EX-99.2 3 ex99_2.htm EXHIBIT 99.2 HIGHLIGHTS, FINANCIALS AND RECENT DEVELOPMENTS Exhibit 99.2 Highlights, Financials and Recent Developments
 

EXHIBIT 99.2
 
Consolidated Report to the Financial Community                            
First Quarter 2006    
(Released April 26, 2006) (Unaudited)                        
 
           
   HIGHLIGHTS    After-Tax EPS Variance Analysis
 1st Qtr.
  
      1Q 2005 Basic EPS - GAAP Basis
 $0.49
  
 § GAAP earnings were $0.67 per share for the       Unusual Items - 2005 
 (0.02)
  
   first quarter of 2006. This compares to GAAP   1Q 2005 Normalized Earnings - non-GAAP Basis 
 $0.47
  
   earnings of $0.49 per share and normalized       Distribution Deliveries 
 (0.02)
  
   non-GAAP* earnings of $0.47 per share in the       JCP&L Rate Increase 
 0.03
  
   first quarter of 2005.       Purchased Power 
 (0.03)
  
          Fossil Fuel Cost 
 (0.04)
  
         Ohio Regulatory Changes
 
  
               - Transition Cost Amortization 
 0.18
  
               - Distribution Deferred Costs 
 0.07
  
               - Rate Stabilization Charge Discount 
 (0.04)
  
          Postretirement Benefit Costs 
 0.01
  
          Financing Costs 
 0.03
  
          Other 
 0.01
  
      1Q 2006 Basic EPS - GAAP Basis  
 $0.67
  
           
 
1Q 2006 Results vs. 1Q 2005
 
 
 § Electric distribution deliveries decreased 3%, primarily due to unseasonably mild weather. Heating-degree-days were 15% lower than in the same period last year and 11% below normal. The reduced distribution deliveries negatively impacted earnings by $0.02 per share, while the JCP&L rate increase approved in May, 2005 improved earnings by $0.03 per share.
 
 § Total electric generation sales rose 2% as a 1.7 million MWh or 7% increase in retail sales more than offset a 1 million MWh or 16% decline in wholesale sales. The change in generation sales mix resulted from returning Ohio shopping customers.  Higher purchased power prices compared to the first quarter of last year, reduced earnings by $0.03 per share. In addition, higher fossil fuel costs, net of deferrals, lowered earnings by $0.04 per share.
 
 § Several elements of our Ohio Rate Plans became effective in the first quarter. Compared to the first quarter last year, a reduction in transition cost amortization increased earnings by $0.18 per share, primarily reflecting the end of generation transition cost recovery in Ohio in 2005. Other changes included the deferral of $0.07 per share of certain distribution costs related to reliability spending, partially offset by a $0.04 per share earnings reduction related to a Rate Stabilization Charge discount provided to shopping customers.
 
 § Postretirement benefit costs other than pensions decreased $6 million largely due to changes in health care benefits.
 
 § Total financing costs decreased by $11 million due to lower preferred stock dividends from last year’s redemption activity and higher capitalized interest, partially offset by higher interest on floating rate debt.
 
 § Other variances included increased investment income and higher earnings from non-core businesses.
 
 
 
2006 Earnings and Cash Generation Guidance*
 
 § Earnings guidance for 2006, excluding unusual items, remains at $3.45 to $3.65 per share.
 
 § Total cash generation (non-GAAP) guidance for 2006 remains at $460 million (after capital expenditures and common dividends).
 
 
* The 2006 GAAP to non-GAAP reconciliation statements are attached and available on the Investor Information section of FirstEnergy Corp.'s website at www.firstenergycorp.com/ir. The 2005 GAAP to non-GAAP reconciliation statements are available on FirstEnergy Corp.'s website.

 
















For additional information, please contact:


Kurt E. Turosky
Terrance G. Howson
Rey Y. Jimenez
Director, Investor Relations
Vice President, Investor Relations
Principal, Investor Relations
(330) 384-5500
(973) 401-8519
(330) 761-4239
 
 
Consolidated Report to the Financial Community - 1st Quarter 2006                                      2
 
                       
              
 

FirstEnergy Corp.
Consolidated Statements of Income
(Unaudited)
(In millions, except for per share amounts)

 
                    
        
Three Months Ended March 31,
        
2006
  
2005
  
Change
  
   
Revenues
               
 
(1
)
  
Electric sales 
    
$
2,511
  
$
2,437
  
$
74
  
 
(2
)
  
FE Facilities 
      
46
   
43
   
3
 
 
(3
)
  
MYR 
    
109
   
92
   
17
 
 
(4
)
  
Other 
      
179
   
178
   
1
 
 
(5
)
 Total Revenues    
 2,845
 
  
 2,750
 
  
 95
 
  
                               
      Expenses                       
 
(6
)
  
Fuel 
      
282
   
233
   
49
 
 
(7
)
  
Purchased power 
      
694
   
662
   
32
 
 
(8
)
  
Other operating expenses 
      
741
   
744
   
(3
)
 
