-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JISTglG0X2cUthep5OVbnCZFb6RmhCHx4kAyemFPoHDjMjU2qJ56dqzUucesPt8I 4rE4PeOhoWXPNtmrF7CO5g== 0000950120-05-000700.txt : 20051018 0000950120-05-000700.hdr.sgml : 20051018 20051018121623 ACCESSION NUMBER: 0000950120-05-000700 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 19 FILED AS OF DATE: 20051018 DATE AS OF CHANGE: 20051018 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRSTENERGY CORP CENTRAL INDEX KEY: 0001031296 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 341843785 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1/A SEC ACT: 1935 Act SEC FILE NUMBER: 070-10307 FILM NUMBER: 051142439 BUSINESS ADDRESS: STREET 1: 76 SOUTH MAIN ST CITY: AKRON STATE: OH ZIP: 44308-1890 BUSINESS PHONE: 3303845100 MAIL ADDRESS: STREET 1: 76 SOUTH MAIN ST CITY: AKRON STATE: OH ZIP: 44308-1890 U-1/A 1 firstenergyu1a.txt FORM U-1/A (As filed with the Securities and Exchange Commission on October 18, 2005) File No. 70-10307 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------------------------------------------- FORM U-1/A AMENDMENT NO. 3 TO APPLICATION/DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 FirstEnergy Corp. Ohio Edison Company The Cleveland Electric Illuminating Company The Toledo Edison Company Pennsylvania Power Company 76 South Main Street Akron, Ohio 44308 (Names of companies filing this statement and address of principal executive offices) ---------------------------------------------------------------------- FIRSTENERGY CORP. (Name of top registered holding company parent of applicants) ----------------------------------------------------------------------- Leila L. Vespoli Douglas E. Davidson, Esq. Senior Vice President and Thelen Reid & Priest LLP General Counsel 875 Third Avenue FirstEnergy Corp. New York, New York 10022 76 South Main Street Akron, Ohio 44308 (Names and addresses of agents for service) ----------------------------------------------------------------------- The Application/Declaration filed in this proceeding on May 23, 2005, as previously amended and restated in its entirety by Amendments No. 1 and 2, filed on June 7, 2005 and July 18, 2005, respectively, is hereby further amended and restated in its entirety to read as follows: ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS ------------------------------------ 1.1 Introduction. FirstEnergy Corp., an Ohio corporation ("FirstEnergy"), is a registered holding company under the Public Utility Holding Company Act of 1935, as amended (the "Act")./1/ FirstEnergy directly owns all of the outstanding common stock of Ohio Edison Company ("Ohio Edison"), The Cleveland Electric Illuminating Company ("Cleveland Electric"), and The Toledo Edison Company ("Toledo Edison"), and indirectly through Ohio Edison owns all of the outstanding common stock of Pennsylvania Power Company ("Penn Power")./2/ Ohio Edison, Penn Power, Cleveland Electric and Toledo Edison are referred to herein as the "Utility Subsidiaries." FirstEnergy and the Utility Subsidiaries are referred to herein as the "Applicants." Ohio Edison was organized under the laws of the State of Ohio in 1930 and owns property and does business as an electric public utility in that state. Ohio Edison also has ownership interests in certain generating facilities located in the Commonwealth of Pennsylvania. Ohio Edison engages in the generation, distribution and sale of electric energy to communities in a 7,500 square mile area of central and northeastern Ohio having a population of approximately 2.8 million. Ohio Edison owns all of Penn Power's outstanding common stock. Penn Power was organized under the laws of the Commonwealth of Pennsylvania in 1930 and owns property and does business as an electric public utility in that state. Penn Power is also authorized to do business and owns property in the State of Ohio. Penn Power furnishes electric service to communities in a 1,500 square mile area of western Pennsylvania having a population of approximately 300,000. Cleveland Electric was organized under the laws of the State of Ohio in 1892 and does business as an electric public utility in that state. Cleveland Electric engages in the generation, distribution and sale of electric energy in an area of approximately 1,700 square miles in northeastern Ohio having a population of approximately 1.9 million. It also has ownership interests in certain generating facilities located in Pennsylvania. - ---------- 1 See FirstEnergy Corp., Holding Co. Act Release No. 27459 (Oct. 29, 2001), as supplemented by Holding Co. Act Release No. 27463 (Nov. 8, 2001) (the "Merger Order"). 2 FirstEnergy's other public utility subsidiaries are Jersey Central Power & Light Company, Pennsylvania Electric Company, Metropolitan Edison Company, York Haven Power Company, The Waverly Electric Power & Light Company and American Transmission Systems, Incorporated. These companies are not applicants in this proceeding. 2 Toledo Edison was organized under the laws of the State of Ohio in 1901 and does business as an electric public utility in that state. Toledo Edison engages in the generation, distribution and sale of electric energy in an area of approximately 2,500 square miles in northwestern Ohio having a population of approximately 800,000. It also has interests in certain generating facilities located in Pennsylvania. Filed herewith as Exhibit H is a table showing the components of consolidated capitalization as of June 30, 2005, of FirstEnergy, Ohio Edison, Penn Power, Cleveland Electric and Toledo Edison. The Applicants are requesting authorization herein for certain transactions that are related to the sale of their respective interests in certain fossil-fuel and hydroelectric generating facilities owned by the Utility Subsidiaries to FirstEnergy Generation Corp. ("FE GenCo"), which is a direct wholly-owned subsidiary of FirstEnergy Solutions Corp. ("FE Solutions") and an indirect subsidiary of FirstEnergy. FE GenCo is an "exempt wholesale generator" ("EWG") under Section 32 of the Act. These asset transfers are in furtherance of FirstEnergy's Ohio and Pennsylvania corporate separation plans, which were described in FirstEnergy's Application/Declaration for authorization to merge with GPU, Inc. ("GPU"). 1.2 Description of Generating Facilities to be Transferred by the Utility Subsidiaries. - -------------------------------------------------------------------------------- The Utility Subsidiaries own, individually or together as tenants in common, interests in the following fossil-fuel and hydroelectric generating plants:/3/
- ----------------------- ------------------ ---------- -------------------------- PLANT LOCATION MW OWNERSHIP% - ----------------------- ------------------ ---------- -------------------------- Ashtabula 5 Ashtabula, OH 244 Cleveland Electric 100% - ----------------------- ------------------ ---------- -------------------------- Bay Shore 1-4 Toledo, OH 631 Toledo Edison 100% Bay Shore Peaking 17 - ----------------------- ------------------ ---------- -------------------------- R.E. Burger 3-5 Shadyside, OH 406 Ohio Edison 100% - ----------------------- ------------------ ---------- -------------------------- R.E. Burger Peaking Shadyside, OH 7 Ohio Edison 85.6% Penn Power 14.4% - ----------------------- ------------------ ---------- -------------------------- Eastlake 1-5 Eastlake, OH 1,233 Cleveland Electric 100% Eastlake Peaking 29 - ----------------------- ------------------ ---------- -------------------------- Lakeshore 18 Cleveland, OH 245 Cleveland Electric 100% Lakeshore Peaking 4 - ----------------------- ------------------ ---------- --------------------------
- ---------- 3 The Utility Subsidiaries do not propose to transfer their remaining percentage ownership interests in certain fossil-fuel units that are not now being leased by FE GenCo, as described in Item 1.3 below. 3 Bruce Mansfield 1 Shippingport, PA 780 Ohio Edison 60% Penn Power 33.5% - ----------------------- ------------------ ---------- -------------------------- Bruce Mansfield 2 Shippingport, PA 780 Ohio Edison 43.06% Penn Power 9.36% Cleveland Electric 1.68% - ----------------------- ------------------ ---------- -------------------------- Bruce Mansfield 3 Shippingport, PA 800 Ohio Edison 49.34% Penn Power 6.28% - ----------------------- ------------------ ---------- -------------------------- W.H. Sammis 1-6 Stratton, OH 1,620 Ohio Edison 100% - ----------------------- ------------------ ---------- -------------------------- W.H. Sammis 7 Stratton, OH 600 Ohio Edison 48% Penn Power 20.8% Cleveland Electric 31.2% - ----------------------- ------------------ ---------- -------------------------- W.H. Sammis Peaking Stratton, OH 13 Ohio Edison 85.6% Penn Power 14.4% - ----------------------- ------------------ ---------- -------------------------- Edgewater Peaking Lorain, OH 48 Ohio Edison 86% Penn Power 14.0% - ----------------------- ------------------ ---------- -------------------------- Richland Peaking 1-3 Defiance, OH 42 Toledo Edison 100% - ----------------------- ------------------ ---------- -------------------------- Seneca Warren, PA 435 Cleveland Electric 100% - ----------------------- ------------------ ---------- -------------------------- West Lorain Lorain, OH 120 Ohio Edison 100% Peaking Unit 1 - ----------------------- ------------------ ---------- -------------------------- Mad River Peaking Springfield, OH 60 Ohio Edison 85.6% Penn Power 14.4% - ----------------------- ------------------ ---------- ------------------------- Stryker Peaking Springfield, OH 18 Toledo Edison 100% - ----------------------- ------------------ ---------- ------------------------ 1.3 Sale of Fossil and Hydroelectric Plants to FirstEnergy Generation Corp. ----------------------------------------------------------------------- Currently, the Utility Subsidiaries lease all of the fossil and hydroelectric generating plants listed in the table above to FE GenCo, which, as indicated, has previously been certified by the Federal Energy Regulatory Commission ("FERC") as an EWG./4/ FE GenCo leases and operates these plants pursuant to the terms of a Master Facility Lease ("Master Lease"), dated as of January 1, 2001 (incorporated herein by reference as Exhibit B-1). The Master Lease, which became effective on January 1, 2001, and has a term of twenty years, was intended as the first step in the eventual transfer of ownership of the leased plants to FE GenCo. The Master Lease is a net lease that, among other things, obligates FE GenCo, as lessee, to pay for all capital improvements to - ---------- 4 FE GenCo was approved by the FERC as an EWG on April 6, 2001. FirstEnergy Generation Corp., 95 FERC P. 62,018 (2001). 4 the leased plants. To date, FE GenCo has expended more than $900 million for major capital improvements to the leased plants. Pursuant to Section 12 of the Master Lease, FE GenCo has an option to purchase the leased generating plants for the purchase price per unit listed in Exhibits A through D to the Master Lease. Section 12 of the Master Lease further provides that, upon exercise of the purchase option, FE GenCo may pay the purchase price either in cash or by executing a promissory note, secured by a lien on the transferred assets. Each of the Utility Subsidiaries and FE GenCo has entered into a Fossil Purchase and Sale Agreement ("Fossil PSA"), filed herewith as Exhibits B-2 through B-5. Under the Fossil PSAs, FE GenCo has agreed to purchase each Utility Subsidiary's fossil units (and, in the case of Cleveland Electric, one hydroelectric generating facility) plus all of the seller's right, title and interest in and to any and all contracts, fuel, spare parts, inventories, equipment, supplies and other assets associated with the transferred units for an amount equal to the purchase price set forth in section 2.2 of each Fossil PSA (the "Purchase Price"), as follows: Ohio Edison - $980 million; Penn Power - $125 million; Cleveland Electric - $389 million;/5/ and Toledo Edison - $88 million, as adjusted through closing to reflect the value of any additional assets or liabilities transferred by the selling Utility Subsidiary to FE GenCo. In addition, under each Fossil PSA, FE GenCo has agreed to assume and discharge all of the liabilities and obligations of the selling Utility Subsidiary that are related to the purchased units (e.g., accumulated deferred income taxes and asset retirement obligations). As consideration for the purchased units, FE GenCo will deliver to the selling Utility Subsidiary its secured promissory note ("FE GenCo Note") in the form filed herewith as Exhibits B-10 through B-13. The principal amount of each FE GenCo Note will be equal to the Purchase Price for the transferred units, as adjusted through closing, will be secured by a lien on the purchased units, bear interest at a rate per annum based on the average weighted cost of long-term debt of the Utility Subsidiary to which the FE GenCo Note is issued, and mature twenty years after the date of issuance. FE GenCo may prepay the FE GenCo Notes at any time, in whole or in part, without penalty. Exhibit I hereto shows the calculation of the average weighted cost of long-term debt of each of the Utility Subsidiaries as of September 30, 2005. If the transactions described above had closed on June 30, 2005, the principal amount of the FE GenCo Notes issued to the Utility Subsidiaries would have been as follows: Ohio Edison - $1,035 million; Penn Power - $125 million; Cleveland Electric - $454 million; and Toledo Edison - $102.6 million. The exact principal amount of each FE GenCo Note delivered at closing may vary slightly as a result of further adjustments through closing. Under each Fossil PSA, FE GenCo has also agreed that, upon request of the selling Utility Subsidiary, it will assume the selling Utility Subsidiary's liabilities and obligations with respect to certain outstanding pollution control revenue bonds ("PCRBs") that were - ---------- 5 The Purchase Price set forth in section 2.2 of the Fossil PSA for Cleveland Electric ($408 million) failed to account for the retirement of one small unit (Ashtabula C), which is not being transferred to FE GenCo, and was based on an incorrect value for another unit (Mansfield Unit 2). 5 issued to finance pollution control equipment related to the purchased plants./6/ If PCRB obligations are assumed by FE GenCo at or prior to closing, then the principal amount thereof will reduce the principal amount of the applicable FE GenCo Note delivered by FE GenCo at closing. If FE GenCo assumes PCRB obligations after closing, the principal amount so assumed will represent a payment of principal on the applicable FE GenCo Note delivered at closing. The Utility Subsidiaries have obtained releases under their respective first mortgage bond indentures for the fossil and hydroelectric units to be transferred to FE GenCo. ITEM 2. FEES, COMMISSIONS AND EXPENSES ------------------------------ The fees, commissions and expenses incurred or to be incurred in connection with the preparation and filing of this Application/Declaration are not expected to exceed $40,000. ITEM 3. APPLICABLE STATUTORY PROVISIONS ------------------------------- 3.1 General. ------ Sections 9(a), 10, and 12(b) of the Act and Rule 45 thereunder are applicable to the proposed acquisition by the Utility Subsidiaries of the FE GenCo Notes. The transfer of the fossil and hydroelectric plants to FE GenCo, which is an EWG, is exempt under Section 32(c)(B) of the Act, since the Public Utilities Commission of Ohio ("PUCO"), Pennsylvania Public Utility Commission ("PPUC"), New Jersey Board of Public Utilities ("NJBPU") and New York Public Service Commission ("NYPSC") have each made the requisite findings under Section 32(c) of the Act. (See Exhibits D-6, D-8, D-10 and D-12.) 3.2 Rules 53 and 54. --------------- Under Rule 53(a), the Commission shall not make certain specified findings under Sections 7 and 12 in connection with a proposal by a holding company to issue securities for the purpose of acquiring the securities of or other interest in an EWG, or to guarantee the securities of an EWG, if each of the conditions in paragraphs (a)(1) through (a)(4) thereof are met, provided that none of the conditions specified in paragraphs (b)(1) through (b)(3) of Rule 53 exists. Rule 54 provides that the Commission shall not consider the effect of the capitalization or earnings of subsidiaries of a registered holding company that are EWGs or "foreign utility companies" ("FUCOs") in determining whether to approve other transactions if Rule 53(a), (b) and (c) are satisfied. - ---------- 6 Currently, the Utility Subsidiaries have outstanding obligations in respect of PCRBs in approximately the following principal amounts: Ohio Edison - $471 million; Penn Power - $63 million; Cleveland Electric - $362 million; and Toledo Edison - $69 million. 6 FirstEnergy currently meets all of the conditions of Rule 53(a), except for clause (1). Under the Merger Order and the 2003 Financing Order, the Commission, among other things, authorized FirstEnergy to invest in EWGs and FUCOs so long as FirstEnergy's "aggregate investment," as defined in Rule 53(a)(1), in EWGs and FUCOs does not exceed $5 billion, which $5 billion amount is greater than the amount which would be permitted by clause (1) of Rule 53(a) which, based on FirstEnergy's "consolidated retained earning," also as defined in Rule 53(a)(1), of $1.9 billion as of June 30, 2005, would be $950 million. The Merger Order and the 2003 Financing Order also specify that this $5 billion amount may include amounts invested in EWGs and FUCOs by FirstEnergy and GPU, Inc. ("GPU") at the time of the Merger Order ("Current Investments") and amounts relating to possible transfers to EWGs of certain generating facilities owned by certain of FirstEnergy's operating utilities ("GenCo Investments"). FirstEnergy has made the commitment that through December 31, 2005, its aggregate investment in EWGs and FUCOs other than the Current Investments and GenCo Investments ("Other Investments") will not exceed $1.5 billion (the "Modified Rule 53 Test"). Under the Merger Order and 2003 Financing Order, the Commission reserved jurisdiction over Other Investments that exceed such $1.5 billion amount. As of June 30, 2005, FirstEnergy's aggregate investment in EWGs and FUCOs was approximately $1 billion,/7/ an amount significantly below the $5 billion amount authorized in the Merger Order. On a pro forma basis, taking into account the sale of the fossil-fuel and hydroelectric units to FE GenCo, FirstEnergy's "aggregate investment" in EWGs and FUCOs as of June 30, 2005 would be approximately $2.6 billion, which is still below the $5 billion threshold authorized under the Merger Order and 2003 Financing Order. Additionally, as of June 30, 2005, FirstEnergy's consolidated retained earnings were $1.9 billion. By way of comparison, FirstEnergy's consolidated retained earnings as of December 31, 2001 were $1.52 billion. In any event, even taking into account the capitalization of and earnings from EWGs and FUCOs in which FirstEnergy currently has an interest, there would be no basis for the Commission to withhold approval of the transactions proposed herein. With respect to capitalization, since the date of the Merger Order, there has been no material adverse impact on FirstEnergy's consolidated capitalization resulting from FirstEnergy's investments in EWGs and FUCOs. As of June 30, 2005, FirstEnergy's consolidated capitalization consisted of 43.3% common equity, 1.1% cumulative preferred stock, 52.8% long-term debt and 2.8% notes payable. As of December 31, 2001, those ratios were as follows: 30.3% common equity, 3.1% cumulative preferred stock, 2.2% subsidiary-obligated mandatorily redeemable preferred securities, 60.9% long term debt and 3.5% notes payable. Additionally, the proposed transactions will not have any impact on FirstEnergy's consolidated capitalization. Further, since the date of the Merger - ---------- 7 This $1 billion amount represents Current Investments only. As of June 30, 2005, FirstEnergy had no GenCo Investments. 7 Order, FirstEnergy's investments in EWGs and FUCOs have contributed positively to its level of earnings, other than for the negative impact on earnings due to FirstEnergy's writedowns of its investments in Avon Energy Partners Holdings ("Avon") and GPU Empresa Distribuidora Electrica Regional S.A. ("Emdersa").(8) The domestic public utility subsidiaries of FirstEnergy are financially sound companies as indicated by their investment grade ratings from the nationally recognized rating agencies for their senior secured debt. The following chart includes a breakdown of the senior secured credit ratings for those utility subsidiaries that currently have ratings for senior secured debt:
