-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HtnawUyVIA9PU2bF+pvWZMUIl5OZ95Ve1Uua/VNg285cyvg5phmIbsjErStTEtuK 88KJREEvk4dOt8RlrSuX4g== 0001031296-05-000250.txt : 20050909 0001031296-05-000250.hdr.sgml : 20050909 20050909170730 ACCESSION NUMBER: 0001031296-05-000250 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050909 ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050909 DATE AS OF CHANGE: 20050909 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: 051078320 BUSINESS ADDRESS: STREET 1: 76 SOUTH MAIN ST CITY: AKRON STATE: OH ZIP: 44308-1890 BUSINESS PHONE: 3303845100 MAIL ADDRESS: STREET 1: 76 SOUTH MAIN ST CITY: AKRON STATE: OH ZIP: 44308-1890 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOLEDO EDISON CO CENTRAL INDEX KEY: 0000352049 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 344375005 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03583 FILM NUMBER: 051078321 BUSINESS ADDRESS: STREET 1: 76 SOUTH MAIN STREET CITY: AKRON STATE: OH ZIP: 43308 BUSINESS PHONE: 2166229800 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLEVELAND ELECTRIC ILLUMINATING CO CENTRAL INDEX KEY: 0000020947 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 340150020 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-02323 FILM NUMBER: 051078322 BUSINESS ADDRESS: STREET 1: 76 SOUTH MAIN STREET STREET 2: C/O FIRSTENERGY CORP CITY: AKRON STATE: OH ZIP: 44308 BUSINESS PHONE: 2166229800 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OHIO EDISON CO CENTRAL INDEX KEY: 0000073960 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 340437786 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-02578 FILM NUMBER: 051078323 BUSINESS ADDRESS: STREET 1: 76 S MAIN ST CITY: AKRON STATE: OH ZIP: 44308 BUSINESS PHONE: 2163845100 8-K 1 main8_k.htm FORM 8-K Form 8-K

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) September 9, 2005



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
 
     
1-2578
OHIO EDISON COMPANY
34-0437786
 
(An Ohio Corporation)
 
 
c/o FirstEnergy Corp.
 
 
76 South Main Street
 
 
Akron, OH 44308
 
 
Telephone (800)736-3402
 
     
1-2323
THE CLEVELAND ELECTRIC ILLUMINATING COMPANY
34-0150020
 
(An Ohio Corporation)
 
 
c/o FirstEnergy Corp.
 
 
76 South Main Street
 
 
Akron, OH 44308
 
 
Telephone (800)736-3402
 
     
1-3583
THE TOLEDO EDISON COMPANY
        34-4375005
 
(An Ohio Corporation)
 
 
c/o FirstEnergy Corp.
 
 
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. below):

[ ] 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 8.01 Other Events

On September 9, 2005, FirstEnergy Corp. announced that its Ohio electric utility operating companies will file an application with the Public Utilities Commission of Ohio (PUCO) that, if approved, would supplement their existing Rate Stabilization Plan (RSP) with a Rate Certainty Plan (RCP). FirstEnergy issued a Press Release and Letter to the Investment Community that provides information related to the RCP. The Press Release and Letter to the Investment Community are attached as Exhibits 99.1 and 99.2, respectively, hereto and are incorporated by reference. Exhibit 99.3, which is also attached hereto and incorporated by reference, provides a comparison of the estimated amortization of regulatory transition costs and deferred shopping incentive balances (including associated carrying charges) under the current RSP and the proposed RCP for the periods 2006 through 2010.


Item 9.01 Financial Statements and Exhibits

(c) Exhibits.

Exhibit No.
Description
 99.1
Press Release issued by FirstEnergy Corp., dated September 9, 2005
 99.2
Letter to the Investment Community, dated September 9, 2005
 99.3
Estimated Ohio Amortization Comparison Schedule













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 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, maintenance costs being higher than anticipated, legislative and regulatory changes (including revised environmental requirements), 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 settlement agreement 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 government investigations and oversight, including by the Securities and Exchange Commission, the United States Attorney’s Office and the Nuclear Regulatory Commission as disclosed in the registrants’ 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 availability and cost of capital, the continuing availability and operation of generating units, the ability of generating units to continue to operate at, or near full capacity, the inability to accomplish or realize anticipated benefits of strategic goals, the ability to improve electric commodity margins and to experience growth in the distribution business, the ability to access the public securities and other capital markets, the outcome, cost and other effects of present and potential legal and administrative proceedings and claims related to the August 14, 2003 regional power outage, the final outcome in the proceeding related to FirstEnergy's Application for a Rate Stabilization Plan (RSP) in Ohio, including, but not limited to, the PUCO's acceptance of the September 9, 2005 proposed supplement to the RSP, the risks and other factors discussed from time to time in the registrants' Securities and Exchange Commission filings, and other similar factors. The registrants expressly disclaim any current intention to update any forward-looking statements contained in this document as a result of new information, future events, or otherwise.



