0001031296-14-000035.txt : 20140804 0001031296-14-000035.hdr.sgml : 20140804 20140804172137 ACCESSION NUMBER: 0001031296-14-000035 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20140804 ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20140804 DATE AS OF CHANGE: 20140804 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-21011 FILM NUMBER: 141013912 BUSINESS ADDRESS: STREET 1: 76 SOUTH MAIN ST CITY: AKRON STATE: OH ZIP: 44308-1890 BUSINESS PHONE: 330-761-7837 MAIL ADDRESS: STREET 1: 76 SOUTH MAIN ST CITY: AKRON STATE: OH ZIP: 44308-1890 8-K 1 a8-klettertotheinvestmentc.htm 8-K 8-K Letter to the Investment Community 8/4/14


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 4, 2014




Commission
 
Registrant; State of Incorporation;
 
I.R.S. Employer
File Number
 
Address; and Telephone Number
 
Identification No.
 
 
 
 
 
333-21011
 
FIRSTENERGY CORP.
 
34-1843785
 
 
(An Ohio Corporation)
 
 
 
 
76 South Main Street
 
 
 
 
Akron, OH  44308
 
 
 
 
Telephone (800)736-3402
 
 
 
 
 
 
 




















Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Item 7.01 Regulation FD Disclosure

On August 4, 2014, FirstEnergy Corp. (FirstEnergy) issued three public documents regarding filings by its Ohio and Pennsylvania electric utility operating companies for approval of an Electric Security Plan in Ohio and distribution rate cases in Pennsylvania, which are attached as Exhibits 99.1, 99.2 and 99.3 hereto and incorporated by reference herein. The information in the Letter to the Investment Community, the press releases and the information contained herein, including Exhibits 99.1, 99.2 and 99.3, shall not be deemed filed for purposes of the Securities Exchange Act of 1934, nor shall such information and Exhibits 99.1, 99.2 and 99.3 be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits

(d)
Exhibits

Exhibit No.

Description
99.1

Press Release issued by FirstEnergy Corp., dated August 4, 2014 (Pennsylvania)
99.2

Press Release issued by FirstEnergy Corp., dated August 4, 2014 (Ohio)
99.3

Letter to the Investment Community, dated August 4, 2014






Forward-Looking Statements: This Form 8-K includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding management's intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” "will," "intend," “believe,” “estimate” and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, which may include the following: the speed and nature of increased competition in the electric utility industry, in general, and the retail sales market in particular; the ability to experience growth in the Regulated Distribution and Regulated Transmission segments and to successfully implement our sales strategy in the Competitive Energy Services segment; the accomplishment of our regulatory and operational goals in connection with our transmission plan and planned distribution rate cases and the effectiveness of our repositioning strategy; the impact of the regulatory process on the pending matters before the Federal Energy Regulatory Commission and in the various states in which we do business including, but not limited to, matters related to rates and pending rate cases and the Electric Security Plan IV; the uncertainties of various cost recovery and cost allocation issues resulting from American Transmission Systems, Incorporated's realignment into PJM Interconnection, L.L.C.; economic or weather conditions affecting future sales and margins such as the polar vortex or other significant weather events, and all associated regulatory events or actions; regulatory outcomes associated with storm restoration, including but not limited to, Hurricane Sandy, Hurricane Irene and the October snowstorm of 2011; changing energy, capacity and commodity market prices including, but not limited to, coal, natural gas and oil, and their availability and impact on margins; the continued ability of our regulated utilities to recover their costs; costs being higher than anticipated and the success of our policies to control costs and to mitigate low energy, capacity and market prices; other legislative and regulatory changes, and revised environmental requirements, including, but not limited to, possible greenhouse gas emission, water discharge, and coal combustion residual regulations, the potential impacts of Cross State Air Pollution Rule, and the effects of the United States Environmental Protection Agency's Mercury and Air Toxics Standards rules including our estimated costs of compliance; the uncertainty of the timing and amounts of the capital expenditures that may arise in connection with any litigation, including New Source Review litigation or potential regulatory initiatives or rulemakings (including that such expenditures could result in our decision to deactivate or idle certain generating units); the uncertainties associated with the deactivation of certain older regulated and competitive fossil units including the impact on vendor commitments, and the timing thereof as they relate to, among other things, Reliability Must Run arrangements and the reliability of the transmission grid; adverse regulatory or legal decisions and outcomes with respect to our nuclear operations (including, but not limited to the revocation or non-renewal of necessary licenses, approvals or operating permits by the Nuclear Regulatory Commission or as a result of the incident at Japan's Fukushima Daiichi Nuclear Plant); issues arising from the indications of cracking in the shield building at Davis-Besse; the impact of future changes to the operational status or availability of our generating units; the risks and uncertainties associated with litigation, arbitration, mediation and like proceedings, including, but not limited to, any such proceedings related to vendor commitments; replacement power costs being higher than anticipated or not fully hedged; the ability to comply with applicable state and federal reliability standards and energy efficiency and peak demand reduction mandates; changes in customers' demand for power, including but not limited to, changes resulting from the implementation of state and federal energy efficiency and peak demand reduction mandates; the ability to accomplish or realize anticipated benefits from strategic and financial goals including, but not limited to, the ability to reduce costs and to successfully complete our announced financial plans designed to improve our credit metrics and strengthen our balance sheet, including but not limited to, our announced dividend reduction and our proposed capital raising initiatives; our ability to improve electric commodity margins and the impact of, among other factors, the increased cost of fuel and fuel transportation on such margins; changing market conditions that could affect the measurement of certain liabilities and the value of assets held in our Nuclear Decommissioning Trusts, pension trusts and other trust funds, and cause us and our subsidiaries to make additional contributions sooner, or in amounts that are larger than currently anticipated; the impact of changes to material accounting policies; the ability to access the public securities and other capital and credit markets in accordance with our announced financial plans, the cost of such capital and overall condition of the capital and credit markets affecting us and our subsidiaries; actions that may be taken by credit rating agencies that could negatively affect us and our subsidiaries' access to financing, increase the costs thereof, and increase requirements to post additional collateral to support outstanding commodity positions, letters of credit and other financial guarantees; changes in national and regional economic conditions affecting us, our subsidiaries and our major industrial and commercial customers, and other counterparties including fuel suppliers, with which we do business; the impact of any changes in tax laws or regulations or adverse tax audit results or rulings; issues concerning the stability of domestic and foreign financial institutions and counterparties with which we do business; the risks and other factors discussed from time to time in our United States Securities and Exchange Commission filings, and other similar factors. Dividends declared from time to time on FirstEnergy Corp.'s common stock during any period may in the aggregate vary from prior periods due to circumstances considered by FirstEnergy Corp.'s Board of Directors at the time of the actual declarations. A security rating is not a recommendation to buy or hold securities and is subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating. The foregoing review of factors should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor assess the impact of any such factor on FirstEnergy's business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. FirstEnergy expressly disclaims any current intention to update, except as required by law, any forward-looking statements contained herein as a result of new information, future events or otherwise.






SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



August 4, 2014

 
 FIRSTENERGY CORP.
 
 Registrant
 
 
 
 
 By:
/s/ K. Jon Taylor
 
K. Jon Taylor
Vice President, Controller and
Chief Accounting Officer






Exhibit Index

Exhibit No.

Description
99.1

Press Release issued by FirstEnergy Corp., dated August 4, 2014 (Pennsylvania)
99.2

Press Release issued by FirstEnergy Corp., dated August 4, 2014 (Ohio)
99.3

Letter to the Investment Community, dated August 4, 2014



EX-99.1 2 exhibit991-pressreleasexpe.htm EXHIBIT 99.1 PRESS RELEASE - PENNSYLVANIA Exhibit 99.1 - Press Release - Pennsylvania


FirstEnergy Corp.                    For Release: August 4, 2014
2800 Pottsville Pike
Reading, Pennsylvania 19612        
www.firstenergycorp.com

News Media Contact:                Investor Contact:
Scott Surgeoner                    Irene Prezelj
(610) 921-6785                    (330) 384-3859


FirstEnergy’s Pennsylvania Utilities File Rate Plans to Help Ensure Continued Reliability Enhancements

Reading, Pa. - To help ensure continued reliability enhancements for its two million Pennsylvania customers, FirstEnergy Corp. (NYSE: FE) subsidiaries Pennsylvania Power Company (Penn Power), West Penn Power Company (West Penn Power), Metropolitan Edison Company (Met-Ed) and Pennsylvania Electric Company (Penelec) today filed comprehensive distribution rate plans with the Pennsylvania Public Utility Commission (PPUC).

For Penn Power, this is the first base rate case filed in 26 years; for West Penn Power, the first in 20 years; and for Met-Ed and Penelec, the first in eight years.

FirstEnergy’s Pennsylvania utilities currently have, on average, the lowest rates in the state among investor-owned electric distribution companies. If approved, the new rates would still, on average, be lower than the average rates charged today by other Pennsylvania utilities. Across FirstEnergy’s Pennsylvania operating companies, the proposed rate plan would result in an average bill increase of $16.59 per month for residential customers.

Since 2006, FirstEnergy’s Pennsylvania utilities have invested more than $1.8 billion for service-related enhancement projects for customers that have not been recovered through the rate process.


“Over the years, with strict cost management and careful planning, we have enhanced service reliability for our customers while holding the line on electric rates,” said Dave Karafa, president of Pennsylvania Operations for FirstEnergy. “Our proposed rate plans are needed in order to make critical customer enhancements, including infrastructure enhancements, by using technology to help reduce the number of outages and the duration and number of affected customers when an outage does occur. The plans are designed to bring our revenues in line with our costs, while minimizing the impact to our customers.”





The rate requests for each utility will include assistance to low-income customers. Here are the specifics for each rate plan:

Penn Power has requested an increase of $28.5 million or approximately 8.7 percent over current rates. If approved, the total bill for an average residential customer using 1,000 kilowatt-hours (KWH) per month would increase 11.8 percent, or $12.39, for a new monthly total bill of $117.15. The bill for a commercial customer using 40 KW for 250 hours would increase 2.6 percent or $22.72 for a total bill of $898.94. The bill for an industrial customer using 20 megawatts for 474 hours would decrease 0.1 percent or $354.09 to $405,471.70.