-------------------------- ---------------------- ------------- ------------ Subsidiary Standard & Poors/9/ Moody's/10/ Fitch/11/ -------------------------- ---------------------- ------------- ------------ Cleveland Electric BBB Baa2 BBB- Toledo Edison BBB Baa2 BBB- Penn Power BBB+ Baa1 BBB+ Jersey Central Power BBB+ Baa1 BBB+ Metropolitan Edison Co. BBB+ Baa1 BBB+ -------------------------- ---------------------- ------------- ------------
Ohio Edison and Pennsylvania Electric Company no longer have ratings for the senior secured debt category. However, Ohio Edison's senior unsecured debt is rated BBB- by S&P, Baa2 by Moodys and BBB by Fitch; and Pennsylvania - ---------- 8 At the time of the Merger Order, FirstEnergy identified certain former GPU EWG and FUCO investments for divestiture within one year. Among those identified were Avon, a holding company for Midlands Electricity plc, an electric distribution business in the United Kingdom and Emdersa and affiliates, an electric distribution business in Argentina. In May 2002, FirstEnergy sold 79.9% of its interest in Avon, and in the fourth quarter of 2002, recorded a $50 million charge ($32.5 million net of tax) to reduce the carrying value of its remaining 20.1% interest. The remaining 20.1% interest in Avon was sold on January 16, 2004. Through 2002, FirstEnergy was unsuccessful in divesting GPU's former Argentina operations and made the decision to abandon its interest in Emdersa in early 2003. On April 18, 2003, FirstEnergy divested its ownership in Emdersa through the abandonment of its shares in Emdersa's parent company. FirstEnergy included in discontinued operations Emdersa's net income of $7 million and a $67 million charge for the abandonment in the second quarter of 2003. An after-tax loss of $87 million (including $109 million in currency transaction losses arising principally from U.S. dollar denominated debt) was included in discontinued operations in 2002. In December 2003, Emdersa Guaracachi S. A. ("EGSA"), GPU Power's Bolivia subsidiary, was sold to Bolivia Integrated Energy Limited. FirstEnergy included in discontinued operations a $33 million loss on the sale of EGSA in the fourth quarter of 2003 and an operating loss for the year of $2 million. On January 30, 2004, FirstEnergy sold its 28.67% interest in Termobarranquilla S. A., Empresa de Servicios Publicos ("TEBSA") for $12 million. An impairment loss of $26 million related to TEBSA was recorded in December 2003 in Other Operating Expenses on the consolidated statement of income and no gain or loss was recognized upon the sale in 2004. 9 Standard & Poor's Rating Services 10 Moody's Investors Service, Inc. 11 Fitch, Inc. 8 Electric Company's senior unsecured debt is rated BBB by S&P, Baa2 by Moodys and BBB by Fitch. FirstEnergy satisfies all of the other conditions of paragraphs (a) and (b) of Rule 53. With respect to Rule 53(a)(2), FirstEnergy maintains books and records in conformity with, and otherwise adheres to, the requirements thereof. With respect to Rule 53(a)(3), no more than 2% of the employees of FirstEnergy's domestic public utility companies render services, at any one time, directly or indirectly, to EWGs or FUCOs in which FirstEnergy directly or indirectly holds an interest. With respect to Rule 53(a)(4), FirstEnergy will continue to provide a copy of each application and certificate relating to EWGs and FUCOs and relevant portions of its Form U5S to each regulator referred to therein, and will otherwise comply with the requirements thereof concerning the furnishing of information. With respect to Rule 53(b), none of the circumstances enumerated in subparagraphs (1), (2) and (3) thereunder have occurred. ITEM 4. REGULATORY APPROVALS -------------------- As indicated in Item 3 above, the Utility Subsidiaries have obtained the requisite findings under Section 32(c) of the Act from the PUCO, PPUC, NJBPU and NYPSC in order or for the transferred fossil-fuel and hydroelectric plants to be considered "eligible facilities." (See Exhibits D-6, D-8, D-10 and D-12.) Thus, the approval of the Commission for the transfer of these plants is not required. Penn Power has obtained the approval of the PPUC for the proposed transactions under Pennsylvania's affiliated interest statute. (See Exhibit D-2.) Also, prior to the merger of FirstEnergy and GPU, the Utility Subsidiaries obtained the authorization of the FERC for the transfer the fossil and hydroelectric plants to FE GenCo./12/ No other state or federal commission or agency, other than this Commission, has jurisdiction over the transactions for which authorization is sought in this Application/Declaration. ITEM 5. PROCEDURE --------- The Commission has issued a notice of filing of this Application/Declaration, and no hearing has been requested. It is requested that the Commission issue an order approving the transactions proposed herein as soon as the Commission's rules allow. The Applicants further request that there be no 30-day waiting period between the issuance of the Commission's order and the date on which it is to become effective. The Applicants submit that a recommended decision by a hearing or other responsible officer of the Commission is not needed with respect to the proposed transactions and that the Division of Investment Management may assist with the preparation of the Commission's decision and/or order in this matter unless the Division of Investment Management opposes the matters covered hereby. - ---------- 12 See FirstEnergy Corp., et al., 94 FERC P. 61,179 (2001). Under the FERC order, the exercise of the purchase option under the Master Lease must occur prior to January 1, 2006. 9 ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS --------------------------------- (a) Exhibits. A None. B-1 Master Facility Lease, dated as of January 1, 2001, between Ohio Edison Company, Pennsylvania Power Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company, as lessors, and FirstEnergy Generation Corp., as lessee (incorporated by reference to Exhibit 10-147 to the Annual Report on Form 10-K of Ohio Edison Company for the year ended December 31, 2004, File No. 1-2578). B-1(a) Amendment No. 1 to Master Facility Lease (filed herewith). B-2 Fossil Purchase and Sale Agreement by and between Ohio Edison Company, as Seller, and FirstEnergy Generation Corp., as Purchaser (previously filed). B-3 Fossil Purchase and Sale Agreement by and between Pennsylvania Power Company, as Seller, and FirstEnergy Generation Corp., as Purchaser (previously filed). B-4 Fossil Purchase and Sale Agreement by and between The Cleveland Electric Illuminating Company, as Seller, and FirstEnergy Generation Corp., as Purchaser (previously filed). B-5 Fossil Purchase and Sale Agreement by and between The Toledo Edison Company, as Seller, and FirstEnergy Generation Corp., as Purchaser (previously filed). B-6 Previously filed exhibit withdrawn. B-7 Previously filed exhibit withdrawn. B-8 Previously filed exhibit withdrawn. B-9 Previously filed exhibit withdrawn. B-10 Form of Ohio Edison Fossil Note (revised exhibit filed herewith). B-11 Form of Penn Power Fossil Note (revised exhibit filed herewith). B-12 Form of Cleveland Electric Fossil Note (revised exhibit filed herewith). B-13 Form of Toledo Edison Fossil Note (revised exhibit filed herewith). B-14 Previously filed exhibit withdrawn. 10 C Not applicable. D-1 Application of Penn Power to Pennsylvania Public Utility Commission for Approval of Affiliated Interest Agreements (Fossil) (previously filed). D-2 Order of the Pennsylvania Public Utility Commission Approving Affiliated Interest Agreements (Fossil) (included in Exhibit D-8 below). D-3 Previously filed exhibit withdrawn. D-4 Exhibit deleted. D-5 Application under Section 32(c) of the Act to the Public Utilities Commission of Ohio - Fossil Plants (previously filed). D-6 Order under Section 32(c) of the Act of the Public Utilities Commission of Ohio - Fossil Plants (filed herewith). D-7 Application under Section 32(c) of the Act to the Pennsylvania Public Utility Commission - Fossil Plants (previously filed). D-8 Order under Section 32(c) of the Act of the Pennsylvania Public Utility Commission - Fossil Plants (filed herewith). D-9 Application under Section 32(c) of the Act to the New York Public Service Commission - Fossil Plants (previously filed). D-10 Order under Section 32(c) of the Act of the New York Public Service Commission - Fossil Plants (filed herewith). D-11 Application under Section 32(c) of the Act to the New Jersey Board of Public Utilities Commission - Fossil Plants (previously filed). D-12 Order under Section 32(c) of the Act of the New Jersey Board of Public Utilities Commission - Fossil Plants (filed herewith). D-13 Previously filed exhibit withdrawn. D-14 Exhibit deleted. D-15 Previously filed exhibit withdrawn. D-16 Exhibit deleted. D-17 Previously filed exhibit withdrawn. D-18 Exhibit deleted. D-19 Previously filed exhibit withdrawn. 11 D-20 Exhibit deleted. E Not applicable. F-1 Opinion of Thelen Reid & Priest, LLP (filed herewith). F-2 Opinion of Gary Benz, Esq. (filed herewith). G Form of Federal Register Notice (previously filed). H Consolidated Capitalization Ratios of FirstEnergy, Ohio Edison, Penn Power, Cleveland Electric and Toledo Edison as of June 30, 2005, actual and pro forma (revised exhibit filed herewith). I Average Weighted Cost of Long-term Debt of Utility Subsidiaries as of September 30, 2005 (revised exhibit filed herewith). (B) FINANCIAL STATEMENTS. FS-1 FirstEnergy Corp. Consolidated Balance Sheets as of December 31, 2004, and Consolidated Statements of Income, Statement of Retained Earnings, and Consolidated Statements of Cash Flows for the year ended December 31, 2004. (Incorporated by reference to FirstEnergy Form 10-K for the period ended December 31, 2004) (File No. 333-21011). FS-2 Ohio Edison Company Consolidated Balance Sheet as of December 31, 2004, and Consolidated Statements of Income, Statement of Retained Earnings and Consolidated Condensed Statements of Cash Flows for the year ended December 31, 2004. (Incorporated by reference to Ohio Edison Company Form 10-K for the period ended December 31, 2004) (File No. 1-2578). FS-3 The Cleveland Electric Illuminating Company Consolidated Balance Sheet as of December 31, 2004, and Consolidated Statements of Income, Statement of Retained Earnings and Consolidated Condensed Statements of Cash Flows for the year ended December 31, 2004. (Incorporated by reference to The Cleveland Electric Illuminating Company Form 10-K for the period ended December 31, 2004) (File No. 1-2323). FS-4 The Toledo Edison Company Consolidated Balance Sheet as of December 31, 2004, and Consolidated Statements of Income, Statement of Retained Earnings and Consolidated Condensed Statements of Cash Flows for the year ended December 31, 2004. (Incorporated by reference to The Toledo Edison Company Form 10-K for the period ended December 31, 2004) (File No. 1-3583). FS-5 Pennsylvania Power Company Consolidated Balance Sheet as of December 31, 2004, and Consolidated Statements of Income, Statement of Retained Earnings, and Consolidated Condensed Statements of Cash Flows for the year ended December 31, 2004. (Incorporated by reference to Pennsylvania Power Company Form 10-K for the period ended December 31, 2004) (File No. 1-3491). 12 FS-6 FirstEnergy Corp. Consolidated Balance Sheets as of June 30, 2005, and Consolidated Statements of Income, Statement of Retained Earnings, and Consolidated Statements of Cash Flows for the six months ended June 30, 2005. (Incorporated by reference to FirstEnergy Form 10-Q for the period ended June 30, 2005) (File No. 333-21011). FS-7 Ohio Edison Company Consolidated Balance Sheet as of June 30, 2005, and Consolidated Statements of Income, Statement of Retained Earnings and Consolidated Condensed Statements of Cash Flows for the six months ended June 30, 2005. (Incorporated by reference to Ohio Edison Company Form 10-Q for the period ended June 30, 2005) (File No. 1-2578). FS-8 The Cleveland Electric Illuminating Company Consolidated Balance Sheet as of June 30, 2005, and Consolidated Statements of Income, Statement of Retained Earnings and Consolidated Condensed Statements of Cash Flows for the six months ended June 30, 2005. (Incorporated by reference to The Cleveland Electric Illuminating Company Form 10-Q for the period ended June 30, 2005) (File No. 1-2323). FS-9 The Toledo Edison Company Consolidated Balance Sheet as of June 30, 2005, and Consolidated Statements of Income, Statement of Retained Earnings and Consolidated Condensed Statements of Cash Flows for the six months ended June 30, 2005. (Incorporated by reference to The Toledo Edison Company Form 10-Q for the period ended June 30, 2005) (File No. 1-3583). FS-10 Pennsylvania Power Company Consolidated Balance Sheet as of June 30, 2005, and Consolidated Statements of Income, Statement of Retained Earnings, and Consolidated Condensed Statements of Cash Flows for the six months ended June 30, 2005. (Incorporated by reference to Pennsylvania Power Company Form 10-Q for the period ended June 30, 2005) (File No. 1-3491). FS-11 Pro forma Balance Sheet of Ohio Edison Company, together with journal entries (updated exhibit filed herewith). FS-12 Pro forma Balance Sheet of Pennsylvania Power Company, together with journal entries (updated exhibit filed herewith). FS-13 Pro forma Balance Sheet of Cleveland Electric Illuminating Company, together with journal entries (updated exhibit filed herewith). 13 FS-14 Pro forma Balance Sheet of Toledo Edison Company, together with journal entries (updated exhibit filed herewith). FS-15 Pro forma Balance Sheet of FirstEnergy Corp. (stand-alone), together with journal entries (updated exhibit filed herewith). There have been no material changes, not in the ordinary course of business, to the aforementioned balance sheets from June 30, 2005, to the date of this Application/Declaration. ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS --------------------------------------- The proposed transactions do not involve "major federal actions significantly affecting the quality of the human environment" as set forth in Section 102(2)(C) of the National Environmental Policy Act, 42 U.S.C. Sec. 4321 et seq. Consummation of the proposed transactions will not result in changes in the operations of the Applicants that would have any impact on the environment. No federal agency is preparing an environmental impact statement with respect to this matter. SIGNATURES Pursuant to the requirements of the 1935 Act, the undersigned companies have duly caused this amended and restated Application/Declaration to be signed on their behalves by the undersigned thereunto duly authorized. FirstEnergy Corp. Ohio Edison Company The Cleveland Electric Illuminating Company The Toledo Edison Company Pennsylvania Power Company By:/s/ Harvey L. Wagner --------------------- Name: Harvey L. Wagner Title: Vice President, Controller and Chief Accounting Officer Date: October 18, 2005 14 EX-99 2 exh_b1a.txt EXHIBIT B-1(A) - AMENDMENT NO. 1 EXHIBIT B-1(a) AMENDMENT NO. 1 TO MASTER FACILITY LEASE AMENDMENT, dated as of October 13, 2005, to the Master Facility Lease, dated as of January 1, 2001 (the "Master Lease"), between OHIO EDISON COMPANY, and Ohio corporation (the "OE Lessor"), PENNSYLVANIA POWER COMPANY, a Pennsylvania corporation (the "PP Lessor"), THE CLEVELAND ELECTRIC ILLUMINATING COMPANY, an Ohio corporation (the "CEI Lessor"), THE TOLEDO EDISON COMPANY, an Ohio corporation (the "TE Lessor") (collectively, the "Lessors" and each, a "Lessor") and FIRSTENERGY GENERATION CORP., an Ohio Corporation (the "Lessee"). WITNESSETH: WHEREAS, the Lessors and the Lessee are parties to the Master Lease; and WHEREAS, the parties desire to amend the Master Lease to correct an inadvertent error in the calculation of the purchase price of the Mansfield 2 Generating Unit as reflected on Exhibit C to the Master Lease. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Amendment of Exhibit C. Exhibit C to the Master Lease is hereby amended and restated in its entirety as attached hereto. 2. Effective Time of Amendment. The Master Lease shall be deemed to have been amended by this Amendment effective as of the time of the execution and delivery of this Amendment. 3. Defined Terms. Capitalized terms used herein and not otherwise defined are used in this Amendment as used or defined in the Master Lease. 4. Agreement Remains in Force. Except as expressly set forth in this Amendment, the Master Lease remains unmodified and in full force and effect. 5. Governing Law. This Amendment shall be governed by and construed in accordance with the law of the State of Ohio. 6. Counterparts. This Amendment may be executed in any number of counterparts and by each of the parties hereto or thereto on separate counterparts, all of such counterparts together constituting but one and the same instrument. [remainder of page intentionally left blank] IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the day and year first above written. FIRSTENERGY GENERATION CORP. By: /s/ David W. Whitehead ---------------------- Name: Title: OHIO EDISON COMPANY By: /s/ David W. Whitehead ---------------------- Name: Title: PENNSYLVANIA POWER COMPANY By: /s/ David W. Whitehead ---------------------- Name: Title: THE CLEVELAND ELECTRIC ILLUMINATING COMPANY By: /s/ David W. Whitehead ---------------------- Name: Title: THE TOLEDO EDISON COMPANY By: /s/ David W. Whitehead ---------------------- Name: Title: 2 Exhibit C THE CLEVELAND ELECTRIC ILLUMINATING COMPANY, LESSOR FirstEnergy Generation Corp., Lessee
Semmiannual Purchase Generating Rent Price Ashtabula C - 100% $ 266,200. $ 4,000,000. Ashtabula 5 - 100% 1,663,750. 25,000,000. Eastlake 1 - 100% 865,150. 13,000,000. Eastlake 2 - 100% 798,600. 12,000,000. Eastlake 3 - 100% 865,150. 13,000,000. Eastlake 4 - 100% 1,650,937. 24,807,472. Eastlake 5 - 100% 8,497,923. 127,692,304. Lakeshore 18 - 100% 1,611,672. 24,217,463. Mansfield 2 - 1.68% 93,150. 6,000,000. Sammis 7 - 31.2% 3,711,091. 55,763,957. Seneca - 100% 5,719,694. 85,945,809. Eastlake Peaking 77,546. 1,165,228. Lakeshore Peaking 92. 1,387. --------------- Total Semiannual Rent $ 25,820,955.