(9
)
  
FE Facilities 
      
47
   
48
   
(1
)
 
(10
)
  
MYR 
      
105
   
92
   
13
 
 
(11
)
  
Provision for depreciation 
      
148
   
143
   
5
 
 
(12
)
  
Amortization of regulatory assets 
      
222
   
311
   
(89
)
 
(13
)
  
Deferral of new regulatory assets 
      
(59
)
  
(60
)
  
1
 
 
(14
)
  
General taxes 
      
193
   
185
   
8
 
 
(15
)
 Total Expenses    
 2,373
 
  
 2,358
 
  
 15
 
  
 
(16
)
 Operating Income    
 472
 
  
 392
 
  
 80
 
  
                               
      Other Income (Expense)                       
 
(17
)
  
Investment income
      
43
   
41
   
2
 
 
(18
)
  
Interest expense
      
(165
)
  
(164
)
  
(1
)
 
(19
)
  
Capitalized interest
    
7
   
-
   
7
 
 
(20
)
  
Subsidiaries' preferred stock dividends
      
(2
)
  
(7
)
  
5
 
 
(21
)
 Total Other Income (Expense)      
(117
)
  
(130
)
  
13
 
                               
 
(22
)
  
Income taxes 
      
134
   
121
   
13
 
 
(23
)
  
Income before discontinued operations
      
221
   
141
   
80
 
 
(24
)
  
Discontinued operations 
    
-
   
19
   
(19
)
 
(25
)
 Net Income    
$
221
  
$
160
  
$
61
  
                               
      Basic Earnings Per Common Share:                     
 
(26
)
  
Before discontinued operations 
    
$
0.67
  
$
0.43
  
$
0.24
  
 
(27
)
  
Discontinued operations 
      
-
   
0.06
   
(0.06
)
 
(28
)
 Basic Earnings Per Common Share    
$
0.67
  
$
0.49
  
$
0.18
  
      Weighted Average Number of                        
 
(29
)
 Basic Shares Outstanding      
329
   
328
   
1
 
                               
      Diluted Earnings Per Common Share:                       
 
(30
)
  
Before discontinued operations 
    
$
0.67
  
$
0.42
  
$
0.25
  
 
(31
)
  
Discontinued operations 
      
-
   
0.06
   
(0.06
)
 
(32
)
 Diluted Earnings Per Common Share    
$
0.67
  
$
0.48
  
$
0.19
  
      Weighted Average Number of                        
 
(33
)
 Diluted Shares Outstanding      
330
   
329
   
1
 
                               



Consolidated Report to the Financial Community — 1st Quarter 2006                                                             3

FirstEnergy Corp.
Consolidated Income Segments
(Unaudited)
(In millions)

 

                                
          
Three Months Ended March 31, 2006
              
Power
               
              
Supply
               
          
Regulated
  
Management
  
Facilities
     
Reconciling
   
          
Services
  
Services
  
Services
  
Other (a)
  
Adjustments (b)
  
Consolidated
   
Revenues
                           
 
(1
)
   Electric sales
      
$
935
  
$
1,576
  
$
-
  
$
-
  
$
-
  
$
2,511
  
 
(2
)
    FE Facilities 
        
-
   
-
   
46
   
-
   
-
   
46
 
 
(3
)
    MYR 
        
-
   
-
   
-
   
109
   
-
   
109
 
 
(4
)
    Other 
        
148
   
43
   
-
   
11
   
(23
)
  
179
 
 
(5
)
    Internal revenues 
        
35
   
-
   
-
   
-
   
(35
)
  
-
 
 
(6
)
Total Revenues
        
1,118
   
1,619
   
46
   
120
   
(58
)
  
2,845
 
                                                 
     
Expenses
                                          
 
(7
)
    Fuel
        
-
   
282
   
-
   
-
   
-
   
282
 
 
(8
)
   Purchased power
        
-
   
694
   
-
   
-
   
-
   
694
 
 
(9
)
    Other operating expenses 
        
299
   
450
   
-
   
4
   
(12
)
  
741
 
 
(10
)
    FE Fascilities 
        
-
   
-
   
47
   
-
   
-
   
47
 
 
(11
)
    MYR
        
-
   
-
   
-
   
105
   
-
   
105
 
 
(12
)
    Provision for depreciation 
        
96
   
46
   
-
   
1
   
5
   
148
 
 
(13
)
    Amortization of regulatory assets 
        
217
   
5
   
-
   
-
   
-
   
222
 
 
(14
)
    Deferral of new regulatory assets 
        
(55
)
  
(4
)
  
-
   
-
   
-
   
(59
)
 
(15
)
    General taxes 
        
140
   
45
   
-
   
1
   
7
   
193
 
 
(16
)
Total Expenses
        
697
   
1,518
   
47
   
111
   
-
   
2,373
 
                                                 
 
(17
)
Operating Income
        
421
   
101
   
(1
)
  
9
   
(58
)
  
472
 
                                                 
     
Other Income Expnese)
                                          