 
2



SIGNATURE



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



September 9, 2005



 
FIRSTENERGY CORP.
 
Registrant
   
 
OHIO EDISON COMPANY
 
Registrant
   
 
THE CLEVELAND ELECTRIC
 
ILLUMINATING COMPANY
 
Registrant
   
 
THE TOLEDO EDISON COMPANY
 
Registrant
   

     
   
 
 
 
 
 
 
   
       /s/                 Harvey L. Wagner 
 

                Harvey L. Wagner
            Vice President, Controller and
                   Chief Accounting Officer
 
 
 
 

 
3









EX-99.1 2 ex99_1.htm EXHIBIT 99-1 PRESS RELEASE ISSUED BY FIRSTENERGY CORP. DATED SPETEMBER 9, 2005 Unassociated Document

 
EXHIBIT 99.1
 
For Release: September 9, 2005
   
News Media Contacts:
FirstEnergy Investor Contact:
FirstEnergy Corp.
Kurt Turosky
Ellen S. Raines
(330) 384-5500
(330) 384-5808
 
www.firstenergycorp.com
 
   
City of Cleveland:
 
Wendy Boerger
 
(216) 664-2238
 
   
City of Akron:
 
Mark Williamson
 
(330) 375-2538
 


FIRSTENERGY, MAYORS AND OTHER KEY PARTIES AGREE ON PLAN
TO FREEZE RATES IN OHIO THROUGH 2008

AKRON, Ohio - FirstEnergy Corp. (NYSE: FE) today will file on behalf of its Ohio electric utility operating companies - Ohio Edison Company, The Cleveland Electric Illuminating Company and Toledo Edison Company - a Rate Certainty Plan (RCP) that, if approved by the Public Utilities Commission of Ohio (PUCO), would essentially maintain current electricity prices through 2008. The RCP was developed as a result of concerns about rising fuel prices. A stipulated agreement in support of the plan has been signed by the cities of Cleveland and Akron, along with the Industrial Energy Users - Ohio and the Ohio Energy Group. Also, the Mayor of the City of Parma has agreed to support the stipulation, pending further approval by city council.

According to City of Cleveland Mayor Jane Campbell, "I’m pleased that FirstEnergy listened to the concerns we and other cities raised about increasing electricity rates at this time. Putting off electricity price increases for the foreseeable future is essential to our efforts to provide basic services in the face of tight city budgets, and will be welcomed by our residents, who are trying to deal with spiraling costs for gasoline, natural gas and fuel oil."
(more)

 
 

 
2

      "I’m pleased that we were able to work with our mayors and the other parties on developing an innovative plan that meets the needs of the people we all serve," said Anthony J. Alexander, president and Chief Executive Officer of FirstEnergy. "With the approval of the PUCO, this plan will provide customers with three more years of stable prices without adversely affecting FirstEnergy’s financial results."

The RCP would postpone for future recovery fuel and distribution-related increases, which FirstEnergy could have filed for under its current rate plan. In fact, a request to establish a generation charge adjustment rider to recover increased fuel costs had been submitted to the PUCO in May 2005. Under the RCP, recovery of PUCO-approved costs for deferred fuel and these other items would not begin before 2009 - when the regulated portion of Toledo Edison and Ohio Edison customer bills is expected to drop because recovery of transition costs will have been completed, and transition cost recovery for The Cleveland Electric Illuminating Company would be nearing its 2010 completion date.

The RCP also provides an opportunity to apply certain customer credits far earlier than otherwise would have been possible without the plan. These credits would not have been reflected in customer bills until 2008.