3 EX-99 3 exb_10.txt EX. B-10 - OHIO EDISON FOSSIL NOTE EXHIBIT B-10 PP FOSSIL NOTE $[____________] ________________, 2005 FIRSTENERGY GENERATION CORP., an Ohio corporation (the "Corporation"), for value received, hereby promises to pay to the order of PENNSYLVANIA POWER COMPANY, a Pennsylvania corporation, its successors and assigns ("Payee"), the principal amount of [__________________________________________], ($[__________]) and to pay interest (calculated on the basis of a 365-day year and charged on the basis of the actual number of days elapsed) on the unpaid balance of such principal amount at a rate per annum of 5.39% from the due date thereof until the obligation of the Corporation with respect to the payment thereof shall be discharged. Interest on the outstanding principal amount of this Note shall be payable semi-annually in arrears, commencing on ________________, and on the 1st day of each May and November thereafter (the "Interest Payment Dates"). The principal balance of this Note, together with all accrued and unpaid interest thereon, on shall be due and payable on ______________, 2025. Payments of principal and interest hereunder may be made either (a) in such coin or currency of the United States of America as at the time of payment shall be legal tender therein for the payment of public and private debts or (b) by way of the Corporation's assumption of Payee's liabilities and obligations under certain Pollution Control Revenue Bonds of the Payee as set forth and described in the Purchase Agreement referred to in Section 1 below. SECTION 1. The Note; Definitions. As used herein, the term "Note" refers to this Secured Promissory Note of the Corporation, dated the date hereof, and originally issued, executed and delivered by the Corporation in the principal amount of [__________________________________________], ($[___________]) pursuant to and subject to the terms of the Purchase and Sale Agreement dated as of April ___, 2005 (the "Purchase Agreement"), between the Corporation and Payee. Unless the context otherwise requires, the term "holder" is used herein to mean the person named as Payee herein. Capitalized terms used in this Note and not otherwise defined herein shall have the meanings set forth in the Purchase Agreement. SECTION 2. Security. This Note is secured pursuant to the terms and provisions of a Security Agreement of even date herewith. SECTION 3. Prepayments. The Corporation may, at its option and subject to the giving of notice as provided herein, at any time prepay this Note, without penalty, in whole or in part upon payment of the principal amount thereof, together with interest on the principal amount so prepaid accrued to the prepayment date. SECTION 4. Amendments and Waivers. This Note may not be modified or amended, except upon the written consent of the holder of this Note, and no covenant, agreement or condition contained in this Note may be waived (either generally or in a particular instance and either retroactively or prospectively) without the written consent of the holder of this Note. SECTION 5. Events of Default. (a) Each of the following shall constitute an "Event of Default" hereunder: (i) Failure by Corporation to pay the interest on, or principal of, this Note within thirty (30) days of the date due; or (ii) Filing by Corporation of a voluntary petition in bankruptcy or a voluntary petition or any answer seeking arrangement or readjustment of its debts or for any other relief under the Bankruptcy Reform Act of 1994, as amended ("Bankruptcy Code"), or under any other existing or future federal or state insolvency act or law, or any formal written consent to, approval of, or acquiescence in, any such petition or proceeding by Corporation, the application by Corporation for, or the appointment by consent or acquiescence of, a receiver or trustee of Corporation or for all or a substantial part of its property; the making by Corporation of an assignment for the benefit of creditors; or (iii) Filing of any involuntary petition against Corporation in bankruptcy or seeking arrangement or readjustment of its debts or for any other relief under the Bankruptcy Code, or under any other existing or future federal or state insolvency act or law; or the involuntary appointment of a receiver or trustee of Corporation, or for all or a substantial part of the property of Corporation; and the continuance of any of such events for a period of ninety (90) days undismissed or undischarged; or (iv) In the event that Debtor shall fail to perform any term, covenant or agreement, in any material respect, under the Purchase Agreement or the Security Agreement, each of even date herewith, between Corporation and Payee or under this Note. (b) Upon the occurrence of an Event of Default, then, and in such event, Payee may declare this Note to be due and payable, whereupon the entire unpaid balance of principal, together with all accrued interest thereon, shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything herein to the contrary notwithstanding. SECTION 6. Extension of Maturity. Should the principal of, or interest on, this Note become due and payable on other than a business day, the maturity thereof shall be extended to the next succeeding business day, and, in the case of principal, or an installment of principal, interest shall be payable thereon at the rate per annum herein specified during such extension. The term "business day" shall mean any day that is not a Saturday, Sunday or legal holiday in the Commonwealth of Pennsylvania or the State of Ohio. SECTION 7. Governing Law. This Note shall be governed by, and construed in accordance with, the laws of the State of Ohio without regard to its rules or principles relating to conflicts of laws. IN WITNESS WHEREOF, the Corporation has caused this Note to be executed on the date first set forth above. FIRSTENERGY GENERATION CORP. By:__________________________________ EX-99 4 exb_11.txt EX. B-11 - PENN POWER FOSSIL NOTE EXHIBIT B-11 PP FOSSIL NOTE $[____________] ________________, 2005 FIRSTENERGY GENERATION CORP., an Ohio corporation (the "Corporation"), for value received, hereby promises to pay to the order of PENNSYLVANIA POWER COMPANY, a Pennsylvania corporation, its successors and assigns ("Payee"), the principal amount of [__________________________________________], ($[__________]) and to pay interest (calculated on the basis of a 365-day year and charged on the basis of the actual number of days elapsed) on the unpaid balance of such principal amount at a rate per annum of 5.39% from the due date thereof until the obligation of the Corporation with respect to the payment thereof shall be discharged. Interest on the outstanding principal amount of this Note shall be payable semi-annually in arrears, commencing on ________________, and on the 1st day of each May and November thereafter (the "Interest Payment Dates"). The principal balance of this Note, together with all accrued and unpaid interest thereon, on shall be due and payable on ______________, 2025. Payments of principal and interest hereunder may be made either (a) in such coin or currency of the United States of America as at the time of payment shall be legal tender therein for the payment of public and private debts or (b) by way of the Corporation's assumption of Payee's liabilities and obligations under certain Pollution Control Revenue Bonds of the Payee as set forth and described in the Purchase Agreement referred to in Section 1 below. SECTION 1. The Note; Definitions. As used herein, the term "Note" refers to this Secured Promissory Note of the Corporation, dated the date hereof, and originally issued, executed and delivered by the Corporation in the principal amount of [__________________________________________], ($[___________]) pursuant to and subject to the terms of the Purchase and Sale Agreement dated as of April ___, 2005 (the "Purchase Agreement"), between the Corporation and Payee. Unless the context otherwise requires, the term "holder" is used herein to mean the person named as Payee herein. Capitalized terms used in this Note and not otherwise defined herein shall have the meanings set forth in the Purchase Agreement. SECTION 2. Security. This Note is secured pursuant to the terms and provisions of a Security Agreement of even date herewith. SECTION 3. Prepayments. The Corporation may, at its option and subject to the giving of notice as provided herein, at any time prepay this Note, without penalty, in whole or in part upon payment of the principal amount thereof, together with interest on the principal amount so prepaid accrued to the prepayment date. SECTION 4. Amendments and Waivers. This Note may not be modified or amended, except upon the written consent of the holder of this Note, and no covenant, agreement or condition contained in this Note may be waived (either generally or in a particular instance and either retroactively or prospectively) without the written consent of the holder of this Note. SECTION 5. Events of Default. (a) Each of the following shall constitute an "Event of Default" hereunder: (i) Failure by Corporation to pay the interest on, or principal of, this Note within thirty (30) days of the date due; or (ii) Filing by Corporation of a voluntary petition in bankruptcy or a voluntary petition or any answer seeking arrangement or readjustment of its debts or for any other relief under the Bankruptcy Reform Act of 1994, as amended ("Bankruptcy Code"), or under any other existing or future federal or state insolvency act or law, or any formal written consent to, approval of, or acquiescence in, any such petition or proceeding by Corporation, the application by Corporation for, or the appointment by consent or acquiescence of, a receiver or trustee of Corporation or for all or a substantial part of its property; the making by Corporation of an assignment for the benefit of creditors; or (iii) Filing of any involuntary petition against Corporation in bankruptcy or seeking arrangement or readjustment of its debts or for any other relief under the Bankruptcy Code, or under any other existing or future federal or state insolvency act or law; or the involuntary appointment of a receiver or trustee of Corporation, or for all or a substantial part of the property of Corporation; and the continuance of any of such events for a period of ninety (90) days undismissed or undischarged; or (iv) In the event that Debtor shall fail to perform any term, covenant or agreement, in any material respect, under the Purchase Agreement or the Security Agreement, each of even date herewith, between Corporation and Payee or under this Note. (b) Upon the occurrence of an Event of Default, then, and in such event, Payee may declare this Note to be due and payable, whereupon the entire unpaid balance of principal, together with all accrued interest thereon, shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything herein to the contrary notwithstanding. SECTION 6. Extension of Maturity. Should the principal of, or interest on, this Note become due and payable on other than a business day, the maturity thereof shall be extended to the next succeeding business day, and, in the case of principal, or an installment of principal, interest shall be payable thereon at the rate per annum herein specified during such extension. The term "business day" shall mean any day that is not a Saturday, Sunday or legal holiday in the Commonwealth of Pennsylvania or the State of Ohio. SECTION 7. Governing Law. This Note shall be governed by, and construed in accordance with, the laws of the State of Ohio without regard to its rules or principles relating to conflicts of laws. IN WITNESS WHEREOF, the Corporation has caused this Note to be executed on the date first set forth above. FIRSTENERGY GENERATION CORP. By:________________________________ EX-99 5 exb_12.txt EX. B-12 - CLEVELAND ELECTRIC FOSSIL NOTE EXHIBIT B-12 CEI FOSSIL NOTE $[________________] ________________, 2005 FIRSTENERGY GENERATION CORP., an Ohio corporation (the "Corporation"), for value received, hereby promises to pay to the order of THE CLEVELAND ELECTRIC ILLUMINATING COMPANY, an Ohio corporation, its successors and assigns ("Payee"), the principal amount of [__________________________________________________], ($[___________]) and to pay interest (calculated on the basis of a 365-day year and charged on the basis of the actual number of days elapsed) on the unpaid balance of such principal amount at a rate per annum of 5.99% from the due date thereof until the obligation of the Corporation with respect to the payment thereof shall be discharged. Interest on the outstanding principal amount of this Note shall be payable semi-annually in arrears, commencing on ________________, and on the 1st day of each May and November thereafter (the "Interest Payment Dates"). The principal balance of this Note, together with all accrued and unpaid interest thereon, on shall be due and payable on ___________, 2025. Payments of principal and interest hereunder may be made either (a) in such coin or currency of the United States of America as at the time of payment shall be legal tender therein for the payment of public and private debts or (b) by way of the Corporation's assumption of Payee's liabilities and obligations under certain Pollution Control Revenue Bonds of the Payee as set forth and described in the Purchase Agreement referred to in Section 1 below. SECTION 1. The Note; Definitions. As used herein, the term "Note" refers to this Secured Promissory Note of the Corporation, dated the date hereof, and originally issued, executed and delivered by the Corporation in the principal amount of [_____________________________________________], ($[__________]) pursuant to and subject to the terms of the Purchase and Sale Agreement dated as of __________________, 2005 (the "Purchase Agreement"), between the Corporation and Payee. Unless the context otherwise requires, the term "holder" is used herein to mean the person named as Payee herein. Capitalized terms used in this Note and not otherwise defined herein shall have the meanings set forth in the Purchase Agreement. SECTION 2. Security. This Note is secured pursuant to the terms and provisions of a Security Agreement of even date herewith. SECTION 3. Prepayments. The Corporation may, at its option and subject to the giving of notice as provided herein, at any time prepay this Note, without penalty, in whole or in part upon payment of the principal amount thereof, together with interest on the principal amount so prepaid accrued to the prepayment date. SECTION 4. Amendments and Waivers. This Note may not be modified or amended, except upon the written consent of the holder of this Note, and no covenant, agreement or condition contained in this Note may be waived (either generally or in a particular instance and either retroactively or prospectively) without the written consent of the holder of this Note. SECTION 5. Events of Default. (a) Each of the following shall constitute an "Event of Default" hereunder: (i) Failure by Corporation to pay the interest on, or principal of, this Note within thirty (30) days of the date due; or (ii) Filing by Corporation of a voluntary petition in bankruptcy or a voluntary petition or any answer seeking arrangement or readjustment of its debts or for any other relief under the Bankruptcy Reform Act of 1994, as amended ("Bankruptcy Code"), or under any other existing or future federal or state insolvency act or law, or any formal written consent to, approval of, or acquiescence in, any such petition or proceeding by Corporation, the application by Corporation for, or the appointment by consent or acquiescence of, a receiver or trustee of Corporation or for all or a substantial part of its property; the making by Corporation of an assignment for the benefit of creditors; or (iii) Filing of any involuntary petition against Corporation in bankruptcy or seeking arrangement or readjustment of its debts or for any other relief under the Bankruptcy Code, or under any other existing or future federal or state insolvency act or law; or the involuntary appointment of a receiver or trustee of Corporation, or for all or a substantial part of the property of Corporation; and the continuance of any of such events for a period of ninety (90) days undismissed or undischarged; or (iv) In the event that Debtor shall fail to perform any term, covenant or agreement, in any material respect, under the Purchase Agreement or the Security Agreement, each of even date herewith, between Corporation and Payee or under this Note. (b) Upon the occurrence of an Event of Default, then, and in such event, Payee may declare this Note to be due and payable, whereupon the entire unpaid balance of principal, together with all accrued interest thereon, shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything herein to the contrary notwithstanding. SECTION 6. Extension of Maturity. Should the principal of, or interest on, this Note become due and payable on other than a business day, the maturity thereof shall be extended to the next succeeding business day, and, in the case of principal, or an installment of principal, interest shall be payable thereon at the rate per annum herein specified during such extension. The term "business day" shall mean any day that is not a Saturday, Sunday or legal holiday in the State of Ohio. SECTION 7. Governing Law. This Note shall be governed by, and construed in accordance with, the laws of the State of Ohio without regard to its rules or principles relating to conflicts of laws. IN WITNESS WHEREOF, the Corporation has caused this Note to be executed on the date first set forth above. FIRSTENERGY GENERATION CORP. By:________________________________ EX-99 6 exb_13.txt EX. B-13 - TOLEDO EDISON FOSSIL NOTE EXHIBIT B-13 TE FOSSIL NOTE $[_____________] ________________, 2005 FIRSTENERGY GENERATION CORP., an Ohio corporation (the "Corporation"), for value received, hereby promises to pay to the order of THE TOLEDO EDISON COMPANY, an Ohio corporation, its successors and assigns ("Payee"), the principal amount of [______________________________________________], ($[___________]) and to pay interest (calculated on the basis of a 365-day year and charged on the basis of the actual number of days elapsed) on the unpaid balance of such principal amount at a rate per annum of 4.38% from the due date thereof until the obligation of the Corporation with respect to the payment thereof shall be discharged. Interest on the outstanding principal amount of this Note shall be payable semi-annually in arrears, commencing on ________________, and on the 1st day of each May and November thereafter (the "Interest Payment Dates"). The principal balance of this Note, together with all accrued and unpaid interest thereon, on shall be due and payable on ___________, 2025. Payments of principal and interest hereunder may be made either (a) in such coin or currency of the United States of America as at the time of payment shall be legal tender therein for the payment of public and private debts or (b) by way of the Corporation's assumption of Payee's liabilities and obligations under certain Pollution Control Revenue Bonds of the Payee as set forth and described in the Purchase Agreement referred to in Section 1 below. SECTION 1. The Note; Definitions. As used herein, the term "Note" refers to this Secured Promissory Note of the Corporation, dated the date hereof, and originally issued, executed and delivered by the Corporation in the principal amount of [___________________________________________], ($[___________]) pursuant to and subject to the terms of the Purchase and Sale Agreement dated as of __________________, 2005 (the "Purchase Agreement"), between the Corporation and Payee. Unless the context otherwise requires, the term "holder" is used herein to mean the person named as Payee herein. Capitalized terms used in this Note and not otherwise defined herein shall have the meanings set forth in the Purchase Agreement. SECTION 2. Security. This Note is secured pursuant to the terms and provisions of a Security Agreement of even date herewith. SECTION 3. Prepayments. The Corporation may, at its option and subject to the giving of notice as provided herein, at any time prepay this Note, without penalty, in whole or in part upon payment of the principal amount thereof, together with interest on the principal amount so prepaid accrued to the prepayment date. SECTION 4. Amendments and Waivers. This Note may not be modified or amended, except upon the written consent of the holder of this Note, and no covenant, agreement or condition contained in this Note may be waived (either generally or in a particular instance and either retroactively or prospectively) without the written consent of the holder of this Note. SECTION 5. Events of Default. (a) Each of the following shall constitute an "Event of Default" hereunder: (i) Failure by Corporation to pay the interest on, or principal of, this Note within thirty (30) days of the date due; or (ii) Filing by Corporation of a voluntary petition in bankruptcy or a voluntary petition or any answer seeking arrangement or readjustment of its debts or for any other relief under the Bankruptcy Reform Act of 1994, as amended ("Bankruptcy Code"), or under any other existing or future federal or state insolvency act or law, or any formal written consent to, approval of, or acquiescence in, any such petition or proceeding by Corporation, the application by Corporation for, or the appointment by