver Valley Implement dry storage by the end of 2014 Unit 1 Current ongoing criticality analysis will increase storage space Beaver Valley Re-rack before 2011 to provide capacity through 2025 Unit 2 Dry storage could then be implemented Continue with wet storage until 2021 Davis-Besse Switch back to dry storage in 2022 Perry Implement dry storage before 2011 Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-5
  • 51. Analyst Meeting New York, NY • December 6, 2007 Energy Delivery & Customer Service Don Schneider Senior Vice President, Energy Delivery & Customer Service
  • 52. Discussion Topics Energy Delivery & Customer Service (ED&CS) Vision, Mission and Focus Areas Regulated rate base Our “Game Plan” Operational performance goals Transitioning to our Future Analyst Meeting Energy Delivery & Customer Service New York, NY ▪ December 6, 2007 2
  • 53. ED&CS Vision, Mission and Focus Areas An industry leading performer that shapes the future of Vision the energy delivery and customer service business Providing safe and reliable electric service at a reasonable Mission cost by leveraging the resources, skills and diversity of our workforce Focus Areas Safety Customer Satisfaction Reliability Financial Performance Employees Analyst Meeting Energy Delivery & Customer Service New York, NY ▪ December 6, 2007 3
  • 54. Regulated Rate Base and Sales Growth Projected Annual Growth Projected Rate Base – 2011 Regulated Companies (T&D) 2007F 2008F Target ($ millions) Net Plant for Rate Base $9,800 $10,100 $11,000 Capital Expenditures, Net of $394 $365 $330 Depreciation Average Annual (2009F – 2011F) OH PA NJ Growth Rate (kWh) 0.9% 1.7% 2.2% Net Plant for Rate Base ($ millions) $4,420 $3,290 $3,000 # of Customers (millions) 2.1 1.3 1.1 Growing asset base and increased distribution throughput Analyst Meeting Energy Delivery & Customer Service New York, NY ▪ December 6, 2007 4
  • 55. Our “Game Plan” is about Performance 2011 Focus Area Key Metrics 2007F 2008F Target Safety OSHA Incident Rate** 1.70* 1.62 1.00 Consistently achieve top-decile (1.24) Reliability Distribution SAIDI (minutes) 128 118 103 Top-quartile performance SAIDI and top-decile in TOF TOF (per circuit) 0.39* 0.31 0.31 Financial Performance Achieve top-quartile total spend per Total Cost Per Customer $270 $265 $263 customer Employees An environment where employees are Total Staffing 7,637 7,898 7,995 valued and accountable for the performance of the business * Top quartile ** Per 100 employees Analyst Meeting Energy Delivery & Customer Service New York, NY ▪ December 6, 2007 5
  • 56. Operational Performance Goals SAIDI Performance Total Cost per Customer $300 220 Top Quartile 190 $270 160 SAIDI (Minutes) ED&CS Total CPC $240 ED&CS 130 100 $210 Top Quartile 70 $180 40 $150 10 2005 2006 2007 2008 2009 2010 2011 2012 2005 2006 2007 2008 2009 2010 2011 2012 Our strategy is to achieve top-quartile operational performance Analyst Meeting Energy Delivery & Customer Service New York, NY ▪ December 6, 2007 6
  • 57. Capital Planning Enhancements Energy Delivery Capital Allocation Tool (E-CAT) Benchmarked leading performers in the area of capital allocation Game Plan: Selected Navigant to help develop Target spend with capital allocation tool based on an emphasis on improving reliability fundamental engineering economics (quantified benefits) Continued focus on operational improvements E-CAT provides the granularity which drives our ability to prioritize thousands of projects based on predicted benefits Capital planning has undergone a fundamental change to enhance our financial discipline Analyst Meeting Energy Delivery & Customer Service New York, NY ▪ December 6, 2007 7
  • 58. Project Management Driving Discipline and Accountability Assigned owner for each project Detailed layout of milestones and subsequent activities for project completion (Primavera) Monthly status reports – Narrative of project status – Enhanced financial rigor Execution of our capital plan is being achieved by driving discipline and accountability Analyst Meeting Energy Delivery & Customer Service New York, NY ▪ December 6, 2007 8
  • 59. 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 Enrollment/Hires Started 2008F 2009F Graduated Hired 2000–2007 Program Line Workers 276 236 214 123 177 Substation 110 87 82 31 60 Electricians Total 386 323 296 154 237 Analyst Meeting Energy Delivery & Customer Service New York, NY ▪ December 6, 2007 9