If the PUCO approves the RCP, customers will pay essentially the same price for electricity through 2008 that they paid in the 1990s. Ohio Edison base rates are about the same as 1990 levels, and base rates for The Cleveland Electric Illuminating Company and Toledo Edison are about the same as they were in 1996.

Supplemental information is included in a September 9, 2005, letter addressed to the investment community, which is posted on the Investor Information section of FirstEnergy’s Web site, www.firstenergycorp.com.

FirstEnergy is a diversified energy company headquartered in Akron, Ohio. Its subsidiaries and affiliates are involved in the generation, transmission and distribution of electricity, as well as energy management and other energy-related services. Its seven electric utility operating companies comprise the nation’s fifth largest investor-owned electric system, based on 4.4 million customers served within a 36,100-square-mile area of Ohio, Pennsylvania and New Jersey.
 
 
 

 
3

 
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 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, maintenance costs being higher than anticipated, legislative and regulatory changes (including revised environmental requirements), 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 settlement agreement 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 and the Nuclear Regulatory Commission 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 availability and cost of capital, 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, 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, the outcome, cost and other effects of present and potential legal and administrative proceedings and claims related to the August 14, 2003 regional power outage, the final outcome in the proceeding related to FirstEnergy's Application for a Rate Stabilization Plan (RSP) in Ohio, including, but not limited to, the Public Utilities Commission of Ohio’s acceptance of the September 9, 2005 proposed supplement to the RSP, the risks and other factors discussed from time to time in our Securities and Exchange Commission filings, and other similar factors. FirstEnergy expressly disclaims any current intention to update any forward-looking statements contained herein as a result of new information, future events, or otherwise.

(090905)
 
 
 
 
 
EX-99.2 3 ex99_2.htm EXHIBIT 99.2 LETTER TO THE INVESTMENT COMMUNITY DATED SEPTEMBER 9, 2005 Exhibit 99.2 Letter to the Investment Community dated September 9, 2005
 
 
 EXHIBIT 99.2
   
 
Terrance G. Howson
 
Vice President
 
Investor Relations
   
 
FirstEnergy Corp.
 
76 S. Main Street
 
Akron, Ohio 44308
 
Tel 973-401-8519
   
 
September 9, 2005



TO THE INVESTMENT COMMUNITY: 1

As detailed in today’s attached news release, FirstEnergy Corp.’s Ohio electric utility operating companies (Companies), will file an application (Application) with the Public Utilities Commission of Ohio (PUCO) that, if approved, would supplement the existing Rate Stabilization Plan (RSP) with a Rate Certainty Plan (RCP). This letter provides additional details about the Application.


Background

On October 21, 2003, to address PUCO concerns regarding rising power prices in an undeveloped competitive electricity marketplace, the Companies filed the RSP to provide customers of FirstEnergy’s subsidiaries - Ohio Edison Company (OE), The Cleveland Electric Illuminating Company (CEI) and The Toledo Edison Company (TE) - with generation price and supply stability through 2008. Under the RSP, the Companies maintained the obligation to provide full service to customers through 2008, while still affording customers the benefits of a competitive marketplace through an annual competitive auction. The RSP also provided for the continuation of certain rate discounts that would have otherwise expired, the implementation of specified regulatory accounting practices, provisions to support customer shopping, and the opportunity for the Companies to seek recovery of increased fuel costs. After PUCO approval, the Companies implemented the RSP on August 5, 2004.


The Current Rate Stabilization Plan

Under the RSP, it is expected that customer rates will change several times prior to the end of 2008. For example:

 
§
Rate increases may be implemented annually over the 2006 through 2008 period to recover higher fuel costs. The request for a Generation Charge Adjustment Factor (GCAF) for the first such increase of approximately $93 million effective January 1, 2006, was filed on May 27, 2005 and represents certain fuel cost increases above the 2002 baseline energy cost level. The Companies expect that subsequent fuel cost increases above the 2002 baseline level would likely be in excess of $113 million in 2007 and $139 million in 2008.


___________________________

1 Please see the forward-looking statement at the end of this letter
 
1

 
 
§
Current distribution rates are maintained through year-end 2007. The Companies anticipated filing to increase distribution rates effective January 1, 2008 to reflect increased distribution investments and expenses.
 
§
Customer rates would decline when the Extended Regulatory Transition Charge recovery ceases for OE and TE by late-summer 2008 and for CEI by late-summer 2010.