West Penn Power has requested an increase of $115.5 million or approximately 8.4 percent over current rates. If approved, the total bill for an average residential customer using 1,000 kilowatt-hours (KWH) per month would increase 14.7 percent, or $13.62, for a new monthly total bill of $106.09. The bill for a commercial customer using 40 KW for 250 hours would increase 4.0 percent or $30.26 for a total bill of $784.73. The bill for an industrial customer using 20 megawatts for 474 hours would increase 3.7 percent or $13,618.41 to $384,356.36.

Penelec has requested an increase of $119.8 million or approximately 8.6 percent over current rates. If approved, the total bill for an average residential customer using 1,000 kilowatt-hours (KWH) a month would increase 16.3 percent, or $19.58, for a new monthly bill of $140.04. The bill for a commercial customer using 40 KW for 250 hours would increase 7.3 percent or $70.59 for a total bill of $1,043.98. The bill for an industrial customer using 20 megawatts for 474 hours would increase 0.9 percent or $4,954.38 to $579,674.81.

Met-Ed has requested an increase of $151.9 million or approximately 11.5 percent over current rates. If approved, the total bill for an average residential customer using 1,000 kilowatt-hours (KWH) per month would increase 17.8 percent, or $20.78, for a new monthly bill of $137.34. The bill for a commercial customer using 40 KW for 250 hours would increase 7.2 percent or $63.64 for a total bill of $950.04. The bill for an industrial customer using 20 megawatts for 474 hours would increase 2.1 percent or $9,278.51 to $454,140.75.

FirstEnergy’s Pennsylvania utilities have requested that the proposed rates would take effect October 3, 2014.


2



FirstEnergy’s base rate plans benefit customers by supporting continued service reliability investments to the local distribution networks that deliver electricity to the homes and businesses in our communities. If approved, planned enhancements would include replacing circuits, enhancing substation security, inspecting and replacing poles, and enhancing tree trimming activities. FirstEnergy will also continue to build infrastructure necessary to support state-of-the-art technologies that can be operated remotely in order to help prevent some outages from occurring, reduce the number of affected customers when an outage does occur, and shorten outage duration.

Penn Power serves approximately 161,000 customers within 1,100 square miles of western Pennsylvania. West Penn Power serves approximately 720,000 customers within 10,400 square miles of central and southwestern Pennsylvania. Met-Ed serves 560,000 customers within 3,300 square miles of eastern and southeastern Pennsylvania. Penelec serves nearly 600,000 customers within 17,600 square miles of northern and central Pennsylvania.

FirstEnergy is a diversified energy company dedicated to safety, reliability and operational excellence. Its 10 electric distribution companies form one of the nation's largest investor-owned electric systems, serving customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York. Follow FirstEnergy on Twitter @FirstEnergyCorp. For additional information on the plan, customers may call the company at 1-800-545-7741.

Editor/Reporter Note: While not a part of the submitted rate plans, effective September 1, 2014, FirstEnergy’s Pennsylvania utilities will implement reductions in their Prices-to-Compare (PTC) for all customers. The PTC is the price customers who choose not to shop pay for the generation and transmission of electricity. This cost is revised on a quarterly basis and is a cost passed on to customers - the companies make no profit on the PTC or generation portion of the electric bill.

Forward-Looking Statements: This news release includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding management's intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” "will," "intend," “believe,” “estimate” and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, which may include the following: the speed and nature of increased competition in the electric utility industry, in general, and the retail sales market in particular; the ability to experience growth in the Regulated Distribution and Regulated Transmission segments and to successfully implement our sales strategy in the Competitive Energy Services segment; the accomplishment of our regulatory and operational goals in connection with our transmission plan and planned distribution rate cases and the effectiveness of our repositioning strategy; the impact of the regulatory process on the pending matters before the Federal Energy Regulatory Commission and in the various states in which we do business including, but not limited to, matters related to rates and pending rate cases and the Electric Security Plan IV; the uncertainties of various cost recovery and cost allocation issues resulting from American Transmission Systems, Incorporated's realignment into PJM Interconnection, L.L.C.; economic or weather conditions affecting future sales and margins such as the polar vortex or other significant weather events, and all associated regulatory events or actions; regulatory outcomes associated with storm restoration, including but not limited to, Hurricane Sandy, Hurricane Irene and the October snowstorm of 2011; changing energy, capacity and commodity market prices including, but not limited to, coal, natural gas and oil, and their availability and impact on margins; the continued ability of our regulated utilities to recover their costs; costs being