  • 60. Customer Satisfaction Contact Center Survey – 81% of customers rated FirstEnergy with a score of 9 or 10 (out of 10) Collection Effort – Reduced number of accounts in arrears by 29% since May 2007 – Deposits received from eligible customers have increased 62% since the beginning of the year – Justified complaints are down 13% from last year Improving the interface with our customers supports our “Game Plan” Analyst Meeting Energy Delivery & Customer Service New York, NY ▪ December 6, 2007 10
  • 61. Transitioning to our Future Safety – Consistently achieve top-decile performance Customer Satisfaction Achieving – A top performer in our industry Energy Reliability Delivery and – Top-quartile performance SAIDI Customer and top-decile in TOF Service’s Financial Performance Vision – Achieve top-quartile total spend per customer Employees – An environment where employees are valued and accountable for the performance of the business Analyst Meeting Energy Delivery & Customer Service New York, NY ▪ December 6, 2007 11
  • 62. Analyst Meeting New York, NY • December 6, 2007 Generation & Commodity Operations Integrated Portfolio Overview Chuck Jones President, FirstEnergy Solutions
  • 63. Discussion Topics Diversity and scale of generation fleet Top-tier operational capability & ongoing commitment to operational excellence Integrated Generation, Commodity & Retail operations Leveraging the value of our existing generating fleet FirstEnergy Solutions’ (FES) renewable energy strategy Analyst Meeting Generation & Commodity Operations New York, NY ▪ December 6, 2007 2 Integrated Portfolio Overview
  • 64. FirstEnergy Generation – Diversity & Scale Michigan Ashtabula Perry 244 MW Seneca 1,258 MW Eastlake Sumpter 451 MW 1,262 MW 340 MW Bay Shore Stryker Erie 648 MW Lake Shore 18 MW Yards Creek Towanda 249 MW Toledo 200 MW Cleveland New Castle Pennsylvania Akron Davis-Besse Edgewater Morristown Richland 893 MW Newark 48 MW 432 MW West Lorain Johnstown Reading 545 MW Harrisburg Allenhurst Trenton W. H. Sammis 2,233 MW New Columbus Beaver Valley Bruce Mansfield Jersey R. E. Burger 1,779 MW 2,490 MW 413 MW Mad River Forked River 60 MW 86 MW Ohio Unit Mission Strategy Baseload Peaking Units Other Load Following MW MW MW MW Mansfield 1-3 2,490 Sammis 1-5 1,020 West Lorain 545 OVEC 463 Wind 145 Beaver Valley 1,2 1,779 Eastlake 1-4 636 Seneca 451 Perry 1,258 Bay Shore 2-4 495 Richland 432 Total 608 FirstEnergy Power Sources Sammis 6,7 1,200 Burger 4 -5 312 Sumpter 340 Davis-Besse 893 Lake Shore 245 Yards Creek 200 C Coal 7,469 MW Eastlake 5 597 Ashtabula 244 Burger 3 & EMDs 101 N Nuclear 3,930 Bay Shore 1 136 Forked River* 86 H Hydro Total Load Following 2,952 651 Mad River 60 G Gas & O Oil 1,599 Total Baseload 8,353 Edgewater 48 Other 608 Stryker 18 Other 63 Total 14,257 MW Total Peaking Units 2,344 * Sale pending Analyst Meeting Generation & Commodity Operations New York, NY ▪ December 6, 2007 3 Integrated Portfolio Overview
  • 65. Diversity and Scale of Generation Fleet Fleet Characteristics and Mission-Driven Strategy Significant scale: FES controls about 14,000 MW Balanced mix of fuel types – 38% nuclear; 62% fossil & other (2007F output) Transportation optionality – Three delivery options for our largest baseload plants – barge, rail and truck Geographic diversity – Participation in two RTOs (MISO and PJM) allows for price discovery and the ability to take advantage of inter-market price differentials Baseload/load following strategy optimizes fleet performance and reliability – Each unit has a specific mission (baseload, load-following or peaking) that provides clear operating objectives – Increases efficiency and reduces wear and tear on baseload units – More efficient plant operation drives increased output and cost reductions Analyst Meeting Generation & Commodity Operations New York, NY ▪ December 6, 2007 4 Integrated Portfolio Overview
  • 66. Top-Tier Operational Capability Focus on Cost Control Mission-driven strategy in Fossil has resulted in significant reductions in cost since 2004 as well as increased output In spite of increased AQC-related O&M in 2008–2010, non-fuel production costs are expected to remain stable Cost-effective execution of outages is expected to drive improvement and stability of nuclear non-fuel expenses Fossil Nuclear ($ / MWh) ($ / MWh) 2004 2005 2006 2007F 2008F 2004 2005 2006 2007F 2008F Non-Fuel Fuel Non-Fuel Fuel Analyst Meeting Generation & Commodity Operations New York, NY ▪ December 6, 2007 5 Integrated Portfolio Overview