 
(18
)
   Investment income
        
27
   
15
   
-
   
-
   
1
   
43
 
 
(19
)
    Interest expense 
        
(94
)
  
(53
)
  
-
   
(1
)
  
(17
)
  
(165
)
 
(20
)
   Capitalized linterest
        
3
   
4
   
-
   
-
   
-
   
7
 
 
(21
)
    Subsidiaries' preferred stock dividends
        
(2
)
  
-
   
-
   
-
   
-
   
(2
)
 
(22
)
Total Other Income (Expense)
 
      
(66
)
  
(34
)
  
-
   
(1
)
  
(16
)
  
(117
)
                                                 
 
(23
)
    Income taxes
        
144
   
27
   
-
   
(7
)
  
(30
)
  
134
 
                                                 
 
(24
)
    Income before discontinued operations
        
211
   
40
   
(1
)
  
15
   
(44
)
  
221
 
 
(25
)
    Discontinued operaitons
        
-
   
-
   
-
   
-
   
-
   
-
 
 
(26
)
Net Income
      
$
211
  
$
40
  
$
(1
)
$
15
  
$
(44
)
$
221
  
                                                 
                                                 
 
(a)  Other consists of MYR (a construction service company) and telecommunications services.                        
  
 
(b)  Reconciling adjustments to segment operating results from internal management reporting to consolidated external financial reporting primarily 
       consists of interest expense related to holding company debt, corporate support services revenues and expenses, fuel marketing revenues which are 
       reflected as reductions to expenses for internal management reporting purposes and elimination of intersegment transactions.                         
  
 
 

Consolidated Report to the Financial Community - 1st Quarter 2006                                                                                                                  4

FirstEnergy Corp.
Consolidated Income Segments
(Unaudited)
(In millions)


        
Three Months Ended March 31, 2005
            
Power
                 
            
Supply
                 
        
Regulated
  
Management
  
Facilities
     
Reconciling
     
        
Services
  
Services
  
Services
  
Other (a)
  
Adjustments (b)
  
Consolidated
  
     Revenues                           
 
(1
)
  
Electric sales
  
$
1,082
  
$
1,355
  
$
-
  
$
-
  
$
-
  
$
2,437
  
 
(2
)
  
FE Facilities
    
-
   
-
   
43
   
-
   
-
   
43
 
 
(3
)
  
MYR
    
-
   
-
   
-
   
92
   
-
   
92
 
 
(4
)
  
Other
    
134
   
22
   
-
   
20
   
2
   
178
 
 
(5
)
  
Internal revenues
    
78
   
-
   
-
   
-
   
(78
)
  
-
 
 
(6
)
  
Total Revenues
    
1,294
   
1,377
   
43
   
112
   
(76
)
  
2,750
 
                                               
          Expenses                                       
 
(7
)
  
Fuel
    
-
   
233
   
-
   
-
   
-
   
233
 
 
(8
)
  
Purchased power
    
-
   
662
   
-
   
-
   
-
   
662
 
 
(9
)
  
Other operating expenses
    
324
   
503
   
-
   
2
   
(85
)
  
744
 
 
(10
)
  
FE Facilities
    
-
   
-
   
48
   
-
   
-
   
48
 
 
(11
)
  
MYR
    
-
   
-
   
-
   
92
   
-
   
92
 
 
(12
)
  
Provision for depreciation
    
126
   
10
   
-
   
1
   
6
   
143
 
 
(13
)
  
Amortization of regulatory assets
    
308
   
3
   
-
   
-
   
-
   
311
 
 
(14
)
  
Deferral of new regulatory assets
    
(60
)
  
-
   
-
   
-
   
-
   
(60
)
 
(15
)
  
General taxes
    
146
   
32
   
-
   
1
   
6
   
185
 
 
(16
)
  Total Expenses    
844
   
1,443
   
48
   
96
   
(73
)
  
2,358
 
                                               
 
(17
)
  Operating Income    
450
   
(66
)
  
(5
)
  
16
   
(3
)
  
392
 
                                               
       Other Income (Expense)                                         
 
(18
)
  
Investment income
    
41
   
-
   
-
   
-
   
-
   
41
 
 
(19
)
  
Interest expense
    
(94
)
  
(7
)
  
-
   
(1
)
  
(62
)
  
(164
)
 
(20
)
  
Capitalized interest
    
3
   
(3
)
  
-
   
-
   
-
   
-
 
 
(21
)
  
Subsidiaries' preferred stock dividends
    
(7
)
  
-
   
-
   
-
   
-
   
(7
)
 
(22
)
  Total Other Income (Expense)    
(57
)
  
(10
)
  
-
   
(1
)
  
(62
)
  
(130
)
                                               
 
(23
)
  
Income taxes
    
157
   
(30
)
  
(3
)
  
10
   
(13
)
  
121
 
                                               
 
(24
)
  
Income before discontinued operations
    
236
   
(46
)
  
(2
)
  
5
   
(52
)
  
141
 
 
(25
)
  
Discontinued operations
    
-
   
-
   
13
   
6
   
-
   
19
 
 
(26
)     Net Income
  
$
236
  
$
(46
)
$
11
  
$
11
  
$
(52
)
$
160
  
                                               
                                               
      (a)       Other consists of MYR (a construction service company) and telecommunications services.                    
   (b)
      Reconciling adjustments to segment operating results from internal management reporting to consolidated external financial reporting primarily
      consists of interest expense related to holding company debt, corporate support services revenues and expenses, fuel marketing  revenues  
      which are reflected as reductions to expenses for internal management reporting purposes and elimination of intersegment transactions.                    