consent or acquiescence of, a receiver or trustee of Corporation or for all or a substantial part of its property; the making by Corporation of an assignment for the benefit of creditors; or (iii) Filing of any involuntary petition against Corporation in bankruptcy or seeking arrangement or readjustment of its debts or for any other relief under the Bankruptcy Code, or under any other existing or future federal or state insolvency act or law; or the involuntary appointment of a receiver or trustee of Corporation, or for all or a substantial part of the property of Corporation; and the continuance of any of such events for a period of ninety (90) days undismissed or undischarged; or (iv) In the event that Debtor shall fail to perform any term, covenant or agreement, in any material respect, under the Purchase Agreement or the Security Agreement, each of even date herewith, between Corporation and Payee or under this Note. (b) Upon the occurrence of an Event of Default, then, and in such event, Payee may declare this Note to be due and payable, whereupon the entire unpaid balance of principal, together with all accrued interest thereon, shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything herein to the contrary notwithstanding. SECTION 6. Extension of Maturity. Should the principal of, or interest on, this Note become due and payable on other than a business day, the maturity thereof shall be extended to the next succeeding business day, and, in the case of principal, or an installment of principal, interest shall be payable thereon at the rate per annum herein specified during such extension. The term "business day" shall mean any day that is not a Saturday, Sunday or legal holiday in the State of Ohio. SECTION 7. Governing Law. This Note shall be governed by, and construed in accordance with, the laws of the State of Ohio without regard to its rules or principles relating to conflicts of laws. IN WITNESS WHEREOF, the Corporation has caused this Note to be executed on the date first set forth above. FIRSTENERGY GENERATION CORP. By:________________________________ EX-99 7 exd-6.txt EX. D-6 - ORDER OF OH PUBLIC UTILITIES COMMISSION EXHIBIT D-6 BEFORE THE PUBLIC UTILITIES COMMISSION OF OHIO In the Matter of the Application of Ohio Edison Company on Behalf of Pennsylvania Power Company for Eligible Facility Case No. 05-678-EL-UNC Determinations Under the Public Utility Holding Company Act. ENTRY The Commission finds- (1) By Commission Order dated December 21, 2000, in Case No. 00- 2320-EL-UNC, this Commission made a determination that allowing the fossil generating plants, as listed in attachment A to the application filed by Ohio Edison Company, the Cleveland Electric Illuminating Company, and the Toledo Edison Company (collectively, "Ohio Operating Companies"), to be eligible facilities under the Public Utilities Holding Company Act of 1935 (PUHCA) will benefit consumers, was in the public interest, and did not violate state law (PUHCA Section 32 [C]). (2) At the time the Commission made its determination in Case No. 00-2320-EL-UNC, FirstEnergy Corp. ("First Energy"), parent company of the Ohio Operating Companies, was not a registered holding company subject to PUHCA. Therefore, no determination from this Commission was required for the portion of the fossil generating assets owned by Pennsylvania Power Company ("Penn Power"), a wholly owned subsidiary of Ohio Edison Company (applicant). The Penn Power fossil generating assets are listed on attachment A to the application in Case No. 05-678-EL-UNC, and referred to collectively as the PP fossil assets. (3) On May 23, 2005, applicant, on behalf of Penn Power, filed this application (Case No. 05-678-EL-UNC) in furtherance of the completion of the transition plan of Ohio Operating Companies as approved by this Commission on July 19, 2000, in Case No. 99- 1212-EL-ETP (the "transition plan"). The transition plan approved by this Commission included a plan to transfer control of Ohio Operating Companies' fossil plants to the competitive services unit of FirstEnergy to be effective no later than January 1, 2001. In order to effectuate that provision of the transition plan, FirstEnergy Generation Corp. ("Genco"), an Ohio corporation and a wholly owned subsidiary of FirstEnergy Solutions Corp. ("FES"), was established. A FirstEnergy subsidiary, FES provides energy-related products and services, and through Genco, currently operates FirstEnergy's non-nuclear generation businesses. Genco, as lessee under the 05-678-EL-UNC -2- master facility lease ("master lease"), dated as of January 1, 2001, with utility subsidiaries as lessors, leases the fossil generation assets to be transferred, and operates and maintains those fossil assets. (4) As an exempt wholesale generator ("EWG"), Genco is exempt from all provisions of PUHCA. Under Section 32 of PUHCA, an EWG must, in general, be exclusively engaged in the business of owning or operating "eligible facilities". (5) Genco intends to exercise a purchase option under the master lease to acquire the fossil and hydro-electric generation assets to be transferred by the utility subsidiaries. Such a transfer of the ownership interest to Genco is contemplated by and in accordance with the Amended Substitute Senate Bill ("SB3"). (6) Applicant states that Penn Power will be transferring its ownership interest in the PP fossil assets to Genco. Because FirstEnergy is now a registered holding company, applicant, on behalf of Penn Power, requests the Commission to expand the scope of its findings in Case No. 00-2320-EL-UNC to include the PP fossil assets; making a separate determination that the transfer of the PP fossil assets to Genco will benefit consumers, is in the public interest, and does not violate state law. (7) Applicant states that Penn Power is a Pennsylvania electric public utility engaged in the production, generation, purchase, transmission, distribution, and sale of electric energy and related utility services to more than 157,000 residential, commercial, and industrial customers located within six counties and 114 municipalities of the Commonwealth of Pennsylvania. It is subject to the jurisdiction of the Pennsylvania Public Utility Commission, and is a wholly owned subsidiary of applicant. (8) Applicant further states that the proposed transfer of PP fossil assets to Genco will not adversely affect either the availability or reliability of electric supply to the customers of applicant or Penn Power or any other electricity customer. (9) This transaction to separate the fossil plants from the operating companies is being implemented in accordance with the transition plan, as approved by this Commission. Further, Section 4928.17(E), Revised Code, provides that "an electric utility may divest itself of any generating asset at any time without Commission approval." In addition, the corporate separation requirement included in the transition plan in accordance with SB3 was one element of the overall policy of the legislation to provide competitive electric services for the 05-678-EL-UNC -3- benefit of customers and the economy of the state. Therefore, the Commission is satisfied that a determination allowing the PP fossil assets to be eligible facilities under the PUHCA will benefit consumers, is in public interest, and does not violate Ohio Law. It is, therefore, ORDERED, That the application for a determination that allowing the PP fossil assets, as listed in attachment A to the application, to be eligible facilities under the PUHCA will benefit consumers, is in the public interest, and does not violate state law, and effectuates the transfer of the PP fossil assets to Genco, is approved. It is, further, ORDERED, That a copy of this entry be served upon all parties of record. THE PUBLIC UTILITIES COMMISSION OF OHIO /S/ Alan R. Schriber, Chairman /S/ Ronda Hartman Fergus Judith A. Jones /S/ /S/ Donald L. Mason Clarence D. Rogers, Jr. RR:djb Entered in the Journal SEP 14 2005 /S/ Renee J. Jenkins Secretary EX-99 8 exd-8.txt EX. D-8 - ORDER OF PA PUBLIC UTILITY COMMISSION EXHIBIT D-8 PENNSYLVANIA PUBLIC UTILITY COMMISSION Harrisburg, PA 17105-3265 Public Meeting held September 9, 2005 Commissioners Present: Wendell F. Holland, Chairman James H. Cawley, Vice Chairman Bill Shane Kim Pizzingrilli Terrance J. Fitzpatrick Petition of Pennsylvania Power Company Seeking a Specific Determination Allowing Certain Fossil Fuel Generating Assets To Be Docket No. P-00052165 Eligible Facilities Pursuant to Section 32 Of the Public Utility Holding Company Act Of 1935 Petition of Pennsylvania Power Company Seeking a Specific Determination Allowing Certain Nuclear Assets To Be Docket No. P-00052166 Eligible Facilities Pursuant to Section 32 Of the Public Utility Holding Company Act Of 1935 Approval of Affiliated Interest Agreements between Pennsylvania Power Company and First Energy Docket No. G-00051111 Nuclear Generating Corporation Approval of Affiliated Interest Agreements between Pennsylvania Power Company and First Energy Docket No. G-00051112 Nuclear Generating Corporation FINAL OPINION AND ORDER BY THE COMMISSION: Before the Commission for disposition are the Petitions of Pennsylvania Power Company ("Penn Power") for the issuance of determinations under Section 32(c) of the Public Utility Holding Company Act (PUHCA) of 1935, 15 U.S.C. ss. 79z-5a(a) (Section 32(c) Petitions). Additionally, Penn Power seeks approval of two affiliated interest agreements (Section 2102 Agreements) filed under Chapter 21 of the Pennsylvania Public Utility Code, 66 Pa. C.S. ss. 2101, et seq. By Secretarial Letter dated June 6, 2005, the Commission extended the 30-day statutory consideration period for the Section 2102 Agreements until further notice as provided in Chapter 21 of the Public Utility Code. The Section 32(c) Petitions and the Section 2102 Agreements involve Penn Power's nuclear facilities (Nuclear Assets) and fossil fuel facilities (Fossil Assets) identified in the Section 32(c) Petitions and Section 2102 Agreements. The Section 32(c) Petitions and the Section 2102 Agreements were served on the Office of Trial Staff, the Office of Consumer Advocate, and the Office of the Small Business Advocate. HISTORY OF THE PROCEEDING On May 19, 2005, Penn Power filed the Section 32(c) Petitions and the Section 2102 Agreements concerning Penn Power's ownership interests and affiliated interests related to Penn Power's fossil and nuclear generating facilities. 2 Penn Power is a direct, wholly owned electric public utility subsidiary of Ohio Edison Company ("Ohio Edison") and its affiliates, Cleveland Electric Illuminating Company (CEI), Toledo Edison Company (Toledo Edison), Metropolitan Edison Company (Met-Ed) and Pennsylvania Electric Company (Penelec) (collectively, the "First Energy Operating Companies" or "FE Operating Companies"). The FE Operating Companies are electric public utilities and direct, wholly owned subsidiaries of First Energy Corporation ("FE Corporation"), a public utility holding company registered under PUHCA. Penelec, Med-Ed and Penn Power are regulated utilities that provide electric service to customers within the Commonwealth of Pennsylvania. CEI, Toledo Edison, and Ohio Edison provide electric service to customers within the State of Ohio and are subject to regulation by the Public Utilities Commission of Ohio ("PUCO"). Penelec, as lessee of property of the Waverly Electric Light & Power Company, also provides electric service in the State of New York and is subject to regulation by the New York Public Service Commission. On June 8, 2005, the Office of Consumer Advocate (OCA) filed Notices of Intervention in the Section 32(c) Petitions and the Section 2102 Agreements. On June 28, 2005, Penn Power filed a Reply to the Answer of the Office of the Consumer Advocate (the Penn Power Answer) on behalf of itself and FE Corporation. The Penn Power answer addresses concerns of the OCA regarding the Section 32(c) Petitions and the Section 2102 Agreements. In the Penn Power answer, Penn Power and FE Corporation agree that ratepayers will not incur any tax effects from the spin-off or transfer transactions. FE Corporation and Penn Power also agree that ratepayers will not be required to pay or fund any transaction costs. In addition, FE Corporation and Penn Power agree that that these transactions are not intended to nor will they increase Penn Power's distribution rates from capital structure and cost of capital effects resulting from these transactions. Finally, FE Corporation and Penn Power agree on a right 3 to examine these issues in any request by Penn Power to increase its distribution rates and to recommend any adjustments deemed necessary. There are no formal protests or challenges to the Section 32(c) Petitions or the Section 2102 Agreements. DISCUSSION I. THE SECTION 32(C) FOSSIL FUEL PETITION AND RELATED AFFILIATED INTEREST AGREEMENT. The Section 32(c) Petition for Penn Power's Assets at Docket No. P-00052165 (the "First Section 32(c) Petition") seeks "eligible facility" status under Section 32 of the Public Utility Holding Company Act of 1935 for the Fossil Assets located in Ohio and Pennsylvania. The Fossil Assets subject to the First Section 32(c) Petition are as follows: 1. The Astabula Generating Station Unit 5 in Ashtabula, Ohio; 2. The Bayshore Generating Station Units 1-4 and the Bayshore Peaking Facility in Toledo, Ohio; 3. The R.E. Burger Generating Station Units 3-5 and the R.E. Burger Peaking Facility in Shadyside, Ohio; 4. The Eastlake Generating Station Units 1-5 and the Eastlake Peaking Facility in Eastlake, Ohio; 5. The Edgewater Peaking Facility in Lorain, Ohio; 6. The Lake Shore Generating Station Unit 18 and the Lake Shore Peaking Facility in Cleveland, Ohio; 7. The Mad River Peaking Facility in Springfield, Ohio, 4 8. The Bruce Mansfield Generating Station Units 1-3 in Shippingport, Pennsylvania; 9. The Richland Peaking Facility Units 1-3 in Defiance, Ohio; 10. The W.H. Sammis Generating Station Units 1-7 and the W.H. Sammis Peaking Facility in Stratton, Ohio; 11. The Stryker Peaking Facility in Springfield, Ohio; 12. The West Lorain Peaking Facility Unit 1 in Lorain, Ohio, and 13. The Seneca Pumped Storage Generating Station in Warren, Pennsylvania. FE Corporation seeks Commission approval in order to proceed with a series of intra-system asset transfers at the conclusion of which First Energy Generation Company ("FE Genco"), an existing wholly owned subsidiary of FE Corporation, will own the Fossil Assets. Currently, FE Corporation complies with the restructuring obligations of Pennsylvania and Ohio law through a previously approved Master Lease that separates FE Corporation's generation assets from its regulated delivery business. Penn Power and FE Corporation desire that FE Genco qualify as an exempt wholesale generator ("EWG") in order to exempt FE Genco from all provisions of PUHCA./1/ The Penn Power and FE Corporation Fossil Assets must be found to be eligible facilities under Section 32(a) of PUHCA in order for FE Genco to be accorded EWG status. Every state commission with jurisdiction over the retail rates pertaining to the Fossil Assets must determine that the proposed transactions will benefit consumers, are in the public interest, and do not violate State law. This is necessary because the rates for electricity produced by the Fossil Assets were regulated by PUCO and the Commission on the date of enactment of Section 32. - ---------- /1/ Some of these facilities were granted Section 32(c) status by a prior Commission Order. See Footnote 5. Today's approval is no way detracts from that approval. We reiterate our approval in order to provide legal certainty as to the facility's treatment in Pennsylvania in light of the recent federal legislation and to provide the FE Corporation and Penn Power with the certainty they seek in light of recent federal legislation. 5 Penn Power and FE Genco seek approval for several reasons. There are no market power concerns arising from the contemplated transactions because there is no net change to FE Corporation's existing owned generation resources and thus competition among suppliers is not directly affected. First Energy Solutions Corporation ("FE Solutions"), a power marketing affiliate of Penn Power, is buying and will continue to buy all the electricity available from the Fossil Assets. The contemplated transactions will not adversely affect either the reliability or availability of electric supply to Penn Power's customers or any other electricity customer. In addition, the contemplated transactions are consistent with the goals of the Commission's Competitive Safeguards/Code of Conduct regulations set forth at 52 Pa.Code ss. 54.121 et seq. Penn Power and FE Corporation also identified several benefits stemming from Commission approval of the First Section 32(c) Petition. Separation of functions enhances the separation of individuals employed in each of FE Corporation's operations. FE Corporation's conducting of its generation business separate from its other operations effectively shields customers from the potential volatility of its competitive operations. The obligation to operate legally distinct entities facilitates increased internal accountability and management. The separation also allows the use of financing techniques better suited to the requirements, characteristics, and risks of non-utility operations without affecting Penn Power's creditworthiness/2/. On February 21, 2001, at P-00011869, the Commission approved a Master Facility Lease (Lease Agreement) whereby FE Genco operates the interests in the Mansfield and Sammis power plants along with certain peaking units (collectively - ---------- /2/ Standard & Poor's has stated that because the transfer of generating assets involves the reclassification of debt and other liabilities among the FirstEnergy subsidiaries, they will review the ratings on certain debt classes at Penn Power. However, Penn Power's debt ratings from Standard & Poor's reflects the consolidated creditworthiness of FirstEnergy Corporation, and that 'in the absence of regulatory or structural insulation', Penn Power will be rated the same as its consolidated Parent, FirstEnergy Corp. 6 Fossil Plant) owned by Penn Power. Under the Lease Agreement, FE Genco has an option to purchase the Fossil Plant at values set forth in the Lease Agreement. Penn Power now seeks Commission approval of a Purchase and Sale Agreement (P&S Agreement) docketed at G-00051112, whereby FE Genco exercises its option to purchase the fossil and hydroelectric generating facilities, referred to in the P&S Agreement as "Purchased Assets". Under the P&S Agreement, FE Genco will purchase acquire, and accept from Penn Power all of Penn Power's right, title, and interest into and under the Purchase Assets. The purchase price as set in the Lease Agreement is $125,411,440. The proposed P&S Agreement outlines the terms whereby FE Genco assumes and agrees to discharge when due, without recourse to Penn Power, all of the liabilities and obligations of Penn Power, direct or indirect, known or unknown, absolute or contingent, directly relating to the Purchase Assets and arising from FE Genco's ownership from and after the Closing Date. In addition to the proposed P&S Agreement, the filing contains an Assignment and Assumption Agreement, a Bill of Sale, the necessary Form of Deeds, a Promissory Note, and a Security Agreement. The attached Bill of Sale conveys the Purchase Assets to FE Genco. There are three Forms of Deeds to accomplish the transfer. The Promissory Note outlines the method of payment whereby FE Genco will pay Penn Power under the terms of the proposed P&S Agreement. Finally, a Security Agreement conveys, assigns, transfers, and grants to Penn Power a security interest in the Collateral to secure FE Genco's performance of the obligations set forth in Section 4 of the Security Agreement. 7 II. THE SECTION 32(C) NUCLEAR FACILITIES PETITION FOR EXEMPT WHOLESALE GENERATOR (EWG) STATUS AND AFFILIATED INTEREST AGREEMENT. The Section 32(c) Petition at P-00052166 (Second Section 32(c) Petition) seeks "eligible facility" status under Section 32 of the Public Utility Holding Company Act of 1935 for multiple nuclear fuel generating power plants located in Ohio and Pennsylvania (collectively, the "Nuclear Assets"). The Nuclear Assets subject to this Section 32(c) Petition are as follows: 1. The Beaver Valley Nuclear Power Plant Units 1 and 2 in Shippingport, Pennsylvania; 2. The Davis-Besse Nuclear Power Plan in Oak Harbor, Ohio, and 3. The Perry Nuclear Power Plant in North Perry Village, Ohio Penn Power and FE Corporation seek Section 32(c) designation as part of a plan to proceed with a series on intra-system asset transfers at the conclusion of which First Energy Nuclear Generation Corporation (FE Nuclear), a newly formed wholly owned, indirect subsidiary of FirstEnergy Corporation, will own the Nuclear Assets. FE Corporation is separating generation assets from its regulated delivery business as part of a compliance effort aimed at implementing restructuring decisions of the PUCO and the PUC. Penn Power and FE Corporation also seek approval because Section 32(c) determinations are consistent with the state and federal commitment to using market forces instead of government regulation to advance security goals, encourage investment in generation, and to protect consumers. Penn Power and FE Corporation state that there is no market power concerns raised by the transactions and designations because the electricity available from the Nuclear Assets is and will continue to be sold to FE Solutions. 