  • 67. Top-Tier Operational Capability Continued Improvement of Asset Utilization 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 100% 95% Factors (%) 90% 85% 80% 75% 2004 2005 2006 2007F 2008F 2011 Target 84.6% 86.9% 88.5% 81.0% 87.2% 90.7% Fossil baseload 89.5% 86.2% 86.8% 90.0% 92.9% 92.4% Nuclear Analyst Meeting Generation & Commodity Operations New York, NY ▪ December 6, 2007 6 Integrated Portfolio Overview
  • 68. Integrated Generation, Commodity & Retail Operations Real-time coordination of fuel burn and unit availability drives generation dispatch optimization – Integrated approach maximizes unit profitability and asset value – Minimize costs when prices are low and maximize revenue when prices are high An integrated portfolio outperforms generation-only or retail-only models – Mitigates the risk associated with independently managed positions Proven experience and capabilities in wholesale markets – Skill, experience and influence in PJM and MISO – Successful participation in multiple auction structures (BGS, Penn Power RFP) Strong presence in retail markets provides market intelligence and maximizes commodity margin Analyst Meeting Generation & Commodity Operations New York, NY ▪ December 6, 2007 7 Integrated Portfolio Overview
  • 69. Integrated Generation, Commodity & Retail Operations Competitive Skills to Succeed in Competitive Generation Markets FES Retail provides a retail sales channel for FES generation – Maximize generation value through higher margin retail sales FES Retail provides natural hedge for FES POLR obligations – Integrated wholesale/retail strategy provides natural hedge for shopping risk inherent in POLR obligation – Successfully implemented integrated wholesale/retail strategy for Penn Power market Focus on competitive electric markets within MISO and PJM FES Retail ranks #13 out of 81 competitive suppliers (1) – – Active participation since 1998 in OH, PA, NJ, MD and MI markets – Market leader in PA market (Duquesne Light, Penn Power) – Competitive expertise allows FES Retail to maximize opportunities as markets transition Execute wholesale/retail strategy in Ohio when market opens in 2009 (1) Non-residential market share (GW). Source: KEMA Semi-Annual Review of U.S. Retailer Rankings: August 2007 Analyst Meeting Generation & Commodity Operations New York, NY ▪ December 6, 2007 8 Integrated Portfolio Overview
  • 70. Maximizing Potential of Generating Fleet Mining Our Assets – incremental, low-risk investment approach to fleet expansion Cumulative Type of MW Addition 2005–2007F 2008F–2011F MW Fossil baseload uprates 130 89 219 Fossil load following uprates 0 84 84 Nuclear baseload uprates 92 78 170 Peaking capacity enhancements* 149 0 149 Total MW additions 371 251 622 * Reflects 12 separate projects including returning 70 MW at Burger Unit 3 that has not been available since summer 2005. 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 – Low technology and construction risk Clarity on capacity and ancillary services market structure, technological advances, and environmental regulations will impact generation asset decisions in the future Analyst Meeting Generation & Commodity Operations New York, NY ▪ December 6, 2007 9 Integrated Portfolio Overview
  • 71. Maximizing Potential of Generating Fleet Leading the Way in Procuring Renewable Energy to Meet Growing Demand FES Wind Energy Portfolio Renewable State Overview Mandate Status Capacity RECs/Year In-service 145 MW 384 GWh 2007 Drives our PA 18% by 2020 renewable In-service 70 MW 180 GWh strategy today 2008 Total: 215 MW 564 GWh On the horizon and will impact Leading wind energy supplier in PA 25% by 2025 OH our renewable (Proposed) Evaluating expansion of current wind strategy in the portfolio future Considering other renewable technologies: Represents a – Solar – minimal part of Compressed air NJ 22.5% by 2020 – our renewable Biomass – Land fill gas requirements – Anaerobic digestion Analyst Meeting Generation & Commodity Operations New York, NY ▪ December 6, 2007 10 Integrated Portfolio Overview