Consolidated Report to the Financial Community - 1st Quarter 2006                                                                                               5
FirstEnergy Corp.
Consolidated Income Segments
(Unaudited)
(In millions)


       
 Three Months Ended March 31, 2006 vs. Three Months Ended March 31, 2005          
  
            
Power
                 
            
Supply
                 
       
 Regulated
  
Management
  
Facilities
     
Reconciling
     
       
 Services
  
Services
  
Services
  
Other (a)
  
Adjustments (b)
  
Consolidated
  
   
Revenues 
                          
 
(1
)
  
Electric sales
  
$
 (147
)
$
221
  
$
-
  
$
-
  
$
-
  
$
74
  
 
(2
)
  
FE Facilities
    
-
   
-
   
3
   
-
   
-
   
3
 
 
(3
)
 
MYR
    
-
   
-
   
-
   
17
   
-
   
17
 
 
(4
)
  
Other
    
14
   
21
   
-
   
(9
)
  
(25
)
  
1
 
 
(5
)
  
Internal revenues
    
(43
)
  
-
   
-
   
-
   
43
   
-
 
 
(6
)
  Total Revenues  
(176
)
  
242
   
3
   
8
   
18
   
95
 
                                               
       Expenses                                      
 
(7
)
  
Fuel
    
-
   
49
   
-
   
-
   
-
   
49
 
 
(8
)
  
Purchased power
    
-
   
32
   
-
   
-
   
-
   
32
 
 
(9
)
  
Other operating expenses
    
(25
)
  
(53
)
  
-
   
2
   
73
   
(3
)
 
(10
)
  
FE Facilities
    
-
   
-
   
(1
)
  
-
   
-
   
(1
)
 
(11
)
  
MYR
    
-
   
-
   
-
   
13
   
-
   
13
 
 
(12
)
  
Provision for depreciation
    
(30
)
  
36
   
-
   
-
   
(1
)
  
5
 
 
(13
)
  
Amortization of regulatory assets
    
(91
)
  
2
   
-
   
-
   
-
   
(89
)
 
(14
)
  
Deferral of new regulatory assets
    
5
   
(4
)
  
-
   
-
   
-
   
1
 
 
(15
)
  
General taxes
    
(6
)
  
13
   
-
   
-
   
1
   
8
 
 
(16
)
  Total Expenses    
(147
)
  
75
   
(1
)
  
15
   
73
   
15
 
                                               
 
(17
)
Operating Income
    
(29
)
  
167
   
4
   
(7
)
  
(55
)
  
80
 
                                               
      Other Income (Expense)                                    
 
(18
)
  
Investment income
    
(14
)
  
15
   
-
   
-
   
1
   
2
 
 
(19
)
  
Interest expense
    
-
   
(46
)
  
-
   
-
   
45
   
(1
)
 
(20
)
  
Capitalized interest
    
-
   
7
   
-
   
-
   
-
   
7
 
 
(21
)
  
Subsidiaries' preferred stock dividends
    
5
   
-
   
-
   
-
   
-
   
5
 
 
(22
)
  Total Other Income (Expense)
 
  
(9
)
  
(24
)
  
-
   
-
   
46
   
13
 
                                               
 
(23
)
  
Income taxes
    
(13
)
  
57
   
3
   
(17
)
  
(17
)
  
13
 
                                               
 
(24
)
  
Income before discontinued operations
    
(25
)
  
86
   
1
   
10
   
8
   
80
 
 
(25
)
  
Discontinued operations
    
-
   
-
   
(13
)
  
(6
)
  
-
   
(19
)
 
(26
)
 Net Income
  
$
(25
)
$
86
  
$
(12
)
$
4
  
$
8
  
$
61
  
                                               
                                               
  (a )
Other consists of MYR (a construction service company) and telecommunications services.             
  (b )
Reconciling adjustments to segment operating results from internal management reporting to consolidated external financial reporting primarily  
consists of interest expense related to holding company debt, corporate support services revenues and expenses, fuel marketing revenues which are reflected as reductions to expenses for internal management reporting purposes and elimination of intersegment transactions. 
                                               

Consolidated Report to the Financial Community - 1st Quarter 2006                                                                                    6
 
FirstEnergy Corp.
Financial Statements
(Unaudited)
(In millions)


Condensed Consolidated Balance Sheet
          
           
   
As of
March 31, 2006
  
As of
Dec 31, 2005
  
Assets
          
Current Assets:
          