3



higher than anticipated and the success of our policies to control costs and to mitigate low energy, capacity and market prices; other legislative and regulatory changes, and revised environmental requirements, including, but not limited to, possible greenhouse gas emission, water discharge, and coal combustion residual regulations, the potential impacts of Cross State Air Pollution Rule, and the effects of the United States Environmental Protection Agency's Mercury and Air Toxics Standards rules including our estimated costs of compliance; the uncertainty of the timing and amounts of the capital expenditures that may arise in connection with any litigation, including New Source Review litigation or potential regulatory initiatives or rulemakings (including that such expenditures could result in our decision to deactivate or idle certain generating units); the uncertainties associated with the deactivation of certain older regulated and competitive fossil units including the impact on vendor commitments, and the timing thereof as they relate to, among other things, Reliability Must Run arrangements and the reliability of the transmission grid; adverse regulatory or legal decisions and outcomes with respect to our nuclear operations (including, but not limited to the revocation or non-renewal of necessary licenses, approvals or operating permits by the Nuclear Regulatory Commission or as a result of the incident at Japan's Fukushima Daiichi Nuclear Plant); issues arising from the indications of cracking in the shield building at Davis-Besse; the impact of future changes to the operational status or availability of our generating units; the risks and uncertainties associated with litigation, arbitration, mediation and like proceedings, including, but not limited to, any such proceedings related to vendor commitments; replacement power costs being higher than anticipated or not fully hedged; the ability to comply with applicable state and federal reliability standards and energy efficiency and peak demand reduction mandates; changes in customers' demand for power, including but not limited to, changes resulting from the implementation of state and federal energy efficiency and peak demand reduction mandates; the ability to accomplish or realize anticipated benefits from strategic and financial goals including, but not limited to, the ability to reduce costs and to successfully complete our announced financial plans designed to improve our credit metrics and strengthen our balance sheet, including but not limited to, our announced dividend reduction and our proposed capital raising initiatives; our ability to improve electric commodity margins and the impact of, among other factors, the increased cost of fuel and fuel transportation on such margins; changing market conditions that could affect the measurement of certain liabilities and the value of assets held in our Nuclear Decommissioning Trusts, pension trusts and other trust funds, and cause us and our subsidiaries to make additional contributions sooner, or in amounts that are larger than currently anticipated; the impact of changes to material accounting policies; the ability to access the public securities and other capital and credit markets in accordance with our announced financial plans, the cost of such capital and overall condition of the capital and credit markets affecting us and our subsidiaries; actions that may be taken by credit rating agencies that could negatively affect us and our subsidiaries' access to financing, increase the costs thereof, and increase requirements to post additional collateral to support outstanding commodity positions, letters of credit and other financial guarantees; changes in national and regional economic conditions affecting us, our subsidiaries and our major industrial and commercial customers, and other counterparties including fuel suppliers, with which we do business; the impact of any changes in tax laws or regulations or adverse tax audit results or rulings; issues concerning the stability of domestic and foreign financial institutions and counterparties with which we do business; the risks and other factors discussed from time to time in our United States Securities and Exchange Commission filings, and other similar factors. Dividends declared from time to time on FirstEnergy Corp.'s common stock during any period may in the aggregate vary from prior periods due to circumstances considered by FirstEnergy Corp.'s Board of Directors at the time of the actual declarations. A security rating is not a recommendation to buy or hold securities and is subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating. The foregoing review of factors should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor assess the impact of any such factor on FirstEnergy's business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. FirstEnergy expressly disclaims any current intention to update, except as required by law, any forward-looking statements contained herein as a result of new information, future events or otherwise.



4
EX-99.2 3 a992-pressreleasexohio.htm EXHIBIT 99.2 PRESS RELEASE - OHIO 99.2 - Press Release - Ohio


FirstEnergy Corp.                    For Release: August 4, 2014
76 S. Main Street                    
Akron, OH 44308                
www.firstenergycorp.com

News Media Contact:                Investor Contact:
Doug Colafella                    Irene Prezelj
(330) 384-5375                    (330) 384-3859


FirstEnergy Ohio Utilities Announce Powering Ohio’s
Progress, a Long-Term Electric Rate Stability Plan
Economic Stability Program will mitigate long-term
price volatility, reliability challenges

Akron, Ohio - FirstEnergy Corp.’s (NYSE: FE) Ohio utilities today filed a proposed Electric Security Plan (ESP) called Powering Ohio’s Progress with the Public Utilities Commission of Ohio (PUCO). The proposed plan will freeze distribution rates in place while helping keep critical baseload power plants available to serve Ohio customers.

Powering Ohio’s Progress proposes to establish electric service for a three-year period from June 1, 2016, through May 31, 2019, for customers of FirstEnergy’s Ohio’s utilities - Ohio Edison, Cleveland Electric Illuminating and Toledo Edison. A key component of the plan is a 15-year Economic Stability Program that will help mitigate rising retail prices and help ensure that vital baseload power plants built to serve Ohio customers remain available to support the state’s electric consumers and businesses.

The Economic Stability Program, as proposed, will reflect a purchased power agreement involving the Davis-Besse Nuclear Power Station in Oak Harbor, Ohio; W.H. Sammis Plant in Stratton, Ohio; and Ohio Valley Electric Corporation (OVEC) units in Gallipolis, Ohio, and Madison, Indiana. FirstEnergy’s Ohio utilities will purchase the output of these facilities and sell it into the wholesale energy and capacity markets. As power prices increase as projected over time, proceeds from the market sales that exceed costs from the purchased power agreement will be applied as credits on customers’ electric bills to mitigate volatility and address rising retail prices.
While the typical residential customer using about 750 kilowatt-hours of electricity per month could expect to see a modest increase in the initial years, the Economic Stability Program is projected to save customers approximately $2 billion over 15 years.

“Reliable, affordable electricity is critical to Ohio’s economic vitality and security,” said FirstEnergy President and Chief Executive Officer Anthony J. Alexander. “Our utilities have made great





strides enhancing service reliability across our system of poles and wires, but Ohio’s economic security and quality of life is highly dependent on maintaining a diverse mix of baseload coal and nuclear power plants. Powering Ohio’s Progress helps ensure these vital facilities continue powering the state’s energy-intensive economy, helps protect customers against volatility as future prices rise, and preserves $1 billion in annual statewide economic benefits, vital tax revenues for local communities, and an estimated 3,000 direct and indirect jobs created by these plants.”