8 The affiliated interest agreement filed at Docket No. G-00051111 seeks Commission approval of a Subscription and Contribution Agreement ("S&C Agreement") between Penn Power and one of its affiliates, FE Nuclear. The applicants assert that the purpose of the agreement is the structural separation of Penn Power's electric generation from its energy delivery functions. Under the S&C Agreement, FE Nuclear receives Penn Power's ownership interests in the Beaver Valley Nuclear Power Plans Unit 1, Unit 2 and Common Facilities, Perry Nuclear Power Plant, and associated assets and rights (collectively Nuclear Plant Interests). Under the proposal, Penn Power would transfer the Nuclear Plant Interests and related assets, together with approximately $62 million of related outstanding Pollution Control Revenue Bond debt, to FE Nuclear as a capital contribution. Penn Power would receive in return 100 shares of FE Nuclear's common stock and FE Nuclear would become a wholly owned subsidiary of Penn Power. Penn Power would then declare and pay a dividend to its parent, Ohio Edison consisting of the FE Nuclear common stock. Ohio Edison, in turn, would dividend that common stock up to FE Corporation so that FE Nuclear would then become a wholly owned subsidiary of FE Corporation. Ultimately, the FE Nuclear and FE Genco interests become wholly owned subsidiaries of FE Solutions. The dividend transactions will be accomplished in a general manner such that no taxes would be payable by Penn Power. There will be no deferred tax liability with respect to these transfers as well. ANALYSIS THE SECTION 32(C) "ELIGIBLE FACILITIES" PETITIONS. Upon consideration, we grant the Section 32(c) Petitions for the reasons discussed below. We take this action to provide FE Corporation and its Pennsylvania subsidiaries the certainty 9 they seek concerning our treatment of these facilities. They seek this certainty in response to the enactment of recent federal energy legislation repealing PUHCA/3/ and establishing a state's right of access to books and records./4/ We also take this action to provide certainty consistent with our prior approval of FE Corporation's request for Section 32(c) approval for some of the facilities/5/ listed in these Section 32(c) Petitions reflecting, as they did, the Energy Policy Act of 1992./6/ Under PUHCA, the Securities and Exchange Commission (SEC) is required to approve the acquisition of the securities of an electric utility company. 15 U.S.C. ss. 79i(a)(2). Without status as an EWG, FE Nuclear would be considered an electric utility company under Section 2(a)(3) of PUHCA. 15 U.S.C. ss. 79b(a)(3). Establishing EWG status for the Fossil Assets and the Nuclear Assets effectively removes these assets from the definition of electric utility company and eliminates the requirement of obtaining SEC approval. To establish EWG status, FERC must determine that the Nuclear and Fossil Asset operations are engaged "exclusively in the business of owning or operating, all or part of one or more eligible facilities and selling electric energy at wholesale." 15 U.S.C. ss. 79z-5a(a)(1). As a precursor to the FERC determination, facilities that were under state regulation as of October 24, - ---------- /3/ Energy Policy Act of 2005, ss. 1263. This legislative provision regarding state access to books and records of a holding company or any associate company or affiliate thereof indicates that the Section 32(c) Petitions and the Section 2102 Affiliated Interest Agreement petitions come within these provisions. A determination on our part is appropriate in order to remove any uncertainty regarding our current view of these facilities and agreements in light of that authority. /4/ Energy Policy Act of 2005, ss. 1265. /5/ Application of Pennsylvania Power Company for (1) Approval, Pursuant to Chapter 21 of the Public Utility Code, of the Lease of Certain Power Production Facilities to FirstEnergy Generation Corporation and (2) Issuance of Findings Required by the Public Utility Holding Company Act to Enable FirstEnergy Generation Corporation to Obtain Exempt Wholesale Generator Status, Docket No. P-00011869 (Order entered February 21, 2001). Today's action is consistent with and in no way detracts from our prior action. /6/ August 26, 1935, c. 687, Title I, ss. 32, as added October 24, 1992, Pub.L. 102-486, Title VII, ss. 711, 106 Stat. 2905. 10 1992, must receive from the jurisdictional state regulatory commission a "specific determination that allowing such facility to be an 'eligible facility' (1) will benefit consumers, (2) is in the public interest, and (3) does not violate State law. . . ." 15 U.S.C. ss. 79z-5a(c). We agree that the Section 32(c) Petitions should be granted for the reasons set forth below. We do so because the required specific determinations demonstrate that the transactions set forth in the Section 32(c) Petitions benefit consumers, are consistent with the public interest, and do not violate state law. We find that there are consumer benefits sufficient to justify granting the Section 32(c) Petitions. The benefit to consumers is evident in Penn Power's statements and commitments to the OCA. We adopt those commitments and make them binding on FE Corporation and Penn Power. First, FE Corporation and Penn Power agree that ratepayers will not incur any tax effects from the spin-off or transfer transactions. Second, FE Corporation and Penn Power also agree that ratepayers are not required to pay or fund any transaction costs. In addition, FE Corporation and Penn Power agree that these transactions are not intended to nor will they increase Penn Power's distribution rates from capital structure and cost of capital effects resulting from these transactions. Finally, FE Corporation and Penn Power agree that a party has the right to examine these issues in any request in a proceeding by Penn Power to increase its distribution rates and to recommend any adjustments deemed necessary. We also find that the Section 32(c) Petitions are consistent with state law as required by 15 U.S.C. 79z-5a(c). We agree with FE Corporation and Penn Power that the proposed transactions envision a transfer of the generation assets consistent with FE Corporation's restructuring under state law. We also agree that there is no indirect or direct harm to other competitive generation supplies or competition in the market. The fact that the electricity is and will 11 remain within the purview of FE Corporation is an important consideration as well. We also find that the Section 32(c) Petitions meet the public interest determination required by 15 U.S.C. ss. 79z-5a(c) for the Fossil Assets and the Nuclear Assets is also based on several considerations. There will be no decrease in the number of competitors or the level of competition in the wholesale market. There is no evidence of any violation of state law such as harm to consumers due to developments that undermine competition or otherwise harm consumers. Finally, there are no adverse impacts sufficient to deny or reconsider our determinations regarding consumer benefits, compliance with state law, or the public interest. We also make our Section 79z-5a(c) determinations for the Fossil Assets and the Nuclear Assets for other reasons under state and federal law. Restructuring provides for structural separation that builds upon the functional separation attained under the current Master Lease agreement. A more competitive electric utility industry in Pennsylvania is in the public interest and consistent with state law. See PaPUC v. West Penn Power Co. and AYP Capital, Inc., Docket No. G-00960476 (June 6, 1996). The Commission already approved Section 32(c) requests involving the transfer of generating facilities by other Pennsylvania electric utilities after determining that no legal impediment exists. See, eg., Appl. of UGI Development Co., Docket No. P-00991693 (August 26, 1999); Appl's of Metropolitan Edison Co. and Pennsylvania Electric Co., Docket Nos. R-00974008 and R-00974009 (October 20, 1998). That approach is appropriate here. Our approval promotes the divestiture plans of FE Corporation and Penn Power without untoward harm to the public interest or the operation of the Fossil Assets or the Nuclear Assets. Divestiture of the Nuclear Assets will be accomplished through a transfer of ownership by a spin-off to a separate corporate subsidiary. The current functional separation of the Master Lease 12 agreement is transformed into a structural separation through a sale at the corporate level. There are no apparent market power considerations sufficient to deny or reconsider this request. That is because there will be no net change to FirstEnergy System's existing owned generation resources. Competition among suppliers will not be adversely affected by our approval of the Section 32(c) Petitions. There is no demonstrable adverse impact upon the availability or reliability of the electricity from Fossil Assets or the Nuclear Assets to Penn Power's customer or any electricity customer sufficient to deny or reconsider this request at this time. All the electricity available from the Fossil Assets and the Nuclear Assets is and will continue to be sold to FirstEnergy Solutions Corporation, a power marketing affiliate of Penn Power. Approval allows the company to transfer the Fossil Assets and the Nuclear Assets from regulated utilities to separate, competitive entities. The transfer promotes compliance with the goals and requirements of the Commission's Competitive Safeguards/Code of Conduct set forth at 52 Pa.Code ss. 54.121 et seq. Approval also transfers the individuals involved with the Fossil Assets and the Nuclear Assets in a way that enhances compliance with these goals and requirements by identifying specific entities and individuals responsible for competitive operations. Penn Power and FE Corporation intend to conduct their competitive generation operations, including the financing activities, through separate legal subsidiaries as opposed to functional divisions in order to better shield customers from the potential earnings volatility of its competitive business operation. Legally distinct entities at the subsidiary level allows the use of financing techniques better suited to the requirements, characteristics, and risks of non-utility operations in a manner that does not undermine Penn Power's creditworthiness. Subsidiaries increase internal accountability while enabling 13 management to evaluate the success of existing and new businesses. This result enhances, rather than detracts from, customer benefits. Finally, this form of organization is consistent with business segment reporting now required under Securities and Energy Commission ("SEC") and financial accounting rules. We realize that FE Corporation recently withdrew its request for Section 32(c) Petition for approval of the nuclear assets from the Ohio Public Utility Commission (OPUC). Pennsylvania and Ohio contain the Nuclear Assets that are the subject of the Second Section 32(c) Petition addressed in today's Opinion and Order. FE Corporation explains that this action should not affect Commission approval because FE Corporation eventually plans to seek EWG status or some other status for the Nuclear Assets and that this action provides FE Corporation with flexibility regarding its generation assets. We recognize that FE Corporation's actions in Ohio strongly suggest that this Commission not act on the Second Section 32(c) Petition and related affiliated interest agreement concerning the Nuclear Assets unless and until FE Corporation seeks approval from the OPUC. The incongruity of seeking approval in one state while withdrawing a request for that same approval in another state is not lost on the Commission. Nevertheless, upon consideration, we grant the Section 32(c) Petitions including the Second Section 32(c) Petition involving the Nuclear Assets. We can approve the Second Section 32(c) Petition along with the First Section 32(c) Petition for the reasons set forth above as well as the considerations below. Approval means that we fully expect FE Corporation to obtain all necessary approvals from the OPUC and to keep the Commission informed of all developments in the other approving states. The Commission could reconsider and possibly rescind this approval if FE Corporation fails to provide the Commission with 14 timely notice. This approach reconciles the incongruity of seeking EWG approval in one state while withdrawing a request for the same approval in another state. We see no reason to unnecessarily delay or prevent the structural separation envisioned in the 32(c) Petitions and the related Section 2102 Affiliated Interest agreements. That separation, as well as the debt transfer and the non-recourse provisions of the transactions, improves the ring-fencing of Penn Power as it relates to the generation assets and operation of FE Corporation. Additionally, we expect FE Corporation management to consider further steps that can be taken to improve the protection of their Pennsylvania utilities through ring-fencing. Based on these considerations, we grant the Section 32(c) Petitions. The generation assets designated in the First and Second Section 32(c) petitions are declared to "eligible facilities" as the overall evidence supports a specific determination regarding consumer benefit, consistency with the public interest, and the lack of any state law violations at this time. THE AFFILIATED INTEREST AGREEMENTS. The first Affiliated Interest Agreement covers Penn Power and First Energy Corporation's Fossil Assets. The second Affiliated Interest Agreement covers Penn Power and First Energy's Nuclear Assets. The First Affiliated Interest Agreement builds upon the Commission's prior approval of a Lease Agreement between Penn Power and FE Genco set forth at Docket No. P-00011869. The Lease Agreement leased Penn Power's interest in the Mansfield and Sammis power plants and certain peaking facilities to FE Genco for 20 years. That same order designated the facilities as "eligible facilities" under PUHCA. As mentioned above, the Lease Agreement gave FE Genco an option to purchase the plants listed in that agreement. Penn Power seeks Commission approval to execute the P&S Agreement between Penn Power and FE Genco pursuant to that purchase option. 15 The Second Affiliated Interest Agreement concerns Penn Power's Nuclear Assets. Penn Power seeks Commission approval of the S & C Agreement between Penn Power and FE Nuclear. The S & C Agreement would result in the structural separation of Penn Power's electric generation from its energy delivery functions. In a letter dated July 11, 2005, staff requested that the applicants provide pro forma accounting entries that would be required on the books of Penn Power, FE Genco and FE Nuclear in order for Penn Power to complete the P&S Agreement with FE Genco and the S&C Agreement with FE Nuclear. Additionally, staff requested before and after organization charts of FE Corporation and the affiliates involved in the proposed transaction. The applicants provided the data in a letter dated July 19, 2005. In approving this order, we request that upon completion of the proposed transactions the applicants file final accounting entries with the Commission. The applicants must file copies of the finalized P&S Agreement and the S&C Agreement. Upon consideration of the filings and the prior decision regarding a request for Section 32(c) relief, we approve these affiliated interest agreements. We do so in light of the considerations set forth regarding the Section 32(c) relief and in order to give Penn Power, FE Genco, FE Corporation and FE Nuclear the ability to proceed and finalize the complete separation of its generation ownership interest from its utility operations. We also do so in reliance on our discussion of the Section 32(c) Petitions as well. CONCLUSION Upon review of the Section 32(c) Petitions, the supplemental pleadings, and the affiliated interest agreements, we grant the Section 32(c) Petitions and approve the Section 2102 Affiliated Interest agreements. The generation assets 16 designated in the First and Second Section 32(c) petitions should be declared "eligible facilities" because the overall evidence supports specific determinations regarding consumer benefits, consistency with the public interest, and the absence of any violation of state law at this time. The Commission has examined the affiliated interest agreements needed to accomplish this structural separation and has determined that they appear to be reasonable and consistent with the public interest; however, approval of these agreements does not preclude the Commission from investigating during any formal proceeding, the reasonableness of any charges under the agreements; THEREFORE, IT IS ORDERED: 1. That the Affiliated Interest Agreement between Pennsylvania Power Company and FirstEnergy Generation Corporation be, and hereby is, approved consistent with this Opinion and Order. 2. That the Affiliated Interest Agreement between Pennsylvania Power Company and FirstEnergy Nuclear Generation Corporation be, and hereby is, approved consistent with this Opinion and Order. 3. That Pennsylvania Power Company shall file with the Commission a copy of the final Purchase and Sale Agreement between itself and FirstEnergy Generation Corporation. Additionally, Pennsylvania Power Company shall file with the Commission a copy of all final accounting entries required to complete the proposed transaction. 4. That Pennsylvania Power Company shall file with the Commission a copy of the final Subscription and Contribution Agreement between itself and FirstEnergy Nuclear Generation Corporation. Additionally, Pennsylvania Power 17 Company shall file with the Commission a copy of all final accounting entries required to complete the proposed transaction. 5. That FE Corporation and its subsidiary Pennsylvania Power Company shall not require ratepayers to incur any tax effects from any spin-off or other transactions. 6. That FE Corporation and its subsidiary Pennsylvania Power Company shall not require ratepayers to fund or pay any transaction costs. 7. That FE Corporation and its subsidiary Pennsylvania Power Company agree that these transactions are not intended to increase Pennsylvania Power Company's distribution rates from capital structure and cost of capital effects that may result from these financial transactions. 8. That FE Corporation and its subsidiary Pennsylvania Power Company agree that all parties interested in matters related to the transactions expressly have the right to examine those issues in any request by Penn Power to increase its distribution rates and to recommend any adjustments they find necessary. 9. That FE Corporation and its subsidiary Pennsylvania Power Company agree that ratepayer obligations regarding nuclear decommissioning costs will remain as specified in the Commission's prior Order regarding Pennsylvania Power Company's Restructuring Plan and its further order approving the Joint Petition for Full Settlement of Pennsylvania Power Company's Restructuring Plan and Related Court Proceedings set forth in Application of Pennsylvania Power Company for Approval of Restructuring Plan Under Section 3806 of the Public Utility Code, Docket No. R-00974149 (Restructuring Order entered July 22, 1998) and (Tentative Order on Settlement entered April 1, 1999). 18 10. That FirstEnergy Corporation and its subsidiary Pennsylvania Power Company shall abide by the additional requirements or obligations set forth in today's Opinion and Order regarding filing and updating the Commission concerning developments in the Ohio Public Utility Commission and the other states where approval is necessary. 