Cash and cash equivalents
  
$
62
  
$
64
  
Receivables
    
1,226
   
1,498
 
Other
    
813
   
755
 
Total Current Assets
    
2,101
   
2,317
 
               
Property, Plant, and Equipment
    
14,285
   
13,998
 
Investments
    
3,466
   
3,407
 
Deferred charges
    
11,945
    
12,119
 
Total Assets
  
$
31,797
  
$
31,841
  
               
Liabilities and Capitalization
              
Current Liabilities:
              
Currently payable long-term debt
  
$
2,116
  
$
2,043
  
Short-term borrowings
    
931
   
731
 
Accounts payable
    
612
   
727
 
Other
    
1,792
   
1,952
 
Total Current Liabilities
    
5,451
   
5,453
 
               
Capitalization:
              
Common stockholders' equity
    
9,320
    
9,188
 
Preferred stock
    
154
   
184
 
Long-term debt and other long-term obligations
    
8,003
   
8,155
 
Total Capitalization
    
17,477
   
17,527
 
Noncurrent Liabilities
    
8,869
   
8,861
 
Total Liabilities and Capitalization
  
$
31,797
  
$
31,841
  
               


Adjusted Capitalization (Including Off-Balance Sheet Items) - Rating Agency View
   
As of March 31,
  
   
2006
  
% Total
  
2005
  
% Total
  
Total common equity
  
$
9,320
    
43
%
$
8,621
    
41
%
Preferred stock
   
154
   
1
%
  
239
   
1
%
Long-term debt *
    
9,859
   
46
%
  
10,416
   
49
%
Short-term debt
    
931
   
4
%
  
310
   
2
%
Off-balance sheet debt equivalents:
                          
Sale-leaseback net debt equivalents
    
1,297
   
6
%
  
1,353
   
6
%
Accounts receivable factoring **
    
-
   
0
%
  
142
   
1
%
Total
 
$
21,561
    
100
%
$
21,081
    
100
%
                           

 
GENERAL INFORMATION
      
   
Three Months Ended March 31,
  
   
2006
  
2005
  
Long-term debt and preferred stock redemptions
  
$
94
  
$
334
  
New long-term debt issues
  
$
-
  
$
-
  
Short-term debt increase**
  
$
200
  
$
140
  
Capital expenditures
  
$
447
  
$
229
  
               
*   Includes amounts due to be paid within one year and excludes JCP&L securitization debt of $260 million and $264 million in 2006 and 2005 respectively.
** Off-balance sheet accounts receivable factoring agreement ($142 million as of March 31, 2005) renewed as an on-balance sheet short-term
     financing agreement in the second quarter of 2005 ($94 million as of March 31, 2006).
 
 
Consolidated Report to the Financial Community - 1st Quarter 2006                                                                                                                                                                                                       7

FirstEnergy Corp.
Financial Statements
(Unaudited)
(In millions)
 

Condensed Consolidated Statements of Cash Flows  
  
   
 Three Months Ended March 31,
  
   
 2006
  
2005
  
Cash flows from operating activities:
           
Net income
  
$
221
  
$
160
  
Adjustments to reconcile net income to net cash from operating activities:
              
Depreciation, amortization, and deferral of regulatory assets
    
350
   
394
 
RCP reliability deferrals
    
(39
)
  
-
 
Deferred purchased power and other costs
    
(125
)
  
(118
)
Deferred income taxes and investment tax credits
    
6
   
(14
)
Income from discontinued operations
    
-
   
(19
)
Cash collateral
    
(74
)
  
2 
  
Change in working capital and other
    
97
   
193
 
Cash flows provided from operating activities
  
$
436
  
$
598
  
               
Cash flows used for financing activities
    
(50
)
  
(359
)
               
Cash flows used for investing activities
    
(388
)
  
(211
)
Net increase (decrease) in cash and cash equivalents
  
$
(2
)
$
28
  
               
 

                    
      
 Three Months Ended March 31,
  
        
2006
  
2005
  
Change
  
 Ohio Regulatory Assets                 
                    
Beginning balance 
        
$
1,924
  
$
2,450
        
                           
 Deferral of shopping incentives
          
3
   
46
 
$
(43
)
 Interest on shopping incentives
          
10
   
10
   
-
 
 Deferral of MISO costs and interest
          
4
   
-
   
4
 
 Deferral of RCP distribution reliability costs
          
39
   
-
   
39
 
 Deferral of RCP fuel costs
          
21
   
-
   
21
 
 Deferral of other regulatory assets
          
3
   
4
   
(1
)
Current period deferrals 
        
$
80
  
$
60
  
$
20
  
                           
 Ohio transition costs amortization
        
$
(102
)
$
(203
)
$
101
  
 MISO costs amortization
          
(5
)
  
-
   
(5
)
 Other
          
(6
)
  
(11
)
  
5
 
Current period amortization 
        
$
(113
)
$
(214
)
$
101
  
                           
Ending Balance  
        
$
1,891
  
$
2,296
        
                           
Deferred Energy Costs - New Jersey 
                          
 Beginning balance
        
$
541
  
$
446
        
 Deferral (recovery) of energy costs
          
17
   
27
 
$
(10
)
Ending Balance 
        
$
558
  
$
473
        
                           
 