FirstEnergy’s current ESP is widely considered a success in terms of its ability to produce competitively priced electricity for customers who remain with the utility for all facets of electric service, as well as giving customers the ability to freely shop for a competitive retail electric supplier. Overall distribution rates for an average residential electric customer have only increased by 40 cents, or about one percent, since FirstEnergy’s first ESP took effect in 2009.

Under Powering Ohio’s Progress, many of the customer benefits in the utilities’ current ESP will continue, including:
Freezing the current base distribution rates through May 31, 2019.
Continuing to provide generation supply to non-shopping customers through a competitive bid process.
Retaining customers' option to shop for a competitive retail electric supplier.
Providing up to $6 million per year in economic development funding for Ohio communities and energy efficiency assistance to low-income customers during the three-year term of the plan.
Supporting continued investment in distribution system reliability.

FirstEnergy is a diversified energy company dedicated to safety, reliability and operational excellence. Its 10 electric distribution companies form one of the nation's largest investor-owned electric systems, serving customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York. Follow FirstEnergy on Twitter @FirstEnergyCorp.


Forward-Looking Statements: This news release includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding management's intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” "will," "intend," “believe,” “estimate” and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, which may include the following: the speed and nature of increased competition in the electric utility industry, in general, and the retail sales market in particular; the ability to experience growth in the Regulated Distribution and Regulated Transmission segments and to successfully implement our sales strategy in the Competitive Energy Services segment; the accomplishment of our regulatory and operational goals in connection with our transmission plan and planned distribution rate cases and the effectiveness of our repositioning strategy; the impact of the regulatory process on the pending matters before the Federal Energy Regulatory Commission and in the various states in which we do business including, but not limited to, matters related to rates and pending rate cases and the Electric Security Plan IV; the uncertainties of various cost recovery and cost





allocation issues resulting from American Transmission Systems, Incorporated's realignment into PJM Interconnection, L.L.C.; economic or weather conditions affecting future sales and margins such as the polar vortex or other significant weather events, and all associated regulatory events or actions; regulatory outcomes associated with storm restoration, including but not limited to, Hurricane Sandy, Hurricane Irene and the October snowstorm of 2011; changing energy, capacity and commodity market prices including, but not limited to, coal, natural gas and oil, and their availability and impact on margins; the continued ability of our regulated utilities to recover their costs; costs being higher than anticipated and the success of our policies to control costs and to mitigate low energy, capacity and market prices; other legislative and regulatory changes, and revised environmental requirements, including, but not limited to, possible greenhouse gas emission, water discharge, and coal combustion residual regulations, the potential impacts of Cross State Air Pollution Rule, and the effects of the United States Environmental Protection Agency's Mercury and Air Toxics Standards rules including our estimated costs of compliance; the uncertainty of the timing and amounts of the capital expenditures that may arise in connection with any litigation, including New Source Review litigation or potential regulatory initiatives or rulemakings (including that such expenditures could result in our decision to deactivate or idle certain generating units); the uncertainties associated with the deactivation of certain older regulated and competitive fossil units including the impact on vendor commitments, and the timing thereof as they relate to, among other things, Reliability Must Run arrangements and the reliability of the transmission grid; adverse regulatory or legal decisions and outcomes with respect to our nuclear operations (including, but not limited to the revocation or non-renewal of necessary licenses, approvals or operating permits by the Nuclear Regulatory Commission or as a result of the incident at Japan's Fukushima Daiichi Nuclear Plant); issues arising from the indications of cracking in the shield building at Davis-Besse; the impact of future changes to the operational status or availability of our generating units; the risks and uncertainties associated with litigation, arbitration, mediation and like proceedings, including, but not limited to, any such proceedings related to vendor commitments; replacement power costs being higher than anticipated or not fully hedged; the ability to comply with applicable state and federal reliability standards and energy efficiency and peak demand reduction mandates; changes in customers' demand for power, including but not limited to, changes resulting from the implementation of state and federal energy efficiency and peak demand reduction mandates; the ability to accomplish or realize anticipated benefits from strategic and financial goals including, but not limited to,  the ability to reduce costs and to successfully complete our announced financial plans designed to improve our credit metrics and strengthen our balance sheet, including but not limited to, our announced dividend reduction and our proposed capital raising initiatives; our ability to improve electric commodity margins and the impact of, among other factors, the increased cost of fuel and fuel transportation on such margins; changing market conditions that could affect the measurement of certain liabilities and the value of assets held in our Nuclear Decommissioning Trusts, pension trusts and other trust funds, and cause us and our subsidiaries to make additional contributions sooner, or in amounts that are larger than currently anticipated; the impact of changes to material accounting policies; the ability to access the public securities and other capital and credit markets in accordance with our announced financial plans, the cost of such capital and overall condition of the capital and credit markets affecting us and our subsidiaries; actions that may be taken by credit rating agencies that could negatively affect us and our subsidiaries' access to financing, increase the costs thereof, and increase requirements to post additional collateral to support outstanding commodity positions, letters of credit and other financial guarantees; changes in national and regional economic conditions affecting us, our subsidiaries and our major industrial and commercial customers, and other counterparties including fuel suppliers, with which we do business; the impact of any changes in tax laws or regulations or adverse tax audit results or rulings; issues concerning the stability of domestic and foreign financial institutions and counterparties with which we do business; the risks and other factors discussed from time to time in our United States Securities and Exchange Commission filings, and other similar factors. Dividends declared from time to time on FirstEnergy Corp.'s common stock during any period may in the aggregate vary from prior periods due to circumstances considered by FirstEnergy Corp.'s Board of Directors at the time of the actual declarations. A security rating is not a recommendation to buy or hold securities and is subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating. The foregoing review of factors should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor assess the impact of any such factor on FirstEnergy's business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. FirstEnergy expressly disclaims any current intention to update, except as required by law, any forward-looking statements contained herein as a result of new information, future events or otherwise.