  • 72. Maximizing Potential of Generating Fleet Generation Output 100 80 (million MWh) 60 40 20 0 2004 2005 2006 2007F 2008F 2009F 2010F 2011F 29.9 28.7 29.0 30.7 32.0 31.0 32.2 32.0 Nuclear 46.5 51.5 53.0 51.5 52.7 52.4 53.7 54.6 Fossil Analyst Meeting Generation & Commodity Operations New York, NY ▪ December 6, 2007 11 Integrated Portfolio Overview
  • 73. Transitioning to our Future Diversity and scale of generation fleet Top-tier operational capability and commitment to operational FES is well- excellence positioned to succeed in Integrated Generation, competitive Commodity and Retail markets operations Maximizing potential of generating fleet Well-positioned in a carbon- constrained world Analyst Meeting Generation & Commodity Operations New York, NY ▪ December 6, 2007 12 Integrated Portfolio Overview
  • 74. Analyst Meeting New York, NY • December 6, 2007 Commodity Operations Ali Jamshidi Vice President, Commodity Operations
  • 75. Discussion Topics Near-term commodity hedge positions Market trends MISO and PJM overview Long-term readiness Analyst Meeting Commodity Operations New York, NY ▪ December 6, 2007 2
  • 76. Commodity Operations’ Objectives Maximizing Margins by Mitigating Risks and Minimizing Supply Costs Effectively manage commodity positions Effectively deploy generation to meet retail obligations and capture market opportunities Enhance fuel supply / logistics to maximize optionality Efficiently manage purchased power requirements Employ strict risk management controls and oversight to minimize exposure to MISO and PJM markets – Volume and price risks – Generation availability risks – Transmission congestion risks Analyst Meeting Commodity Operations New York, NY ▪ December 6, 2007 3
  • 77. Expected Supply Portfolio for FES* Significant reductions in mostly on-peak energy purchases Expected Total Supply 95 94 90 100 (million MWh) 80 60 40 20 0 2008F 2009F 2010F 11 7 9 Forward / Spot Purchases 32 31 32 Nuclear 52 52 53 Fossil, Hydro, Wind Supply numbers exclude JCP&L and firm contract portion of ME/PN •*Assumes move to open market in Ohio in 2009 and beyond Analyst Meeting Commodity Operations New York, NY ▪ December 6, 2007 4
  • 78. Expected Sales Portfolio for FES* Significant increases in higher margin sales Expected Total Sales 95 94 90 100 (million MWh) 80 60 40 20 0 2008F 2009F 2010F 1 31 29 Retail Auction 12 20 24 Competitive Retail 16 20 21 Forward / Spot Sales 14 19 20 ME/PN PRA Obligations 52 0 0 OH PSA Obligations Sales numbers exclude JCP&L and firm contract portion of ME/PN •*Assumes move to open market in Ohio in 2009 and beyond Analyst Meeting Commodity Operations New York, NY ▪ December 6, 2007 5
  • 79. PJM Capacity Position ME and PN have long-term capacity contracts Beaver Valley nuclear plant (1,779 MW) committed in PJM to cover capacity position Covered capacity prior to RPM auction for planning year 2008-2009 to replace long-term contracts Committed Seneca pumped storage (451 MW) to PJM as a capacity resource for planning year 2009 (commencing in June 2009) Continue to actively explore other options with our assets PJM Net Capacity FES View (continuing to serve the ME and PN PRA) 3500 2800 2100 1400 700 MW 0 (700) (1400) (2100) (2800) (3500) Jul Jul Jul Jan Feb Jun Jan Feb Jun Jan Feb Jun Oct Oct Oct Mar Mar Mar May Nov Dec May Nov Dec May Nov Dec Sep Sep Sep Aug Aug Aug Apr Apr Apr 2008 2009 2010 Includes Beaver Valley, Forked River and Seneca Analyst Meeting Commodity Operations New York, NY ▪ December 6, 2007 6
  • 80. Commodity Positions – Policy / Strategy Coal and Related Commodities Significantly close positions in the near term Layer in longer physical term contracts to smooth out supply costs Maintain some flexibility in hedging activities to take advantage of market opportunities Continuously explore and enhance fuel blends and inventory management Use financial hedges as necessary to manage variability Trade around our assets – no speculative trading Analyst Meeting Commodity Operations New York, NY ▪ December 6, 2007 7
  • 81. Coal Commodity Position Continue working to Securing Open Coal Commodity Positions secure long-term fuel supply contracts Actively testing alternate 2008 99% fuel blends at various plants to optimize plant 91% 2009 economics and flexibility Engaged in fuel flexibility 2010 100% initiative to expand margins and fuel choices 0 5,000 10,000 15,000 20,000 25,000 Total Needed Tons Total Covered Tons Analyst Meeting Commodity Operations New York, NY ▪ December 6, 2007 8