These examples demonstrate the variability of expected customer rate levels with rates both increasing and decreasing throughout the period of the RSP. While the RSP provides customers and the Companies with substantial benefits, the rate fluctuations adversely impact the ability of customers to plan for their utility costs and the ability for investors to anticipate consistent financial performance levels from FirstEnergy throughout the period.


The Proposed Rate Certainty Plan

In an effort to provide increased stability for customer rate levels and for the Companies’ financial performance, the Companies propose to implement the RCP as an attractive supplement to the RSP. The RCP has been designed to provide customers with lower, more certain rate levels than otherwise available under the RSP during the Plan period, and to provide the Companies with financial results generally comparable to those attainable under the RSP.

Through a combination of modifications to transition cost recovery periods, accounting deferrals of distribution related costs, and accelerated use of the cost of removal regulatory liability to reduce deferred shopping incentives balances, it is anticipated that the impact of fuel and distribution cost increases can be mitigated to avoid overall price increases to customers through 2008.

In order to accomplish these objectives, major provisions of the RCP include:

 
·
Distribution Rates - maintain the existing level of base distribution rates through December 31, 2008 for OE and TE, and April 30, 2009 for CEI.
 
·
Distribution Deferrals - the Companies will be allowed to defer and capitalize the costs listed below during the period of January 1, 2006 through December 31, 2008, not to exceed $150 million in each of the years 2006, 2007, and 2008. The amounts deferred will be included in distribution rate base (earning a return at the embedded cost of long-term debt) and recovered in rates over a 25 year period commencing with distribution rates first effective on or after January 1, 2009 for OE and TE and May 1, 2009 for CEI. Costs qualifying for deferred treatment are:
 
-
Post-in-service interest expense, depreciation expense and property taxes for energy delivery related expenditures on infrastructure improvements and reliability expenditures;
-
Operations and maintenance costs for infrastructure improvements and reliability expenditures;
-
Vegetation management costs;
-
Storm preparation and restoration expenses; and
-
Any additional expenditures incurred for infrastructure improvement and reliability purposes.

 
2

 
·
Regulatory Transition Charge (RTC) and Extended RTC Recovery Periods and Rate Levels - adjust the RTC and Extended RTC recovery periods and rate levels so that full recovery of authorized costs will occur as of December 31, 2008 for OE and TE, and as of December 31, 2010 for CEI.
 
-
OE's and TE’s recovery of Extended RTC amounts through the RTC rate component will begin on January 1, 2006 rather than following the end of the recovery of regulatory transition costs. The amortization of the Extended RTC amounts will match the revenue received (consistent with the RSP) and the amortization of the regulatory transition costs will continue using the effective interest method taking into account an extended amortization schedule through December 31, 2008.
-
CEI's RTC rate components will remain at current levels, but will be reduced after all regulatory transition costs are recovered, currently expected to be April 30, 2009. The RTC rate will then be reduced to allow full recovery of Extended RTC amounts by December 31, 2010 with amortization matching the reduced revenue levels.
 
 
·
Deferred Shopping Incentive Balances - the Companies will reduce their deferred shopping incentive balances as of January 1, 2006 by up to $75 million for OE, $45 million for TE, and $85 million for CEI. These reductions will be made possible by accelerating the application of (or reducing) each respective company's accumulated cost of removal regulatory liability. This action will reduce the amount of deferred shopping incentives and carrying charges to be recovered through the RTC as the Companies will adjust their respective books of accounts for ratemaking and financial reporting purposes to reduce the cost of removal regulatory liability by the amounts credited to the deferred shopping incentive balance.
 
·
Fuel Recovery Mechanism - the Companies’ increased fuel costs of up to $75 million, $77 million, and $79 million in 2006, 2007, and 2008, respectively, will be recovered from all OE and TE distribution and transmission customers through a fuel recovery mechanism. The fuel recovery mechanism will be set at a rate approximately equal to the reduction in the RTC rate level that was made possible by the extension of the amortization period and the reduction in the deferred shopping incentive balance discussed above. If increased fuel costs are greater than the fuel recovery mechanism revenues, the excess costs will be deferred (Fuel Deferrals) by the Companies and recovered commencing with the distribution rate case first effective on or after January 1, 2009.
 
·
Shopping Credits - the Companies shopping credits will be adjusted during 2006 through 2008 to account for fuel recovery and cost levels.
 