11. That this approval shall be effective as of the date of entry of this Opinion and Order. BY THE COMMISSION, James J. McNulty Secretary (SEAL) ORDER ADOPTED: September 9, 2005 ORDER ENTERED: September 9, 2005 19 EX-99 9 exd-10.txt EX. D-10 - ORDER OF NY PUBLIC SERVICE COMMISSION EXHIBIT D-10 STATE OF NEW YORK PUBLIC SERVICE COMMISSION At a session of the Public Service Commission held in the City of Albany on August 24, 2005 COMMISSIONERS PRESENT: William M. Flynn, Chairman Thomas J. Dunleavy Leonard A. Weiss Neal N. Galvin Patricia L. Acampora CASE 05-E-0609 - Petition of Waverly Electric Light & Power Company for Determination of Eligible Facility Status of Certain Nuclear Generating Assets Pursuant to Section 32 of the Federal Public Utility Holding Company Act of 1935. CASE 05-E-0610 - Petition of Waverly Electric Light & Power Company for Determination of Eligible Facility Status of Certain Fossil Generating Assets Pursuant to Section 32 of the Federal Public Utility Holding Company Act of 1935. ORDER MAKING EXEMPT WHOLESALE GENERATOR FINDINGS (Issued and Effective September 9, 2005) BY THE COMMISSION: BACKGROUND ---------- In separate petitions dated May 19, 2005 (collectively, the Petitions), the Waverly Electric Light & Power Company (Waverly or the company), a wholly-owned subsidiary of Pennsylvania Electric Company, which is in turn a wholly-owned subsidiary of FirstEnergy Corporation (FE Corp), sought determinations that certain nuclear generating facilities and fossil generating facilities, which are owned by affiliates of Waverly that are also subsidiaries of FE Corp, are eligible facilities pursuant to ss. 32 of the Public Utility Holding Company Act (PUCHA). The FE Corp subsidiaries intend to transfer their ownership interests CASES 05-E-0609 and 05-E-0610 in the nuclear generating facilities to FirstEnergy Nuclear Generating Corporation (FE Nuclear), and their ownership interests in the fossil generating facilities to FirstEnergy Generation Corporation (FE Fossil)./1/ Before FE Nuclear or FE Fossil may commence exempt wholesale generator (EWG) operations, however, it must be determined under PUCHA that allowing EWG operations will benefit New York consumers, is in the public interest, and does not violate New York law./2/ PUCHA requires those determinations under these circumstances because Waverly, which provides New Yorkregulated retail electric service to approximately 13,400 customers in and around the Village of Waverly, New York, is affiliated with FE Nuclear and FE Fossil, and all three affiliates are subsidiaries of FE Corp, a registered holding company under PUCHA. Waverly asks that we make the PUCHA findings because we have jurisdiction over Waverly's provision of electric service in the Village of Waverly. Pursuant to State Administrative Procedure Act (SAPA) ss. 202(1), a Notice of Proposed Rulemaking was published in the State Register on June 29, 2005. The public comment period has expired and no comments on the Petitions were received. THE PETITIONS ------------- Regarding the nuclear generating assets, Waverly notes that it does not hold an ownership interest in those facilities, nor does it recover associated costs or expenses in its rates. It reports, however, that its affiliates, the Cleveland Electric Illuminating Company, the Toledo Edison Company, the Ohio - ---------- 1 The nuclear and fossil generating units that will be transferred are listed in Appendix A. 2 In general, EWGs must be engaged exclusively in the business of owning and/or operating eligible facilities and selling electricity at wholesale. 15 U.S.C. ss. 79z-5a(c). -2- CASES 05-E-0609 and 05-E-0610 Edison Company and the Pennsylvania Power Company (collectively, the Regulated Affiliates), intend to transfer their ownership interests in the nuclear assets, which are located in Pennsylvania and Ohio. Regarding the fossil generation assets, Waverly again notes it does not hold an ownership interest in those facilities, nor does it recover associated costs or expenses in its rates. It reports, however, that its Regulated Affiliates intend to transfer their ownership interests in the fossil assets, again located in Pennsylvania and Ohio. In support of its request for relief, Waverly states that these transfers are a component of the Regulated Affiliates' plans, approved by the Pennsylvania Public Utility Commission and the Public Utilities Commission of Ohio, to restructure by divesting their generating assets while maintaining their regulated electric delivery businesses. Waverly believes extending eligible facility status to the nuclear and fossil generating facilities to be transferred would be consistent with the Commission's policies of encouraging generation facility divestiture in order to promote the development of a vibrant wholesale electric marketplace to the benefit of consumers. Waverly maintains that no market power concerns are raised by the contemplated transactions because there will be no net change in the amount of generation, approximately 11,926 MW, owned by FE Corp and its affiliates. Therefore, Waverly avers that competition among electric suppliers in the region will be unaffected. In addition, the Petitions state that the transactions will not adversely affect the availability and reliability of electric supply to Waverly's customers, because sales of electricity from the nuclear and fossil assets will continue as before, through FirstEnergy Solutions Corporation (FE Solutions), a power marketing affiliate of the company. -3- CASES 05-E-0609 and 05-E-0610 Allowing the nuclear and fossil assets to be eligible facilities, Waverly contends, does not violate any New York statute or Commission regulation. As a result, in conformance with PUCHA ss. 32(c), Waverly asks that findings be made that FE Nuclear's and FE Fossil's ownership as EWGs will benefit consumers, is in the public interest, and does not violate New York law. DISCUSSION AND CONCLUSION ------------------------- We find that operating the Ohio and Pennsylvania generation facilities as EWGs will avoid unnecessary federal regulation, enabling FE Nuclear and FE Fossil to participate more efficiently in the wholesale electric market. Other requests to make findings on EWG status under similar circumstances have been granted, including the making of the findings upon sales of generation by other affiliates of FE Corp./3/ The electric industry restructuring accomplished in Pennsylvania and Ohio resembles the restructuring plans adopted for New York utilities under Opinion No. 96-12./4/ Allowing the nuclear and fossil generating facilities to operate as EWGs is consistent with our policies announced in Opinion No. 96-12, and will benefit New York consumers and serve the public interest by encouraging divestiture of generation assets from regulated delivery service, and by promoting a vibrant wholesale electric marketplace. Moreover, there is no violation of New York laws or regulations in transferring these out-of-state generation facilities to a new owner. We also find that the provision of - ---------- 3 Case 99-E-0276, GPU Energy Companies - EWG Status, Order Making Exempt Wholesale Generator Findings (issued May 24, 1999); Case 00-E-0012, GPU, Inc. - EWG Status, Order Making Exempt Wholesale Generator Findings (issued March 30, 2000). 4 Case 94-E-0952, Competitive Opportunities Regarding Electric Service, Opinion No. 96-12 (issued May 20, 1996). -4- CASES 05-E-0609 and 05-E-0610 safe and adequate service to Waverly's customers will not be adversely affected by these transactions. Accordingly, in conformance with PUCHA, we find that allowing the Ohio and Pennsylvania generating facilities that FE Nuclear and FE Fossil will purchase to become eligible facilities, with FE Nuclear or FE Fossil as the respective owners either indirectly through one or more affiliates, as defined in federal law,/5/ or directly: (1) will benefit New York consumers; (2) will be in the public interest of New York; and, (3) will not violate New York Law./6/ The Commission orders: - ---------------------- 1. The findings on exempt wholesale generator status under the Public Utility Holding Company Act of 1935 described in the body of this Order are made. 2. These proceedings are closed. By the Commission, (SIGNED) JACLYN A. BRILLING Secretary - ---------- 5 15 U.S.C. ss. 79b(a)(11); 18 C.F.R. ss. 365.3(a)(1)(i). 6 15 U.S.C. ss. 79z-5a; 18 C.F.R. ss. 365.3. CASES 05-E-0609 and 05-E-0610 APPENDIX A Nuclear Power Plant Assets: - --------------------------- Beaver Valley Nuclear Power Plant Units 1 and 2 (Shippingport, Pennsylvania) Davis-Besse Nuclear Power Plant (Oak Harbor, Ohio) Perry Nuclear Power Plant (North Perry Village, Ohio) Fossil Power Plant Assets: - -------------------------- Ashtabula Generating Station Unit 5 (Ashtabula, Ohio) Bay Shore Generating Station Units 1-4 and the Bay Shore Peaking Facility (Toledo, Ohio) R.E. Burger Generating Station Units 3-5 and the R.E. Burger Peaking Facility (Shadyside, Ohio) Eastlake Generating Station Units 1-5 and the Eastlake Peaking Facility (Eastlake, Ohio) Edgewater Peaking Facility (Lorain, Ohio) Lakeshore Generating Station Unit 18 and the Lakeshore Peaking Facility (Cleveland, Ohio) Mad River Peaking facility (Springfield, Ohio) Bruce Mansfield Generating Station Units 1-3 (Shippingport, Pennsylvania) Richland Peaking Facility Units 1-3 (Defiance, Ohio) W.H. Sammis Generating Station Units 1-7 and the W.H. Sammis Peaking Facility (Stratton, Ohio) Stryker Peaking Facility (Springfield, Ohio) West Lorain Peaking Facility Unit 1 (Lorain, Ohio) Seneca Pumped Storage Generating Station (Warren, Pennsylvania) EX-99 10 exd-12.txt EX. D-12 - ORDER OF NJ PUBLIC UTILITIES EXHIBIT D-12 Agenda Date: 09/30/05 Agenda Item: 2A STATE OF NEW JERSEY BOARD OF PUBLIC UTILITIES TWO GATEWAY CENTER NEWARK, NJ 07102 www.bpu.state.nj.us ENERGY ------ IN THE MATTER OF THE VERIFIED PETITION OF JERSEY CENTRAL POWER & LIGHT COMPANY SEEKING A SPECIFIC ORDER OF APPROVAL DETERMINATION ALLOWING CERTAIN ) FOSSIL GENERATION ASSETS TO BE ELIGIBLE FACILITIES PURSUANT TO SECTION 32 OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 DOCKET NO. EM05050454 (SERVICE LIST ATTACHED) BY THE BOARD: By petition dated May 19, 2005, Jersey Central Power & Light Company ("JCP&L" or "Company") requested a determination by the Board of Public Utilities ("Board") that allowing certain fossil generating assets (collectively, "Fossil Assets") to be "eligible facilities" pursuant to Section 32 of the Public Utility Holding Company Act of 1935 ("PUHCA"), will benefit consumers, is in the public interest and does not violate New Jersey law. A copy of the petition was served upon the Division of the Ratepayer Advocate ("Advocate"). The Fossil Assets have a total combined capacity of 8,132 megawatts ("MW') and are comprised of the following generation facilities located in Ohio and Pennsylvania: Ashtabula Generating Station Unit 5, Bayshore Generating Station Units 1-4, Bayshore Peaking Facility, R.E. Burger Generating Station Units 3-5, R.E. Burger Peaking Facility, Eastlake Generating Station Units 1-5, Eastlake Peaking Facility, Edgewater Peaking Facility, Lake Shore Generating Station Unit 18, Lake Shore Peaking Facility, Mad River Peaking Facility, Bruce Mansfield Generating Station Units 1-3, Richland Peaking Facility Units 1-3, W.H. Sammis Generating Station Units 1-7, W.H. Sammis Peaking Facility, Seneca Pumped Storage Generating Station, Stryker Peaking Facility and West Lorain Peaking Facility Unit 1. The location, generation capacity and ownership interests of each of the Fossil Assets are set forth in Appendix A to the petition. JCP&L and its affiliates, Cleveland Electric Illuminating Company ("CEI"), Toledo Edison Company ("Toledo Edison"), Ohio Edison Company ("Ohio Edison"), Metropolitan Edison Company ("Met-Ed") and Pennsylvania Electric Company ("Penelec") (collectively, the "FirstEnergy Operating Companies"), are electric public utilities and direct, wholly-owned subsidiaries of FirstEnergy Corp. ("FirstEnergy"), a public utility holding company registered under PUHCA. Additionally, Pennsylvania Power Company ("Penn Power") is a direct, wholly-owned electric public utility subsidiary of Ohio Edison. Penelec, Met-Ed and Penn Power provide electric service to customers within the Commonwealth of Pennsylvania and are subject to regulation by the Pennsylvania Public Utility Commission ("PaPUC"). CEI, Toledo Edison and Ohio Edison provide electric service to customers within the State of Ohio and are subject to regulation by the Public Utilities Commission of Ohio ("PUCO"). Penelec, as lessee of the property of the Waverly Electric Light & Power Company, also provides electric service to customers in the State of New York and is subject to regulation by the New York Public Service Commission ("NYPSC"). JCP&L asserts that FirstEnergy and certain of the FirstEnergy Operating Companies, as described below, desire to proceed with a series of asset transfers at the conclusion of which FirstEnergy Generation Corporation ("FirstEnergy Generation" or "GENCO"), an existing wholly-owned, indirect subsidiary of FirstEnergy, will own the Fossil Assets. JCP&L asserts that these transactions are being undertaken in furtherance of one of the principal objectives of the restructuring plans of CEI, Toledo Edison, Ohio Edison and Penn Power (collectively, the "Transferring Utilities" or "Transferors"), that were approved by the PUCO and, in the case of Penn Power, by the PaPUC. JCP&L further asserts that, under the restructuring plans, generation assets that had been owned by the Transferring Utilities were to be eventually separated from the regulated delivery business of the Transferring Utilities through transfer to a separate corporate entity. As an interim step in this plan, the Transferring Utilities entered into a master facility lease dated as of January 1, 2001 ("Master Lease"), pursuant to which FirstEnergy Generation leases from the Transferring Utilities their respective interests in the Fossil Assets and operates and maintains the Fossil Assets. The contemplated transactions, together with the transfer of certain nuclear generation assets, addressed in a separate petition filed with the Board,/1/ will essentially complete the divestiture plans./2/ According to JCP&L, the Master Lease has been approved by the PUCO, the PaPUC, the NYPSC and the Federal Energy Regulatory Commission ("FERC"), and includes a purchase option under which Genco may purchase the Fossil Assets at specified prices. JCP&L asserts that FirstEnergy Generation intends to exercise this option and acquire the Fossil Assets for a total purchase price of approximately $1.6 billion and will also assume all of the Transferring Utilities' direct and indirect liabilities associated with the Fossil Assets. JCP&L asserts that FirstEnergy will file a petition with the FERC seeking authorization for the contemplated transactions insofar as such transactions are subject to the jurisdiction of that agency. JCP&L asserts that it and FirstEnergy desire that FirstEnergy Generation qualify as an exempt wholesale generator ("EWG"), which will exempt FirstEnergy Generation from all provisions of PUHCA. Under Section 32(a) of PUHCA, certain generators of electricity qualify for EWG status if they are, in general, engaged exclusively in the business of owning and/or operating eligible facilities and selling electricity at wholesale. In order for FirstEnergy Generation to be accorded EWG status with respect to the Fossil Assets, the Fossil Assets must be found to be eligible facilities. Pursuant to Section 32(c) of PUHCA, generation facilities that were included in the rates of a registered public holding company's affiliated state-regulated utility as of October 24, 1992 (the date of the enactment of Section 32 of PUHCA) must receive state consent before they can be considered to be eligible facilities. Because rates for the electric energy produced by the Fossil Assets were in effect under, - ---------- /1/ In the Matter of the Verified Petition of Jersey Central Power & Light Company Seeking a Specific Determination Allowing Certain Nuclear Generation Assets to be Eligible Facilities Pursuant to Section 32 of the Public Utility Holding Company Act of 1935, Docket No. EM05050455, dated May 19, 2005. /2/ The interests that are subject to the Master Lease that are being transferred do not include certain ownership interests in the generation facilities that are currently subject to sale and leaseback arrangements. In addition, interests in certain fossil units not now being leased by FirstEnergy Generation are not being transferred. 2 Docket No. EM05050454 inter alia, Pennsylvania and Ohio law, as applicable, as of October 24, 1992, the Fossil Assets need to be considered "eligible facilities" under PUHCA, (c) ... every State commission having jurisdiction over any such rate or charge must make a specific determination that allowing such facility to be an eligible facility (1) will benefit consumers, (2) is in the public interest, and (3) does not violate State law; [p]rovided, [t]hat in the case of such a rate or charge which is a rate or charge of an affiliate of a registered holding company: (A) such determination with respect to the facility in question shall be required from every State commission having jurisdiction over the retail rates and charges of the affiliates of such registered holding company ....[15 U.S.C. ss. 79z-5a(c)] JCP&L holds no ownership interest in the Fossil Assets, and no costs or expenses related to the Fossil Assets are currently reflected in the Company's rates. However, in accordance with Section 32(c) of PUHCA, as an affiliate of the other Transferring Utilities and a subsidiary of FirstEnergy, JCP&L also must obtain from this Board a specific determination that allowing the Fossil Assets to be eligible facilities (1) will benefit consumers, (2) is in the public interest and (3) does not violate New Jersey law. The Company asserts that allowing the Fossil Assets to be eligible facilities does not violate any New Jersey statute or Board regulation. JCP&L also asserts that no market power concerns are raised by the contemplated transactions, as there will be no net change to FirstEnergy's existing owned generation resources and, thus, competition among electricity suppliers in the region will not be affected. The Company further asserts that, because all of the electricity available from the Fossil Assets is, and will continue to be, sold to FirstEnergy Solutions Corp., a power marketing affiliate of the Company, the contemplated transactions will not adversely affect either the availability or reliability of electric supply to the Company's customers or to any other electricity customer. JCP&L submitted an affidavit, signed by Guy L. Pipitone, Senior Vice President of FirstEnergy Corp., dated July 11, 2005, wherein he certifies: GENCO presently operates the Assets and purchases all of their output under a 20-year Master Facility Lease dated as of January 1, 2001. GENCO, in turn, sells all of this power to FirstEnergy Solutions Corp. ("Solutions"), a wholly-owned subsidiary of FirstEnergy Corp. Solutions has a full requirements contract with the Transferors to supply power to meet their provider of last resort and other needs. The subject contracts have all been filed with and accepted by the Federal Energy Regulatory Commission ("FERC"). Remaining energy is sold by Solutions either to retail customers or in the competitive wholesale markets through the Midwest Independent System Operator ("Midwest ISO") or the PJM Interconnection, LLC ("PJM") or via bilateral contracts. Some of the remaining energy is sold at wholesale to Metropolitan Edison Company and Pennsylvania Electric Company under contracts filed with and accepted by FERC. Midwest ISO has operational control of the transmission assets owned by FirstEnergy Corp. subsidiary American Transmission Systems, Incorporated ("ATSI"). ATSI owns the transmission assets formerly owned by the Transferors. To the extent relevant, PJM has operational control of the transmission assets owned by JCP&L and its electric 3 Docket No. EM05050454 public utility affiliates other than the Transferors, i.e., Metropolitan Edison Company and Pennsylvania Electric Company. Pursuant to various state codes of conduct and FERC's Standards of conduct, there is a separation of personnel and information between any regulated utility company, on the one hand, and GENCO and Solutions, on the other hand. GENCO and Solutions personnel have no preferential access to information regarding the FirstEnergy System's transmission or distribution systems. Thus, with respect to uncommitted energy, GENCO and Solutions have no ability to affect the operation of the FirstEnergy System's transmission or distribution systems to their advantage relative to an unaffiliated generator. Mr. Pipitone asserts that, in connection with authorizations to sell at market-based rates, FERC has determined that various companies within the FirstEnergy System, including all of the electric public utility subsidiaries of FirstEnergy Corp., GENCO and Solutions, satisfy FERC's generation market power standard for the grant of market-based rate authority. See FirstEnergy Operating Companies, et al., Docket Nos. ER01-1403-000 et al., 111 FERC P. 61,032 (April 14, 2005). Mr. Pipitone further asserts that, in light of the foregoing, and, in particular, because the operation of the Fossil Assets and the disposition of their output will not change as a result of the subject transactions, the transfer of the Fossil Assets to FirstEnergy Generation will raise no horizontal or vertical market power concerns. Discussion and Findings - ----------------------- It should be noted at the outset that the Energy Policy Act of 2005 ("EPACT"), which was passed by Congress on July 29, 2005, and signed into law by President Bush on August 8, 2005, provides for the repeal of PUHCA six months after the effective date of EPACT. Nonetheless, for the reasons described above, JCP&L has requested that this Board make a specific determination that allowing the Fossil Assets to be "eligible facilities" pursuant to Section 32 of PUHCA will benefit consumers, is in the public interest and does not violate New Jersey law. Pursuant to Section 32(c)(A) of PUHCA, it appears that such a finding is required of this Board in order for the Fossil Assets to be considered eligible facilities under federal law, notwithstanding the fact that JCP&L does not hold any ownership interest in the Fossil Assets and that no costs or expenses related to the Fossil Assets are currently, or ever have been, reflected in JCP&L's rates. Having reviewed the petition in this matter, and having reviewed the affidavit provided by JCP&L, it appears that the sale of the Fossil Assets to FirstEnergy Generation will not adversely affect either the availability or reliability of electric supply to JCP&L's customers or the availability of competitive energy supplies in the northeast. Furthermore, it appears that allowing the Fossil Assets to become eligible facilities under PUHCA will enable them to operate more freely in the competitive marketplace, thereby creating greater competition, which should lead to lower electric prices, to the benefit of electric customers. Based on the affidavit