  • 82. Coal Transportation Position Actively pursuing closure to Securing Open Coal long-term transportation Transportation Positions positions – rail contract signed, 2010 barge contract agreement reached 97% 2008 Continuing to evaluate additional delivery options 2009 91% to increase both capabilities and flexibility Enhanced rail unloading 2010 58% capabilities in process at Ashtabula, Bay Shore and 0 5,000 10,000 15,000 20,000 25,000 Lake Shore In 2008, FES will manage PRB Total Needed Tons Total Covered Tons rail logistics previously outsourced Analyst Meeting Commodity Operations New York, NY ▪ December 6, 2007 9
  • 83. Emission Allowance Position SO2 Position SO2 Position Based on projected generation: 350,000 – SO2 emission allowance 260,000 positions are well covered for (tons) 170,000 2008 and 2009 – Closed 2010 SO2 positions early 80,000 to mitigate potential scrubber -10,000 projects completion risks 2008 2009 2010 Needed Covered Position – 2008 seasonal NOx is covered – 2009 – 2010 seasonal NOx Seasonal NOx Position requirements are expected to 30,000 be fully covered as allocations are made to states (OH due in 20,000 Jan. 2008) (tons) 10,000 – Annual NOx allocations are 0 beginning and markets are 2008 2009 2010 still thin -10,000 Needed Covered Position Analyst Meeting Commodity Operations New York, NY ▪ December 6, 2007 10
  • 84. Fuel Flexibility Creates Margin & Fuel Choices Enhanced systems, tools and processes providing the ability to react and adjust blends quickly to match market prices “Fuel Flex” creates value by continuously increasing fuel blend choices – Maximize revenues when real-time market prices are favorable – Minimize costs when market prices are low The Right Fuel at the Right Time Analyst Meeting Commodity Operations New York, NY ▪ December 6, 2007 11
  • 85. Energy Forward Prices – 2008 2008 Calendar Strips - Power $90 $80 $70 $60 $/MWh $50 $40 $30 $20 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 PJM WH On Cinergy On PJM WH Off Cinergy Off Analyst Meeting Commodity Operations New York, NY ▪ December 6, 2007 12
  • 86. Energy Forward Prices – 2009 2009 Calendar Strips - Power $90 $80 $70 $60 $/MWh $50 $40 $30 $20 Jan-07 Feb-07 M ar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 PJM WH On Cinergy On PJM WH Off Cinergy Off Analyst Meeting Commodity Operations New York, NY ▪ December 6, 2007 13
  • 87. Energy Forward Price – Outlook Natural Gas Forward Average Price and Heat Rates (12-month, last day of month) 13.00 12.00 11.00 $/Dth or Dth/MWh 10.00 9.00 8.00 7.00 6.00 5.00 4.00 11/30/2005 12/30/2005 1/30/2006 2/28/2006 3/30/2006 4/30/2006 5/30/2006 6/30/2006 7/30/2006 8/30/2006 9/30/2006 10/30/2006 11/30/2006 12/30/2006 1/30/2007 2/28/2007 3/30/2007 4/30/2007 5/30/2007 6/30/2007 7/30/2007 8/30/2007 9/30/2007 10/30/2007 NG Price CIN Heat rate PJM Heat Rate Analyst Meeting Commodity Operations New York, NY ▪ December 6, 2007 14
  • 88. Commodity Forward Prices – Overview Demand continues to outpace supply Reserve margins shrinking Underlying commodity prices increasing Environmental requirements increasing Construction costs escalating Heat rates and dark spread exhibiting growth Prices / Outlook – Energy – Capacity – Ancillary Services Analyst Meeting Commodity Operations New York, NY ▪ December 6, 2007 15
  • 89. Transitioning to our Future Near-term commodity positions well hedged Proven skills in managing commodity risks Track record in maximizing asset utilization Well positioned in MISO and PJM Proven retail/wholesale skills in MISO and PJM Analyst Meeting Commodity Operations New York, NY ▪ December 6, 2007 16
  • 90. appendix Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-1
  • 91. Generation by Type – 2006 RFC Capacity (MW) Coal plants nearing 3% 1% 5% 49% their maximum capacity 13% factors Expect gas units to be on the dispatch margin Coal more often Gas Nuclear Dispatch prices should Oil 28% Hydro trend upward Other RFC Net Energy (MMWh) 1% 1% 24% RFC – Reliability First Corporation (ECAR, MAIN, MAAC) •Source: EIA database & EPA 6% 68% Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-2