·
Carrying Charges - fuel deferrals and distribution deferrals will be capitalized with carrying costs at the respective Company's embedded cost of long-term debt.
 
·
Competitive Bid Process - should the competitive bid process produce an auction clearing price that the PUCO accepts, major provisions of the RCP will remain in effect, including the distribution deferrals that will begin to be recovered when new distribution rates become effective. However, fuel recovery provisions would be terminated when the auction clearing prices become effective and the maximum time period for recovery of OE's and TE's Extended RTC amounts would revert to the RSP recovery periods.


 
3

The Companies have filed a Motion to Consolidate the pending GCAF proceeding with this Application.

Several parties have joined in a Stipulation and Recommendation to support the RCP and the PUCO’s approval of the Application. Signatory parties included the Industrial Energy Users - Ohio, the Ohio Energy Group, and the cities of Cleveland and Akron.

Benefits of the Rate Certainty Plan

The RCP is expected to provide customers with a variety of benefits, including the following:

 
·
The customer rate effects from the recovery of increased fuel costs through the fuel recovery mechanism will be substantially mitigated over the 2006 through 2008 time period. A significant portion of any fuel cost increase will be offset by an equivalent decrease to the RTC, with the balance of the increase, if any, deferred for future collection from customers. Customers will not experience a rate increase during this period due to increased fuel costs.
 
·
Maintaining the same level of base distribution rates through December 31, 2008 will delay for at least one year any distribution rate increase that would be allowed under the current RSP for OE and TE. CEI customers will have their base distribution rates maintained at current levels through April 30, 2009.
 
·
Accelerating the recovery of shopping incentive deferrals will reduce the carrying charges that would have accrued on the balances under the current RSP.
 
·
Accelerating the use of the cost of removal regulatory liability will provide customers with immediate rate benefits that would have not been realized until a subsequent base rate case.
 
·
Residential transitional rate credits will be extended for the lengthened RTC recovery period providing residential customers this benefit for a longer period.
 
·
The competitive bidding process will continue as approved in the RSP proceeding.

In summary, customers would experience lower, stable and more certain rate levels under the RCP than they will under the current RSP.

From an investor and business perspective, the RCP also provides benefits:

 
·
The RCP provides the Companies with a more stable and consistent earnings pattern during the period of the Plan as the current series of rate increases and decreases have been eliminated and the amortization levels of transition costs plus deferred costs are more consistent from year-to-year.
 
·
The ability to defer up to $450 million of delivery system improvement expenditures alleviates any concern that an extension of the level of current base distribution rates would create a disincentive for the Companies to make such expenditures.


 
4

 
 
·
Accelerating the use of the existing cost of removal regulatory liability for ratemaking purposes provides flexibility in accomplishing customer rate objectives during the market development period without compromising the Companies' financial results.

The RCP is consistent with the objectives of maintaining stability in both customer rates and FirstEnergy's financial performance. We are hopeful that the PUCO will approve the RCP in a timely manner and have requested such approval by November 1, 2005.


Upcoming FirstEnergy Investor Events
 
Merrill Lynch Global Power & Gas Leaders Conference
September 27, 2005
New York City

3rd Quarter, 2005 Earnings Release
October 25, 2005

Edison Electric Institute (EEI) Financial Conference
November 6-9, 2005
Hollywood, FL

Annual FirstEnergy Analyst Meeting
November 30, 2005
New York City


If you have any questions concerning information in this update, please call Kurt Turosky, Director of Investor Relations, at (330) 384-5500, or me at (973) 401-8519.



 
Very truly yours,
   
   
   
   
 
Terrance G. Howson
 
Vice President - Investor Relations



 
5







Forward-Looking Statement
 

This investor letter 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, maintenance costs being higher than anticipated, legislative and regulatory changes (including revised environmental requirements), 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 settlement agreement 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 and the Nuclear Regulatory Commission 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 availability and cost of capital, 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, 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, the outcome, cost and other effects of present and potential legal and administrative proceedings and claims related to the August 14, 2003 regional power outage, the final outcome in the proceeding related to FirstEnergy's Application for a Rate Stabilization Plan (RSP) in Ohio, including, but not limited to, PUCO's acceptance of the September 9, 2005 proposed supplement to the RSP, the risks and other factors discussed from time to time in our Securities and Exchange Commission filings, and other similar factors. FirstEnergy expressly disclaims any current intention to update any forward-looking statements contained herein as a result of new information, future events, or otherwise.