UNUSUAL ITEMS
  
Three Months Ended March 31,
  
   
2006
  
2005
  
Change
  
               
Gain (Loss) on Non-Core Asset Sales of:
             
FE Facilities and MYR subs and FES Gas Operations (a)(b)
  
$
-
  
$
8
  
$
(8
)
All Other, net (c)
    
-
   
9
   
(9
)
Total Gain (Loss) on Non-Core Asset Sales
    
-
   
17
   
(17
)
EPA settlement (c)
    
-
   
(19
)
  
19
 
NRC fine (c) (d)
    
-
   
(3
)
  
3
 
Total-Pretax Items
    
-
   
(5
)
  
5
 
                     
EPS Effect
  
$
-
  
$
0.02
  
$
(0.02
)
                     
(a) Included in "Discontinued operations"
    
(c) Included in "Other operating expenses"
  
(b) Before income tax benefit of $12.2 million
    
(d) Non-tax deductible
  
                     

Consolidated Report to the Financial Community - 1st Quarter 2006                                                                                                                                                                                                         8
 
FirstEnergy Corp.
Statistical Summary
(Unaudited)



                      
 ELECTRIC SALES STATISTICS       
Three Months Ended March 31,
  
 (kWh in millions)       
2006
  
2005
  
Change
  
                      
 Electric Generation Sales                   
Retail- Regulated 
            
24,006
   
21,646
   
10.9
%
Retail - Competitive 
            
2,719
   
3,413
   
-20.3
%
    Total Retail
            
26,725
   
25,059
   
6.6
%
Wholesale 
            
5,422
   
6,432
   
-15.7
%
Total Electric Generation Sales 
            
32,147
   
31,491
   
2.1
%
                             
Electric Distribution Deliveries 
                            
Ohio          - Residential
      
 
    
4,443
   
4,523
   
-1.8
%
                 - Commercial
            
3,644
   
3,761
   
-3.1
%
                 - Industrial
            
5,659
   
5,815
   
-2.7
%
                 - Other
            
91
   
98
   
-7.1
%
                    Total Ohio
            
13,837
   
14,197
   
-2.5
%
                             
Pennsylvania     - Residential
      
 
    
3,092
   
3,174
   
-2.6
%
                         - Commercial
            
2,650
   
2,694
   
-1.6
%
                         - Industrial
            
2,563
   
2,620
   
-2.2
%
                                         - Other
            
20
   
21
   
-4.8
%
                                Total Pennsylvania
            
8,325
   
8,509
   
-2.2
%
                             
New Jersey       - Residential
      
 
    
2,254
   
2,354
   
-4.2
%
             - Commercial
            
2,204
   
2,229
   
-1.1
%
                 - Industrial
            
691
   
743
   
-7.0
%
                 - Other
            
22
   
22
   
0.0
%
                Total New Jersey
            
5,171
   
5,348
   
-3.3
%
                             
Total Residential 
            
9,789
   
10,051
   
-2.6
%
Total Commercial 
            
8,498
   
8,684
   
-2.1
%
Total Industrial 
            
8,913
   
9,178
   
-2.9
%
Total Other 
            
133
   
141
   
-5.7
%
                             
Total Distribution Deliveries 
            
27,333
   
28,054
   
-2.6
%
                             
Electric Sales Shopped 
                            
Ohio          - Residential
      
 
    
596
   
1,884
   
-68.4
%
             - Commercial
            
957
   
1,776
   
-46.1
%
                 - Industrial
            
734
   
1,163
   
-36.9
%
                Total Ohio
            
2,287
   
4,823
   
-52.6
%
                             
Pennsylvania          - Residential
      
 
    
1
   
6
   
-83.3
%
                                 - Commercial
            
1
   
25
   
-96.0
%
                                 - Industrial
            
131
   
447
   
-70.7
%
                                Total Pennsylvania
            
133
   
478
   
-72.2
%
                             
New Jersey            - Residential
      
 
    
-
   
1
   
-100.0
%
                                 - Commercial
            
403
   
542
   
-25.6
%
                                 - Industrial
            
504
   
564
   
-10.6
%
                                Total New Jersey
            
907
   
1,107
   
-18.1
%
                             
Total Electric Sales Shopped 
            
3,327
   
6,408
   
-48.1
%
                             


                
 OPERATING STATISTICS 
As of March 31,
  
 For 12 Months Ended 
2006
      
2005
  
                
System Load Factor 
    
61.2
%
        
66.8
%
Capacity Factors: 
                    
 Fossil
   
64.5
%
        
59.1
%
 Nuclear
    
90.7
%
        
88.5
%
Generation Output: 
                    