EX-99.3 4 exhibit993lettertotheinves.htm EXHIBIT 99.3 INVESTOR LETTER Exhibit 99.3 Letter to the Investment Community 8/4/14


Irene M. Prezelj
Vice President
Investor Relations
 
FirstEnergy Corp.
76 S. Main Street
Akron, Ohio 44308
Tel 330-384-3859
 
August 4, 2014

    

TO THE INVESTMENT COMMUNITY:1

On August 4, 2014, the Ohio and Pennsylvania electric utility operating companies of FirstEnergy Corp. (FE) made filings for approval of an Electric Security Plan (ESP) in Ohio and distribution rate cases in Pennsylvania. These actions further support a strategic focus on regulated operations and better position these companies to deliver on their ongoing commitment to upgrade, modernize and maintain reliable electric service while preserving economic security in these states. This Letter provides a summary of the significant portions of the filings in both Ohio and Pennsylvania.

Ohio ESP IV: “Powering Ohio’s Progress”

Background
FE’s Ohio utility operating companies Ohio Edison Company (OE), The Cleveland Electric Illuminating Company (CEI) and The Toledo Edison Company (TE), (collectively The Ohio Companies) currently serve customers under ESP 3. When evaluating options for Ohio customers after the current plan ends in May 2016, The Ohio Companies took into consideration the impact of extreme weather events, such as the polar vortex in January of 2014, and the unseasonable heat wave in September of 2013, on the cost of retail power. These events are likely to continue as a significant number of baseload power plants across the region are retired. To address economic development and job retention efforts in the state, as well as future volatility and retail price increases, and to stabilize retail prices for customers, The Ohio Companies are seeking state approval of “Powering Ohio’s Progress” through their filing of ESP IV.

Overview
The ESP IV would begin on June 1, 2016, if approved by the Public Utilities Commission of Ohio (PUCO). The plan builds on the success of the current ESP 3 and includes an Economic Stability Program. The Ohio Companies have requested PUCO approval of Case No. 14-1297-EL-SSO by April 8, 2015. Supporting documents filed by The Ohio Companies will be available at www.puco.ohio.gov.



_______________________________________ 
1Please see the Forward-looking Statements at the end of this letter.







Major Provisions
Powering Ohio’s Progress includes an Economic Stability Program.
The Economic Stability Program includes a FERC jurisdictional Purchased Power Agreement (PPA) where The Ohio Companies purchase the output from FirstEnergy Solutions (FES), specifically power generated by its Davis-Besse nuclear plant, Sammis supercritical coal plant and a portion of the Ohio Valley Electric Corporation’s (OVEC) generation output (total of 3,244 MW).
The Program provides a stability mechanism for customers who are estimated to realize a savings of approximately $2 billion over the 15-year period between
June 1, 2016 and May 31, 2031. The costs, including a return on and of the investment in the Sammis and Davis-Besse plants, would be netted against the revenues received from the sale of the associated energy and capacity into the markets, to derive either a credit or charge to be applied to utility customer monthly bills through a Retail Rate Stability Rider, which is the element of the Economic Stability Program subject to approval by the PUCO. The credit or charge would apply to both default service and customers shopping with a competitive retail supplier.
The Program does not impact the wholesale competitive bid process or retail competition. The Ohio Companies would continue to utilize competitively bid auctions to procure generation supply for customers who do not choose a competitive retail supplier.
Customers would continue to have the option of shopping for an alternative generation supplier, either individually or as part of a governmental aggregation program.
Overall, the Economic Stability Program delivers significant benefits:
With the ongoing operation of these plants, the state of Ohio benefits through the promotion of economic development, retaining thousands of jobs in the state, preserving millions of dollars in tax revenues for Ohio communities, and promotes manufacturing and other industries in Ohio.
Ohio utility customers are provided safeguards from volatility and retail price increases as energy and capacity prices rise in future years, saving a projected $2 billion over 15 years through the PPA.
FES benefits from the diversity provided by a cost-based source of revenues for approximately 25 percent of its generation portfolio with a rate of return.
Powering Ohio’s Progress continues several beneficial distribution-related provisions from ESP 3 including:
A freeze on The Ohio Companies’ base distribution rates at current levels through May 31, 2019, the requested term of the ESP.
Annual filing of the Significant Excessive Earnings Test (SEET).
Continuation of storm deferrals, collection of lost distribution revenue, and the Delivery Capital Recovery Rider (Rider DCR) with caps increasing annually at $30 million. (See Exhibit 1)
Establishes a non-bypassable placeholder rider for future capital costs arising from governmental directives such as NERC cyber security and physical security.
Provides up to $6 million annually in economic development funding for Ohio communities and energy efficiency assistance for low-income customers.