  • 92. Reserve Margin Outlook Resource adequacy needed to maintain reliability MISO portion of RFC reserve margins continue to be unfavorable to the PJM portion MISO capacity value opportunities Existing Generation Only: 2008 2009 2010 2011 18.8% 16.4% 14.7% 12.9% Total RFC 11.5% 10.2% 9.0% 7.5% MISO Portion of RFC 20.3% 17.6% 15.8% 14.0% PJM Portion of RFC Existing Generation + Planned Resources: 2008 2009 2010 2011 19.5% 17.7% 16.3% 14.8% Total RFC Based on the November 12.3% 11.7% 11.4% 10.0% 2007 RFC Long Term MISO Portion of RFC Resource Assessment, 21.0% 18.7% 16.8% 15.5% PJM Portion of RFC 2007-2016 Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-3
  • 93. RPM and Resource Adequacy in PJM Reliability Pricing Model (RPM) has increased capacity pricing, however not enough generation is being built yet MISO capacity value, particularly ECAR portion, will demand premium RPM Base Residual Auction Capacity Prices 250 200 $/MW Day SWMAAC 150 EMAAC 100 MAAC + APS RTO 50 0 2007/08A 2008/09A 2009/10F Planning Year Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-4
  • 94. Resource Adequacy in MISO Current operating reserve requirements met by Designated Network Resources (DNR) DNR, while not an organized market, are purchased and sold Planning Reserve Sharing Group to meet planning requirements underway Reliability requirements will force deliverability tests Reserve short zones/areas will demand premium Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-5
  • 95. Ancillary Service Market (ASM) in MISO ASM market set to start next June Market-based ASM is good for the MISO market and good for reliability Some generators will see an upside Rate ($/MWH) FES Current PJM Rate* ** Market* Regulation $0.13 $0.78 Spinning & Suplemental $0.29 $0.10 Total $0.42 $0.88 •*Figures are estimates only •**Rate amounts are estimates based on MISO Tariff Schedule 3,5, & 6 Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-6
  • 96. Analyst Meeting New York, NY • December 6, 2007 Financial Outlook Rich Marsh Senior Vice President and Chief Financial Officer
  • 97. Discussion Topics Review of Key 2007 Financial Accomplishments 2008 Financial Overview Major Earnings and Cash Drivers 2009–2011 Capital Expenditures 2009–2011 Finance Plans Conclusions Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 2
  • 98. 2007 – Key Financial Accomplishments Consistent financial results – Narrowed Non-GAAP 2007 earnings guidance to $4.15 to $4.25*, the top half of original guidance range Continued strong cash flow – Expect net cash from operating activities of $1.7B – Includes pension contribution of $300M Enhanced capital structure – Transferred $427M of tax-exempt pollution control debt from utilities to unregulated Gencos – Issued approximately $1.1B of operating company debt Strengthened pension fund – Voluntary $300M contribution – Plan well funded * See GAAP to Non-GAAP reconciliations in the Financial Outlook Appendix. Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 3
  • 99. 2007 – Key Financial Accomplishments (continued) Positioned FirstEnergy Solutions (FES) as an independent capital raising entity – Investment grade credit ratings (BBB/Baa2) received in March 2007 – Completed $1.3B sale and leaseback transaction on 779 MW portion of Unit 1 of the Bruce Mansfield Plant – Captured benefit of $752M of expiring tax capital loss carryforwards – Equivalent to borrowing at 3.6% for a term of 33 years – Upsized FES’ borrowing capacity under FirstEnergy’s revolver to $1.0B Increased shareholder value – Year-to-date stock price appreciation of 13.7% (through Nov. 2007) – Three year annualized TSR of 21.5% (through Nov. 2007) – Dividend increase of 11.1% (March 2007) – Accelerated repurchase of approx. 14.4 million shares (March 2007) Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 4
  • 100. 2007 / 2008 Earnings Guidance 2007 Non-GAAP Earnings Guidance* Original (Feb. 2007) $4.05 – $4.25 Revised (Oct. 2007) $4.15 – $4.25 Affirmed (Dec. 2007) $4.15 – $4.25 Establishing 2008 Non-GAAP earnings guidance of $4.15 to $4.35 per share* – Normalized to exclude anticipated gain on the planned sale of non-core assets, currently estimated at $0.08 per share in 2008 * See GAAP to Non-GAAP reconciliations in the Financial Outlook Appendix. On a GAAP basis, 2008 EPS is expected to be $4.23 to $4.43 reflecting an $0.08 gain on the planned sale of non-core assets. Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 5