6




EX-99.3 4 ex99_3.htm EXHIBIT 99-3 ESTIMATED OHIO AMORTIZATION COMPARISON SCHEDULE Unassociated Document

                       
EXHIBIT 99.3
 Estimated Ohio Amortization Comparison
 
(In millions)
                         
                         
 
Rate Certainty Plan
 
Rate Stabilization Plan
 
Difference
                         
 
                                                                      Transition Costs
 
Transition Costs
 
Trans. Costs
         
Total
       
Total
 
Total
   
OE
CEI
TE
Ohio
 
OE
CEI
TE
Ohio
 
Ohio
 
Projected Balance 12/31/05
$       285
$      475
$      183
$      943
 
$        285
$       475
$       183
$      943
 
$0
                         
 
Amortization 2006
$         89
$      125
$        54
$      268
 
191
125
82
398
 
(130)
 
2007
90
138
60
288
 
94
138
92
324
 
(36)
 
2008
106
158
69
333
 
-
158
9
167
 
166
 
2009
-
54
-
54
 
-
54
-
54
 
0
 
2010
-
-
-
-
 
-
-
-
-
 
0
 
Transition Cost Amort
$      285
$      475
$      183
$      943
 
$       285
$       475
$       183
$     943
 
$0
                         
                         
 
                                                                        Shopping Incentives & Carrying Charges
            Shopping Incentives & Carrying Charges
 
Shopping Incent. & CC
         
Total
       
Total
 
Total
   
OE
CEI
TE
Ohio
 
OE
CEI
TE
Ohio
 
Ohio
 
Projected Balance 12/31/05
$       333
$      434
$      131
$       898
 
$       333
$      434
$      131
$      898
 
$0
 
Regulatory Liability Offset
(75)
(85)
(45)
(205)
 
-
-
-
-
 
(205)
 
Adj Balance 12/31/05
$       258
$      349
$        86
$       693
 
$       333
$      434
$      131
$      898
 
($205)
                         
 
Carrying Charges 2006
$         10
$        25
$          4
$         39
 
$         16
$        31
$           9
$        56
 
($ 17)
 
2007
6
27
2
35
 
13
34
10
57
 
(22)
 
2008
2
29
1
32
 
6
36
5
47
 
(15)
 
2009
-
24
-
24
 
-
28
-
28
 
(4)
 
2010
-
9
-
9
 
-
9
-
9
 
0
   
18
114
7
139
 
35
138
24
197
 
(58)
                         
 
Incentives & CC to be amortized
$       276
$      463
$        93
$       832
 
$       368
$      572
$      155
$  1,095
 
($263)
                         
 
Amortization 2006
$         90
$            -
$        30
$       120
 
$             -
$           -
$           -
$           -
 
$120
 
2007
92
-
31
123
 
156
-
-
156
 
(33)
 
2008
94
-
32
126
 
212
-
155
367
 
(241)
 
2009
-
186
-
186
 
-
292
-
292
 
(106)
 
2010
-
277
-
277
 
-
280
-
280
 
(3)
 
Incentives & CC Amort
$      276
$      463
$        93
$       832
 
$      368
$     572
$     155
$  1,095
 
($263)
                         
                         
 
                                                                     Net Amortization & Carrying Charges
 
Net Amortization & Carrying Charges
 
Net Amort & CC
   
 
 
 
Total
 
 
 
 
Total
 
Total
 
 
OE
CEI
TE
Ohio
 
OE
CEI
TE
Ohio
 
Ohio
 
 
 
 
 
 
 
 
         
 
Amortization 2006
$       169
$      100
$        80
$       349
 
$       175
$        94
$        73
$      342
 
$7
 
2007
176
111
89
376
 
237
104
82
423
 
(47)
 
2008
198
129
100
427
 
206
122
159
487
 
(60)
 
2009
-
216
-
216
 
-
318
-
318
 
(102)
 
2010
-
268
-
268
 
-
271
-
271
 
(3)
 
Net Amortization
$       543
$      824
$     269
$   1,636
 
$       618
$      909
$     314
$   1,841
 
($205)
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-----END PRIVACY-ENHANCED MESSAGE-----