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Pennsylvania Distribution Rate Cases
FE’s Pennsylvania utility operating companies Metropolitan Edison Company (Met-Ed), Pennsylvania Electric Company (Penelec), Pennsylvania Power Company (Penn Power) and West Penn Power Company (West Penn) (collectively, The Pennsylvania Companies) also filed today for distribution base rate increases in order to establish the groundwork for enhanced reliability and customer service while also providing a fair return to shareholders. The distribution base rate increases proposed by The Pennsylvania Companies would be, if approved by the Pennsylvania Public Utility Commission (PAPUC), the first base distribution rate increases in more than 20 years. (See Exhibit 2).

The Pennsylvania Companies anticipate a PAPUC decision in the April 2015 timeframe. The individual company case numbers can be found in Exhibit 2. Supporting documents filed by The Pennsylvania Companies will be available at www.puc.state.pa.us.
 
Major Provisions
The Pennsylvania Companies are requesting an aggregate $416 million revenue increase across the four utility companies. Please refer to Exhibits 2 and 3 for details on each companies’ filing. In addition, The Pennsylvania Companies are requesting the PAPUC to approve new riders or adjustments to existing riders. Certain requests are similar to concepts that the PAPUC has previously approved for the other Pennsylvania Companies. Approval of the riders as filed would not increase the rates of return for any of The Pennsylvania Companies. Certain riders are described below.


The Pennsylvania Companies
Smart Meter Technologies (SMT-C): While all of the Pennsylvania Companies are able to recover the costs to implement their Smart Meter Deployment Plan through the existing SMT-C Rider, The Pennsylvania Companies have requested to include in their distribution base rate revenue requirement the test period costs to implement their Smart Meter Deployment Plans. The SMT-C Rider would remain in the tariffs as the mechanism to recover the cost of implementing their Smart Meter Plan, net of savings, in excess of such costs being recovered in base rates in the future.
Storm Damage Cost: Provides for a credit or charge on customer bills to reflect the difference between storm related expenses in base rates and actual storm related expenses and eliminates risk by providing timely recovery of storm costs. The rate would be filed annually on December 1 and charged to residential customers.


West Penn
Universal Service Rider (USC): Provides for full recovery for the costs of low-income programs. The utility would file annually for the charge to be effective on January 1 of each year and the charge would be collected from residential customers only. The proposed rider mirrors the USC Riders that the PAPUC approved for Met-Ed, Penelec and Penn Power in prior cases.











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Upcoming FirstEnergy Investor Events

Second Quarter 2014 Earnings Call
August 5, 2014
1:00PM (EST)

Goldman Sachs Global Clean Energy and Power Conference
August 12, 2014
New York City

If you have any questions concerning the information in this update, please contact me at (330) 384-3859, Meghan Beringer, director of Investor Relations at (330) 384-5832, or Rey Jimenez, manager of Investor Relations at (330) 761-4239.

Sincerely,


/s/ Irene M. Prezelj


Irene M. Prezelj
Vice President, Investor Relations



































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Exhibit 1
Delivery Capital Recovery Rider (Rider DCR) Caps
Period
Amount ($M)
Current:
 
    6/1/14-5/31/15
$195
     6/1/15-5/31/16
$210
 
 
Proposed:
 
     6/1/16-5/31/17
$240
     6/1/17-5/31/18
$270
     6/1/18-5/31/19
$300


Exhibit 2
Met-Ed
Penelec
Penn Power
West Penn
Case Docket Number
R-2014-2428745
R-2014-2428743
R-2014-2428744
R-2014-2428742
Last Base Distribution Rate Increase
1992
1986
1988
1994
Proposed Rate of Return
ROE
10.90%
10.90%
10.9%
10.9%
Overall Return
8.05%
8.31%
8.51%
8.14%
Capital Structure
50% Debt, 50% Equity
50.10% Debt, 49.90% Equity
49.9% Debt, 50.1% Equity
49.9% Debt, 50.1% Equity
Cost of Debt
5.21%
5.72%
6.12%
5.38%
Increase in Distribution Net Plant
50% since 2007
53% since 2007
380% since 1988
122% since 1994
Amortization of Storm Costs
$22M
$4M
-
$5M
Storms
Hurricane Irene, 2011 October Snowstorm, Tropical Storm Lee, Hurricane Sandy, Winter Storm Nika
Hurricane Irene, 2011 October Snowstorm, Tropical Storm Lee
N/A
February 2010 winter storm
Time Period
Feb 2011 -Sept 2012, Oct 2012, Feb 2014
Feb 2011 -Sept 2012
N/A
February, 2010


















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Exhibit 3
$ Thousands
Met-Ed
Penelec
Penn Power
West Penn
Distribution Base Rates
$149,328
$116,499
$25,379
$66,825
USC Rider
-
-
-
29,565
DSS and HPS Rider
(716)
(524)
(1,074)
7,351
Smart Meter Rider2
$3,315
$3,817
$4,178
$11,794
Total Revenue Increase
$151,927
$119,792
$28,483
$115,535
% Change Over Revenues at Existing Rates3
11.5%
8.6%
8.7%
8.4%
2 This amount is in addition to that which is reflected in the August 4 distribution base rate filing. The following amounts were amortized for legacy meters: $11M at Met-Ed, $11M at Penelec, $2M at Penn Power, and $6M at West Penn
3 The percentage was calculated based on total estimated revenue for the fully projected future test year consisting of distribution revenue as well as generation service revenue, with the latter reflecting generation rates equivalent to the Companies’ applicable prices for default service.