 Fossil
   
63
%
        
61
%
 Nuclear
    
37
%
        
39
%
                     
WEATHER 
    
2006
    
Normal
    
2005
  
Composite Heating-Degree-Days 
                    
 1st Quarter
    
2,524
   
2,818
   
2,979
 
Composite Cooling-Degree-Days 
                    
 1st Quarter
    
-
   
1
   
-
 
                     

 
Consolidated Report to the Financial Community - 1st Quarter 2006      9

FirstEnergy Corp.
2006 Cash Flow
(Unaudited)
 
Reconciliation of First Quarter 2006 Cash From Operating Activities (GAAP) to
Free Cash Flow (Non-GAAP) and Cash Generation (Non-GAAP)
 (In millions)
 
 
 
  
Net Cash from Operating Activities:
 
 
  
 
 
 
  
Net Income
$
221
  
Adjustments:
 
 
  
Depreciation 
 
148
 
Amortization of regulatory assets 
 
222
 
Deferral of new regulatory assets 
 
(20
 )
RCP reliability deferrals 
 
(39
 ) 
Deferred purchased power and other costs 
 
(125
 ) 
Deferred income taxes and ITC, net 
 
6
 
Other, including changes in working capital 
 
23
 
Net Cash from Operating Activities (GAAP)
$
436
  
 
 
 
  
Other Items:
 
 
  
Capital expenditures
 
(376
 ) 
Nuclear fuel fabrication
 
(71
 ) 
Contributions to nuclear decommissioning trusts
 
(3
 )
Common stock dividends
 
(148
 )
Other, net
 
(99
 )
Free Cash Flow (Non-GAAP)
$
(261
 ) 
 
 
 
  
Non-core asset sales and other
 
57 
  
Cash generation (Non-GAAP)
$
(204
 )
 
 
 
  
The GAAP to Non-GAAP reconciliation statements are available on the Investor Information section of FirstEnergy Corp.'s website at www.firstenergycorp.com/ir.
 

 
Consolidated Report to the Financial Community - 1st Quarter 2006                                                                                                                                                                                                      10

FirstEnergy Corp.
2006 Cash Flow Guidance
(Unaudited)
 
 Reconciliation of 2006 Estimated Cash from Operating Activities (GAAP) to
Estimated Free Cash Flow (Non-GAAP) and Estimated Cash Generation (Non-GAAP)
(In millions)
 
 
 
Net Cash from Operating Activities:
 
 
GAAP Earnings Guidance
 
$1,135-1,200
Adjustments:
 
 
Depreciation 
 
635
Amortization of regulatory assets 
 
860
Deferral of new regulatory assets 
 
(90)
RCP reliability deferrals 
 
(150)
Deferred purchased power costs 
 
(360)
Deferred income taxes and ITC, net 
 
(20)
Collateral call refunds 
 
70
Other, including changes in working capital 
 
4
 Net Cash from Operating Activities (GAAP)
$2,117
 
 
 
Other Items:
 
 
 
 
 
Capital expenditures
   (1,116) 
Nuclear fuel fabrication
 
(160)
Common stock dividends
 
(593)
Other, net
 
(45)
 Free Cash Flow (Non-GAAP)
$
203
 
 
 
Non-core asset sales
 
80
JCP&L securitization 1
 
177
 Cash Generation (Non-GAAP)
$
460
 
 
 
1 Potential securitization range of $177m - $277m.
 
 
 
 
 
The GAAP to Non-GAAP reconciliation statements are available on the Investor Information
 
 
section of FirstEnergy Corp.'s website at www.firstenergycorp.com/ir.
 
 
 
 
Consolidated Report to the Financial Community —— 1st Quarter 2006                                                                                                                                                                                                11
 
                                                       

RECENT DEVELOPMENTS

 
Met-Ed and Penelec Transition Rate Plan Filing
On April 10, Metropolitan Edison Company (Met-Ed) and Pennsylvania Electric Company (Penelec) filed a comprehensive transition rate plan, including requests for general rate increases, with the Pennsylvania Public Utility Commission. The plan is the first request to increase base rates since 1986 for Penelec and 1992 for Met-Ed. The filing addresses transmission, distribution and power supply issues while ensuring that customers continue to pay below-market prices for generation through 2010. Under the preferred approach, Met-Ed requested an overall increase of $216 million or 19%, while Penelec requested an increase of $157 million, or 15%. If approved, Met-Ed and Penelec customer rates for electricity in 2007 would remain comparable to the average rates currently charged by electric utilities across Pennsylvania.
 
Record Generation Output
FirstEnergy set a new first quarter generation output record of 20 million megawatt-hours, a 7.0% increase over the prior record established in the first quarter of 2005. The generation record was attributable to an increase in fossil generation, which established its best quarterly output ever.
 
Nuclear Plant Updates
On April 19, Beaver Valley Unit 1 returned to service 11 days ahead of schedule from a refueling and construction outage. The Unit became the first plant in the world to cut a temporary opening in its containment building and replace its steam generators and reactor head all within a 65-day timeframe. Other major work activities included replacing the turbine rotor, rewinding the main generator, and replacing about 40 percent of the fuel assemblies. Beaver Valley Unit 1 had operated safely and reliably for a unit-record of 456 consecutive days when it was taken off line for the outage and had posted an availability factor of 100 percent since its last refueling in the fall of 2004.