  • 101. 2008 Earnings Per Share Guidance $5.00 Ohio Transition Cost Amortization $0.14 Depreciation $4.50 & General $0.03 Taxes $0.06 ($0.13) $0.05 Other Generation $4.25* 2007 $0.04 Output $4.20* Share ($0.10) Financing ($0.04) Buyback Costs Outage Wires O&M Sales Costs Growth $4.00 $3.50 Midpoint 2007 Midpoint 2008 Non-GAAP Non-GAAP EPS Guidance EPS Guidance * See GAAP to Non-GAAP reconciliations in the Appendix. 2008 EPS guidance, excluding special items, is $4.15 to $4.35. On a GAAP basis, 2008 EPS is expected to be $4.23 to $4.43 reflecting an $0.08 gain on the planned sale of non-core assets. Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 6
  • 102. Common Dividend Management will recommend that the Board of Directors declare a quarterly dividend of $0.55 per share payable March 2008 at their December 18 meeting Dividend Increases: Payment Quarterly Change from Annualized Date Rate Prior Period Rate 1Q 2008 55.00¢ 10.00% $2.20 1Q 2007 50.00¢ 11.10% $2.00 1Q 2006 45.00¢ 4.65% $1.80 4Q 2005 43.00¢ 4.24% $1.72 1Q 2005 41.25¢ 10.00% $1.65 4Q 2004 37.50¢ – $1.50 Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 7
  • 103. Capital Expenditures Forecast 2007F 2008F Change ($ millions) Energy Delivery $746 $730 $(16) FENOC 149 131 (18) Fossil 104 96 (8) Corporate 88 86 (2) Subtotal $1,087 $1,043 $(44) AQC 387 650 263 Total $1,474 $1,693 $219 Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 8
  • 104. Available Cash Forecast 2007F 2008F Change ($ millions) Net Cash from Operating Activities $1,698 $2,224 $526 Capital Expenditures (1,474) (1,693) (219) Nuclear Fuel Fabrication (94) (136) (42) Available Cash before $130 $395 $265 Dividends Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 9
  • 105. Major Earnings & Cash Drivers 2009 – 2011 Distribution rate case in OH effective 2009 Market generation prices in OH in 2009 Market generation prices in PA in 2011 Asset mining / realizing full potential of generation assets Further operational enhancements Timely recovery of regulated costs and capital investments Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 10
  • 106. Major Earnings & Cash Drivers 2009 – 2011 (continued) Declining margin from Ohio transition plans Impact of expiring Met-Ed/Penelec third-party power contract in 2009 Increasing fuel and purchased power costs Increasing O&M costs Higher depreciation expenses (non-cash) Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 11
  • 107. Projected 2008 – 2011 Capital Expenditures ($ millions) 2008F 2009F 2010F 2011F AQC $650 $500 $156 $11 Change from Prior Year $261 ($150) ($344) ($145) 2009F – 2011F 2008F ($ millions) Average Energy Delivery $730 $730 FENOC 131 260 Fossil 96 155 Corporate 86 75 Subtotal without AQC $1,043 $1,220 Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 12
  • 108. Projected 2008 – 2011 Capital Expenditures FENOC capital incorporates Davis-Besse steam generator replacement in 2014 and power uprates at Davis-Besse, Perry and Beaver Valley 2008F 2009F 2010F 2011F ($ millions) Steam Generator $3 $41 $62 $65 Power Uprates 2008 – 2011 $4 $8 $15 $34 2013 & 2014 — $34 $52 $55 Fossil capital reflects $17M for generator work at Mansfield and Sammis in 2008 and $33M for asset mining initiatives over 2008 – 2010 period Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 13
  • 109. 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 – $3.4B 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 – $1.9B already transferred – $1.5B, 6.45% Series B FE Notes due November 2011 Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 14
  • 110. Finance Plans: 2008 and Beyond (continued) Efficient funding of capital program – Capital expenditures financed largely through internal cash flow, even during peak AQC spend – New tax-exempt financings of approximately $200M planned to support Sammis AQC project Potential uses of substantial growth in free cash following completion of AQC projects – Dividend growth – Potential for share repurchases – Invest for future growth – Ability to take advantage of strategic opportunities Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 15
  • 111. Transitioning to our Future Flexible and agile financial strategy – avoid “big bets” Favorable competitive generation assets; well- positioned regarding potential carbon legislation “Asset mining” provides low-risk, low-capital approach to increasing generation capacity Proven record of operational performance Aggressive plan to drive further efficiencies Manageable capital spending program Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 16