submitted by JCP&L, it does not appear that this transaction raises any significant generation or transmission market power issues within the State of New Jersey or PJM. The Board further notes that no entity has opposed JCP&L's request. Therefore, for the reasons stated, the Board HEREBY DETERMINES that allowing the Fossil Assets to be eligible facilities pursuant to Section 32 of PUHCA will benefit consumers, is in the public interest and does not violate State law. 4 Docket No. EM05050454 The Board's determination is based on the facts of this transaction as they have been presented and shall not be precedential for any such future requests, by this or any other company, for similar determinations for other facilities. DATED: 10/3/05 BOARD OF PUBLIC UTILITIES BY: /S/ ------------------------- JEANNE M. FOX PRESIDENT /S/ /S/ - ------------------------- ------------------------- FREDERICK F. BUTLER CONNIE O. HUGHES COMMISSIONER COMMISSIONER /S/ ------------------------- JACK ALTER COMMISSIONER ATTEST: /S/ ------------------------- KRISTI IZZO SECRETARY I HEREBY CERTIFY that the within document is a true copy of the original in the files of the Board of Public Utilities /S/ - ------------------------- KRISTI IZZO 5 Docket No. EM05050454 EX-99 11 exf-1.txt EX. F-1 - OPINION OF THELEN REID & PRIEST, LLP EXHIBIT F-1 [Letterhead of Thelen Reid & Priest LLP] October 18, 2005 Securities and Exchange Commission 100 F Street, N.E. Washington, DC 20549 Re: FirstEnergy Corp. - File No. 70-10307 ------------------------------------- Ladies and Gentlemen: We have examined the Application or Declaration on Form U-1, as amended (the "Application"), under the Public Utility Holding Company Act of 1935, as amended (the "Act"), filed in the above-referenced proceeding by FirstEnergy Corp. ("FirstEnergy") and certain of its public-utility subsidiary companies named therein, of which this opinion is to be a part. The Application requests authorization for Ohio Edison Company, Pennsylvania Power Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company (collectively, the "Utility Subsidiaries") to acquire promissory notes issued by FirstEnergy Generation Corp. ("FE GenCo"), an indirect non-utility subsidiary of FirstEnergy that has been determined to be an "exempt wholesale generator" under Section 32 of the Act, in connection with the Utility Subsidiaries' sale of their respective interests in certain fossil-fuel and hydroelectric generating plants to FE GenCo. We have also examined copies, signed, certified or otherwise proven to our satisfaction, of the governing documents of FirstEnergy and the Utility Subsidiaries and such other documents, instruments and agreements, and have made such further investigation as we have deemed necessary as a basis for this opinion. We are members of the bars of the States of New Jersey and New York and are not expert in the laws of any jurisdiction other than the laws of such states and the federal laws of the United States of America. As to all matters herein which are governed by the laws of the State of Ohio and the Commonwealth of Pennsylvania, we have relied upon the opinion of Gary D. Benz, Esq., which is being filed as Exhibit F-2 to the Application. Based upon and subject to the foregoing, and assuming that the proposed transactions are carried out in accordance with the Commission's order in this proceeding, we are of the opinion that: (a) all State laws applicable to the proposed transactions will have been complied with; (b) FE GenCo is validly organized and existing under the laws of the State of Ohio and the notes to be issued to the Utility Subsidiaries will be valid and binding obligations of FE GenCo; (c) the Utility Subsidiaries will legally acquire the promissory notes to be issued by FE GenCo; and (d) the proposed transactions will not violate the legal rights of the holders of any securities issued by FirstEnergy. We hereby consent to the filing of this opinion as an exhibit to the Application and in any proceedings before the Commission that may be held in connection therewith. This opinion may not be relied upon by any other person for any other purpose. Very truly yours, THELEN REID & PRIEST LLP EX-99 12 exf-2.txt EX. F-2 - OPINION OF GARY BENZ, ESQ. EXHIBIT F-2 [Letterhead of Gary D. Benz] October 18, 2005 Securities and Exchange Commission 100 F Street, N.E. Washington, DC 20549 Re: FirstEnergy Corp., et al. - File No. 70-10307 --------------------------------------------- Ladies and Gentlemen: I have examined the Application or Declaration on Form U-1, as amended (the "Application"), under the Public Utility Holding Company Act of 1935, as amended (the "Act"), filed in the above-referenced proceeding by FirstEnergy Corp. ("FirstEnergy") and certain of its public-utility subsidiary companies named therein, of which this opinion is to be a part. The Application requests authorization for Ohio Edison Company, Pennsylvania Power Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company (collectively, the "Utility Subsidiaries") to acquire promissory notes issued by FirstEnergy Generation Corp. ("FE GenCo"), an indirect non-utility subsidiary of FirstEnergy that has been determined to be an "exempt wholesale generator" under Section 32 of the Act, in connection with the Utility Subsidiaries' sale of their respective interests in certain fossil-fuel and hydroelectric generating plants to FE GenCo. I have also examined copies, signed, certified or otherwise proven to my satisfaction, of the governing documents of FirstEnergy and the Utility Subsidiaries and such other documents, instruments and agreements, and have made such further investigation as I have deemed necessary as a basis for this opinion. I am Associate General Counsel of FirstEnergy Corp. and have acted as such in connection with the filing of the Application. I am a member of the bars of the State of Ohio and Commonwealth of Pennsylvania and am not licensed to practice in any other jurisdiction. Based upon and subject to the foregoing, and assuming that the proposed transactions are carried out in accordance with the Commission's order in this proceeding, I am of the opinion that: (a) all Ohio and Pennsylvania state laws applicable to the proposed transactions will have been complied with; (b) FE GenCo is validly organized and existing under the laws of the State of Ohio and the notes to be issued to the Utility Subsidiaries will be valid and binding obligations of FE GenCo; (c) the Utility Subsidiaries will legally acquire the promissory notes to be issued by FE GenCo; and (d) the proposed transactions will not violate the legal rights of the holders of any securities issued by FirstEnergy or any associate company. I hereby consent to the filing of this opinion as an exhibit to the Application. This opinion may not be relied upon by any other person for any other purpose, except that Thelen Reid & Priest LLP may rely on this opinion in rendering their opinion filed as Exhibit F-1 to the Application. Very truly yours, /s/ Gary D. Benz EX-99 13 exh.txt EX. H - CONSOLIDATED CAPITALIZATION RATIOS EXHIBIT H
As Reported at Subsequent to June 30, 2005 Non-Nuclear Transfer FirstEnergy Amount Ratio Amount Ratio - ----------- ------------ ----------- -------------- ----------- Common Equity $ 8,640,396 43.37% $ 8,640,396 43.37% Preferred Stock 213,719 1.07% 213,719 1.07% Long-Term Debt 10,512,694 52.77% 10,512,694 52.77% Short-Term Debt 554,824 2.79% 554,824 2.79% ------------ ----------- ------------- ----------- Total Capitalization $ 19,921,633 100.00% $ 19,921,633 100.00% ------------ ----------- ------------- ----------- Ohio Edison - ----------- Common Equity $ 2,409,698 58.71% $ 2,576,736 60.31% Preferred Stock 75,070 1.83% 75,070 1.76% Long-Term Debt 1,393,799 33.95% 1,393,799 32.63% Short-Term Debt 226,301 5.51% 226,301 5.30% ------------ ----------- ------------- ----------- Total Capitalization $ 4,104,868 100.00% $ 4,271,906 100.00% ------------ ----------- ------------- ----------- Cleveland Electric - ------------------ Common Equity $ 1,854,152 41.79% $ 1,834,742 41.53% Preferred Stock - 0.00% - 0.00% Long-Term Debt 2,023,777 45.61% 2,023,777 45.81% Short-Term Debt 559,290 12.60% 559,290 12.66% ------------ ----------- ------------- ----------- Total Capitalization $ 4,437,219 100.00% $ 4,417,809 100.00% ------------ ----------- ------------- ----------- Toledo Edison - ------------- Common Equity $ 827,560 49.43% $ 849,621 50.09% Preferred Stock 126,000 7.53% 126,000 7.43% Long-Term Debt 387,432 23.14% 387,432 22.84% Short-Term Debt 333,136 19.90% 333,136 19.64% ------------ ----------- ------------- ----------- Total Capitalization $ 1,674,128 100.00% $ 1,696,189 100.00% ------------ ----------- ------------- ----------- Penn Power - ---------- Common Equity $ 349,059 62.81% $ 350,714 62.93% Preferred Stock 14,105 2.54% 14,105 2.53% Long-Term Debt 146,941 26.44% 146,941 26.36% Short-Term Debt 45,597 8.21% 45,597 8.18% ------------ ----------- ------------- ----------- Total Capitalization $ 555,702 100.00% $ 557,357 100.00% ------------ ----------- ------------- -----------
EX-99 14 exi.txt EX. I - AVERAGE WEIGHTED COST OF LONG-TERM DEBT EXHIBIT I OHIO EDISON Embedded Cost of Long Term Debt 9/30/2005
DATE OF DATE OF PRINCIPAL AMOUNT COST OF ANNUAL TITLE CUSIP # OFFERING MATURITY AMOUNT OUTSTANDING MONEY COST ----- ------- -------- -------- ------ ----------- ----- ---- POLLUTION CONTROL NOTES OAQDA 2000 Series C (3) * 677525NT0 Jun-00 Jun-23 50,000,000 50,000,000 2.8498% 1,424,893 OAQDA Series 1989 A (10) *** 677525RH1 Jan-88 Feb-15 50,000,000 50,000,000 3.3061% 1,653,058 OWDA 2000 Series A (6) ** 677660PC0 Apr-00 Oct-33 44,800,000 44,800,000 2.6266% 1,176,703 OAQDA 2000 Series A (7) ** 677525NQ6 Apr-00 Oct-33 12,300,000 12,300,000 2.6266% 323,068 OWDA 1988 Series B (2) * 677660DH2 Sep-00 Sep-18 33,000,000 33,000,000 3.0274% 999,031 OAQDA 1988 Series C (8) * 677525JC2 Sep-88 Sep-18 23,000,000 23,000,000 3.0274% 696,294 OAQDA 1989 Series A (1) *** 677525JG3 Feb-89 Feb-14 50,000,000 50,000,000 2.8120% 1,406,021 OWDA 1999 Series B 677660NY4 Dec-99 Jun-33 30,000,000 30,000,000 3.3761% 1,012,824 OWDA 1999 Series A 677660NT5 Jun-99 Jun-33 41,000,000 41,000,000 3.3761% 1,384,193 OAQDA 1999 Series B 677525MR5 Jun-99 Jun-33 9,000,000 9,000,000 3.3761% 303,847 OAQDA 1999 Series C (11) ** 677525NK9 Dec-99 Jun-16 47,725,000 47,725,000 2.4972% 1,191,769 BCIDA 1999 Series A (8A) ** 074876FM0 Sep-99 Sep-33 108,000,000 108,000,000 2.5292% 2,731,498 OAQDA 2000 Series B (5) ** 677525NR4 Apr-00 Apr-15 19,000,000 19,000,000 2.6182% 497,462 BCIDA 2001 Series A (9) ** 074876FC2 Jun-01 Jun-31 69,500,000 69,500,000 2.5740% 1,788,946 BCIDA 2000 Series A (4) ** 074876FB4 Apr-00 Apr-30 60,400,000 60,400,000 2.6489% 1,599,918 BCIDA 1993 Series A 074876DV2 Sep-93 Sep-33 14,800,000 14,800,000 5.5974% 828,414 OWDA 2005 Series A (12) ** 67766WHD7 Apr-05 Apr-29 6,450,000 6,450,000 2.7176% 175,286 OQWDA Series 2005 A (13) ** 677525QN0 Apr-05 Apr-29 100,000,000 100,000,000 2.6930% 2,693,026 OWDA 2005 Series B (14) ** 677660SS2 Jun-05 Jan-34 40,000,000 40,000,000 2.8005% 1,120,191 BCIDA 1995 Series 074876DW0 Sep-95 Oct-20 60,000,000 60,000,000 7.5405% 4,524,298 BCIDA 1998 Series A 07487UAA8 May-88 Jun-28 13,521,974 13,521,974 5.4352% 734,941 -------------- ------------ SUB-TOTAL PCN 882,496,974 28,265,679 SR. UNSECURED NOTES 4.000% Series 677347BZ8 Apr-03 May-08 175,000,000 175,000,000 4.0946% 7,165,618 5.450% Series 677347CA2 Apr-03 May-15 150,000,000 150,000,000 5.5330% 8,299,529 -------------- ------------ 325,000,000 15,465,146 OTHER 7.680% Pepco PEPCO001 Apr-94 Oct-05 200,000,000 5,293,333 7.7602% 410,776 -------------- ------------ 5,293,333 410,776 Total LOC & Insurance Credit Support Fees 4,182,666 * Daily Interest Rate TOTAL LONG-TERM DEBT OUTSTANDING 1,212,790,307 48,324,268 ** 35 day variable rate ============== ============ *** Weekly Interest rate ---------------------------- ---------------------- 3.9846% ----------------------
PENNPOWER Embedded Cost of Long Term Debt 9/30/2005
DATE OF DATE OF PRINCIPAL AMOUNT COST OF ANNUAL TITLE CUSIP # OFFERING MATURITY AMOUNT OUTSTANDING MONEY COST ----- ------- -------- -------- ------ ----------- ----- ---- FIRST MTG BONDS 9.740% Series 709068900 Nov-89 Nov-19 20,000,000 14,156,000 9.8584% 1,395,552 7.625% Series 709068AW0 Jul-93 Jul-23 40,000,000 6,500,000 7.8083% 507,537 ----------- --------- SUB-TOTAL FMB 20,656,000 1,903,089 POLLUTION CONTROL NOTES OWDA 1988 Series 677660HX8 May-88 May-18 13,300,000 13,300,000 6.4525% 858,176 OAQDA1988 Series 677525DE9 May-88 May-18 3,500,000 3,500,000 6.4525% 225,836 OAQDA 1997 Series (2) * 677525MF1 Jul-00 Jul-27 4,500,000 4,500,000 3.0735% 138,306 OWDA 1997 Series (1) * 677660LV2 Jul-00 Jul-27 5,800,000 5,800,000 3.0735% 178,261 OWDA 1999 Series A (5) 677660NX6 Dec-99 Jun-33 5,200,000 5,200,000 2.6293% 136,724 BCIDA 2001 Series A (4) ** 074876FD0 Jun-01 Sep-21 14,925,000 14,925,000 2.5000% 373,125 LCIDA 2001 Series A (3) ** 519833AH0 Jun-01 Mar-17 17,925,000 17,925,000 2.4379% 436,999 OAQDA 2002 Series A 677525PK7 Jul-02 Jan-29 14,500,000 14,500,000 3.8450% 557,529 BCIDA 1993 Series 074876DU4 Sep-93 Sep-28 6,950,000 6,950,000 5.7799% 401,705 LCIDA 1993 Series A 519833AF4 Sep-93 Sep-17 10,600,000 10,600,000 5.6901% 603,146 BCIDA 1993 Series 074873AB6 Oct-93 Oct-13 1,000,000 1,000,000 6.0918% 60,918 BCIDA 1998 Series A 07487UAA8 Jun-98 Jun-28 1,733,896 1,733,896 5.4352% 94,241 OWDA 1994 Series 677660HK1 Aug-94 Aug-23 11,200,000 11,200,000 6.6721% 747,280 OAQDA 1994 Series 677525LN5 Aug-94 Aug-23 1,500,000 1,500,000 6.6445% 99,667 BCIDA 1995 Series A 074876EE9 Sep-95 Sep-28 14,250,000 14,250,000 6.4484% 918,891 ----------- --------- SUB-TOTAL PCN 126,883,896 5,830,803 Total LOC & Insurance Credit Support Fees 214,030 - -------------------------- ----------- --------- * Weekly Interest Rate ** 35 day variable rate TOTAL LONG-TERM DEBT OUTSTANDING 147,539,896 7,947,923 - --------------------------- =========== ========= --------------------- 5.3870% ---------------------
CEI Embedded Cost of Long Term Debt 9/30/2005
DATE OF DATE OF PRINCIPAL AMOUNT COST OF ANNUAL TITLE CUSIP # OFFERING MATURITY AMOUNT OUTSTANDING MONEY COST ----- ------- -------- -------- ------ ----------- ----- ---- FIRST MTG BONDS 6.86% Series 1861086A2 9/29/1998 10/1/2008 125,000,000 125,000,000 7.2595% 9,074,421 7.88% Series Sec. Note (FMB) 186108BS4 11/1/1997 11/1/2017 300,000,000 300,000,000 7.8800% 23,640,000 7.43% Series Sec. Note (FMB) 186108BQ8 11/1/1997 11/1/2009 150,000,000 150,000,000 7.4300% 11,145,000 ------------- ----------- SUB-TOTAL FMB 575,000,000 43,859,421 SECURED TRUST NOTES 7.130% 186118AE5 6/11/1997 7/1/2007 120,000,000 120,000,000 7.2224% 8,666,871 5.65% Senior Notes 186108CC8 12/11/2003 1/1/2013 300,000,000 300,000,000 5.6981% 17,094,360 ------------- ----------- SUBTOTAL TRUST NOTES 420,000,000 25,761,231 PREFERRED $25 Par-Trust Preferred 186127205 12/19/2001 12/15/2031 100,000,000 100,000,000 9.3131% 9,313,146 ------------- ----------- SUBTOTAL PREFERRED 100,000,000 9,313,146 POLLUTION CONT. NOTES OAQDA 1998 Series B 677525MM6 10/6/1998 10/1/2030 12,085,000 12,085,000 3.7841% 457,303 OAQDA 2002 Series 677525PL5 7/1/2002 12/1/2013 78,700,000 78,700,000 6.9367% 5,459,184 OAQDA 2005 Series A (7)** 677525QQ3 7/1/2005 1/1/2034 2,900,000 2,900,000 2.2900% 66,410 OWDA Series 2005 A (6)** 677660ST0 7/1/2005 1/1/2034 40,900,000 40,900,000 2.6500% 1,083,850 BCIDA 2005 Series B (7)** 074876FR9 7/1/2005 7/15/2035 45,150,000 45,150,000 2.5721% 1,161,282 BCIDA 1998 Series 074876EJ8 10/6/1998 10/1/2030 46,300,000 46,300,000 3.8146% 1,766,167 OWDA 1998 Series A (4)** 677660NQ1 10/6/1998 10/1/2030 23,255,000 23,255,000 3.8347% 891,760 OWDA 1998 Series A 677660SL7 10/6/1998 10/1/2030 23,255,000 23,255,000 2.6553% 617,496 OWDA 1988 Series A 677660SE3 3/2/1988 3/1/2015 39,835,000 39,835,000 2.5655% 1,021,954 OAQDA 1988 Series B 677525PV3 3/2/1988 3/1/2018 72,795,000 72,795,000 2.5644% 1,866,752 OWDA 2004 Series A (5)** 67766OSJ2 9/2/2004 9/1/2033 46,100,000 46,100,000 2.7958% 1,288,881 OWDA 1999 Series A (2)* 677660SG8 7/7/1999 6/15/2033 27,700,000 27,700,000 2.4366% 674,939 OAQDA 2002 Series B (3)** 677525PT8 10/1/2002 9/1/2033 30,000,000 30,000,000 2.5792% 773,756 OAQDA 1997 Series 677525MH7 8/26/1997 8/1/2020 62,560,000 62,560,000 6.1224% 3,830,185 BCIDA 2005 Series A (8)** 074876DY6 5/1/1995 5/1/2025 53,900,000 53,900,000 2.6730% 1,440,755 OWDA 1997 Series 677660LX8 8/26/1997 8/1/2020 54,600,000 54,600,000 6.2235% 3,398,043 OAQDA 1997 Series 677525MG9 8/26/1997 8/1/2020 15,900,000 15,900,000 6.2235% 989,540 OWDA 1997 Series A (1) * 677660LW0 6/1/2000 6/1/2020 47,500,000 47,500,000 2.8792% 1,367,610 BCIDA 1998 Series A 07487UAA8 5/1/1998 6/1/2027 5,993,376 5,993,376 5.4788% 328,368 ------------- ----------- SUBTOTAL PCN 729,428,376 28,484,234 Total LOC & Insurance Credit Support Fees 1,863,641 -------------------------- ------------- ----------- * Weekly Variable Rate Total Long-Term Debt Outstanding 1,824,428,376 109,281,673 -------------------------- ============= =========== --------------------- 5.9899% ---------------------
TOLEDO EDISON Embedded Cost of Long Term Debt 930/2005
DATE OF DATE OF PRINCIPAL AMOUNT COST OF ANNUAL TITLE CUSIP # OFFERING MATURITY AMOUNT OUTSTANDING MONEY COST ----- ------- -------- -------- ------ ----------- ----- ---- SECURED TRUST NOTES BM Series A Sec 186118AE5 6/11/1997 7/1/2007 30,000,000 30,000,000 7.2224% 2,166,720 ----------- ---------- SUBTOTAL SECURED TRUST NOTES 30,000,000 2,166,720 POLLUTION CONTROL NOTES BCIDA 1999 Series A (1)*** 074876EL3 6/1/1999 6/1/2030 34,850,000 34,850,000 2.7814% 969,327 BCIDA 1998 Series A 07487UAA8 5/1/1998 6/1/2028 3,750,754 3,750,754 5.4353% 203,864 OWDA 1999 Series A (2)*** 677660NWO 6/15/1999 6/1/2033 18,800,000 18,800,000 2.8500% 535,796 OWDA 1999 Series 677660NW8 9/2/1999 9/1/2033 31,600,000 31,600,000 4.5290% 1,431,152 OAQDA 1999 Series A 677525NJ2 9/2/1999 9/1/2033 5,700,000 5,700,000 2.7705% 157,920 BCIDA 1995 Series 074876EB5 7/15/1995 5/1/2020 35,000,000 35,000,000 7.9088% 2,768,088 BCIDA 1995 Series 074876EC3 7/15/1995 5/1/2020 19,000,000 19,000,000 7.9081% 1,502,548 OWDA 2000 Series B (3)** 677660QZ8 9/20/2000 9/20/2033 30,900,000 30,900,000 2.8321% 875,104 OWDA 2004 Series A (7)** 677660HN5 9/28/1994 10/1/2023 30,500,000 30,500,000 2.8517% 869,764 OAQDA 2002 Series A (4)** 677525PS0 10/1/2002 9/1/2033 20,200,000 20,200,000 2.6076% 526,730 BCIDA 2005 Series A (8)** 074876DZ3 5/1/1995 5/1/2020 45,000,000 45,000,000 2.3520% 1,058,393 OAQDA 1997 Series 677525MJ3 8/27/1997 8/1/2027 10,100,000 10,100,000 6.3222% 638,538 OAQDA 2000 Series A (5)** 677525PY7 7/17/2003 4/1/2024 34,100,000 34,100,000 2.5500% 869,550 OWDA 2000 Series A (6)** 677660SF0 7/17/2003 4/1/2024 33,200,000 33,200,000 2.4000% 796,800 ----------- ---------- SUBTOTAL PCN 352,700,754 13,203,573 Total LOC & Insurance Credit Support Fees 1,399,927 ---------------------------- * Daily variable rate ----------- ---------- ** 35 day variable rate Total Long-Term Debt Outstanding 382,700,754 16,770,219 ----------------------------- =========== ========== --------------------- 4.3821% ---------------------
EX-99 15 fs_11.txt EX. FS-11 - OHIO EDISON BALANCE SHEET OHIO EDISON COMPANY - CORPORATE PRO FORMA BALANCE SHEETS AS OF JUNE 30, 2005
Non-nuclear As Reported Adjustments Pro Forma ----------- ----------- --------- (In thousands) ASSETS UTILITY PLANT: In service $ 4,808,514 $ (2,001,003) a $ 2,807,511 Less-Accumulated provision for depreciation 2,446,307 (1,186,662) b 1,259,645 ----------- ------------- ----------- 2,362,207 (814,341) 1,547,866 ----------- ------------- ----------- Construction work in progress- Electric plant 103,893 (258) c 103,635 Nuclear Fuel - - - ----------- ------------- ----------- 103,893 (258) 103,635 ----------- ------------- ----------- 2,466,100 (814,599) 1,651,501 ----------- ------------- ----------- OTHER PROPERTY AND INVESTMENTS: Investment in lease obligation bonds 9,072 9,072 Nuclear plant decommissioning trusts 302,945 302,945 Long-term notes receivable from associated companies 174,635 1,034,991 d 1,209,626 Other 860,928 (262) e 860,666 ----------- ------------- ----------- 1,347,580 1,034,729 2,382,309 ----------- ------------- ----------- CURRENT ASSETS: Cash and cash equivalents 143 (1) f 142 Receivables- Customers - - Associated companies 181,264 181,264 Other 6,731 6,731 Notes receivable from associated companies 594,025 594,025 Materials and supplies, at average cost 69,491 (16,966) g 52,525 Prepayments and other 3,043 3,043 ----------- ------------- ----------- 854,697 (16,967) 837,730 ----------- ------------- ----------- DEFERRED CHARGES: Regulatory assets 811,571 811,571 Property taxes 61,419 (2,535) h 58,884 Unamortized sale and leaseback costs 57,670 57,670 Other 56,019 56,019 ----------- ------------- ----------- 986,679 (2,535) 984,144 ----------- ------------- ----------- $ 5,655,056 $ 200,628 $ 5,855,684 =========== ============= =========== CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common stockholder's equity- Common stock, without par value, authorized 175,000,000 shares - 100 shares outstanding $ 2,099,089 $ 165,383 j $ 2,264,472 Accumulated other comprehensive loss (57,125) (57,125) Retained earnings 367,734 367,734 ----------- ------------- ----------- Total common stockholder's equity 2,409,698 165,383 2,575,081 Preferred stock 60,965 60,965 Long-term debt and other long-term obligations 1,084,817 - 1,084,817 ----------- ------------- ----------- 3,555,480 165,383 3,720,863 ----------- ------------- ----------- CURRENT LIABILITIES: Currently payable long-term debt 268,641 268,641 Short-term borrowings- Associated companies 2,960 2,960 Other - - Accounts payable- Associated companies 75,156 75,156 Other 10,096 10,096 Notes payable to associated companies Accrued taxes 145,892 145,892 Accrued interest 8,550 8,550 Other 56,622 56,622 ----------- ------------- ----------- 567,917 - 567,917 ----------- ------------- ----------- NONCURRENT LIABILITIES: Accumulated deferred income taxes 621,311 67,599 k 688,910 Accumulated deferred investment tax credits 52,723 (22,935) l 29,788 Asset retirement obligation 207,515 (6,884) m 200,631 Retirement benefits 263,846 263,846 Other 386,264 (2,535) h 383,729 ----------- ------------- ----------- 1,531,659 35,245 1,566,904 ----------- ------------- ----------- COMMITMENTS AND CONTINGENCIES ----------- ------------- ----------- $ 5,655,056 $ 200,628 $ 5,855,684 =========== ============= ===========