The Davis-Besse Nuclear Power Station is currently in the process of restarting, following the completion of its scheduled refueling outage. Major work activities during the outage included replacing several components in the plant’s turbine which is expected to increase power output by 11 megawatts, rebuilding two of the four reactor coolant pumps, and replacing approximately 40 percent of the fuel assemblies.
 
Renewable Wind Power Portfolio
During the quarter, FirstEnergy entered into several long-term agreements to expand its renewable wind power portfolio. On March 15, FirstEnergy entered into 20-year agreements to purchase the combined 250-megawatt output of two new wind power generation projects being developed in West Virginia, targeted to be operational by December 2007. On March 27, FirstEnergy entered into a 23-year agreement to purchase 80-megawatts of wind power from a project being developed in Pennsylvania, targeted to be operational by early 2007. When combined with existing contracts, FirstEnergy anticipates offering more than 360-megawatts of renewable wind power, more than any other company in the Mid-Atlantic region.

Ohio Competitive Bid Process
On February 23, the Competitive Bid Process (CBP) auction manager, National Economic Research Associates, notified the Public Utilities Commission of Ohio (PUCO) that the CBP designed to potentially provide firm generation service for our Ohio utilities’ 2007 and 2008 actual load requirements could not proceed due to lack of interest, as there were no bidder applications submitted. Additionally, on March 16, the PUCO denied applications for rehearing filed by various third parties regarding the Commission’s rules for the CBP.

Penn Power RFP Proposal
On April 20, the Pennsylvania Public Utility Commission (PPUC) approved Pennsylvania Power Company's POLR supply plan with modifications. The approved plan encourages wholesale electric suppliers to participate in a bidding process to provide customers with generation service from Jan. 1, 2007, through May 31, 2008. Penn Power’s POLR rates are currently capped at prices determined through restructuring agreements which are set to expire year-end 2006. As noted in the PPUC’s press release, the Commission is obligated to approve a POLR plan with rates that reflect prevailing market prices and that allow Penn Power to recover all reasonable costs for service.
 
Consolidated Report to the Financial Community - 1st Quarter 2006                                                                12



Forward-looking Statements. This Consolidated Report to the Financial Community includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements typically contain, but are not limited to, the terms "anticipate," "potential," "expect," "believe," "estimate" and similar words. Actual results may differ materially due to the speed and nature of increased competition and deregulation in the electric utility industry, economic or weather conditions affecting future sales and margins, changes in markets for energy services, changing energy and commodity market prices, replacement power costs being higher than anticipated or inadequately hedged, the continued ability of our regulated utilities to collect transition and other charges or to recover increased transmission costs, maintenance costs being higher than anticipated, legislative and regulatory changes (including revised environmental requirements), and the legal and regulatory changes resulting from the implementation of the Energy Policy Act of 2005(including, but not limited to, the repeal of the Public Utility Holding Company Act of 1935), the uncertainty of the timing and amounts of the capital expenditures (including that such amounts could be higher than anticipated) or levels of emission reductions related to the Consent Decree resolving the New Source Review litigation, adverse regulatory or legal decisions and outcomes (including, but not limited to, the revocation of necessary licenses or operating permits, fines or other enforcement actions and remedies) of governmental investigations and oversight, including by the Securities and Exchange Commission, the United States Attorney's Office, the Nuclear Regulatory Commission and the various state public utility commissions as disclosed in our Securities and Exchange Commission filings, generally, and with respect to the Davis-Besse Nuclear Power Station outage and heightened scrutiny at the Perry Nuclear Power Plant in particular, the timing and outcome of various proceedings before the Pennsylvania Public Utility Commission, including the transition rate filings for MetEd and Penelec, the continuing availability and operation of generating units, the ability of our generating units to continue to operate at, or near full capacity, our inability to accomplish or realize anticipated benefits from strategic goals (including employee workforce initiatives), the anticipated benefits from our voluntary pension plan contributions, our ability to improve electric commodity margins and to experience growth in the distribution business, our ability to access the public securities and other capital markets and the cost of such capital, the outcome, cost and other effects of present and potential legal and administrative proceedings and claims related to the August 14, 2003 regional power outage, circumstances which may lead management to seek, or the Board of Directors to grant, in each case in its sole discretion, authority for the implementation of a share repurchase program in the future, the risks and other factors discussed from time to time in our Securities and Exchange Commission filings, and other similar factors. Dividends declared from time to time during any annual period may in aggregate vary from the indicated amounts due to circumstances considered by the Board at the time of the actual declarations. Also, a security rating should not be viewed as a recommendation to buy, sell or hold securities and it may be subject to revision or withdrawal at any time. We expressly disclaim any current intention to update any forward-looking statements contained herein as a result of new information, future events, or otherwise.

 
 
 
 
 
 
 
Consolidated Report to the Financial Community - 1st Quarter 2006                                                                13