 
Forward-looking Statements

This Letter to the Investment Community includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding management's intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” "will," "intend," “believe,” “estimate” and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, which may include the following: the speed and nature of increased competition in the electric utility industry, in general, and the retail sales market in particular; the ability to experience growth in the Regulated Distribution and Regulated Transmission segments and to successfully implement our sales strategy in the Competitive Energy Services segment; the accomplishment of our regulatory and operational goals in connection with our transmission plan and planned distribution rate cases and the effectiveness of our repositioning strategy; the impact of the regulatory process on the pending matters before the Federal Energy Regulatory Commission and in the various states in which we do business including, but not limited to, matters related to rates and pending rate cases and the Electric Security Plan IV; the uncertainties of various cost recovery and cost allocation issues resulting from American Transmission Systems, Incorporated's realignment into PJM Interconnection, L.L.C.; economic or weather conditions affecting future sales and margins such as the polar vortex or other significant weather events, and all associated regulatory events or actions; regulatory outcomes associated with storm restoration, including but not limited to, Hurricane Sandy, Hurricane Irene and the October snowstorm of 2011; changing energy, capacity and commodity market prices including, but not limited to, coal, natural gas and oil, and their availability and impact on margins; the continued ability of our regulated utilities to recover their costs; costs being higher than anticipated and the success of our policies to control costs and to mitigate low energy, capacity and market prices; other legislative and regulatory changes, and revised environmental requirements, including, but not limited to, possible greenhouse gas emission, water discharge, and coal combustion residual regulations, the potential impacts of Cross State Air Pollution Rule, and the effects of the United States Environmental Protection Agency's Mercury and Air Toxics Standards rules including our estimated costs of compliance; the uncertainty of the timing and amounts of the capital expenditures that may arise in connection with any litigation, including New Source Review litigation or potential regulatory initiatives or rulemakings (including that such expenditures could result in our decision to deactivate or idle certain generating units); the uncertainties associated with the deactivation of certain older regulated and competitive fossil units including the impact on vendor commitments,

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and the timing thereof as they relate to, among other things, Reliability Must Run arrangements and the reliability of the transmission grid; adverse regulatory or legal decisions and outcomes with respect to our nuclear operations (including, but not limited to the revocation or non-renewal of necessary licenses, approvals or operating permits by the Nuclear Regulatory Commission or as a result of the incident at Japan's Fukushima Daiichi Nuclear Plant); issues arising from the indications of cracking in the shield building at Davis-Besse; the impact of future changes to the operational status or availability of our generating units; the risks and uncertainties associated with litigation, arbitration, mediation and like proceedings, including, but not limited to, any such proceedings related to vendor commitments; replacement power costs being higher than anticipated or not fully hedged; the ability to comply with applicable state and federal reliability standards and energy efficiency and peak demand reduction mandates; changes in customers' demand for power, including but not limited to, changes resulting from the implementation of state and federal energy efficiency and peak demand reduction mandates; the ability to accomplish or realize anticipated benefits from strategic and financial goals including, but not limited to, the ability to reduce costs and to successfully complete our announced financial plans designed to improve our credit metrics and strengthen our balance sheet, including but not limited to, our announced dividend reduction and our proposed capital raising initiatives; our ability to improve electric commodity margins and the impact of, among other factors, the increased cost of fuel and fuel transportation on such margins; changing market conditions that could affect the measurement of certain liabilities and the value of assets held in our Nuclear Decommissioning Trusts, pension trusts and other trust funds, and cause us and our subsidiaries to make additional contributions sooner, or in amounts that are larger than currently anticipated; the impact of changes to material accounting policies; the ability to access the public securities and other capital and credit markets in accordance with our announced financial plans, the cost of such capital and overall condition of the capital and credit markets affecting us and our subsidiaries; actions that may be taken by credit rating agencies that could negatively affect us and our subsidiaries' access to financing, increase the costs thereof, and increase requirements to post additional collateral to support outstanding commodity positions, letters of credit and other financial guarantees; changes in national and regional economic conditions affecting us, our subsidiaries and our major industrial and commercial customers, and other counterparties including fuel suppliers, with which we do business; the impact of any changes in tax laws or regulations or adverse tax audit results or rulings; issues concerning the stability of domestic and foreign financial institutions and counterparties with which we do business; the risks and other factors discussed from time to time in our United States Securities and Exchange Commission filings, and other similar factors. Dividends declared from time to time on FirstEnergy Corp.'s common stock during any period may in the aggregate vary from prior periods due to circumstances considered by FirstEnergy Corp.'s Board of Directors at the time of the actual declarations. A security rating is not a recommendation to buy or hold securities and is subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating. The foregoing review of factors should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor assess the impact of any such factor on FirstEnergy's business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. FirstEnergy expressly disclaims any current intention to update, except as required by law, any forward-looking statements contained herein as a result of new information, future events or otherwise.



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