  • 112. Transitioning to our Future (continued) Potential to change earnings and cash flow growth trajectory through transition to competitive generation markets Financial flexibility and ample liquidity Competitive and growing dividend Substantial free cash flow following completion of AQC projects Management and employees incentivized to drive value growth for investors Analyst Meeting Financial Outlook New York, NY ▪ December 6, 2007 17
  • 113. appendix Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-1
  • 114. Share Repurchase Summary (Shares in millions) 2006 2007F Cumulative Beginning Shares 329.8 319.2 329.8 Shares Repurchased 10.6 14.4 25.0 Ending Shares 319.2 304.8 304.8 % Reduction 3.2% 4.5% 7.7% Cost ($ millions) $627 $940* $1,567* Avg. Price per Share $58.99 $65.39* $62.68* Annual EPS Benefit $0.13 $0.19* $0.32* * Estimate subject to settlement Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-2
  • 115. FirstEnergy Credit Ratings Corporate Credit Senior Rating (S&P) / Senior Secured As of November 30, 2007 As of December 6, Issuer Rating Unsecured (Moody's) S&P Moodys S&P Moodys S&P Moodys FirstEnergy 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 On October 18, S&P revised the outlook of FE and its subsidiaries to negative from stable On November 2, Moody’s revised the outlook of FE and its subsidiaries to stable from positive Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-3
  • 116. FFO Calculation and Coverage Ratios FFO Interest Coverage FFO Calculation FFO + Adjusted Interest Net Income = Adjusted Interest Add back non-cash items: + Depreciation, amortization (incl. nuclear fuel and lease Adjusted Interest: amortization), and deferral of regulatory assets + Interest expense (before AFUDC) + Deferred purchased power and other costs + Interest portion of leases + Deferred income taxes and investment tax credits - JCP&L securitization bond expense + Investment impairments = Adjusted Interest + Deferred rents and lease market valuation liability + Accrued compensation and retirement benefits - AFUDC = FFO FFO Debt Coverage Debt / Capitalization FFO Rating Agency View Regulatory View = Adjusted Debt Debt: Debt: + Short-term borrowings Adjusted Debt: + Long-term debt + Long-term debt + Short-term borrowings + Present Value of sale and + Long-term debt leasebacks + Present value of sale and leasebacks - Securitization bonds - Cash and cash equivalents = Rating Agency Debt = Regulatory Debt - JCP&L securitization bonds Capitalization: Capitalization: = Adjusted Debt + Rating Agency Debt + Regulatory Debt + Common stockholders’ equity + Common stockholders’ equity = Rating Agency Capitalization = Regulatory Capitalization Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-4
  • 117. Strong Liquidity Position Company Type Term Maturity Amount ($M) FirstEnergy Corp. RCA* 5-year Aug. 2011 $ 2,750 FirstEnergy Corp. Bank Lines Various Various 120 OH & PA Utilities A/R Fin. 1-year Various 550 Total $ 3,420 * Revolving Credit Agreement Substantial liquidity available – $3.1B available borrowing capacity at November 30, 2007 Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-5
  • 118. 2007 Non-GAAP Earnings Per Share Guidance Reconciliation GAAP to Non-GAAP Affirmed on December 5, 2007 2007 EPS Basic EPS (GAAP basis) $4.21 – $4.31 Excluding Special Items: New Regulatory Asset Authorized by PPUC (0.05) Gain on sale of non-core assets (0.04) Trust Securities Impairment 0.03 Basic EPS (Non-GAAP basis) $4.15 – $4.25 Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-6
  • 119. 2008 Non-GAAP Earnings Per Share Guidance Reconciliation GAAP to Non-GAAP Issued on December 5, 2007 2008 EPS Basic EPS (GAAP basis) $4.23 – $4.43 Excluding Special Items: Gain on sale of non-core assets (0.08) Basic EPS (Non-GAAP basis) $4.15 – $4.35 Analyst Meeting Appendix New York, NY ▪ December 6, 2007 App-7
  • 120. Analyst Meeting New York, NY • December 6, 2007 Closing Marks Tony Alexander President and CEO
  • 121. Bottom Line – FirstEnergy is an attractive risk/reward opportunity Effectively managing transition to competitive markets Realizing full potential of assets Significant Earnings Reinvesting for future growth Growth Effectively deploying strong cash flow Potential Striving for continuous improvement Maintaining strategic flexibility Well-positioned for climate legislation Analyst Meeting Corporate and Strategic Overview New York, NY ▪ December 6, 2007