COMBINED EXPLANATORY NOTES FOR THE PRO FORMA OPERATING COMPANY BALANCE SHEETS a. The transfer of non-nuclear generation plant in service to FGCO. b. The transfer of the accumulated provision for depreciation on non-nuclear plant in service to FGCO. c. The transfer of non-nuclear plant construction work in progress to FGCO. d. The establishment of an associated company note receivable as consideration for the purchased assets and assumption of liabilities. e. The transfer of other property and investments related to non-nuclear plant assets to FGCO. f. The transfer of working cash funds used for expense advances at certain non-nuclear generation facilities to FGCO. g. The transfer of materials and supplies for non-nuclear generation plant to FGCO. h. The transfer of deferred property tax charges for non-nuclear generation plant to FGCO. i. The transfer of other work in progress for non-nuclear generation plant to FGCO. j. To record in other paid-in capital the difference between the net book value and the purchase price, pursuant to the purchase option in the Master Lease, for the non-nuclear generation assets. k. The transfer of accumulated deferred income taxes for non-nuclear generation plant to FGCO. l. The transfer of accumulated deferred investment tax credits for non-nuclear generation plant to FGCO. m. The transfer of asset retirement obligations related to the non-nuclear generation plants to FGCO. n. The transfer of deferred property taxes and accumulated deferred investment tax credits for non-nuclear generation plant to FGCO. o. The establishment of notes payable to associated companies to reflect the net liabilities transferred to FGCO. EX-99 16 fs_12.txt EX. FS-12 - PENN POWER BALANCE SHEET PENNSYLVANIA POWER COMPANY PRO FORMA CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2005
Non-nuclear As Reported Adjustments Pro Forma ----------- ----------- --------- (In thousands) ASSETS UTILITY PLANT: In service $ 892,826 $ (253,637) a $ 639,189 Less-Accumulated provision for depreciation 371,569 (129,881) b 241,688 ------------ ------------ ------------ 521,257 (123,756) 397,501 ------------ ------------ ------------ Construction work in progress- Electric plant 122,232 (86) c 122,146 Nuclear Fuel - - ------------ ------------ ------------ 122,232 (86) 122,146 ------------ ------------ ------------ 643,489 (123,842) 519,647 ------------ ------------ ------------ OTHER PROPERTY AND INVESTMENTS: Nuclear plant decommissioning trusts 144,704 144,704 Long-term notes receivable from associated companies 32,795 125,047 d 157,842 Other 526 (240) e 286 ------------ ------------ ------------ 178,025 124,807 302,832 ------------ ------------ ------------ CURRENT ASSETS: Cash and cash equivalents 24 (23) f 1 Notes receivable from associated companies 448 448 Receivables- Customers 46,545 46,545 Associated companies 10,632 10,632 Other 939 939 Materials and supplies, at average cost 38,729 (1,515) g 37,214 Prepayments and other 17,184 17,184 ------------ ------------ ------------ 114,501 (1,538) 112,963 ------------ ------------ ------------ DEFERRED CHARGES: Regulatory assets - - Other 9,915 9,915 ------------ ------------ ------------ 9,915 - 9,915 ------------ ------------ ------------ $ 945,930 $ (573) $ 945,357 ============ ============ ============ CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common stockholder's equity- Common stock, $30 par value $ 188,700 $ - $ 188,700 Other paid-in capital 65,035 1,655 j 66,690 Accumulated other comprehensive loss (13,706) (13,706) Retained earnings 109,030 109,030 ------------ ------------ ------------ Total common stockholder's equity 349,059 1,655 350,714 Preferred stock not subject to mandatory redemption 14,105 14,105 Long-term debt and other long-term obligations 121,167 121,167 ------------ ------------ ----------- 484,331 1,655 485,986 ------------ ------------ ----------- CURRENT LIABILITIES: Currently payable long-term debt 25,774 25,774 Short-term borrowings- Associated companies 25,597 25,597 Other 20,000 20,000 Accounts payable- Associated companies 25,282 25,282 Other 2,627 2,627 Accrued taxes 26,158 26,158 Accrued interest 1,988 1,988 Other 8,712 8,712 ------------ ------------ ----------- 136,138 - 136,138 ------------ ------------ ----------- NONCURRENT LIABILITIES: Accumulated deferred income taxes 84,400 729 k 85,129 Asset retirement obligation 142,872 (2,212) m 140,660 Retirement benefits 50,697 50,697 Regulatory liabilities 36,888 36,888 Other 10,604 (745) n 9,859 ------------ ------------ ----------- 325,461 (2,228) 323,233 ------------ ------------ ----------- COMMITMENTS AND CONTINGENCIES ------------ ------------ ----------- $ 945,930 $ (573) $ 945,357 ============ ============ ============
COMBINED EXPLANATORY NOTES FOR THE PRO FORMA OPERATING COMPANY BALANCE SHEETS a. The transfer of non-nuclear generation plant in service to FGCO. b. The transfer of the accumulated provision for depreciation on non-nuclear plant in service to FGCO. c. The transfer of non-nuclear plant construction work in progress to FGCO. d. The establishment of an associated company note receivable as consideration for the purchased assets and assumption of liabilities. e. The transfer of other property and investments related to non-nuclear plant assets to FGCO. f. The transfer of working cash funds used for expense advances at certain non-nuclear generation facilities to FGCO. g. The transfer of materials and supplies for non-nuclear generation plant to FGCO. h. The transfer of deferred property tax charges for non-nuclear generation plant to FGCO. i. The transfer of other work in progress for non-nuclear generation plant to FGCO. j. To record in other paid-in capital the difference between the net book value and the purchase price, pursuant to the purchase option in the Master Lease, for the non-nuclear generation assets. k. The transfer of accumulated deferred income taxes for non-nuclear generation plant to FGCO. l. The transfer of accumulated deferred investment tax credits for non-nuclear generation plant to FGCO. m. The transfer of asset retirement obligations related to the non-nuclear generation plants to FGCO. n. The transfer of deferred property taxes and accumulated deferred investment tax credits for non-nuclear generation plant to FGCO. o. The establishment of notes payable to associated companies to reflect the net liabilities transferred to FGCO. EX-99 17 fs_13.txt EX. FS-13 - CLEVELAND ELECTRIC BALANCE SHEET THE CLEVELAND ELECTRIC ILLUMINATING COMPANY PRO FORMA CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2005
Non-nuclear As Reported Adjustments Pro Forma ----------- ----------- --------- (In thousands) ASSETS UTILITY PLANT: In service $ 4,497,877 $ (1,250,234) a $ 3,247,643 Less-Accumulated provision for depreciation 2,000,871 (827,608) b 1,173,263 ------------ ------------- ------------ 2,497,006 (422,626) 2,074,380 ------------ ------------- ------------ Construction work in progress- Electric plant 79,897 (4,772) c 75,125 Nuclear fuel 4,330 4,330 ------------ ------------- ------------ 84,227 (4,772) 79,455 ------------ ------------- ------------ 2,581,233 (427,398) 2,153,835 ------------ ------------- ------------ OTHER PROPERTY AND INVESTMENTS: Investment in lessor notes 564,172 564,172 Nuclear plant decommissioning trusts 401,610 401,610 Long-term notes receivable from associated companies 7,546 453,988 d 461,534 Other 15,945 (5,176) e 10,769 ------------ ------------- ------------ 989,273 448,812 1,438,085 ------------ ------------- ------------ CURRENT ASSETS: Cash and cash equivalents 207 207 Receivables- Customers 255,422 255,422 Associated companies 29,279 29,279 Other 11,109 11,109 Notes receivable from associated companies 23,537 23,537 Materials and supplies, at average cost 87,713 (45,746) g 41,967 Prepayments and other 1,948 1,948 ------------ ------------- ------------ 409,215 (45,746) 363,469 ------------ ------------- ------------ DEFERRED CHARGES: Goodwill 1,693,629 1,693,629 Regulatory assets 902,137 902,137 Property taxes 77,792 (7,088) h 70,704 Other 36,471 36,471 ------------ ------------- ------------ 2,710,029 (7,088) 2,702,941 ------------ ------------- ------------ $ 6,689,750 $ (31,420) $ 6,658,330 ============ ============= ============ CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common stockholder's equity- Common stock, without par value $ 1,356,983 $ - $ 1,356,983 Other paid-in capital - (19,410) j (19,410) Accumulated other comprehensive income 16,212 - 16,212 Retained earnings 480,957 480,957 ------------ ------------- ------------ Total common stockholder's equity 1,854,152 (19,410) 1,834,742 Long-term debt and other long-term obligations 1,948,083 1,948,083 ------------ ------------- ------------ 3,802,235 (19,410) 3,782,825 ------------ ------------- ------------ CURRENT LIABILITIES: Currently payable long-term debt 75,694 75,694 Short-term borrowings- Associated companies 404,290 18,758 o 423,048 Other 155,000 155,000 Accounts payable- Associated companies 191,959 191,959 Other 5,733 5,733 Accrued taxes 122,675 122,675 Accrued interest 21,782 21,782 Lease market valuation liability 60,200 60,200 Other 43,841 43,841 ------------ ------------- ------------ 1,081,174 18,758 1,099,932 ------------ ------------- ------------ NONCURRENT LIABILITIES: Accumulated deferred income taxes 543,554 223 k 543,777 Accumulated deferred investment tax credits 58,241 (21,151) l 37,090 Asset retirement obligation 281,206 (2,752) m 278,454 Retirement benefits 84,428 84,428 Lease market valuation liability 638,100 638,100 Other 200,812 (7,088) h 193,724 ------------ ------------- ------------ 1,806,341 (30,768) 1,775,573 ------------ ------------- ------------ COMMITMENTS AND CONTINGENCIES ------------ ------------- ------------ $ 6,689,750 $ (31,420) $ 6,658,330 ============ ============= ============
COMBINED EXPLANATORY NOTES FOR THE PRO FORMA OPERATING COMPANY BALANCE SHEETS a. The transfer of non-nuclear generation plant in service to FGCO. b. The transfer of the accumulated provision for depreciation on non-nuclear plant in service to FGCO. c. The transfer of non-nuclear plant construction work in progress to FGCO. d. The establishment of an associated company note receivable as consideration for the purchased assets and assumption of liabilities. e. The transfer of other property and investments related to non-nuclear plant assets to FGCO. f. The transfer of working cash funds used for expense advances at certain non-nuclear generation facilities to FGCO. g. The transfer of materials and supplies for non-nuclear generation plant to FGCO. h. The transfer of deferred property tax charges for non-nuclear generation plant to FGCO. i. The transfer of other work in progress for non-nuclear generation plant to FGCO. j. To record in other paid-in capital the difference between the net book value and the purchase price, pursuant to the purchase option in the Master Lease, for the non-nuclear generation assets. k. The transfer of accumulated deferred income taxes for non-nuclear generation plant to FGCO. l. The transfer of accumulated deferred investment tax credits for non-nuclear generation plant to FGCO. m. The transfer of asset retirement obligations related to the non-nuclear generation plants to FGCO. n. The transfer of deferred property taxes and accumulated deferred investment tax credits for non-nuclear generation plant to FGCO. o. The establishment of notes payable to associated companies to reflect the net liabilities transferred to FGCO. EX-99 18 fs_14.txt EX. FS-14 - TOLEDO EDISON BALANCE SHEET THE TOLEDO EDISON COMPANY PRO FORMA CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2005
Non-nuclear As Reported Adjustments Pro Forma ----------- ----------- --------- (In thousands) ASSETS (In thousands) UTILITY PLANT: In service $ 1,902,930 $ (250,831) a $ 1,652,099 Less-Accumulated provision for depreciation 802,653 (179,882) b 622,771 ------------ ------------ ------------ 1,100,277 (70,949) 1,029,328 ------------ ------------ ------------ Construction work in progress- Electric plant 52,465 (2,688) c 49,777 Nuclear Fuel 4,063 4,063 ------------ ------------ ------------ 56,528 (2,688) 53,840 ------------ ------------ ------------ 1,156,805 (73,637) 1,083,168 ------------ ------------ ------------ OTHER PROPERTY AND INVESTMENTS: Investment in lessor notes 178,797 178,797 Nuclear plant decommissioning trusts 315,142 315,142 Long-term notes receivable from associated companies 40,014 102,550 d 142,564 Other 1,784 (156) e 1,628 ------------ ------------ ------------ 535,737 102,394 638,131 ------------ ------------ ------------ CURRENT ASSETS: Cash and cash equivalents 15 (3) f 12 Receivables- Customers 2,105 2,105 Associated companies 19,373 19,373 Other 3,182 3,182 Notes receivable from associated companies 16,099 16,099 Materials and supplies, at average cost 46,192 (4,936) g 41,256 Prepayments and other 742 742 ------------ ------------ ------------ 87,708 (4,939) 82,769 ------------ ------------ ------------ DEFERRED CHARGES: Regulatory assets 504,522 504,522 Goodwill 330,192 330,192 Property taxes 24,100 (2,535) h 21,565 Other 39,189 7 i 39,196 ------------ ------------ ------------ 898,003 (2,528) 895,475 ------------ ------------ ------------ $ 2,678,253 $ 21,290 $ 2,699,543 ============ ============ ============ CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common stockholder's equity- Common stock, $5 par value $ 195,670 $ 195,670 Other paid-in capital 428,566 22,061 j 450,627 Accumulated other comprehensive income 18,646 - 18,646 Retained earnings 184,678 184,678 ------------ ------------ ------------ Total common stockholder's equity 827,560 22,061 849,621 Preferred stock not subject to mandatory redemption 126,000 126,000 Long-term debt 296,482 296,482 ------------ ------------ ------------ 1,250,042 22,061 1,272,103 ------------ ------------ ------------ CURRENT LIABILITIES: Currently payable long-term debt 90,950 90,950 Short-term borrowings Accounts payable- - Associated companies 34,806 - 34,806 Other 3,117 3,117 Notes payable to associated companies 333,136 333,136 Accrued taxes 57,466 57,466 Lease market valuation liability 24,600 24,600 Other 25,802 - 25,802 ------------ ------------ ------------ 569,877 - 569,877 ------------ ------------ ------------ NONCURRENT LIABILITIES: Accumulated deferred income taxes 235,448 10,233 k 245,681 Accumulated deferred investment tax credits 24,024 (6,813) l 17,211 Retirement benefits 41,464 41,464 Asset retirement obligation 200,867 (1,656) m 199,211 Lease market valuation liability 255,700 255,700 Other 100,831 (2,535) h 98,296 ------------ ------------ ------------ 858,334 (771) 857,563 ------------ ------------ ------------ COMMITMENTS AND CONTINGENCIES ------------ ------------ ------------ $ 2,678,253 $ 21,290 $ 2,699,543 ============ ============ ============
COMBINED EXPLANATORY NOTES FOR THE PRO FORMA OPERATING COMPANY BALANCE SHEETS a. The transfer of non-nuclear generation plant in service to FGCO. b. The transfer of the accumulated provision for depreciation on non-nuclear plant in service to FGCO. c. The transfer of non-nuclear plant construction work in progress to FGCO. d. The establishment of an associated company note receivable as consideration for the purchased assets and assumption of liabilities. e. The transfer of other property and investments related to non-nuclear plant assets to FGCO. f. The transfer of working cash funds used for expense advances at certain non-nuclear generation facilities to FGCO. g. The transfer of materials and supplies for non-nuclear generation plant to FGCO. h. The transfer of deferred property tax charges for non-nuclear generation plant to FGCO. i. The transfer of other work in progress for non-nuclear generation plant to FGCO. j. To record in other paid-in capital the difference between the net book value and the purchase price, pursuant to the purchase option in the Master Lease, for the non-nuclear generation assets. k. The transfer of accumulated deferred income taxes for non-nuclear generation plant to FGCO. l. The transfer of accumulated deferred investment tax credits for non-nuclear generation plant to FGCO. m. The transfer of asset retirement obligations related to the non-nuclear generation plants to FGCO. n. The transfer of deferred property taxes and accumulated deferred investment tax credits for non-nuclear generation plant to FGCO. o. The establishment of notes payable to associated companies to reflect the net liabilities transferred to FGCO. EX-99 19 fs_15.txt EX. FS-15 - FIRSTENERGY BALANCE SHEET FIRSTENERGY CORP. PRO FORMA BALANCE SHEETS AS OF JUNE 30, 2005
Non-nuclear As Reported Adjustments Pro Forma ----------- ----------- --------- (In thousands) ASSETS OTHER PROPERTY AND INVESTMENTS: Long-term notes receivable from associated companies $ 32,259 $ - $ 32,259 Investments in subsidiaries 11,995,203 11,995,203 Other 116,450 116,450 ------------- ------------- ------------- 12,143,912 - 12,143,912 ------------- ------------- ------------- CURRENT ASSETS: Cash and cash equivalents 100 100 Notes receivable from associated companies 1,003,534 1,003,534 Receivables- Associated companies 6,203 6,203 Other 16,328 16,328 Prepayments and other 35,392 35,392 ------------- ------------- ------------- 1,061,557 - 1,061,557 ------------- ------------- ------------- DEFERRED CHARGES: Accum. Deferred income taxes 50,663 50,663 Other 57,491 57,491 ------------- ------------- ------------- 108,154 - 108,154 ------------- ------------- ------------- $ 13,313,623 $ - $ 13,313,623 ============= ============= ============= CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common stockholder's equity- Common stock $ 32,984 $ - $ 32,984 Other paid-in capital 7,047,470 7,047,470 Accumulated other comprehensive loss (330,028) (330,028) Retained earnings 1,914,023 1,914,023 Unallocated ESOP common shares (34,126) (34,126) ------------- ------------- ------------- Total common stockholder's equity 8,630,323 - 8,630,323 Long-term debt 4,046,827 4,046,827 ------------- ------------- ------------- 12,677,150 - 12,677,150 ------------- ------------- ------------- CURRENT LIABILITIES: Currently payable long-term debt 300,000 300,000 Short-term borrowings- Associated companies Other Accounts payable- Associated companies 70,014 70,014 Other Notes payable- Associated companies Other 41,000 41,000 Accrued taxes 14,004 14,004 Accrued interest 36,145 36,145 Other 136,922 136,922 ------------- ------------- ------------- 598,085 - 598,085 ------------- ------------- ------------- NONCURRENT LIABILITIES: Accumulated deferred income taxes Accumulated deferred investment tax credits Asset retirement obligation Retirement benefits 10,548 10,548 Other 27,840 27,840 ------------- ------------- ------------- 38,388 - 38,388 ------------- ------------- ------------- COMMITMENTS AND CONTINGENCIES ------------- ------------- ------------- $ 13,313,623 $ - $ 13,313,623 ============= ============= =============
COMBINED EXPLANATORY NOTES FOR THE PRO FORMA OPERATING COMPANY BALANCE SHEETS a. The transfer of non-nuclear generation plant in service to FGCO. b. The transfer of the accumulated provision for depreciation on non-nuclear plant in service to FGCO. c. The transfer of non-nuclear plant construction work in progress to FGCO. d. The establishment of an associated company note receivable as consideration for the purchased assets and assumption of liabilities. e. The transfer of other property and investments related to non-nuclear plant assets to FGCO. f. The transfer of working cash funds used for expense advances at certain non-nuclear generation facilities to FGCO. g. The transfer of materials and supplies for non-nuclear generation plant to FGCO. h. The transfer of deferred property tax charges for non-nuclear generation plant to FGCO. i. The transfer of other work in progress for non-nuclear generation plant to FGCO. j. To record in other paid-in capital the difference between the net book value and the purchase price, pursuant to the purchase option in the Master Lease, for the non-nuclear generation assets. k. The transfer of accumulated deferred income taxes for non-nuclear generation plant to FGCO. l. The transfer of accumulated deferred investment tax credits for non-nuclear generation plant to FGCO. m. The transfer of asset retirement obligations related to the non-nuclear generation plants to FGCO. n. The transfer of deferred property taxes and accumulated deferred investment tax credits for non-nuclear generation plant to FGCO. o. The establishment of notes payable to associated companies to reflect the net liabilities transferred to FGCO. -----END PRIVACY-ENHANCED MESSAGE-----